Public Ownership Is Not A Dirty Word

March 23, 2020 8:43 AM

“ So what claim do those airlines have to public assistance? If they are going to be on the receiving end of a massive public bailout, it’s time first to admit that deregulation has been a colossal failure and begin to reverse its course. And if the federal government is going to assume financial responsibility, it should do so only on the grounds that the airlines will be again treated as public utilities, providing a narrowly defined public service that society needs to function.” It’s Time to Nationalize the Airlines (American Prospect) “Only democratic government can ensure the planned wind-down of fossil fuel production in accordance with climate safety goals,” she writes. “With room for private profit cut out of fossil fuel extraction and production, the powerful entrenched opposition of the energy sector would crumble.” A Moderate Proposal: Nationalize the Fossil Fuel Industry (New Republic) Previously: Big Oil Has Never Been Cheaper, Let’s Buy it (and wind it down)
posted by The Whelk (49 comments total)

In renationalisation news today

Britain’s trains have effectively been nationalised, at least temporarily, after the government suspended rail franchise agreements to avoid train companies collapsing because of the coronavirus.

Under emergency measures announced by the Department for Transport (DfT), train operators have been offered the chance to transfer “all revenue and cost risk” to the government and be paid a small management fee to continue running services.

Whilst this is being framed as a reaction to measures taken to combat COVID-19 - reduced timetables and so on - this has been coming for a while on the back of the Williams Review and the general feeling from the industry is that it will likely be extended beyond the 6 months and is the end of the franchising model as we know it...
posted by jontyjago at 8:58 AM on March 23, 2020 [7 favorites]

The thing I saw floating around, that I really, really liked, was that if United (I think) is valued at $70 billion, and they’re asking for a $60 billion bailout, the country should just buy the airline outright.

That, and cruise lines asking for bailouts from the US government while flying flags out of the Bahamas or Panama to avoid paying US taxes or following US labor laws should fuck right off.
posted by Ghidorah at 9:07 AM on March 23, 2020 [102 favorites]

...cruise lines asking for bailouts from the US government while flying flags out of the Bahamas or Panama to avoid paying US taxes or following US labor laws should fuck right off.

This. A bajillion times, this.

I'm not convinced the government needs to get into the airline business. That said, I would be totally down with imposing some very draconian requirements for receiving aid. Like slicing executive pay and financial incentives to below the bone, along the lines of top pay can only be x-times that of the lowest-paid employee. No stock buybacks. No executive bonuses. No layoffs.
posted by Thorzdad at 9:18 AM on March 23, 2020 [28 favorites]

Related (not on the nationalization wavelength but in terms of who feels they need a bailout but emphatically does not participate in the tax system in good faith):

All the major cruise lines are asking for bailouts from the U.S. Government.

Yet, Disney Cruises sails under the Bahamian flag ... Celebrity Cruises under Liberian/Maltese flags & Carnival Cruises under the Panamanian flag - all to avoid U.S. taxes & employment law

Just sayin'
@Sabrina_McDa
--

posted by DirtyOldTown at 9:24 AM on March 23, 2020 [26 favorites]

Or, you know, what Ghidorah said.
posted by DirtyOldTown at 9:28 AM on March 23, 2020 [3 favorites]

Thanks, DirtyOldTown, for finding the original.
posted by Ghidorah at 9:37 AM on March 23, 2020 [2 favorites]

where i live we have a thing called SMUD (Sacramento Municipal Utilities District) that is our power company. ours.
posted by wmo at 9:47 AM on March 23, 2020 [2 favorites]

While I hate the way the airlines run the airlines, it’s easy to imagine government doing a much worse job.
posted by Jode at 9:53 AM on March 23, 2020 [3 favorites]

It's easy because of that antigovernment propaganda they've been feeding us for 40 years.
posted by Kirth Gerson at 9:55 AM on March 23, 2020 [68 favorites]

It's always interesting to me how many hardcore capitalist/free-marketeers suddenly feel like the normal rules of capitalism (e.g., if you inject $60B of capital into an entity whose post-money valuation is $70B, then you own 60/70 = 85.7% of that entity) shouldn't apply if the government is involved.
posted by angrynerd at 9:59 AM on March 23, 2020 [49 favorites]

Why can't they split the difference? Bail out United in the form of buying it, then turn it over to its employees as an employee-owned corporation? Saves the infrastructure United represents, but transfers the wealth to working people.
posted by DirtyOldTown at 10:00 AM on March 23, 2020 [27 favorites]

Is Medicare doing a worse job than United Health Care? Is the USPS doing a worse job than UPS? Is the Air Force doing a worse job than American Airlines? The government is perfectly capable of running any major business. It's the right-wing politicians who say it isn't, and work at making that true, who are the problem.
posted by Kirth Gerson at 10:02 AM on March 23, 2020 [72 favorites]

I'd be all for taking the airlines into receivership at the federal level, but given the impossibility of that in the current political climate, something more like TARP, where the government essentially purchased an equity stake in GM and Chrysler, nursed them back to health, and recovered the entirety of the investment is probably the best possible outcome here.
posted by tonycpsu at 10:06 AM on March 23, 2020 [4 favorites]

Tonycpsu - the government lost over $10 billion on GM, the one major TARP program that was heavily concentrated in common equity, and the only one to have losses of that magnitude.
posted by MattD at 10:14 AM on March 23, 2020 [2 favorites]

Thanks for the correction. Other elements of TARP made the program basically revenue-neutral, but I'd forgotten about the loss for GM. That one ended up being a more conventional "bailout", which is definitely not the right thing to do in the case of the airlines.
posted by tonycpsu at 10:20 AM on March 23, 2020 [2 favorites]

Yet, Disney Cruises sails under the Bahamian flag ... Celebrity Cruises under Liberian/Maltese flags & Carnival Cruises under the Panamanian flag - all to avoid U.S. taxes & employment law

Just sayin'
@Sabrina_McDa


Princess Cruises has enough employees in CA-25 (where Katie Hill, first Dem congressional rep of the district literally ever, was a rep before she practically blackmailed into quitting) to make a difference between Cristy Smith (a Dem) winning in Nov instead of Mike Garcia (a Rep Raytheon exec). Perhaps headlines of "Pelosi has put you out of work" aren't the best thing for Cristy's election campaign.

Just sayin'
posted by sideshow at 10:38 AM on March 23, 2020 [1 favorite]

Perhaps headlines of "Pelosi has put you out of work" aren't the best thing for Cristy's election campaign.

You're assuming that a bailout would meaningfully protect those jobs.

Cruises were already notorious sources of various infections. Especially given the prominent role of the Diamond Princess in the early reporting about COVID-19, I honestly think this may be a body blow to that industry; it may not be possible to bail it out.

And even if it were, there's no guarantee that the bailout money would "trickle down" to the workers in that district. There's plenty of precedent showing companies using bailout money to line the pockets of executives and investors, while "restructuring" a lot of the lower-level employees out of a job.

And finally, even if the perfect bailout exists that actually saves the jobs in that district, you're assuming Cristy Smith's opponents won't just replace "Pelosi has put you out of work" with something equally disingenuous or outright dishonest. They may even stick with "Pelosi has put you out of work"... they never let facts get in the way of the message, which is that Democrats Are Your Enemy.
posted by Riki tiki at 11:16 AM on March 23, 2020 [11 favorites]

"Government should be run like a business!"
"Ok, we're going to buy you out and fire you, then. It's cheaper and you suck at your job."
".... I didn't mean like that!"
posted by mhoye at 11:29 AM on March 23, 2020 [36 favorites]

(To be clear, the idea that government should be run like a business is the dumbest idea in all of modern public life. It's like saying you should operate your 747 just like a submarine, because they're sort of the same shape. But I'd be happy if the people who champion that terrible idea someday have to live with the real consequences of that advocacy, particularly if the public did well in the exchange.)
posted by mhoye at 11:32 AM on March 23, 2020 [19 favorites]

While I hate the way the airlines run the airlines, it’s easy to imagine government doing a much worse job.

Socialism properly implies above all things the co-operative control by the workers of the machinery of production; without this co-operative control the public ownership by the State is not Socialism – it is only State capitalism.
posted by CheeseDigestsAll at 12:16 PM on March 23, 2020 [4 favorites]

Air New Zealand is 52% owned by the New Zealand government. It is a well run, highly regarded airline, both as an airline to fly with, and as an employer here in New Zealand. It is regarded as our "national carrier" and a strategic asset. It has received a rescue package recently, as a result of the COVID-19 pandemic, primarily consisting of loans. There are plenty of ownership models that mix private and public ownership in creative ways that can work well. It doesn't have to be one or the other.
posted by vac2003 at 12:20 PM on March 23, 2020 [29 favorites]

(To be clear, the idea that government should be run like a business is the dumbest idea in all of modern public life.

I disagree, it’s just the people who like to throw around that phrase have no idea on what it means and would be up in arms if the government implemented it. Same with the phrase, “run the budget like a household budget”. Those words don’t mean what you think they mean.
posted by jmauro at 12:29 PM on March 23, 2020 [1 favorite]

I'd love to see something with landlords. If the tenants can't make rent and the bank is breathing down their neck, the Gov wil buy the property and turn it into a strata, collectively owned by the tenants, with one share going to the landlord should they choose to live there. The Gov can just sit on the loan until the economy recovers.
posted by klanawa at 12:50 PM on March 23, 2020 [3 favorites]

people who like to throw around that phrase have no idea on what it means

Go on then. What does it mean?
posted by klanawa at 12:52 PM on March 23, 2020 [2 favorites]

Go on then. What does it mean?

If government was run like a business, then the most profitable services would be grown, the least profitable ones would be eliminated, and every thing they fund would be subject to value capture. To put it in more concrete terms:

highways would be expensive to drive down.
National parks would cost more to enter.
Social services for the bottom 20% would be eliminated and probably increased for the top 40%.
Voting would be tied to income.
posted by The_Vegetables at 12:59 PM on March 23, 2020 [6 favorites]

Whoa there, one dystopia at a time.
posted by DirtyOldTown at 1:04 PM on March 23, 2020 [14 favorites]

If we nationalize the airlines, can we finally get the ADA to apply to them? So I can get my wheelchair onto the plane and maybe even get to use the bathroom? You know, getting treated as if they thought I was a person worth respecting?
posted by Soliloquy at 1:07 PM on March 23, 2020 [27 favorites]

Bailing out the cruise industry is a terrible idea for the tax reasons listed above, but also because who on planet earth is going to take a cruise ever again even after we have a Covid19 vaccine?!
posted by youthenrage at 1:32 PM on March 23, 2020 [1 favorite]

Bailing out the cruise industry is a terrible idea for the tax reasons listed above, but also because who on planet earth is going to take a cruise ever again even after we have a Covid19 vaccine?!

Lots of people? This is like asking "Who is going to go outside or to the store ever again? or Who would ever go to Mexico since drug lords kill Americans there?"
posted by The_Vegetables at 1:36 PM on March 23, 2020 [1 favorite]

Yes exactly the same as those things, I take it back.
posted by youthenrage at 1:44 PM on March 23, 2020 [1 favorite]

Breaking: COVID-19 attacks sarcasm receptors. Internet in disarray. Onion becomes the Paper of Record. New York Times reduced to publishing Branco cartoons and Dr. Oz' wellness tips.
posted by klanawa at 1:58 PM on March 23, 2020 [5 favorites]

I would be totally down with imposing some very draconian requirements for receiving aid.

Just hand them money on the same terms as student loans: They get several years of no interest, with extensions possible if they can prove financial hardship (i.e. no profits at all), but the debt never goes away.

Point out to congressfolk how great it'll be for the economy to have these high-value long-term loans from stable businesses!

Disney Cruises sails under the Bahamian flag ... Celebrity Cruises under Liberian/Maltese flags & Carnival Cruises under the Panamanian flag - all to avoid U.S. taxes & employment law

Not a registered, tax-paying business in the US: No bailout money.
If cruise lines want bailout money, they can stand in line behind the manufacturers in other countries who make much of our tech supplies. "Provides an important service to US citizens" should not be the criteria for a bailout.

If it is, "cruise line" is not going to be at the top of that list.
posted by ErisLordFreedom at 2:28 PM on March 23, 2020 [12 favorites]

Go on then. What does it mean?

If government was run like a business, then the most profitable services would be grown, the least profitable ones would be eliminated, and every thing they fund would be subject to value capture. To put it in more concrete terms:

highways would be expensive to drive down.
National parks would cost more to enter.
Social services for the bottom 20% would be eliminated and probably increased for the top 40%.
Voting would be tied to income.

Even more basic than that:
1) Fully fund the IRS, it's the biggest ROI of anywhere in the government.
2) When there is a downturn borrow like crazy to do things, if people want to give you money at negative real interest rates you say yes please.
3) Simply, simply all forms and interactions with your customers
4) Charge people and companies real rates for things instead of the made up political rate (i.e. flood insurance should reflect your actual rate, not your political power, etc)
5) Charge people and companies then can afford more, more. i.e. higher tax rates on the rich.

That would be the start in my mind.
posted by jmauro at 4:20 PM on March 23, 2020 [2 favorites]

New York Times reduced to publishing Branco cartoons and Dr. Oz' wellness tips.

This would be so, so much better than the bullshit swing-to-the-right they’ve been peddling for about the last several years (though have ramped up recently). It’s kind of sad/funny to see them shifting away from what has been a pretty liberal stance. The thing is, it doesn’t matter how far right they shift to, Trump (and years of actual politicians on the right before him) have been discrediting the Times to their followers for so long, no Republican is ever going to put their faith in the paper, and they’ll end up losing their followers on the left.

Or at least I can dream.
posted by Ghidorah at 4:35 PM on March 23, 2020 [2 favorites]

That would be the start in my mind.

Alright, obviously my sarcasm receptor is fucked too.
posted by klanawa at 4:47 PM on March 23, 2020

Regarding the airlines, how about we end domestic airline protections and allow foreign carriers to transport passengers within the US? I can't say what this would make air travel look like in 10 years but I'm pretty sure we would not be bailing out British Airlines or Lufthansa, no matter how bad their finances looked. Plus we'd get some true competition instead of the 3 or 4 vertical monopolies that universally suck, and maybe it would stimulate the domestics to get better. Or go under. At this point, I don't really care.

Jobs? Those foreign carriers are going to need pilots and crew and flight attendants and luggage handlers and so on. What wouldn't they need? Another set of scumbag C-level psychopaths. Sorry, bye, don't let the plug door hit you on the way out.
posted by ensign_ricky at 5:10 PM on March 23, 2020 [4 favorites]

Plus we'd get some true competition instead of the 3 or 4 vertical monopolies that universally suck, and maybe it would stimulate the domestics to get better. Or go under. At this point, I don't really care.

With rare exceptions (utilities, professional sports), enforcement of regulations is what helps prevent monopolies, while deregulation incentivizes consolidation — it's a cost-cutting measure, after all, where the goal of deregulation is to aim for cost efficiencies. There is a connection between increasing deregulation of flight since the early 1980s and the according and ongoing drop in general quality in flying, itself, which has gotten so bad, a passenger bill of rights has been proposed.
posted by They sucked his brains out! at 6:05 PM on March 23, 2020 [2 favorites]

With rare exceptions (utilities, professional sports), enforcement of regulations is what helps prevent monopolies, while deregulation incentivizes consolidation — it's a cost-cutting measure, after all, where the goal of deregulation is to aim for cost efficiencies. There is a connection between increasing deregulation of flight since the early 1980s and the according and ongoing drop in general quality in flying, itself, which has gotten so bad, a passenger bill of rights has been proposed.

I have to agree, you bring up a lot of good points. Does re-regulating and tariffing seats make sense? Or do we need a big load of anti-trust to break the 3 back into 15 smaller airlines? Do we need to make it easier for new airlines to start? Do we make it easier for the huge old airlines to fail to make room for smaller, (hopefully) less shitty airlines?

Or does the state take control of the airlines, re-regulate, re-tariff and run them as an arm of the state, ala a lot of countries? Maybe that makes sense just from the perspective that the government would assumedly run the airlines conservatively. And you wouldn't have the oligarchs pushing for bailout money that just ends up in a numbered account in Panama.

I don't know, eliminating cabotage may be simpler than trying to re-regulate the airlines. And it would allow the US to get rid of a constant burden (bailing out terrible airlines and even more terrible executives) while keeping a lot of jobs. Think about your last experience flying: is there anything worth salvaging in domestic airlines?

Edit: aren't airlines more of a utility anyway?
posted by ensign_ricky at 6:43 PM on March 23, 2020 [2 favorites]

Public ownership of anything would be nightmare, right now. Just another way to funnel money from the poor to the rich.

It's not even just the current joke of an administration I'm talking about. Plenty* of the current wealth transfer that is crippling our economy, society and political system is a direct result of the Clinton administration's deregulation spree, and hands-off approach to obvious violations of anti-trust law.

*Not all, of course. But, the problem is much bigger than the perennial "wrong asshole is in charge".

Our civil society and political system are so broken that I don't think we can have any meaningful improvement without changes at the Constitutional level. We can't progress in the era of Fox News, Facebook and Citizens United. Racism and Minority rule are virtually guaranteed until we get rid of the last vestiges of Federalism. We need to raise the level of public discourse beyond grade-school level.

This is going to require ton of work - mostly local, on the ground activism targeting local officials. We need to change minds and shift the conversation one person at a time. That's the only chance to the wealthy and the corporations who have the means to dominate the national media.
posted by Anoplura at 9:28 PM on March 23, 2020 [1 favorite]

Air New Zealand is 52% owned by the New Zealand government. It is a well run, highly regarded airline, both as an airline to fly with, and as an employer here in New Zealand.

On the other hand, South African Airways (which is now in business rescue, one step before complete bankruptcy) is 100% owned by the South African government and has received R29 billion worth of bailouts over the past 20 years. That billions of Rands that the SA government has spent subsidising middle and upper class travel when they could be spending it on health care and education for the poor.

Our most recent budget cut the Health budget by R4bn and promised to guarantee R16bn of SAA's debt over the next three years.
posted by PenDevil at 11:48 PM on March 23, 2020 [3 favorites]

Public ownership of anything would be nightmare, right now. Just another way to funnel money from the poor to the rich.

The solution to them not taking a bailout (ie: they should have saved enough money to survive a downturn like this on their own without federal expenditures) would also do nothing but funnel money from the poor to the rich. Some money from stock buybacks may end up in wealthy people's accounts in Panama, but plenty of other money goes into the accounts of pension funds and other public stock portfolios, pushing wealth outward and down. Not only that, with a bailout we as a public get to set terms, which is not something we are getting to do with companies not asking for bailouts, like for example Google and Facebook.
posted by The_Vegetables at 7:07 AM on March 24, 2020

how about we end domestic airline protections and allow foreign carriers to transport passengers within the US?

I could be wrong, but aren't many foreign airlines subsidized by their home countries? I imagine if the US opened its skies then domestic carriers would start pressing for their own subsidies.

Better to just nationalize then outright and run them as a non-profit utility.
posted by Panjandrum at 7:28 AM on March 24, 2020 [1 favorite]

with a bailout we as a public get to set terms

With a bailout under the current Senate and President, "we as a public" would not be setting the terms.
posted by ErisLordFreedom at 12:06 PM on March 24, 2020

under the current Senate and President, "we as a public" would not be setting the terms

So true. What David Graham Phillips wrote in "The Treason of the Senate" in 1906 is still true, that most senators represent not the people but "the interests" and treacherously serve them to transfer public resources into private hands.

"Politics does not determine prosperity. But in this day of concentrations, politics does determine the distribution of prosperity. Because the people have neglected politics, have not educated themselves out of credulity to flimsily plausible political lies and liars, because they will not realize that it is not enough to work, it is also necessary to think, they remain poor, or deprived of their fair share of the products, though they have produced an incredible prosperity…. The Senate is the most powerful part of our public administration…. The laws it permits or compels, the laws it refuses to permit, the interpreters of laws it permits to be appointed–these factors determine whether the great forces which modern concentration has produced shall operate to distribute prosperity equally or with shameful inequality and cruel and destructive injustice."
posted by lathrop at 2:06 PM on March 24, 2020 [1 favorite]

Cruises were already notorious sources of various infections.

This should be in the running for understatement of the year. In just the past month in Baltimore cruises have returned twice because of mass outbreaks, first the flu and just this past week norovirus.

Cruise ships are basically giant floating petri dishes with a pool and comped drinks. They are a disease vector that can and should disappear for the good of public health; let them fail.
posted by CosmicRayCharles at 7:38 PM on March 24, 2020

Cruise ships are basically giant floating petri dishes with a pool and comped drinks.

I've never been on a cruise myself, but from everything I've heard and read it's the food on cruises that is included, and you gotta pay for all the drinks - which are, as expected, overpriced.
posted by Anoplura at 8:19 PM on March 24, 2020

With a bailout under the current Senate and President, "we as a public" would not be setting the terms.

Fair enough, but there have been stories about Harvard, Google, Facebook, and other companies laying off employees, and they have billions of dollars in the bank. So the ultimate effect is the same.
posted by The_Vegetables at 7:43 AM on March 25, 2020

Cruise ships are also massive polluters - funding them at all is like funding coal mines.

“Twelve years ago, banks asked for a bailout after years of irresponsible, highly leveraged lending. The Treasury Department put out a three-page term sheet seeking money from Congress with no strings attached, even eliminating judicial review. Democrats balked, called it a slush fund and worse, then agreed after a few mostly meaningless bits of oversight and some promises to help ordinary people. That $700 billion bailout was window dressing for trillions that came from the Federal Reserve, but it kept Congress quiet, hooking them into the rescue of the system.

Twelve years later, virtually the same course of events is taking place.”
posted by The Whelk at 8:26 AM on March 25, 2020 [2 favorites]

It’s time to nationalize the airlines
posted by The Whelk at 6:48 AM on March 26, 2020