You’re a government whose current debt obligations is 100% of your GDP. Although you own vast resources and have a sprawling population of 320 million, 40 - 50% of your yearly income comes in the form of tax receipts from the population. The political winds have made it impossible to increase taxes, therefore spending is cut, which means the economy slows, less taxes are collected, and a death spiral of debt and poverty continues in perpetuity; indeed, it has been clear since 1981 that your population abhor taxation are willing to increase the deficit in favor of tax cuts. You also know that the last time a sitting President and Congress voted to raise taxes to tackle the deficit, they were booted out of office.
Now, back to you. You’re glorious. You have your own army, your own science and space programs, and even your own corp of engineers that can build you things. Not only that, but you have federal lands with vast reservoirs of untapped oil and natural gas as well as mines filled with precious metals and minerals. Powered by a central bank that can provide liquidity to your endeavors. Open a Oil Company: If Exxon-Mobil pulled in $40 billion in one year, a government-owned oil company could likely pull in twice that amount or, likewise, pass that savings on to the customer in the form of cheaper gas. Open a Pharmaceutical Company: There’s a $10 billion dollar market in the United States. Using your scientists, you can develop drugs and acquire patents that’d be transferred to the federal government. Patents for discoveries will ensure a steady flow of royalties that can be used to reduce debt or, likewise, be used to reduce the cost to the taxpayer in the form of cheaper medications. Open a Bank: Banking sector contributes about 10% to GDP, which, if my math is correct, would be $1.5 trillion. Let’s say a U.S bank could 6% of that, which would be $90 billion. The U.S Bank could lend to customers, offer loans, engage in high frequency trading, commodities, etc etc.
All said and done, that would be $140 billion or $1.4 trillion in revenue over ten years. This could be used to cover the anticipated $4 trillion in deficit reduction advocated by Simpson-Bowles Commission.
There are some government owned corporations, Amtrak and USPS are examples.
The UK tried to run a lot of sectors of the economy at one point and it was generally viewed as a failure by everyone except for some uneducated Northern English.
The firm majority of business sectors would bring in more money from taxes or use fees on private businesses than profits from government companies. Part of it is the flexibility of capitalism in and of itself, but a much bigger part of this inefficiency from a market standpoint is political meddling, and the related public pressure to provide cheap or free services to those whoever the particular lobbier thinks deserves is.
So there may be reasons for a government to run a business, but taking in more in profits than in taxes is usually not one of them.
That said, there are certainly sectors where government involvement would make the sectors more efficient from a consumption of labor standpoint, for instance health care. There are a lot of people whose entire jobs are to deny services to patients or to argue for said coverage, and the need for these would be greatly reduced in a goverment health care system. It’s just that political pressure and the reality of having to treat everyone would mean that it wouldn’t turn out to be a greatly profitable system. The benefit would be that there would be a lot more health care going on to the people who need it most, using fewer manpower resources that could then be used in other sectors of the economy.
Some states do this, in the form of state liquor stores. The ones here in NH are successful, making $140 million profit last year (that may not seem like much, but NH is a small state). This is one of the reasons NH doesn’t need a personal income tax, or sales tax (except on certain items).
There was a proposal to have a government run health insurance company. Actually called the “public option,” the mere mention of those words caused most people to freak the fuck out.
Why bother starting a business, you’re the GOVERNMENT, for cripes sakes, just confiscate one that’s already all set up and chugging along. And once you find that the nifty business you took over can’t compete with you running it, you can, because you’re the GOVERNMENT, declare a monopoly. Or, being the GOVERNMENT, you just make some laws that force your competitors to be as inefficient as you are.
There’s also Federal Prison Industries, aka UNICOR. By federal law, any products FPI manufactures can only be sold to the government, but their services can be sold to anyone. They have call centers, data entry, etc.
Selling licenses for activities on public lands is a business – like the right to harvest timber or minerals.
I don’t understand. I’m not advocating abolishing private enterprise, I’m merely suggesting that government be able to compete for a share profits.
If I was wrong, kindly point to where the value was incorrect rather than making some vague statement to the contrary. My point Alessan, is this: the U.S government main source (40-50%) of revenue is from U.S tax receipts. This invisible line connecting tax revenues and employment, means that a recession or an anomaly in the job market can leave the government with declining tax receipts.
IMO, this over reliance on tax revenues coupled with lack of political will to raise taxes, means that the U.S should exploit other ways to raise revenue without raising taxes. In fact, I would suspect, that if the profits of government-owned business may grow large enough to address the deficit in a way that allows cut individual tax rates.
It seems like a win-win. The government gets a crack at business and making money and an opportunity to reduce tax rates for all.
I don’t know about the bribe stuff but generally most people agree the recent requirement that USPS prefund their retiree benefits from current revenues has created a massive shortfall for the USPS that no private company would be running into. Additionally, the USPS needs a lot of structural reform in addition to getting rid of the silly prefunding requirement in order to operate more effectively.
Many of these structural reforms, like closing down relatively unused post offices, canceling Saturday delivery and etc can and are blocked by Congress leaving the USPS virtually no way to avoid running deep in the red at present.
I would guess the assertion is this state of affairs was brought about in part by political influence from FedEx and UPS since USPS is still the largest parcel and mail mover in the country and the worse off they are the better its private competitors are.
It would seem easy to fix: relax the requirement for prefund retiree benefits to cover the shortfall. Do you know what Congress they did this in? I’ve never ever heard of this.
And then after Congress passed a law requiring the Postal Service to accumulate this huge amount of money for future expenses, Congress turned around and essentially said, “You know as long as you’ve got this big pile of money that you’re not using sitting around, we’re going to borrow it.”
And if the same recession hurts the government-owned business, who covers the loss? Now you have to raise taxes not just to cover government expenses, but also to keep massive government corporations afloat.
That’s the difference between revenues and profits. It’s not enough for a company to have massive revenues - it needs to have revenues massive enough to cover its expenses and have something left as profit. An the bigger the business, the bigger its expenses.
Unless you’re from the southeastern U.S. you’ve probably never even heard of the Tennessee Valley Authority, a truly massive government corporation designed during the Depression to modernize the most pitiful, desperate, poverty-stricken region of the country.
And ever since the government proved it could be done, private industry has been after them to break up the TVA, sell its pieces and end this “socialism.”