It's Time to Reconsider Government Ownership of Companies
As we bail out Wall Street, America can learn an economics lesson from Germany’s most successful beer
by Jay Walljasper - 26 Sep 2008
At a moment’s notice, the old rules and certainties about our economy have been tossed out the window.
For almost 30 years, the clear message from corporate headquarters, economic gurus and Washington itself has been that government has no useful role to play in business. Deregulate everything in sight and then let the market can work its magic—that was Ronald Reagan’s recipe for prosperity, which was eventually endorsed by most Democrats.
And it worked—in a few select places. Tony suburbs and upscale urban enclaves around the country lavished in luxurious excess not seen since the day of Louis XVI and Marie Antoinette. (Remember the annual December news reports of Wall Street traders spending $200-$400-$600-and-more on individual bottles of wine to celebrate the arrival of their annual bonus?)
Meanwhile, most Americans struggled to stay afloat as good jobs dwindled and wages declined in terms of buying power. Is it any wonder that people took out dubious loans during a time when the housing boom seemed the only way to get ahead financially?
That bubble has dramatically burst, and government intervention in the economy is being demanded—right now with no questions asked!—by the high rollers who amassed fortunes thanks to business deregulation. The federal government—long reviled by business leaders—is now supposed to take over doomed companies to protect top dogs in the financial industry.
But let’s stop and minute and think about this. If it’s such a splendid idea for the state to assume control of a failing company, with taxpayers covering the losses, then it must be an even better idea for government to run successful companies that don’t lose billions of dollars and provide the public with important services.
In this brand new era, when the old economic theories no longer apply, we owe it to ourselves to take a second look at state ownership of businesses—an idea scorned ever since Reagan, Thatcher and their free market comrades seized control of the world economy in the 1980s.
In recent years billions of dollars of assets in publicly-owned telephone, broadcasting, railroad, airline, health care and key industrial companies around the world have been handed over to private investors in what amounts to the largest enclosure of the economic commons in human history. Once public property that citizens could influence through their elected officials, these socially strategic businesses are not accountable to anyone today but their shareholders, who often don’t even live in the country.
We should explore government ownership in certain industries as another way to restore the commons, along with reforms such as worker cooperatives, community and non-profit ownership, re-regulation of corporations and support for socially-beneficial entrepreneurs. Housing, transportation, and insurance, for instance, are basic public services that should be viewed as a social commons rather than solely as an opportunity for investors to reap profits.
And, judging by the success of a small government-owned brewery in Germany, even industries that do not provide basic services might benefit the public if they were run by the state. (This depends, of course, on whether you see beer as a basic public services like many Germans do.)
I learned about the remarkable success of the Rothaus Brewery, owned since 1806 by the German state of Baden-Württemberg, not in some unreconstructed lefty journal or wild-eyed nouveau-Marxist website, but the New York Times.
What makes Rothaus newsworthy to the Times is not its ownership structure, but the fact that it has doubled business since 1992 while beer sales throughout Germany, dominated by huge corporate breweries like Lowenbrau and Beck’s, have plunged 13 percent. This small brewery has accomplished this feat without any radio or TV advertising. Loyal beer drinkers, especially young ones, carry out the company’s marketing strategy by telling their friends about Rothaus.
“Even the fact that it is wholly owned by the state of Baden-Württemberg lends it a sense of homeyness in a rootless era,” the Times reports. “That, in turn, has given it creditability with anti-corporate, anti-globalization crowd. In Germany, where capitalism is viewed with deep mistrust and populism is on the upswing, that is not such a small audience.”
The beer is particularly popular in cosmopolitan Berlin. “I could never identify myself with a beer like Beck’s,” notes Basti Wisbar, 31, a bartender in at Waldorheule, a tavern in the countercultural neighborhood of Kreuzberg.
What makes matters even more interesting is that the state-owned Rothaus brewery is managed by a former politician from the Christian Democrat party, Germany’s leading conservative force. The Christian Democrats have dominated Baden-Württemberg’s politics since 1948, but the popular state-owned brewery has never been put up for privatization.
In light of dramatic changes in our economy right now, Americans might be advised to follow the lead of Germany’s radical beer drinkers and conservative politicians by experimenting with government ownership of some businesses as way to promote a commons-based society—where a mix of economic approaches can spread prosperity more widely and better withstand financial upheavals.