Nationalization (or rather Nationalisation) was a big part of Jeremy Corbyn’s manifesto during the 2017 and 2019 General Elections. If Labour won, it promised that anything and everything would be nationalized, usually at below market price.

I’ve always been skeptical of claims that nationalization leads to any kind of savings. The claim is that since a Government company doesn’t have to worry about profits for shareholders, it can be more efficient than a private company. All the profits that are paid out as dividends are instead re-invested into the company to provide better service at a lower cost.

But there truly isn’t any law saying a company ever has to provide dividends and profits. If Corbyn, McDonnell and co truly thought that companies could run better and more efficiently without profit, they could always just do that themselves without need of the government. Private citizens can always set up a non-profit corporation, they can take money from people (God know’s Corbyn was a fundraising machine) and set up a company that doesn’t pay dividends to shareholders, but instead re-invests everything to provide better service at a lower cost.

If such a non-profit did truly provide better service at a lower cost, then customers would flock to it over the for-profit companies that already exist. And again since this non-profit doesn’t hand out dividends, then Corbyn Co could easily be the fastest growing company in the world as it takes on more and more customers and reinvests into being better and better.

So why did they need nationalization? Why couldn’t they give the British people good services as a low price by just setting up a non-profit company and out-competing the for-profit ones? Why do socialists only ever think they can succeed by taking from someone else?

I think they simply didn’t have enough economic literacy to realize how their whole idea was such a shambles. Non-profit companies haven’t taken over the world because for-profit companies are actually way more efficient. They’re more efficient than non-profits and more efficient than Government companies, but socialists prefer to deny the lessons of history and keep acting like it’s the 1970s.

Not only are nationalized companies less efficient, but the act of nationalization creates inefficiencies. The idea that the government can force a sale of a profitable enterprise creates a chilling effect as investors become less likely to invest knowing it can all be taken from them at any moment. People don’t want to be forced to sell to the government, even at a “fair” price. Most eminent domain projects throughout history were done at a “fair” price, with people being paid the market value for their homes and then kicked out to make way for freeways and whatnot. But “fair” price or not, no one likes a forced sale.

And Corbyn Co wanted to take things a step further by paying below market value for the companies they wanted to nationalize. So not only was the government forcing a sale, but they were also committing theft at the same time.

I write all this because nationalization became a big word again during the recent bout of inflation, and I’ve seen way to many people jump on the bandwagon saying we need to nationalize energy companies, housing companies, and everything else to keep prices down. But prices don’t rise because companies are greedy, they rise because of fundamental shortages and inefficiencies. A nationalized company would have just as much trouble with inflation as a for-profit one, only a nationalized company could push its losses onto the taxpayers rather than be forced to raise prices and cut costs.

High prices are a signal that there is a shortage and that alternative avenues should be sought. When the price of gas rose, I decided I couldn’t justify driving to work every day so I tried to bike whenever possible. But would a nationalized American Gas company instead pass that cost onto the taxpayer? Wouldn’t they keep prices low so that I kept using as much gas as I always did? In that case every taxpayer who tries to be a good world citizen and use less carbon would be subsidizing me personally as a drove a distance that I could easily bike instead.

As inflation tapers off, it seems clear that nationalization was not the answer, and we are entering the Era of Corporate Generosity. But I doubt we’ve silenced forever the calls of nationalization, no matter how many times it leads to omnishambles. Still, I hope no serious nationalization proposal is put forward for a long time yet.