Accuracy in Media

Via Salon, the Independent Media Institute tells us that really, we should just get the government to buy the oil companies. We’re always amused at how many “independents” keep calling for more government, but leave that aside.

The idea here seems to be that the U.S. government should buy the oil companies at the top of the cycle – oil is expensive right now, profits are high – and then, well, lose a lot of money. We’re sure taxpayers will be real happy about this.

The argument is that the American government has bought companies in the past when this was necessary. Wilson nationalized the railroads, telephones and so on in WWI. Roosevelt did so again with oil, Goodyear and so on in WWII. All were, as they agree, sent back into the private sector after the problem was over.

More recently, parts of AIG, Citigroup and GMAC were bought by the government – again all sold again once the crisis was past. So, too, General Motors. So why not the oil companies?

“America has a long, proud history of taking on companies that put profit before the public good — and we could take over the Big Three oil companies for less than $500 billion,” the piece says.

It would be possible to take a controlling interest for that sum, yes. But that would then leave all the other shareholders – largely our pensions, if not our 401(k)s directly – subject to government management.

But what would be the government management of those companies once taken over? With the other examples given in more recent times, it was that the company was failing and needed to be put back on its feet. Profits were even made, TARP definitely made a profit out of the banks.

Here the idea is the opposite. The ask is that taxpayers pay that $500 billion to take over the oil companies in order to close them down. Why would we want to lock ourselves into losing that much money? Even if we accept that climate change is a problem that needs to be dealt with why would we do it in a manner that guarantees a half a trillion dollar loss?

Salon is ranked around number 60 in the media sites dealing with law and government. It gains around 9 million visits a month  as it does so. It’s significantly influential in progressive circles too.

One of the problems that Salon has is that all too many of the ideas presented fail to pass the most basic economic analysis. The entire aim of beating climate change is that coming out the other side we’re richer as a people and a nation. Why propose something that guarantees a massive loss for us taxpayers?




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