The Government Nudge: A Public Role in the Private Sector

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http://www.thenation.com/article/161256/government-nudge-public-role-private-sector

It’s not easy envisioning a more democratic and just economy not dominated by large corporations. It may be even harder to imagine ways to get from here to there, with giant corporations restructured or displaced altogether. The central involvement of the government in the private sector—as a direct market participant and as a rule setter—offers opportunities, too little appreciated, to spur new forms of economic organization.

Consider the recent case of General Motors. In June 2009 GM—the world’s leading auto maker for much of the twentieth century, and the emblematic enterprise of the modern corporate era—declared bankruptcy. When it re-emerged a month later, the government was its majority holder. Remarkably, this move was accompanied by precious few ideas about how the government could manage and restructure GM to achieve social ends. There was no serious talk about directing R&D funds to speed the introduction of electric cars. No serious consideration of converting closed plants to produce light rail or other products for a sustainable future. No proposals to give workers—who own a sixth of the company’s postbankruptcy shares—meaningful control over the company, or to break it up. Instead, Obama administration officials emphasized their interest in returning GM to private shareholder control as soon as possible.

The GM example is less of an outlier than it might seem. When the government took an ownership stake in Citigroup, AIG, Fannie Mae and Freddie Mac in the midst of the financial crisis, it also took a severely limited view of its role—imposing few obligations in exchange for the bailouts. Whether the public maintains control over an extended period or not, such ownership positions offer an opportunity to fundamentally restructure corporate giants. If the government is going to use taxpayer money to save corporations from disaster, it should seize the opportunity to reshape them for the public good.

The government could also remodel the economy through more intentional economic engagement as a service provider. A single-payer Medicare for All system would simply do away with corporate health insurers. Massively expanded public transit systems would refashion our dysfunctional transportation arrangements.