Similar to citizens, companies are guaranteed certain protections by the state. If the state is threatened, it seems conceivable that the state could be justified in "nationalizing" companies to aid the war effort. Here are my questions then:

1. Just like the draft can force people to fight in a time of need, can the US government "nationalize" companies/corporations in a time of need?

2. If so, what are the implications of this practice? If not, what prevents the US from doing so?

3. Bonus question: is there precedence for this idea already?

I don't see how your questions follow from your premise (companies are entitled to protection, therefore the government can take them over )

The government cannot nationalize a company, for any reason. I think it is unprecedented in the US. Although the government can "eminent domain" property for the good of the citizenry (often abusing this power), there is no basis for taking over the management of companies.

What prevents the US from doing it? No precedent, so the Constitution, I guess.

I'll just jump straight to the bonus question Mr. Trebek

3. Bonus question: is there precedence for this idea already?

The only precedent that I know of comes from personal experience of flying back from the Gulf War, and I'm not sure if this falls exactly under what you are asking logophage, and that is the Civilian Reserve Air Fleet.

Link

1. Just like the draft can force people to fight in a time of need, can the US government "nationalize" companies/corporations in a time of need?

If needed, I'd bet the Congress would figure out a way to do it. But it's not needed, really. I'll tell you why in a moment.

2. If so, what are the implications of this practice? If not, what prevents the US from doing so?

I'll go with the "not" side and say that doing so would end up doing more damage to the economy -- by taking money out of investors hands -- than it would help in the medium-term.

3. Bonus question: is there precedence for this idea already?

Yes and no. Here's where I finally get to explain. In WWII, much of the steel and food output from this country was directed to the war effort. How did that happen?

The government bought up the supply. And it has the economic power to do that. So why take over a company when it can purchase its entire output for a war effort?

I agree with amf. It isn't needed, which is why it wouldn't happen. Could nationalization of businesses ever be absolutely necessary for the survival of all? I don’t see how that argument could be reasonably made. The draft of individuals is an expensive enough process for everyone…individuals, government, and society.

Though both instances would be a violation of liberties under compelling national emergency, the only (potential) benefit would arise from the drafting individuals. No benefits at all for the drafting of businesses, as they would still operate voluntarily (in fact far more efficiently) without conscription.

The premise is the idea that the state affords protections to businesses operating within the state. There are certain rights and responsibilities associated with those businesses for the good of the state. Just as citizens have responsibilities in times of war ala selective service, it seems reasonable to contemplate a parallel idea for businesses.


Yes, so what's the difference between eminent domain and nationalizing? Seems to me eminent domain could be employed here.

Edited to respond to amf:


It's conceivable that the state could believe there is sufficient reason to nationalize despite the negative economic impact. For example, what if all but a few communications satellites remained functional after some attack (physical or viral)? Could the military take over the NBC satellite to aid in communications?

...and as to precedence...

Yes, since the government could "own" steel & food, it did. However, I find it hard to believe that the government could "own" all the silicon whereas it could just decide to "own", say, Intel.

While I said it was conceivable, I can easily respond to your satellite example. NBC doesn't own the satellites; it leases space on it. The government could easily override those contracts -- since they transmit through the airwaves regulated by the FCC -- without having to own the leasing company or actually run the company... in effect, buying up all its supply. Would expect that NBC has backup plans in place for such an occurrance as a satellite failing, so this wouldn't impose as much harm as, say, taking several billion in investment capital and flushing it down the toilet by taking over GE.

As for silicon: and why would it need to own all the silicon or the Intel plants -- most of which are overseas now anyway? And it didn't "own" the steel plants; just took priority over the supply. A few cars still got made those years, just not as many in the years before or after.

You've made my case for me. I wasn't referring to NBC itself; I was referring to whoever owns the satellite. The government could take it over in times of need. As for nationalizing radio spectrum, it's an equivalent idea. But, there are many examples to pull from: shipping companies & assets, air transport companies and assets, energy companies and assets, etc. The list could go on.


Sure, Intel was just an example. How about Motorola? Most manufacturing occurs in the States. But, the point isn't to cite specific examples; the point is to rebutt the idea that the WWII example you cited is the only way it can play out. So, if the US government decided it needed to "take" priority of supply, it could do so based on precedence. Additionally, I don't see any convincing reason yet why the government couldn't or shouldn't at least theoretically nationalize a business and/or its assets should it deem it necessary.

Yes, it definitely took priority on certain industries' supplies back in the wars, but here's the thing: it didn't take control of the company AND it paid the company for what it produced. Shareholders still maintained their investment and received their dividend checks. The economic model on which this country is founded -- free enterprise -- didn't suffer.

Taking over a business -- in essence making it a business owned by the state -- is not in the best interest of either the government or the economy.

For this same reason, the idea of using government social security funds to invest in private companies is a non-starter. No one wants that level of government control over businesses. No one wants the government to sit on the board of major corporations. It's a totalitarian wet dream... and a Republican's nightmare.

It seems that most businesses exist in contractual space.

I am not sure what the Federal Government is allowed to do to a private contract, even in peace time.

Here's the thing. From your arguments, there seems to be more unanswered questions.

1. When the government is the sole customer, what is the substantial difference between paying the company for work or just buying the company at "value"?

2. In a time of war where the nation requires sacrifices, can't the nation require corporations to make sacrafices as well?

3. Why is it not in the interest of the state to take over a company in a time of war but it is in the interest of the state to institute a draft? Why do corporations get preferential treatment?

4. Does capitalism trump nationalism? Does capitalism trump democracy?

Sorry, you don't get to ask more debate questions

Seriously:

1. The government isn't running the company or taking value from the shareholders/owners of the company, since the government isn't TAKING the resulting product, but PURCHASING it at market prices (or better). How do you think the Kennedy clan got so rich?

2. We're in a war now, right? You sacrifice anything lately?

The auto industry definitely sacrificed a lot during the war, because they couldn't get the steel necessary to create cars. Which was ok, because they also had trouble getting enough people to help build the cars.

3. Because rich people don't go fight in wars, but they do finance politicians and corporations.

4. Not trump, but support... at least in the case of democracy.

For question 1 the key phrase is: "in time of need. NEED we must realize that neccessity is the mother of invention in a time of need smart entraprenuers step up to the plate. The Federal Government wouldn't need to conscript industry to fight a war for example because Ford or GM would say "Hey theres money to be made here if we produce Hummers for the Army"
They would do these things because its profitable.

Question 2 is after reading the above is irrelevent

Question 3 No

1.)The definite answer is-YES! Here's why: First, corporations are a "legal person" in the eyes of the law. Since that is the case, it is theoretically possible for a corporation to be "drafted" for public service and be at Uncle Sam's call just as a soldier is. Second, corporations are allowed to function only through government permission through a charter. Some progressive groups have tried to go after certain corporations through this route, click here, and here.

2.)Yes, corporations can and should be asked to sacrifice for the greater good through not cutting back workers or things like that.

3.)No, it won't be followed through because during the first two world wars, the government set up boards filled with government leaders and businessmen to map out what the companies would produce for Uncle Sam. The government dictated what was to be produced and the corporations received full contract payments as well as a bonus. Should we have a large scale conflict again, I think this model would be followed again.