Public Fuel and Power Act of 2014 (Final vote)

[Fmr. Pres. Duke]

Quick question: has anyone factored in the cost of buying up the entire energy sector? It has to be in the trillions of dollars in just buying up these companies alone.

[Fmr. Pres. Duke]

How would this bill treat foreign energy companies, since the federal government cannot buy them? Are they just barred from doing business here? Has anyone considered the consequences that would have on prices and supply?

[Fmr. Pres. Duke]

What? So if we nationalize then we are just giving away power? There will be no bills at all? How will we be able to afford that? I'm not trying to fight over anything. I'm just asking basic questions because I am genuinely curious.

[Fmr. Pres. Duke]

Since it is apparent we are going to move forward with this, can someone explain to me how foreign energy companies will operate in a hypothetical Atlasia where our domestic energy corporations are nationalized? Will they still be allowed to do business in this country and compete with Atlasia? Or will they be forbidden to operate here?

[Fmr. Pres. Duke]

Since it is apparent we are going to move forward with this, can someone explain to me how foreign energy companies will operate in a hypothetical Atlasia where our domestic energy corporations are nationalized? Will they still be allowed to do business in this country and compete with Atlasia? Or will they be forbidden to operate here?

I would oppose outright protectionism, but I'd like to see foreign competitors priced out. That would mean a somewhat different plan than what was proposed, though, considering I'm not sure that the original plan could keep costs down.

This is me speaking, and not the administration, although the President has made somewhat similar comments.

This is why I have such concern over this bill. If we cut out foreign energy corporations, we cut out a big chunk of supply, which will cause costs to go up domestically and in turn rates. If we allow them to operate in this country, there is a chance they will offer lower prices than our nationalized energy corporations due to their lower labor costs, and then this whole endeavor will be a massive loss in our budget, and we can't really afford it.

The profit margins in this industry are already in the single digits, which is why it's going to be difficult to really lower costs when labor costs will certainly increase as millions of workers will become federal employees. If we cut out foreign competition entirely, we risk catastrophes if there is a shock in energy markets or massive blackouts in the event we lack the ability to provide enough energy to people during peak demand seasons.

These are my concerns, and I honestly thank you for taking the time to answer them, because many of the questions have fallen on deaf ears so far. I am not opposed to having the government step in when there is a market failure in a specific industry, but I fail to see why any of this is needed aside from TNF's understandable desire to nationalize all industry. If the margins were 15-20% or there was evidence of price gauging, I'd be more open to this idea. The way I see it is, there are other ways to help the poor who have trouble paying their gas/power bills than this.

Also, what is stopping these companies from simply reincorporating overseas to avoid nationalization in the first place?

[Fmr. Pres. Duke]

I really can't fathom how we'd price things much lower than they already are, and effectively pricing out everyone else would likely cause this whole thing to operate at a loss.

With all of that said, I'll wait for the next debate, and I plan to be more active in it than I was this one!

[Fmr. Pres. Duke]

Well, I think there are couple issues at work here:

1. My desire for some form of nationalization isn't borne specifically of profit margins. 8% or 15%, I'd support nationalization either way. I say this pretty often, but nationalization is about correcting the oligopoly to me. And 8% isn't razor thin, either.

2. I don't hold any misconception that a nationalized [insert whatever industry here] would have difficulty being profitable if we want to keep consumer costs down. I also don't really have any particular belief that they HAVE to be profitable with no room for error. I think that this specific issue is in the public interest enough that minor shortfalls are justified. With that said, literally no revenue from this project would be untenable, to say the least.

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In some manner, the corporate tax laws which you helped pass will help us frown upon that very strongly, although it's not as strong a disincentive as I might hope.

I guess my overarching point is, if the margins currently are around 8%, and we factor in the startup/acquisition costs, the increasing labor costs, and the potential drop in supply we could see if foreign sources of energy are barred or leave this country entirely, that 8% margin is gone. We could be looking at an increase in rates in this scenario. If we want to drop rates, we are looking at operating this whole thing at a loss, which isn't a smart decision, at least in my eyes. This is where my concern lies and why I am having a hard time understanding why this is necessary.

As for my tax bill we passed a while ago, you're right, there is nothing that forbids these companies from reincorporating overseas to avoid being nationalized. We have no laws on the books forbidding that, and I don't think such a law could ever be enacted that forces a company to remain here. All it did was end the double taxation under our previous system and only taxed revenues derived from business in Atlasia. If all of these energy companies reincorporated overseas, we'd just lose additional revenue.

If we are nationalizing for the sake of nationalizing, then that's okay, I won't pry any further because the goal is simply to nationalize, and I likely will never be satisfied in that event.

I am fine continuing to debate this issue, and I look forward to seeing what the next proposal is or how the senate changes this current one, but I am still firmly opposed to it for now for the reasons listed and the questions I have asked. If that makes me a 'right winger' in the eyes of everyone, it is a cross I will have to bear.

[Fmr. Pres. Duke]

Oh, and another question. Hypothetically, if we nationalize and operate right at cost, meaning we see zero profits, how will we ever upgrade our energy infrastructure? Power grids? R&D for future technology? It seems like people are not taking into account that many of the profits these companies make are invested back into the business to keep things modernized and to develop new methods to distribute energy or to better our efficiency. All of the money for that goes away if this goes through.

[Fmr. Pres. Duke]

I just feel like no one is reading my posts or simply does not understand what I am asking.

We will not raise massive amounts of money with this venture, and anyone that believes that to be the case simply does not understand a thing about economics. I need to see if we understand what is going on.

First of all, everyone understands the government is going to have to pay at least market value for these companies, correct? We aren't just "taking them over" for free.

Second, everyone understands that these companies make, on average, about 8% profit, right?

Third, everyone understands that once all the workers are unionized, wages will go up, and in turn, costs will increase, correct?

Fourth, I am not sure what "enterprise system" means, but these facts will reign true if the government purchases these companies or someone else. The government still operates using the same revenue/cost structure private companies do, the only thing different is it can run deficits. If we are okay at operating this at a loss, then let's say so and move along.

As for the innovation question, the private sector has long out-innovated the government, which is usually the last ones to adopt newer technology. But I'm not even arguing that. I am arguing that we won't have the money to invest in R&D and maintenance if we are selling energy at cost, because we won't have any profits to invest in it. This isn't rocket science, guys.

[Fmr. Pres. Duke]

At least someone admitted they are ok at operating at a loss. Of course, when you decide you're going to do that, if the losses become too great, you have to start cutting back to the point where the public is actually hurt far more than it would have been should the nationalization never had taken place. You see shortages, lack of innovation due to lack of money, the list goes on. When this occurs, foreign energy corporations will step in and take business away from the federal power/fuel/whatever company, and then the losses can be infinite, putting pressure on the budget until we finally privatize it again like many countries around the world have done from the brief research I have done. If we ban foreign energy corporations from operating here, then millions will just be without energy sources due to shortages.

There is little evidence to suggest the public will benefit from this change long term or even short term unless we take a massive hit in our budget.

[Fmr. Pres. Duke]

There is no deep profit pool. How dense are some of you? These companies, on average, make an 8% margin. They do not have billions and billions of cash sitting on the sidelines just waiting to be invested. And you have to pay for that cash in the event of a takeover. You cannot just say "we want to nationalize, so we are taking all your profits and your company for free or less than market value." It is unconstitutional otherwise because the government cannot just take private businesses without compensating the shareholders, and in most cases, it is above market value.

I echo others. I'd like to see those favoring the bill merely state they do not like private ownership and then we know where you all stand. Right now, we are just arguing in circles and none of the answers make any sense at all.

[Fmr. Pres. Duke]

I'm not sure I am understanding your question, but I think it is tougher for the economy to recover if this government project fails as opposed to a single private power company failing to meet demand in this instance because it is such a massive project - 1/10th of the economy. It would be difficult for the government to absorb that large of a shock. If this goes through and is a failure, we are looking at a major drag on our economy and as the budgetary pressure this would be astronomical. Imagine the troubles with the post office x10.

And if a private company is able to offer lower rates than the public company, it's just game over. If the government undercuts the prices of private companies artificially because its operating at a loss, and they decide to just stop doing business here, then what? When supply drops and prices for the energy soars?

Again, how can we expect more than a nominal drop in rates when it is a given that labor costs will increase if we nationalize due to unionization? Where will the money come from to invest in the maintenance, support and R&D that the current profits are used for? Is it really worth going through all of this trouble for a small drop in rates, if that's even possible? And I am not convinced rates will drop; I believe they will increase unless we operate at a permanent loss.  

As of now, most energy companies have between $1-5 billion in cash on hand, hardly a ton, and most invest these profits back into their operations. These are not companies swimming in cash like other sectors.

[Fmr. Pres. Duke]

So non-senators are not allowed to post in senate threads anymore going forward?