Government Ownership

views updated May 29 2018

GOVERNMENT OWNERSHIP

GOVERNMENT OWNERSHIP. According to American economic and political ideology, government is supposed to keep its distance from the private sector, and on the whole it does. The government owns much less in the United States than in Europe, where many countries have taken over airlines, mines, and telecommunications systems. Nevertheless, the United States has never been a perfect haven for private interests. Each of the 90,000 American governments (federal, state, county, city, water district, etc.) owns something, be it land, buildings, resources, or a business. The government can own entities that it runs as regular departments (such as local sanitation departments), or it can own what are known as public enterprises or government corporations, which are created and wholly or partly owned by the government but are run essentially as businesses (for example, the New Jersey Turnpike Authority).

Government ownership is as old as the United States. The post office has existed since the nation's founding, and the first Bank of the United States (1791) was partially funded by the federal government. On the local level, Philadelphia built one of the first public waterworks in the country in 1799. In the early nineteenth century, governments chartered many corporations to build "internal improvements." For example, New York created the Erie Canal Commission in 1816 to pay for and manage the state's canal system.

In the first half of the nineteenth century, government also came to own a considerable amount of land as it purchased (Louisiana) or conquered (California) territory. Congress and the president typically gave away federal land or sold it cheaply. The Homestead Act (1862) offered 160 acres to any person willing to live on and work the land for five years. By the 1870s, however, the fledgling conservation movement had inspired governments to limit the private acquisition of public land. In 1872 Yellowstone became the first national park, and forest preserves were set aside starting in 1891. Despite the psychic importance of property ownership in the United States, the federal government still owns about a third of all land (much of it in the West), though private businesses and individuals are permitted to use much of it for various purposes, including recreation, grazing, and mineral extraction.

In the late nineteenth century, cities (and counties) started creating public companies to deliver important services such as education, water, fire protection, sanitation, electricity, and mass transit, all of which had once been private. The transition was piecemeal. New York, for example, offered public water and sewers in the 1830s and 1840s, took over street cleaning in 1881, and bought out two private subway companies in 1940, but it never owned utilities. Since the 1980s, a movement to reprivatize government-owned services has borne fruit with the rise of charter schools and private prisons.

Government corporations, which are created by government but run as businesses, took off during the New Deal. The pioneering Tennessee Valley Authority (1933), which still provides electric power, forced energy companies to lower costs. In the late 1990s, there were more than 6,000 government corporations in existence, including the Federal National Mortgage Association (Fannie Mae), Amtrak, the Legal Services Corporation, the Empire State Development Corporation, and the United States Postal Service (converted from government department to corporation in 1971). These public enterprises compete with private lenders, transit companies (such as Greyhound), lawyers, real estate developers, and shipping companies (for example, United Parcel Service, FedEx).