I wrote this passage some while ago, but never published the underlying project:
The American Constitution is hostile to nationalization at a fundamental level. The Fifth Amendment prohibits government “takings” without just compensation to the owners, and that is sometimes called the “takings clause.” Since the United States did not start off with a large number of state-owned enterprises, there is no simple and legal way for the country to get from here to there. Government nationalization of private companies would prove expensive, most of all to the government itself. More importantly, the strength of American corporate interests has taken away any possible pressures to eliminate or ignore this amendment.
The lack of interest in state-owned enterprises reflects some broader features of the United States, most of all a kind of messiness and pluralism of control. An extreme federalism has bred a large number of regulators at federal, state, and local levels, often with overlapping jurisdictions. Each level of government digs its claws into the regulatory morass, and not always for the better, but this preempts nationalization, which would centralize power and control in one level of government. That is not the American way.
A tradition of strong state-level regulation was built up during the mid- to late 19th century, when the federal government did not have the resources, the reach, or the scope to do much nationalizing. America developed some very large national commercial enterprises, such as the railroads, Bell (a phone company), and Western Union (a communications and wire service), which were quite large and far-ranging before the federal government itself had reached a mature size. At that time local government accounted for about half of all government spending in the country and the federal government had few powers of regulation. It wasn’t quite laissez-faire, but America could not rely on its federal government and this shaped the later evolution of the country. To handle these booming corporate entities, America created more state-level regulation of business than was typical for the other industrializing Western countries. That steered Americans away from nationalization as a means for distributing political benefits or disciplining corporations[1]
This policy decision to rely so much on multiple levels of federalistic regulation comes with a price. American failures in physical infrastructure have been the other side of the coin of American successes in business. A strong rule of law, combined with so many legal checks and balances and blocking points, has carved out a protected space for private American businesses. They can operate with relatively secure property rights. At the same time, those same laws and blocking points make it hard to get a lot of things built when a change in property rights is required, whether government or business or both are doing the building. The law is used to obstruct growth and change, and for NIMBYism — “Not In My Backward,” and more generally for giving any litigation-ready interest group a voice in any decision it cares about. Can you imagine a sentence like this being written about China?: “The [New York and New Jersey] Port Authority sent out letters inviting tribe representatives to join the environmental review project, inviting the Shawnee Tribe of Oklahoma and the Sand Hills Nation of Nebraska.”[2]
In America background patriotism sustains a rule by general national consensus, and so the American government doesn’t need extensive state-owned companies to build or maintain political support through the creation of so many privileged insiders. The American paradox is this: the reliance on the law reflects a relatively strong and legitimate government, but the multiplication of that law renders government ineffective in a lot of practical matters, especially when it comes to the proverbial “getting things done,” a dimension where the Chinese government has been especially strong.
You should note that although the United States has not so many state-owned enterprises, the American government still has ways of expressing its will on business, or as the case may be, favoring one set of businesses over another. In these latter cases it can be said that American business is expressing its will over government through forms of crony capitalism, a concept which is spreading in both America and China.
The United States has evolved a subtle brand of corporatism and industrial policy that is mostly decentralized and also – this is an important point — relatively stable across shifts of political power. America uses its large country privileges to maintain access to world markets and to protect the property rights of its investors, usually without much regard for whether they are Democrats or Republicans. For instance the State Department works hard to maintain open world markets for films and other cultural goods and services. Toward this end America has used trade negotiations, diplomatic leverage, foreign aid, and also explicit arm-twisting, based on its military commitments to protect allied nations in Western Europe and East Asia. America already had successful entertainment producers, it just wanted to make sure they could earn more money abroad, and that is why the American government usually insists on open access for audiovisual products when it negotiates free trade treaties. Yet in these deals there is not much if any explicit favoritism for one movie or television studio over another, or for one political alliance over another. Democrats are disproportionately overrepresented in Hollywood, but Republican administrations protect the interests of the American entertainment sector nonetheless. It’s about the money and the jobs, not about shifting political coalitions. You’ll note that the independence from particular political coalitions gives the American business environment a particular stability and predictability, to its advantage internationally and otherwise.
[1] See Millward (2013, chapter nine, and p.222 on chartering powers).
[2] That is from Howard (2014, p.10).
Contemporary TC again: Let us hope that I was at least partially correct…
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