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BINARY ECONOMIC MODES FOR THE PRIVATIZATION OF PUBLIC ASSETS - page 11 / 14

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questions immediately arose: citizens of the state who were

(1) born

How to provide ownership or achieved citizenship after

participation to those creation of the GSOC

and (2) what to do about those shareholders who cease to be citizens by virtue of

relocating outside the departing shareholders

state? either to

The original AGSOC proposals retain their shares or to sell those

would shares

have permitted to other eligible

shareholders. While this issue, it was not

a public market for GSOC stock was designed to partially address clear that sufficient stock would change hands (even if non-resident

shareholders were required to divest their shares) to meet the need of special concern to opponents of AGSOC was the possibility of a developing between the AGSOC shareholders and subsequent residents a participation in the GSOC.

new citizens. Of sharp dichotomy who did not have

In addition to establishment of the class of individuals eligible to participate in the General Stock Ownership Corporation, the specter of broad based ownership of an entity investing in resources or industry presented concerns in the political arena. For example, representatives of the administration in Alaska expressed concerns about the possibility that the income of AGSOC shareholders might be impacted negatively by state taxation and regulation. As one commentator said, “Obviously, a lot of tradeoffs are involved, but the political and economic issue reduces itself to the following: Would it be better to expedite resource development and lower State taxes in such a case in order to allow AGSOC’s shareholders to benefit directly (albeit by only a marginal increase in their dividend) and at the same time deprive the State treasury of potentially enormous revenues which could be devoted to various social welfare programs? These programs would ultimately return greater proportionate benefits to those in the lower income brackets in the State and possibly lesser benefits (than AGSOC) to those in the upper income brackets.” (Donohue, 1979).

Interestingly, this concern did not deter the government of the Canadian Province of British Columbia when it chose to create the British Columbia Resource Investment Corporation (BCRIC). The provincial government had, over the years prior to 1979, acquired a number of commercial enterprises such as lumber mills, paper plants, chemical companies, and natural gas transmission systems to prevent their sale to foreign

interests (BCRIC, 1979).

In seeking to divest itself of these assets the government

created BCRIC. The company exchanged 15 million shares of stock to the government for $151.5 million (Canadian) of profitable assets from the government owned companies. The government then distributed 12 million of the shares to the citizens of British Columbia, five free shares each. In addition, every resident was eligible to purchase up to 5,000 additional shares for $6.00 (Canadian) each. When the distribution was complete, BCRIC, with more than 2.1 million shareholders, was one of the most widely held corporations in the world (Toronto Star, 1979).

Perhaps the most interesting issue addressed by the author in support of GSOC enabling legislation before the Alaska State Legislature was the debate over the political role of a privately held corporation owned by all the citizens of the state. Concern was voiced that the GSOC could become a “Fourth Branch of Government.” The specter of a broadly held company, the dividends from which represented a significant share of each citizen’s

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