Re: [Pen-l] Desperately seeking/avoiding nationalization

[Laurent GUERBY <laurent@xxxxxxxxxx>]

On Sat, 2009-01-17 at 06:08 -0500, Ann Davis wrote:
> I think a relevant, realistic discussion of the pros and cons of
> nationalization would be extremely helpful.

Same call with some argumentations by Chris Dillow here:

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2009/01/arguing-about-bank-nationalization.html
<<
Arguing about bank nationalization

Weâre edging towards nationalizing the banks. First, the government
announces plans to insure loans to small businesses, saying that credit
insurance markets fail in recession - which makes them as useful as
umbrellas that donât work when itâs raining. And now, it is thinking of
buying banksâ bad assets, thus saying - what we know - that banks canât
trade their way out of trouble.
All of which raises the question: if banks are failing so badly and need
so much intervention, what is the point of keeping them in the private
sector?
Thereâs one thing government can do much better than the private sector,
especially in recession - raise finance cheaply. This means nationalized
banks, operating with government guarantees, could raise money cheaper
in wholesale markets. And it means governments find it cheaper than the
private sector to inject capital (shareholders funds) into banks.
What, then, is the offsetting disadvantage of nationalized banks? 
One moronic argument is that itâll politicize lending. It neednât.
Government supporters donât get a better service from the passport
agency, win more premium bond prizes or get easier driving tests. Such
examples show that itâs trivially possible to design a hands-off
structure for publicly-owned services.
A less stupid answer is âworse management.â 
But this is not self-evident. 
[...]
Interestingly, the most powerful opponent of market socialism, Hayek,
did not think this the decisive argument against state ownership. He
granted - perhaps only for the sake of argument - that socialist
managers âwill be as capable and as anxious to produce cheaply as the
average capitalist entrepreneur.â*
[...]
Now, Iâm not arguing here for nationalizing banks. Iâm just making three
points.
1. Can we discuss this without ideological blinkers? On the âleftâ
thereâs a tendency to regard the failures of markets or private
ownership as inherent features of the system, whilst failures of
government are mere accidents. The ârightâ makes the opposite error.
[...]
>>

Laurent


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