New York Times Editorial: Let’s Nationalize The Banks
Watching our modern political theater, in which government-caused crises are used as an excuse for more government control, I’m reminded often of this 1934 Chicago Tribune editorial cartoon from Carey Orr. Specifically the “plan” down in the lower left-hand corner:
There is a lot of blaming capitalism for government failures going. Our friends on the left have perpetrated a myth about the housing collapse and banking crisis being the result of unfettered capitalism when really the root of the policy was government policy which promoted subprime lending. But facts don’t matter. It was capitalism that caused the subprime mortgage bust, and now that blame of capitalism is fueling calls for a nationalization of the nation’s largest banks. And not in some obscure left-wing rag, but in the editorial pages of the New York Times:
Most liberals in Washington — President Obama included — keep hoping the banks can be more tightly controlled but otherwise left as is. That’s the theory behind the two-year-old Dodd-Frank law, which Republicans and Wall Street are still working to eviscerate.
Some economists in and around the University of Chicago, who founded the modern conservative tradition, had a surprisingly different take: When it comes to the really big fish in the economic pond, some felt, the only way to preserve competition was to nationalize the largest ones, which defied regulation…
One of the most important Chicago School leaders, Henry C. Simons, judged in 1934 that “the corporation is simply running away with our economic (and political) system.” … The central problem, then as now, was that very large corporations could easily undermine regulatory and antitrust strategies…
Simons did not shrink from the obvious conclusion: “Every industry should be either effectively competitive or socialized.” If other remedies were unworkable, “The state should face the necessity of actually taking over, owning, and managing directly” all “industries in which it is impossible to maintain effectively competitive conditions.”
The governemnt promoted and incentivized subprime lending, and when the banks went after the subprime mortgage market with gusto creating a bubble that ultimately popped, some want to take the banks over as punishment for that misguided government policy.
It’s amazing how the failure of intrusive government policy leads some to demand even more government intrusion.
What makes us think that the government can manage the banks any better? Again, the banking crisis of the Bush/Obama administrations was brought about by government policy which made social engineering, and not profits, the goal of lending. Had we not replaced the profit motive with a social agenda we’d have never had the financial collapse.
But the left, unable to own up to their own mistakes, won’t accept that reality.Tags: banks, nationalization, subprime mortgages