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The Times put out an interesting column by Gar Alperovitz, who seems to have some of the air of the lefty radical about him. In light of the continuing scandals of the banking and finance industry, he argues that maybe we should consider nationalizing the industry on the grounds that it is no longer competitive and the banks are obviously too big to be effectively regulated.
You could expect this from the Times and a lefty, but what made this piece interesting is that he grounds his argument on the basis of conservative philosophy and the Chicago School, the pinnacle of conservative economics. The key is the important place that competition played in capitalist theory.
For the record, as much as I would love to see these masters of the universe have their noses rubbed in it, I am not very big on the idea of nationalization. It seems like too much power for government and would have to prove corrupting over time. Though, I can smile at the idea of temporarily nationalizing them and then selling them out in smaller pieces again. This is still dreaming, of course, but it might be nice if more people at least considered it. It seems fair to say that the system, as it stands, is only going to crash us. It has already injured us with a broken economy and an engorging inequality that distorts and wrecks our democratic politics.
You could expect this from the Times and a lefty, but what made this piece interesting is that he grounds his argument on the basis of conservative philosophy and the Chicago School, the pinnacle of conservative economics. The key is the important place that competition played in capitalist theory.
The central problem, then as now, was that very large corporations could easily undermine regulatory and antitrust strategies. The Nobel laureate George J. Stigler demonstrated how regulation was commonly “designed and operated primarily for” the benefit of the industries involved. And numerous conservatives, including Simons, concluded that large corporate players could thwart antitrust “break-them-up” efforts — a view Friedman came to share.Unfortunately, though, it would seem that these financial players are also too big and powerful to be nationalized as well. If you cannot meangingully regulate them, how can you take them over? Mr. Alperovitz raises a very interesting debating point, but nothing practical can come of it. Nevertheless, I thought it was a point worth keeping.
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.”
For the record, as much as I would love to see these masters of the universe have their noses rubbed in it, I am not very big on the idea of nationalization. It seems like too much power for government and would have to prove corrupting over time. Though, I can smile at the idea of temporarily nationalizing them and then selling them out in smaller pieces again. This is still dreaming, of course, but it might be nice if more people at least considered it. It seems fair to say that the system, as it stands, is only going to crash us. It has already injured us with a broken economy and an engorging inequality that distorts and wrecks our democratic politics.
