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NYT Op-Ed Calls For The Nationalization Of Banks

From the Op-Ed section of the New York Times:

Wall Street Is Too Big to Regulate

By GAR ALPEROVITZ | Sunday, July 22, 2012

The Barclays interest-rate scandal, HSBC’s openness to money laundering by Mexican drug traffickers, the epic blunders at JPMorgan Chase — at this point, four years after Wall Street wrecked the global economy, does anyone really believe we can regulate the big banks? And if we broke them up, would they really stay broken up?

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.” …

Yes, it’s clear Mr. Simons part of the conservative tradition.

To be sure, Simons later revised some of his views, and in the main he and others weren’t focused on financial crises. …

But the logic of his argument remains: With high-paid lobbyists contesting every proposed regulation, it is increasingly clear that big banks can never be effectively controlled as private businesses. If an enterprise (or five of them) is so large and so concentrated that competition and regulation are impossible, the most market-friendly step is to nationalize its functions…

After all, what could be more "market-friendly" than nationalization?

Nationalization isn’t as difficult as it sounds. We tend to forget that we did, in fact, nationalize General Motors in 2009; the government still owns a controlling share of its stock. We also essentially nationalized the American International Group, one of the largest insurance companies in the world, and the government still owns roughly 60 percent of its stock.

Of course, it would probably take another financial meltdown to make banking nationalization politically tenable

Gar Alperovitz, a professor of political economy at the University of Maryland, is the author of “America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy.”

But who knows? With any luck Obama might be able to bring another meltdown about in his next term. In any case, it is very chilling to read these kind of suggestions in what is used to be a reputable newspaper.

And they wonder why so many companies are nervous.

This article was posted by Steve on Tuesday, July 24th, 2012. Comments are currently closed.

5 Responses to “NYT Op-Ed Calls For The Nationalization Of Banks”

  1. BannedbytheTaliban says:

    I’m surprised the author described the ‘bailouts’ of GM and AIG as nationalization. Usually that word is taboo, especially when Obama’s critics accuse him of being a socialist (which is usually met with grammatically incorrect sneers of “you don’t even know what socialism is”). But look how well those two nationalizations have worked for the American taxpayer. We are living the dream, a chicken in every pot and a volt in every garage.

  2. Right of the People says:

    Just think with a Volt in every garage you could warm yourself beside its fire while you cook your chicken over its flames.

    Why is the Slimes still in business? When are they scheduled to change their name to Pravda? Probably not until after the election. Twenty years ago they would have been laughed off the public stage for publishing such tommyrot. There are dark times ahead or more correctly darker times ahead.

  3. River0 says:

    This is a sickness, the belief that a federal government that fails constantly in almost every endeavor should be given more power and authority. This would be suicide. Which is really at the core of these bogus Utopian beliefs. Their ideal world never existed, never will, and causes disaster, chaos, and death every time it’s tried.

    The EU has failed. The Chinese are failing. We’re sinking. And it’s not because of capitalism

    We’ve never known genuine capitalism in our lifetimes. It died in the 1930’s and ’40’s under FDR. WWII was a huge factor.

    All we know is a hybrid socialist-corporatist-capitalism, heavily regulated and taxed by government in Washington.

  4. BigOil says:

    I would argue the banks have already been defacto nationalized. Our federal overlords already control mortgage loans through Fannie an Freddie, student loans…and have heaped on onerous regulations through Dodd-Frank.

    When banks are so constrained by the government they cannot issue loans and facilitate the flow of money in the private sector…they have become little more than another appendage of the federal monster.

  5. GetBackJack says:

    Then it’s tome for us, We The People, to nationalize all news media companies.

    Fumigate the establishments then restock the companies with real Americans who cling to their guns, God and the Constitution.

    I like the sound of that

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