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Why would nationalization be Some economist like Roubini
and Krugman argue for
nationalization of US banks?
Why would that be a better
plan for the banks?
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It wouldn't. It's been tried before. |
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It all has to do with risk. A reasonable person who supports a market economy understands that risk and reward have to be paired. If any person or firm or bank or any entity can separate out the risk from the reward, that's a market failure. In the case of the mortgage giants that were nationalized, Fannie May and Freddie Mac, the taxpayers were on the hook for the risk, but the shareholders got all of the rewards. That kind of separation is dangerous, and it isn't really capitalism. Any time it's true that the taxpayers are on the hook for a company's risk, it makes sense to nationalize that company so that taxpayers will also, theoretically, receive the reward if things turn out good. That's the idea anyway. On the other hand it is important to remember that Krugman's an idealist who'd never admit that his model is wrong, and would argue the same medicine for any problem. |
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