Nationalization Follies: Manchester United (States)
Tom Smith is certainly in the running for Most Depressing Blog Post of the Day honors for this observation:
The U.S. is now taking giant leaps down the road to state capitalism. That’s like socialism, only worse. Just think of it as the worst parts of both systems. Socialism for rich people. Capitalism with lots of regulation and high taxes for everybody else.
Kevin Drum is more cheerful about this development:
With all the talk of bank nationalization in the air, I’d just like to point out something directly that usually gets mentioned only in passing: we’ve already done a whole lot of nationalizing. Even if you don’t count the forced takeover and sale of outfits like Wachovia, Washington Mutual, Countrywide, IndyMac, and Bear Stearns, the fact remains that we’ve already nationalized three enormous financial institutions: Fannie Mae, Freddie Mac, and AIG. We just don’t like to call it that.
And one more thing while we’re on the subject: Since you, the American taxpayers, are now the owner of AIG, you’re also the main sponsor of the Manchester United football club. The last time I mentioned this, the season was young and our club was mired in 14th place. But I’m happy to report that since the U.S. takeover of AIG in September, our plucky lads have been playing well and Man U now leads the Premier League. Who says nationalization is bad for business?
Well, Tyler Cowen, for one.
The more general point is that nationalizing AIG, or quasi-nationalizing AIG, hasn’t solved the basic problems there. Nationalization is hardly to blame for these problems, but the post-collapse AIG has been a mess, bleeding money and lacking accountability. You might claim: “they didn’t nationalize it the right way” and maybe they didn’t. Still, once you proceed down the nationalization path, you have to live with the nationalizations you will get, not the nationalizations as a professor might recommend they be done. The AIG transition was overseen by Bernanke and Geithner and of course Congress isn’t nearly as smart or as well-informed as those two guys.
Of course, one might argue, neither were the capitalists running AIG, et.al.
Photo by Flickr user 99 James Nguyen under Creative Commons license.