A recent poll showed that the vast majority of Americans oppose nationalization of banks. I wonder whether the pollsters explained what nationalization means because I suspect most of the respondents don’t have a clue. What they think they know is that nationalization is Socialism and Socialism is bad.
I don’t know whether Socialism is good or bad. I guess it depends on how it’s implemented. It didn’t work in some countries but it seems to be working in others. From an American perspective, Canada is probably Socialist, and its banking system is a lot healthier than America’s. Sweden would also be considered Socialist, I suppose. Japan, on the other hand, is a capitalist country like the good ol’ USA.
Back in the 1990s, Japan’s economy ran aground, much like the American economy has now. The big banks were broke and so were major corporations. The Japanese government responded by pumping money into the banks and propping up the major corporations. It also introduced a big stimulus package and encouraged the bailed out banks to provide loans to small businesses. Sound familiar? Anyway, the result was a dismal decade of economic stagnation.
When Sweden was confronted with a similar economic crisis, the government there nationalized the failed banks, got them running efficiently and then sold them to private investors. From all accounts the result was economic resurgence.
President Obama and his team know what happened in Japan and what happened in Sweden. So why do they seem hell-bent on following Japan’s example and not Sweden’s? I bet it has to do with politics. With the Republican leadership looking for any excuse to attack the new President, the last thing the Obama team wants is to look like a bunch of Socialists. They know the vast majority of Americans are convinced that Capitalism is good and Socialism is bad.
Surprisingly, it’s the dyed-in-the-wool free marketers who are suggesting that America may need to nationalize its zombie banks temporarily, as Sweden did. Those who’ve apparently seen the light include former Fed Chairman Alan Greenspan (left) and Republican Senator Lindsey Graham (far left). In recent media interviews, both have argued in favor of nationalizing failed U.S. banks.
With that kind of neo-liberal support, the Obama team should just go ahead and nationalize the banks. If it were up to me, I would nationalize the insurance companies and the health care industry, too – maybe even the car manufacturers. But I know the Obama team wouldn’t dare go that far. The American public would not stand for it. That would be Socialism – and Socialism is bad, remember?