In the Wall Street Journal's oped pages today, John Steele Gordon explains why headline-driven politicians simply can't run businesses. He writes:
The Obama administration is bent on becoming a major player in -- if not taking over entirely -- America's health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government's track record in running economic enterprises. It is terrible.
No, that's not really true:
The first indication that Gordon historical analysis doesn't have history on its side is that he has no contemporary examples of failed government-bailout or takeover. He provides two examples and they are both about a century old: a government-run steel plant from 1913 and a telephone nationalization from 1917. I understand that these quasi-wartime nationalizations did not go swimmingly, but really, there are has been quite a bit of history since the Treaty of Versailles. Are there no good examples younger than the Suffrage Amendment?
As I wrote yesterday, the government's bailout record for struggling organizations (that are not banks) is surprisingly effective. As as for banks, recent world history suggests that nationalization can work. It's a bit surprising to read an article about nationalization and US banking policy and not hear about Scandinavia. So if Gordon won't make the point, I will: Sweden nationalized its own struggling bank systems quite successfully in recent history.
The rest of Gordon's piece is filled with self-evident observations about government that don't really prove any pint: "Governments are run by politicians, not businessmen;" "Politicians need headlines;" "Governments use other people's money." Well look, that's all somewhat true, but governments are also run by politicians who used to work in finance, as we know all too well from Simon Johnson. And a really good story about how to use other peoples' money for bad ends has been written, thank you, and those authors are in New York, not Washington.
Finally: "Successful corporations are run by benevolent despots." John, do you know who you're writing for? If that's really true, shouldn't the Wall Street Journal be clamoring for Obama to take over everything?