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.