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All of which Governments are not very good at doing, if their management of the public service is any guide...

notes from no w here
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jan 21st, 2009 at 05:23:43 PM EST
[ Parent ]
It depends on the country you're referring to. Anyway:
  1. They can't do worse than the current management,
  2. I'm pretty sure they can find good managers within the existing staff of the banks,
  3. They can ask some excellent consultants to help them...;-)


"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Jan 21st, 2009 at 05:48:24 PM EST
[ Parent ]
Reagan was partly right saying: "Government is the problem."  This is certainly true when that government is run by Republicans.  We see the effectiveness of all of Paulson's brilliant management of the disposition of the first half of the TARP funds.  If the Obama Administration does not quickly jettison residual neo-lib economic dogma, they could turn out to be little better.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jan 21st, 2009 at 11:46:18 PM EST
[ Parent ]
Concerning your first sentence: "Reagan was partly right saying: 'Government is the problem.'"

Reagan was never right about anything, partially or otherwise. As detailed in Stockman's book, numbers were created out of thin air, then modified to comply with political dogma. Famously in one instance, a major component (defense spending increases, if I remember correctly) were multiplied by 4 just because Reagan misunderstood a number as being yearly, instead of the sum spread over the course of his first 4 year term, and no one wanted to call him on it.

In the course of it all, the interest on the debt alone rose to a yearly amount ($138 billion in 1987) greater than the original budgeted defense budget ($136 billion in 1980 - One has to qualify that, since there was so much off-budget...but I don't want to get into the whole Bush black-ops thing.)

My point is merely this. What we (USians) have had in the last 28 some years has not been government. It has been manipulation of assets for the monied class, it has been a continuous death-rattle reaction to the humiliation of losing an undeclared war in Viet Nam, and it has been hopefully the last desperate gasp grasp for riches by those who see that the arc of history is not going to go their way...but it hasn't been 'government'.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Jan 22nd, 2009 at 10:12:04 AM EST
[ Parent ]
Well, he was right in that the sort of people he appointed to office made certain that government was a problem.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jan 22nd, 2009 at 02:40:40 PM EST
[ Parent ]
Very funny.

It is like saying that, given the root of the word 'govern' is Latin and Greek, 'to steer', that they did govern by steering us and our future into the rocks.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Jan 22nd, 2009 at 03:50:28 PM EST
[ Parent ]
It is funny, but it also was policy.  As to Ronnie, I have characterized the "Reagan Philosophy" as a Shoebox Full of Shibboleths.  This is based on Ronnie's habit from the time he was a G.E. spokesman of carrying around a shoebox full of Reader's Digest anecdotes and news clips from which he would construct speeches.  By dint of insufficiently challenged repetition this got elevated to the status of a political philosophy.  Sadly, this was the highest form of philosophy which he could grasp, which well suited him to his audience.  That made him a useful tool.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jan 22nd, 2009 at 04:59:46 PM EST
[ Parent ]
they did govern by steering us and our future into the rocks.
And we applauded all the way, even after the ship hit the rocks.  Only now, with a new hurricane bearing down on the still stranded ship, is the applause starting to die down.  Most people still see no relation between Reagan's "government is the problem" and "let the fox guard the henhouse" approach and our current difficulties.  They are outraged at bankers using public monies to pay bonuses, but see this as some sort of aberration instead of recognizing it as an epiphany of the actual nature of the existing system.  These are the sort who "would hate to think" that that is how our system actually works.  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jan 22nd, 2009 at 05:16:19 PM EST
[ Parent ]
The weird thing is that generations will be paying for this, and complaining about what the liberals have done to their kids, romanticizing Uncle Ronnie all the way to their graves.

I can't talk about him anymore. It is not healthy.

Never underestimate their intelligence, always underestimate their knowledge.

Frank Delaney ~ Ireland

by siegestate (siegestate or beyondwarispeace.com) on Thu Jan 22nd, 2009 at 09:09:28 PM EST
[ Parent ]
I am the eldest of three brothers.  My father died when I was 12.  I am 5&1/2 and 11 years older, respectively, than my brothers.  When the youngest was 22, in about 1977, all three were reasonable liberals.  By 1980 I was the only one who voted against RR.  It seemed as though an evil spell had been thrown over the world that even limited what basically good people, such as Clinton, could do.  I am not yet convinced that the spell is gone. Thirty years of bitter lessons.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jan 22nd, 2009 at 10:00:31 PM EST
[ Parent ]
That's sweeping enough to be ideological, Frank. Management of public service-type activities (telecoms, anyone? Rail?) by private interests can be arguably worse than anything state-owned services ever did. And, in this case, the banks are collapsing because private interests on the marketplace have utterly failed.

The point of my question was precisely to say, however, that nationalisation is not a panacea. We should be talking about what it should set out to do, what are the right policies, what rules should be followed, what best management practice should be adopted.

Taking pot-shots at the guarantor of final resort, when private interests have shown massive irresponsibility seriously threatening ordinary people's livelihood, is kinda misplaced, imo.

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jan 22nd, 2009 at 03:49:30 AM EST
[ Parent ]
Disclaimer: I hadn't seen Melanchthon's comment below on John Gapper's piece, when I wrote that!
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Jan 22nd, 2009 at 04:01:01 AM EST
[ Parent ]
Quite. Is there an example anywhere on the planet of privatised health care offering a better front line service than nationalised health care?

The US approach is a moral, financial and medical disaster for most of the population, and hardly seems like something to aspire to.

It seems bizarre to me that so many people are claiming that the private sector is still de facto better at business than government is, when the last two centuries have proven otherwise over and over.

The private sector is better at profit, but it certainly isn't better at providing consistent high quality services. It may provide better services sometimes, but only under very specific democratic and legislative conditions.

Otherwise the tail wags the dog right off a cliff and no one wins - the business sector least of all.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jan 22nd, 2009 at 05:35:41 AM EST
[ Parent ]
Technically, yes.

It's a mistake to conflate the systems of nationalized healthcare provision present in the UK and Spain with the system of nationalized health insurance that France and many other EU countries have.

And the French system generally comes out on top in surveys of national healthcare systems.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Thu Jan 22nd, 2009 at 11:47:29 AM EST
[ Parent ]
The French system is currently being starve-the-beasted...

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Thu Jan 22nd, 2009 at 11:59:46 AM EST
[ Parent ]
Far from being ideological, I am speaking from personal experience, and particularly in relation to Ireland.  I am constrained in what I can say specifically because I am on the Boards of three Charities who receive much of their funding from three separate Government Departments (and have to spend much of their management resource "managing" those relationships which are often quite dysfunctional.

On the more general point I would agree that there is nothing worse than a public sector monopoly except a private sector monopoly and I would always want key infrastructural resources to be in public ownership and control, particularly when it is dysfunctional or uneconomic or environmentally undesirable to have competing infrastructures.

If the current financial melt-down has taught us anything, it is that key parts of the financial infrastructure have become so strategically indispensable and vulnerable that they also need to be taken into public ownership to prevent some of the dysfunctional behaviours which precipitated the meltdown.

I am not enough of a financial expert to delineate precisely what the scope of that public ownership needs to be - it need not, for example, include many smaller retail banks, mortgage institutions, credit unions etc.

However once a bank becomes "too big to fail" it also becomes too big to regulate effectively, and thus must either be broken up into smaller components or taken into public ownership.

Even market ideologists who extol the virtues of competition have to accept that that model only works when there are sufficient players in the market to create real price competition and where the more inefficient or less innovative players have to be allowed fail for the good of the consumers within the whole system.

The reality is that big business is all about stifling competition by gaining near monopoly control of certain segments and thus being able to dictate prices.  Unless the regulatory environment can prevent this happening, public ownership is the only alternative.

The problem in todays globalising economy is that many corporations are bigger and power powerful that the states which are supposed to be regulating them, and even in the US the bigger businesses wield so much lobbying , media, and political power that they are effectively beyond regulation or fair competition.

In the meanwhile the political ideology of free market competition is still rooted in the economic realities of 50 or 100 years ago or of smaller businesses now.

My only concern with the nationalisation route is that managing such huge complex and specialised businesses is beyond the competence of most Civil Servants and the comprehension of most politicians and their constituents.  We are thus in danger of replacing a fundamentally dysfunctional private sector system with a badly managed public one.

We thus have two imperative:

  1. Dramatically improve our public sector management capabilities, and
  2. Better regulate those strategically important sectors which remain in private ownership

Calling for one doesn't obviate the need for the other and neither am I dogmatic as to precisely where the boundary between the two should lie.

notes from no w here
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jan 22nd, 2009 at 07:58:52 AM EST
[ Parent ]
if you take out the first paragraph.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Thu Jan 22nd, 2009 at 08:24:13 AM EST
[ Parent ]
I'm not sure I'm qualified to write a good FP story on this.  I don't have much knowledge of the banking industry, and have only been following the nationalisation debates through your and Melanchthon's diaries and the odd link.

The purpose of my intervention is to draw attention to the fact that running a major bank - or an entire banking system - is a non-trivial management challenge which politicians will tend to run away from because it could involve unpopular decisions and make them vulnerable to their electorates - who understand high finance even less.

Rather than having an ideological lets nationalise/ no you can't debate, it may be helpful to identify more precisely the dysfunctional aspects of the current system, the the parts which need more public oversight or outright control, and in particular the skills, structures and systems required to exercise that oversight/control more effectively.

The public will not want to be duped into "socialising the losses, after the profits have been privatised" and being left with the shell of a system which is poorly understood and doesn't work very well in the first place.

Long term we may well need entirely different systems and processes - on the lines advocated by Chris Cook - in any case, so now could be a very bad time to be taking on huge contingent liabilities in return for a business model which no longer works.

Ireland has Nationalised Anglo-Irish bank, whilst being adamantly opposed to nationalising the big two.  The "social partners" are now going to be asked to accept major wage cuts and cuts in public services to generate a minimum saving of €2 Billion p.a. (and rising) in order to reduce our public sector deficit from 10% to 3% over the next few years.

The Unions are bound to ask for a quid pro quo- if workers are to make such major sacrifices what guarantees do they have that they will also be the major beneficiaries when the economy turns around?

Some kind of corporate partnership and profit sharing model seems to be required - and Chris would be a great person to input into that design process.  I'm thinking of writing more considered piece as a LTE,op ed or other intervention into the Irish debate, and if I do I will of course also publish it here.

notes from no w here

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jan 22nd, 2009 at 10:38:41 AM EST
[ Parent ]
Long term we may well need entirely different systems and processes - on the lines advocated by Chris Cook - in any case, so now could be a very bad time to be taking on huge contingent liabilities in return for a business model which no longer works.

Can I point out that no-one appears to have any clue what the long term consequences of what Chris advocates would be?
by Colman (colman at eurotrib.com) on Thu Jan 22nd, 2009 at 10:42:37 AM EST
[ Parent ]
That tends to be the way with new ideas. I'm going through some of the practical ramifications with him at the moment.  There are elements of what he prooses already in place.  Partnership, profit sharing, employee Board representation, unitisation of future revenue streams are not all reasonably well understood concepts.  The key issue is that you cannot expect people to make huge sacrifices without some stake in future gains...

notes from no w here
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jan 22nd, 2009 at 11:06:42 AM EST
[ Parent ]
Colman:
Can I point out that no-one appears to have any clue what the long term consequences of what Chris advocates would be?

I do, and I've said it often enough.

Personally, I don't think much of the long-term consequences of the existing system.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jan 24th, 2009 at 12:18:16 AM EST
[ Parent ]

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