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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
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