Why Communists Should Not Run Banks

Certain people just should not be in charge of the economy.

Certain people just should not be in charge of the economy.

It’s really a macrocosm of socialist failure. Left to its own devices, private enterprise would loan money to individuals most likely to repay it, at interest rates commensurate with the amount of risk involved in the loan.

But government didn’t care for that system, and substituted one in which the criteria for loans was not based on ability to repay, but on a political calculus that favored groups identified as potential sources of political support. Many of these borrowers would not have gotten loans under the previous regime, for the very good reason that they were bad risks.

Nature and economics do not long tolerate fools. Of course the loans went bad. And the consequences have been severe.

This is typical of what happens when economic decisions are politicized.

Advertisements

2 Comments

Filed under Uncategorized

2 responses to “Why Communists Should Not Run Banks

  1. mockmook

    Just wanted to compliment you on this epic piece of wisdom: “There are two kinds of people in the electorate: 1. People who remember how horrible the Jimmy Carter years were. 2. People who are about to find out.”

    I’m sure you know it’s been quoted by powerline.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s