Matthew Richardson, who teaches applied economics at NYU’s Stern business school, has written an excellent article about the dangers and advantages of nationalization. Most important, he says, are that we learn the four central lessons of the example of Sweden.
What are those? Here you go:
- Decisive action in terms of evaluating the solvency of the financial institutions.
- Some form of “nationalisation” of the insolvent firms.
- Separation of these insolvent firms into good and bad ones with the idea of reprivatising them.
- The management of the process was delegated to professionals, as opposed to government regulators.