Don’t blame capitalism

It’s the only thing that can save us, write the always excellent Carl Schramm and Bob Litan.

we believe one of the major reasons for the resurgence in productivity growth in the 1990s and through much of this decade was the transformation of our economy from managerial capitalism dominated by large existing firms (think Big Autos, Big Steel, the old AT&T, and the old IBM) into a vibrant form of entrepreneurial capitalism powered by new high-growth firms (think the younger Microsoft, Intel, Cisco, and Google). If too many of our larger financial and nonfinancial firms become wards of the government for too long, we fear that could politicize credit decisions and tilt the economic playing field away from entrepreneurial endeavors. Large enterprises whose creditors know they will be protected if the firms run into trouble are more likely to take imprudent risks and put U.S. taxpayers in jeopardyas we have learned too well with Fannie and Freddie.

Comments are closed.