Tuesday, September 04, 2012

David Davis should learn a little more history

Yesterday we had David Davis offering his opinion on what to do about our economic situation, and while I'm not exactly a George Osborne fan hearing the proposed "solutions" to our problems emanating from the Tory right makes me thankful for Osbornes (relatively) sensible approach to our situation.

There is no doubt that many of the ideas emanating from Davis et al are very bad, for example his proposal for faster deeper cuts has us asking where the new demand will coming from, I've not seen the speech but none of the coverage I've read indicates he can provide a clear answer on this. What I'd like to concentrate on for now though, is a comment he made on Osborne's small business bank idea.

"They may help a small amount. The history of government-sponsored banks is not a very good one in any country in the world, let alone ours."

I've pointed out in the past that the extraordinary growth witnessed in South Korea began with the government nationalising most of the banking sector. Indeed, it's argued that in this case freeing the banks from government control was a factor in the 1997 Asian financial crisis. China is also an example of a country that has used state run banks to aid in it's development.

The examples I give above are reasonably well documented, they are also far from the only examples that can be found. What Davis has said about government sponsored banks is just plain wrong.

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