The President of Iceland Explains Why We Should Let the Banks Fail, Iceland Did and Now “Prospers”

Iceland

I don’t agree with every point made by the Icelandic president but I agree with most of what he said.

I particularly like this quote.

“Why do they consider banks to be the holy churches of the modern economy? Why are private banks…not allowed to go bankrupt?”

Good question.

One particularly important point he also raises toward the end of this short interview is that banks in many ways are “high-tech” companies. They employ engineers, IT people etc. When the banks failed in Iceland these highly skilled workers went to other parts of the economy and now the Icelandic IT sector is “blooming.”

Think of the creativity which could be unleashed if we stopped propping the behemoths on Wall Street. Our tech people are the best in the world. In a free market these creative types, the people who innovate, who create prosperity, could do things which make far better use of their human capital.

But because we misallocate regular capital, the best human capital follows. We wallow in the economic mire instead of figuring out how to teleport ourselves.