The current debate about bank nationalization reminds of the – Disinvestment process that started in India about ten years ago.
Indian economy was slowly opening up and the government was selling its equity stake in large public sector companies to private investors and corporate houses.
This process was fraught with political perils and was called – Privatization, in the beginning. However, the government soon found out that the word – Privatization was one that had a lot of negative connotation and didn’t go down well with the largely socialist mindset that used to prevail then (and now) in India.
Privatization raised many difficult questions such as:
1.Â Â Â Â How will the government value its stake in the companies that it owned?
2.Â Â Â Â Would the government sell off its crown – jewels to private players for bargain prices?
3.Â Â Â Â What will the government do with the money it raises by selling its stake?
4.Â Â Â Â Would it make the existing private players stronger, if they bought large public sector companies with which they were competing?
5.Â Â Â Â Should foreigners be allowed to own a stake in India’s crown jewels?
These were some thorny issues that the government had to navigate and there were quite a few uproars at the way some of the deals were handled.
One thing that happened along the way was the Privatization process was renamed to – Disinvestment.
I think this was done to get away from the word – Privatization and the negative connotation it held in the minds of a lot of people. Although there is no formal research to prove whether changing the name worked or not — I think it certainly helped reduce the sharpness of certain arguments against Privatization. As a university debater – I was taught to use words that were loaded and painted a picture in people’s mind, instead of dull bland words. This is something we do subconsciously every day.
Consider these two statements:
- Do you want war?
- Do you want the bloodshed that comes with war?
The word – bloodshed is charged enough to change the complexion of the question and is quite likely to sway the thoughts of most who read it.
What does it have to do with Bank Nationalization?
The US government has got large stakes in a lot of too big to fail US banks, it decides how much capital they need to survive, it guarantees their capital, even toys with the idea of replacing board members and CEOs.
After all this – the debate must be all, but over. But, it just doesn’t die down. They just need to change the name of the process, so that people don’t get all worked up about it and the inevitable takes place on its own pace.