Mankiw's Proposal

I’ve argued with my more staunchly libertarian friends, both online and off, about the financial crisis and what can/should be done about it. Now I ask them: Would this plan of Greg Mankiw’s be acceptable to you?

Whenever any financial institution attracts new private capital in an arms-length transaction, it can access an equal amount of public capital. The taxpayer would get the same terms as the private investor. The only difference is that government’s shares would be nonvoting until the government sold the shares at a later date.

This plan would solve the three problems. The private sector rather than the government would weed out the zombie firms. The private sector rather than the government would set the price. And the private sector rather than the government would exercise corporate control.

Sounds really good to me.