Ha-Joon Chang - 23 Things They Don't Tell You About Capitalism

[MB_722]

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I'm reading this book aswell


http://www.amazon.com/Things-They-Dont-About-Capitalism/dp/1608191664/ref=sr_1_1?ie=UTF8&qid=1299128476&sr=8-1

a review

Ha-Joon Chang, Reader in the Political Economy of Development at Cambridge University, has written a fascinating book on capitalism's failings. He also wrote the brilliant Bad Samaritans. Martin Wolf of the Financial Times says he is `probably the world's most effective critic of globalisation'.

Chang takes on the free-marketers' dogmas and proposes ideas like - there is no such thing as a free market; the washing machine has changed the world more than the internet has; we do not live in a post-industrial age; globalisation isn't making the world richer; governments can pick winners; some rules are good for business; US (and British) CEOs are overpaid; more education does not make a country richer; and equality of opportunity, on its own, is unfair.

He notes that the USA does not have the world's highest living standard. Norway, Luxemburg, Switzerland, Denmark, Iceland, Ireland, Sweden and the USA, in that order, had the highest incomes per head. On income per hours worked, the USA comes eighth, after Luxemburg, Norway, France, Ireland, Belgium, Austria and the Netherlands. Japan, Switzerland, Singapore, Finland and Sweden have the highest industrial output per person.

Free-market politicians, economists and media have pushed policies of de-regulation and pursuit of short-term profits, causing less growth, more inequality, more job insecurity and more frequent crises. Britain's growth rate in income per person per year was 2.4 per cent in the 1960s-70s and 1.7 per cent 1990-2009. Rich countries grew by 3 per cent in the 1960s-70s and 1.4 per cent 1980-2009. Developing countries grew by 3 per cent in the 1960s-70s and 2.6 per cent 1980-2009. Latin America grew by 3.1 per cent in the 1960s-70s and 1.1 per cent 1980-2009, and Sub-Saharan Africa by 1.6 per cent in the 1960s-70s and 0.2 per cent 1990-2009. The world economy grew by 3.2 per cent in the 1960s-70s and 1.4 per cent 1990-2009.

So, across the world, countries did far better before Thatcher and Reagan's `free-market revolution'. Making the rich richer made the rest of us poorer, cutting economies' growth rates, and investment as a share of national output, in all the G7 countries.

Chang shows how free trade is not the way to grow and points out that the USA was the world's most protectionist country during its phase of ascendancy, from the 1830s to the 1940s, and that Britain was one of world's the most protectionist countries during its rise, from the 1720s to the 1850s.

He shows how immigration controls keep First World wages up; they determine wages more than any other factor. Weakening those controls, as the EU demands, lowers wages.

He challenges the conventional wisdom that we must cut spending to cut the deficit. Instead, we need controls capital, on mergers and acquisitions, and on financial products. We need the welfare state, industrial policy, and huge investment in industry, infrastructure, worker training and R&D.

As Chang points out, "Even though financial investments can drive growth for a while, such growth cannot be sustained, as those investments have to be ultimately backed up by viable long-term investments in real sector activities, as so vividly shown by the 2008 financial crisis."

This book is a commonsense, evidence-based approach to economic life, which we should urge all our friends and colleagues to read.

[MM2K]

A free market doesnt exist in a vacuum, but that doesnt mean one doesnt really exist if it has to be in an overseen atmosphere. If every country is losing manufacturing jobs and gaining service jobs, how do you not call that a post industrial age? If globalization isnt making the world richer, than how do you explain tons of Chinese coming out of poverty? How do you explain poor Americans being able to afford things they once were not able to afford? Yes, ofcourse governments can pick winners, but at the detriment of other people and the overall efficiency of the economy, and therefore the overall standard of living for all Americans. Yes, some rules are good for business. If he thinks CEOs are overpaid, I would have to assume that he thinks the market is overrating CEOs and therefore the pay of CEOs wil come crashing down. If not, what does it mean to say that CEOs are overpaid? If someone who owns a company pays a CEO a certain amount of his own money, what does it mean to say that the CEO is overpaid? Even if the CEO worked for free, it likely would not even take one penny off the price of the product the company sells. It certainly can be true that more education doesnt make a country richer, depending on how much education the coutnry already has. Yes, it could be true that equal opportunity is unfair on its own, but so what? What is the point of saying that? What are you going to do about it? That's like saying that its unfair that earthquakes always hit California and never Texas. Let me give you a Thomas Sowell parable. Say you have two surgeons. One was born in hardship and had to scratch and claw his way through life, and barely squeaked through medical school. The other was born in luxury and aced everything in medical school. Who would you rather have operating on you? Ill take the one who was born in luxury thank you very much.

[Soul Crusher]

Hhhhhmmmmm, many things a few of us keep harping on. 

[kcballer]

Looks like it could be a good read.  Might have to pick it up.  He's making a lot of sense.