Posts Tagged ‘Regulatory Bodies’

Owen Jones Meets Critic of Neoliberal Economics, Ha-Joon Chang

August 16, 2016

Ha-Joon Chang Pic

In his series of videos on YouTube, Owen Jones, the author of Chavs: The Demonisation of the Working Class, goes to meet with various public figures. These include Jeremy Corbyn, Peter Hitchens and so on. In this video he talks to Ha-Joon Chang, a South Korean economics professor at Cambridge University. Chang’s interesting as he’s a critic of Neoliberalism, the free market economics that has been this country’s political dogma since the Margaret Thatcher. I put up a post a little while ago on Chang’s 23 Things They Don’t Tell You About Capitalism.

The conversation begins by Chang attacking the government’s decision to cut public spending in order to shrink the debt. He says that public debt represents public demand, and if you shrink it, the economy will also shrink, and you’ll still be left with a massive debt. This is what has happened to Greece. It’s far better actually to put more money into the economy. When Jones asked him if Osborne was stupid for pursuing this policy, Chang states very clearly that Osborne did it for other reasons – to undermine and destroy the welfare state, and make the country more like America.

The two then discuss whether it really is a case of capitalism for the poor, and Socialism for the rich. The welfare net for the poor is being destroyed, but there are massive subsidies for the rich. Chang makes the point that big business demands these subsidies, but when the issue of taxation is raised, that’s an entirely voluntary matter, and they’ll start an offshore bank account to avoid paying it. He also discounts the Libertarian attitude that ‘taxation is theft’. He makes the point that wealth is socially created. The attitude that taxation is theft may have made sense in the 16th century, when most people were independent farmers, but it doesn’t apply today, when you need a whole ranges of services to create wealth. They also remark on the double standards about the issue of inequality and greed. Libertarians and neoliberals like greed, because it supposedly stimulates the economy. But as soon the poor start resenting the excessive wealth of the rich, then they denounce them for being envious. Chang states that you can’t have inequality, as it means the poor and rich aren’t living in the same world. They might inhabit the same geographical area, but it’s like one was living in the 22nd Century and the other in the 18th and 19th.

Jones makes the point that whenever anybody discusses nationalisation, they automatically go back to the 1970s and the inefficiency of the services then. Chang states that nationalisation isn’t necessarily the answer, as if something is properly regulated you can have the benefits of nationalisation without it. However, there are examples where private enterprise, or at least unregulated private enterprise doesn’t work. He compares the British and Japanese rail networks. The British rail network now consumes massive subsidies, and is the most expensive in Europe. It doesn’t work, because you can’t have a competitive system on the same piece of railway.

Jones also tackles him about the welfare state. Isn’t it true that it’s bloated, and encourages people to be lazy and feckless. Chang states that there is one aspect to that question that he does agree with. He believes the welfare state does need some reform, as it was created in the 1940s-50s. Now people are living longer, nearly 30 years after their retirement. But he says there’s little evidence that it makes people lazy, and criticises the way people have stopped talking about it as an important form of social security. He makes the point that in countries with a strong welfare state, people are much more willing to accept corporate restructuring. Such as in Sweden, for example. This is not to say they prefer it, but they are willing to accept it. In countries like America where there is little in the way of a welfare state, workers, even if not unionised, are much more resistant to change because they can lose everything.

Chang also talks about the difference between classical liberalism, democracy and neoliberalism. Neoliberalism is a return to the economic doctrines of the 18th and 19th century, when the only form of liberty that mattered was the liberty to own and use property how you wanted. Initially, liberals weren’t democrats, because they feared that democracy would limit the freedom of the property-owners to do as they wished. Neoliberalism is a return to this system, with a bit of democracy. However, the political situation is altered so that democracy does not interfere with the liberties of the propertied classes. For example, they’re in favour of an independent central banks, as then it doesn’t have to be accountable to government over interest rates and the effect that may have on society. They’re also in favour of independent regulatory authorities, as that won’t allow government to interfere with private industry either.

Lastly, Jones asks him if he believes that the system will ever change. Chang makes the point that the past several decades have seen changes that people did not believe would happen. He talks about how Maggie Thatcher 25 years ago said that there would never been Black majority rule in South Africa. If you go back fifty years, then the leaders of the African independence movements were all hunted men in British prisons. It may not happen for decades, but eventually change will come. He quotes a proverb, which says that you must be a pessimist in your head, and an optimist in your heart. Above all, you have to keep fighting, as they won’t give you anything.

Here’s the video:

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