Eulogy for a Local Hero

Something odd happened the day after Run Run Shaw died. The local media sang in chorus praises to the grand old man of Hong Kong cinema. As the tributes poured in, it would appear that Shaw, who died at the age of 107, was a saint. No one had a negative word to say about him.

If the reaction is anything to go by, you would think the local press held a conference before delivering the eulogy. For the views expressed were unanimously reverential. Without exception, newspaper articles lauded him as a man of vision. Commentators saw him as a heroic pioneer who single-handedly built the HK movie and TV industry. They praised him for hand-picking and cultivating the stars and starlets who subsequently shined on the big screen. They applauded Shaw the philanthropist for donating millions to charity.  

In a documentary, the local English-language TVB Pearl—the television station Shaw founded—lovingly portrayed him as a gentleman always kind to everyone. To show respect for the man, the last 15 minutes of the programme were entirely devoted to a photo exhibition. With only soft music playing in the background and no commentary, viewers were tenderly treated to an endless series of pictures of Shaw with his family and grandchildren, with friends and tycoons, politicians and celebrities, and the rich and famous.

During that time, everyone sat and gawked; it was meant to be a cozy family photo-album session. Slowly, we were pulled into Shaw’s extended family and showbiz world. The idea behind the display, I suppose, is that in time, we would feel irresistibly drawn to the great man and in the end, everyone would mourn him, perhaps even as a family member. If that is the intention, I must say it didn’t work, not with me at least.      

Though it is much too flattering, the appraisal by the HK press is correct in some aspects. Shaw was the quintessential movie mogul. The Shaw Brothers Studio was the biggest of its kind in Asia, releasing a staggering 800 movies worldwide. Modelled on Hollywood of the 1930’s, his Hong Kong-based film empire controlled everything from acting talent to production, distribution and the movie theatres. At its peak, Shaw’s business owned a chain of 200 cinemas in Asia and the US.

A shrewd businessman, he took note of the local cinema-goers’ liking for martial arts action and practically invented the hugely successful kung fu genre. As his fortune grew, part of the wealth was funnelled to worthy causes such as education, hospitals and disaster relief efforts in China. All of this has been extensively documented about the glittering Shaw legend.

Flawed titan  

Dig deeper under the glitzy surface, however, and the picture of a flawed man emerges. Like most local self-made tycoons in those days, Shaw ruled his business with an iron fist. He looked upon the coterie of actors as his chattels and ran the studio like it was a sweatshop. Films were turned out at a furious pace, around the clock. In its heyday, his studio made about 40 movies a year on 12 sound stages that operated in three eight-hour shifts. Everyone, directors and actors included, worked a 60-hour week. Wages were generally low, so some had to moonlight to supplement their incomes. Staff signed eight-year service contracts and most lived in the dormitories built on the lot. It was a show-biz boot camp, Hong Kong style.

The way he managed his business tells us something about the man. Shaw was a bean counter at heart. Ironically, his obsession with keeping outlay low had cost him dearly. Though he was supposed to have an eye for spotting talent, his instinct failed him when it came to signing Bruce Lee. Back in the early 1970’s, Shaw turned down the future star’s proposal for a contract offer of $10,000 per film. In his mind, no Asian actor was worth that much. Little did he know. Lee shrugged off the rejection and approached Raymond Chow, the boss of Golden Harvest. Chow made him an offer he couldn’t refuse. Lee went on to star in his first movie, The Big Boss, and rocketed to superstardom soon after.

Lee wasn’t the only actor Shaw failed to win over to his side. Jackie Chan, along with other actors and directors, also found Chow’s offers a lot more persuasive. Adding injury to insult, Chow himself was Shaw’s former protégé. He jumped ship to set up his own company as he felt hampered by Shaw’s iron grip. The string of defections to Golden Harvest and other budding rivals soon broke Shaw’s virtual monopoly on the movie business.             

The fixation on cost was not Shaw’s only weakness. Asked what his favourite films were, he once said, with a deadpan face, “I particularly like movies that make money.” The reply wasn’t a joke, but a give-away to his other obsession: wealth accumulation. Shaw certainly realised his lifelong goal. His business empire was worth an estimated $3.5 billion in 2007. But while profit was a powerful incentive for Shaw, the narrow, exclusive focus also signified an unadventurous strategy in film making.   

With his conservative mindset, Shaw had built a movie and TV industry that focused on generating cash and cash alone. For Shaw, film making was purely a business model, a production-line make-belief factory that produces formulaic products. He didn’t really care about the quality of the movies and TV shows his business churned out. So long as they drew the masses into his movie theatres, he was happy.

I wouldn’t begrudge him for amassing a fortune. He was, after all, a businessman. But less forgivable is Shaw’s lack of ideas and imagination. For decades, his studio produced a never-ending stream of safe, profitable staples —one-dimensional kung-fu action flicks (habitually with the heroes/heroines beating the villains/evil enemies to a pulp), tear-jerking melodramas, worn-out Cantonese operas and juvenile farces. Those were his trusty recipes for success, and he religiously stood by them. His studio rarely ventured to make films with a difference to add class to Hong Kong cinema. With the accent on output, stagecraft (or production value as film makers call it) in the Shaw Brothers movies was sloppy, and quality was often found wanting.   

But quality is vital, even in a profit-oriented business. Think about Hollywood or film centres elsewhere. Producers there don’t only bank on dependable, cash-generating movies. Much as they love safe returns, they understand that long-term survival hinges on refinements in production value and the injection of creative energy and original ideas into the mix. In embracing artistry, they take risks. Sometimes the effort flops, but once in a while, the result is a breakthrough, an enormous success that makes waves. That, in a nutshell, is how cinema renews itself. In the absence of vigor, the entertainment business inevitably sinks into a morass.

Oblivious of the peril, Shaw and his imitators stepped up the mass production of celluloid junk. When disaster struck in the late 1990’s, Hong Kong cinema went into a steep decline as audiences, bored with the usual fare, deserted en masse. In terms of output or box office receipts, it is now a pale shadow of its former self. Rather than reflect on what has gone wrong, the industry continues to look for convenient scapegoats. Film piracy and changing lifestyles, among other things, are routinely blamed for its misfortune. Though the rot has set in long ago, film makers keep trying to revive the comatose zombie with tired formulas and used-up genres.

It is no exaggeration, therefore, to say that the sorry state of Hong Kong cinema is at least partly down to Shaw’s legacy. Thanks to his commercial success, he has been immensely influential. Shaw left behind him a tradition of film making that, though way past its expiry date, is still faithfully followed by scores of local film makers. While his friends and associates may disagree, any attempt to reverse the decline of the HK cinema must come to terms with this dead weight. An impartial assessment of Shaw’s impact, warts and all, is long overdue.      

A separate issue is the quality of reporting. In unanimously praising Shaw, the local press is doing itself a disservice. The unreserved flattery also raises a question. Hong Kong may have a free press, but does it have a vibrant media that does its job impartially? No sensible person would dispute the importance of a free press, but the reporting of Shaw’s death shows that a free media alone is no guarantee of good journalism.

Advertisements
Posted in Hong Kong, Movies | Tagged , , , , , , | 2 Comments

A Touch of Zen in Sports

Energy is eternal delight—William Blake

Be water, my friend—Bruce Lee

Some weeks ago, randomly surfing the TV channels with nothing in mind other than an itch for some diversion to watch while chomping down a hastily-cooked beef stew, I came across a rare treat. It was a documentary about a surfer. His name I missed entirely; at the time it was immaterial.  

Before me on the screen was a swirling, twisting figure wrapped in a sweeping arc of water, his (webbed?) feet on the crest of the waves. My auditory and savoury senses seemed to have shut down. While I watched spellbound, the TV narrator’s drone receded into the background. Morsels of untasted food rested half-chewed in my mouth. All this I was only dimly aware of. Because the eyes took over, and the images dancing on the retina held me in a trance.

Riding the waves                                                                                                                        The surfer rose and fell, surging, flowing, turning and veering off, all the while in tempo with a rolling water-mountain. He looked small against the waves now in full swell, their jaws a wicked curl engulfing his torso. Yet for reasons both obvious and obscure, he wasn’t dwarfed by the whirlpool churning all around him.

The sea whipped up a storm, sending massive waves to crash down against the surfer. The bronze Viking took that as a beckoning call. Without missing a beat, he cut in to meet the waves head on, his knees bent to keep low, body leaning at an impossible slant. It was a breathtaking moment when grace and miracle and magic collided as he glided his way across the roaring waves. As the swell subsided, he eased off in a semi-circular swing not unlike a matador who has eluded a rampant bull’s charge, ready for the next round of assault.    

In my eyes, he was a blurred, slippery form, an ocean cat treading on cascading sheets of water, coaxing it to accept his water-jig as part of its motion. No harm would come to him. However long he rode the sea—I lost track of time—he was in a state of grace, an immortal almost.      

I have seen surfing before, even daring stunts that elicit all the usual superlatives. But this was no circus act. After recovering from the initial jolt, I tried to make sense of what I saw. At first, I attributed my heightened reaction to one of those instances when the mind, in full alertness, eagerly sucks in the images and mischievously goes into overdrive to set the neurons racing.

To be sure, receptiveness played a part in my awe, but it was more than that. It was a stunning feat alright, at once foreign yet not off the map. Foreign because I, a landlubber, have never surfed and don’t have a clue to the mechanics of water sports. But something about him—the majestic grace, the effortless ease, the calm focus with which he rose to meet whatever came at him—was familiar. Once I recognised that, something clicked in my head, and other great sportsmen soon sprang to mind.  

The maestro                                                                              

It was a parade of the icons of our time, too numerous to list here. Pele, for one, had the same qualities. Arguably the best all-round footballer ever, the Brazilian legend mesmerised legions of fans with his dazzling displays. Commentators said he was blessed with the gift of genius, his silky skills a fortuitous result of disciplined training and good genes. Not many understood his game or how he conjured up the magic, so beautiful yet simple and direct, for his club Santos week after week.

Besides sweat and genius, Pele was special because he was totally focused on his play. By that I don’t mean the ordinary sense of mental concentration or commitment, but rather a total immersion in the game one enters into effortlessly without knowing how. When Pele was on-form, his whole being was engaged, and this was apparent in his moves on the pitch—be it a measured pass into space for the winger to fetch, a jiggle to give himself room to shoot, or a run past a pack of defenders before driving the ball into the net.

With Pele in full swing—he was consistently in that blessed state— every part, every atom in him was in tune with what was happening in his vicinity. This heightened consciousness is not some extra-sensory perception, a drug-induced or mystical state of mind. It comes naturally to a person fully absorbed in what he or she is doing in the here and now.

That may sound pedestrian to some, but being truly focused makes a world of difference. It allows the player to perform at his best and sets the world-beating athletes apart from their competitors. It enables the privileged few to reach deep into the well-spring of life, unlocking a new set of possibilities.

Being focused and centred provides a window to another dimension, a vista forever off-limits to the non-members. That is how great sportsmen manage to respond creatively to any challenge, leaving the well-trodden territory of the training manuals to improvise on the fly.

One feat pulled off by Pele in a World Cup match always stands out in my mind, and it serves to hint at the deep repertoire Pele was able to draw upon and what a player at the peak of his powers is capable of. The set-up was simple enough. A Brazilian midfield lieutenant lofted the ball into the penalty area. The odds didn’t look good as the two Nordic full backs shadowing Pele stood a good three inches taller than our lone attacker. That didn’t stop him launching a perfectly-timed jump to soar, eagle-like, above them.

For several time-stopping seconds, he hung in mid-air, gravity ostensibly humbled. Just as you think he was about to head the ball, Pele did the unthinkable. He somehow anchored himself, arching his back to receive the ball on his chest, his body still several feet off the ground. The ball bounced languidly off him to bob past the defenders before dropping into an ocean of space he had carved out for himself.

With the full backs caught completely out of play, the rest was easy. Swooping down from his Olympian height, Pele closed in and stabbed the ball past the helpless goalkeeper for the third and final act in a classic piece of football drama. The feat, aesthetically beautiful and exhilarating, was permanently seared into my memory. 

For the uninitiated, it was simply a wonderful goal, pure eye-candy, a chance that arose from a combination of sheer athleticism and superb ball juggling. Surely, just one of the many tricks Pele was able to pull out of his bag thanks to his unique skills, right? Yes, it was all of the above and more.

Ad-libbing                                                                                                                                  Even more remarkable than the wonderful display of gymnastics and ball control was his off-the-cuff response to the situation. A firm believer in simplicity, Pele wasn’t an exhibitionist. He didn’t opt for the spectacular to show off. He must have sensed that the angle proffered didn’t favour a direct aerial stab at goal.

What would you do? Lesser mortals would stick to their training and go for a header, hoping for the best. Not Pele. The maestro picked the path of least resistance. Improvising on the spot, he let the ball do the work to evade the defensive ring. As usual, it turned out to be the right move. Pele pulled it off not because he was trained to deal with that kind of scenario, but because he operated in a different dimension.                  

The surfer I marveled at was likewise in that rarefied state amid the ocean waves. Graceful as it was, you could tell his show wasn’t some choreographed water ballet. The treacherous sea would wreck any rehearsed maneuvers, no matter how well planned and practised beforehand.  

His act was a continual series of spontaneous mini movements—an adjustment of his stance here, a slight body twist there, an easing of his leg muscles at a crucial moment, all this plus myriad other moves known only to seasoned surfers—that responded to the ferocious waves to keep him afloat. His consciousness stayed in harmony with what was happening around him. He was in a state of flow thanks to his undivided immersion in his jig.                          

Pele and the surfer are not, of course, the only people privy to the extraordinary experience. Many elite athletes and sportsmen have stumbled on the same thing. In the past 30 years, what began as hushed whispers in locker rooms about the mystifying experience has grown into common knowledge among the pundits.

Not to be outdone, sport psychologists have got on the bandwagon, doing scores of studies on the ‘curious’ phenomenon. They even coined a phrase for it: someone who breaks into the heightened state of consciousness is said to be ‘in the zone’.

No New Age fad, the magical place is very real for those who have basked in it. The experience of being in the zone is summed up by Ken Robinson in his book, The Element: “We become focused and intent. We live in the moment. We become lost in the experience and perform at our peak. Our breathing changes, our minds merge with our bodies, and we feel ourselves drawn effortlessly into the heart of the Element.” 

In the zone                                                                                                                                  Top sportsmen are reluctant to talk about it—the athletic nirvana they all seek to bottle—as if reference to this ‘personal’ experience would break the enchantment. When they do, it is often in reverential tones. For the professional high flyers, it is the only faith worth keeping. But it is an open secret that some of the best athletes are cult devotees of the zone.  

In a study of elite athletes and their zone experiences, psychologists Janet Young and Michelle Pain found that “athletes recalled these special moments during sport participation as salient, highly valued and extremely meaningful.” But the man who put zone psychology on the map is Mihaly Csikszentimihalyi.

In a seminal work, Flow: The Psychology of Optimal Experience, Csikszentimihalyi writes “of a state of mind when consciousness is harmoniously ordered, and [people] want to pursue whatever they are doing for its own sake.” What he calls “flow” (and what others call being in the zone) “happens when psychic energy—or attention—is invested in [a] realistic goal.” In pursuing it, “a person must concentrate attention on the task at hand and momentarily forget everything else.”

The characteristics of flow, a phenomenon experienced by people the world over, regardless of race and gender, include deep concentration, exceptional performance, emotional buoyancy, a heightened sense of mastery, a lack of self-consciousness and self-transcendence. Flow is significant because it “obliterates all else out of consciousness,” according to Csikszentimihalyi. “It is the state of self-actualisation or transcendental behaviour.”

For those unfamiliar with the zone, the lack of self-consciousness may be puzzling, but it is reported by all visitors who have been there. In Zen in the Art of Archery, the German philosopher Eugen Herrigel sheds light on the experience: “The archer ceases to be conscious of himself as the one who is engaged in hitting the bull’s-eye which confronts him. This state of unconscious is realised only when, completely empty and rid of the self, he becomes one with the perfecting of his technical skill, though there is in it something of a quite different order which cannot be attained by any progressive study of the art.”

Physical exertion is not the only way to access the zone. Others have found it through physically passive activities such as painting, writing, playing music, meditation, and even math! Still, it would seem that sports are the medium through which most people cross the threshold.

Although researchers focus on top athletes, the zone is not completely barred to mere mortals. At some points in our lives, some of us accidentally hit upon the experience. I still remember vividly some of the extraordinary moments when playing soccer, the game I loved more than anything else.

It always began with a relaxed state of mind, playing purely for enjoyment and nothing else. Free of anxieties, mind and body would somehow work as one to focus on the present, on the ball, and what needs to be done. It was never forced. I didn’t snap my fingers and will the zone to come along. But when I was lucky enough to be in the zone, it was football paradise because every movement, every action was natural, intuitive, pure and perfect.            

(The following section is not intended to trumpet my sporting ability; it’s merely a factual account of my personal experience of being in the zone.)

Anything is possible                                                                                                          

Thirty-yard passes, for instance, invariably landed at the feet of a galloping teammate. The precision often looked uncanny, as if measured by a machine. But there never was a conscious intent on my part to aim the pass, much less to work out the geometry and the motion of the ball and the players.

It happened almost automatically. Amid the chaos of darting movements, I would look up, pick out the forward running through the middle and, spotting the space available just beyond the defensive wall, let fly the ball. As if guided by an invisible force, it unfailingly reached the target. It wasn’t a matter of the conscious mind imposing its command and deciding how to make it work. The obtrusive ego, the pesky I that intrudes into everything in our wakeful moments, didn’t even get a look in. On those occasions, it had the day off.

On days like these, when the mind and body merged as one, almost every move proved just right. With the ball at my feet, I improvised freely, doing just what was called for. Sometimes that produced inventive, unorthodox play. Techniques not found in training manuals, skills I didn’t even suspect were in my repertoire, rolled off my feet in the heat of play.

Actions were purely spontaneous, without the mediation of conscious thought. (This is distinct from conditioned, habitual reflexes.) If play dictated going past the defenders marking me and curling a shot on the 25-yard line, then it would be done, simply and effortlessly. I was merely a channel to transmit the flow of play. Every action was immensely enjoyable. It was nirvana on a football pitch.  

When you are in the zone, almost anything is possible; everything gets as easy as pie. Despite the glorious passes and all the goals scored, I didn’t feel a tinge of pride. I was playing without self-consciousness. Of course, I didn’t get into the zone in every match (I wished I did). But it happened often enough, probably because I had an intense passion for football. To gain admission to the zone, you must love the game.    

The only other sport in which I had experienced the blissful flow was table tennis, but only once, many moons ago when I played in a school competition. That match remains fresh in my memory. I was trailing by several points about one-third of the way through.

Ping-pong perfection                                                                                                            Then for no apparent reason, it happened out of the blue. The ball and the game became the centre of my universe. There was nothing else. I paid no heed to the noise and the umpire keeping score in the background. There was just the ball, my opponent and I in a cosseted space.

I wasn’t playing to win, but simply hitting every ball that came along the best I could. The focus was scary because I hardly missed a shot. I wasn’t just playing well; it was a self-transcending moment. It must have been unnerving for the other kid. The tide soon changed though the score didn’t matter to me at the time.

My opponent tried hustling my game by varying the pace. It didn’t work. He even played to my forehand to tempt me into making hurried shots. That didn’t do any good either. I returned everything he threw at me, blocking his shots or firing top spins to go on the offensive. Every shot was played with precision and verve. It was faultless table tennis. Everything flowed that day.

In the end his game fell apart, and the final result made the match look easy. I had never before beaten my opponent, a regular playmate after school and my equal in every respect, by such a big margin. After the match, the umpire, the undefeated champion of our school, congratulated me. Earnestness written all over his face, he asked, “Who are you?” Coming out of a trance-like state, I only managed a mumbled reply.   

Three days later, I played in the quarter-finals. My adversary was a kid I used to beat regularly. It ended badly for me. The night before, I had fantasised about getting through to the next round. I had to win, I told myself. In the match my jitters got in the way. I played abominably, making countless unforced errors. There was no trace of the sparkling performance seen earlier. I wasn’t even in it.

My game was rushed, uninspired and lifeless. Predictably, I lost. The reason was obvious: I was nowhere near the zone. Ever since that occasion, I have never found it again. It was a once-in-a lifetime experience for me in table tennis, and it remains an unsolved mystery I keep returning to years later. 

Zone mechanics                                                                                                                      While the zone has entered our lexicon, explaining how it works is not easy. Words are ill-equipped to pin down a purely existential experience that lies outside of every-day conventions and language with its fixed subjects and objects and rigid boundaries. What follows is, at best, an awkward attempt at rationalisation.

The game, or any activity, has its distinct rhythms and energy. If you can zero in on that and merge with it, you have a perfect fit. When you are so drawn into the game that you become a channel, your internal energy becomes part of the flow. William Blake, the 18th century poet, painter and visionary, once wrote somewhat cryptically, “Energy is eternal delight.” What Blake had in mind, of course, is not physical energy but something far bigger.

A player or athlete in the zone is in touch with his core. He taps into a primal source of energy, the inexhaustible spring that breathes life into everything. The liberating experience sets him free to transcend his limitations, and the outcome, naturally, is breathtaking performances.               

All this is, of course, a post-mortem account. When you are in the zone, you don’t stop to dwell on what you are experiencing. If you do, you would soon find yourself shut out. Being detached and questioning is not the way to stay in the zone. In sports, self-consciousness is your worst enemy. That, apparently, was what led to Michael Jordan’s fall from grace. At the height of his career, he was a man on fire, a demigod on the basket ball court. For Jordan, it seemed nothing could go wrong.

Alas, fate is capricious. In the first game of the 1992 NBA finals, he had just sunk six consecutive three-pointer. “In that moment,” sports writer Andrew Cooper notes, “it appeared as though even he was overwhelmed by the immensity of his gift…..And that was the giveaway. He had become self-conscious, and so he had lost that edge, that intensity of concentration…..Even for Michael Jordan, visiting hours on Olympus are limited.”        

For top players and athletes, being locked out of the zone is tantamount to professional suicide. In an age obsessed with winning and success, that is worse than purgatory. Often forgotten is that the zone is about much more than achieving peak performances and victory. It is a portal for us to cross over to the other side, to catch a glimpse of the sublime landscape that lies beyond, of what is possible when we soar above our drab selves.   

Although this aspect of sports gets shoved aside in contemporary culture, it is what drew people in ages past—from the athletes of ancient Greece to the Shaolin monks and masters of martial arts in the east—to their pursuits of excellence. They understood that the zone is the essence of the athletic experience and that at their root, as Cooper puts it, “sports are a theater for enacting the drama of self-transcendence.”    

The philosopher warrior                                                                                                          In recent times, perhaps no one was more aware of this than Bruce Lee, the kung fu icon still worshipped by millions of followers 40 years after his premature demise. Back in his day, vocabulary for the zone didn’t even exist, but he constantly exhorted others to be fluid, to move and act spontaneously.

Here’s a typical statement from Lee: “A good martial artist does not become tense but ready. Not thinking yet not dreaming, ready for whatever may come…..To have no technique, there is no opponent, because the word ‘I’ does not exist. When the opponent expands I contract and when he contracts, I expand. And when there is an opportunity, ‘I’ do not hit, ‘It’ hits all by itself.”

Most people associate kung fu with a stylised set of lethal techniques, a form to be unleashed on an opponent. Lee, on the other hand, talked a great deal about a return to simplicity, about having no technique: “Take things as they are. Punch when you have to punch. Kick when you have to kick.”

That may seem paradoxical. But he was, of course, referring to the spontaneity that comes with the zone. A person in that state is poised to act freely. In the words of Lee, he is “using no way as a way, using no limitations as a limitation.” This is not to be confused with rejecting training. After all, you can’t simply improvise without a complete mastery of technique.    

Lee drew much of his home-brewed street-fighting wisdom from Taoism, the arcane Chinese philosophy that stretches back thousands of years. Like the Taoist forebears before him, he was emphatic about casting off the shackles of norms, conventions and rules. “When there is freedom from mechanical conditioning, there is simplicity,” said Lee. “The classical (read conventional) man is just a bundle of routine, ideas and tradition. If you follow the classical pattern, you are understanding the routine, the shadow—you are not understanding yourself.”  

What is the ultimate in the departure from set patterns and ideas? For Lee, that can only be fluidity, a form that can’t be categorised or pinned down. Moving from this premise, the philosopher warrior offers the following counsel: “Empty your mind, be formless, shapeless—like water. Now you put water in a cup, it becomes the cup, you put water in a bottle, it becomes the bottle, you put it in a teapot, it becomes the teapot. Now water can   flow, or it can crash. Be water, my friend.” 

The elusive path                                                                                                                     What does it mean to be formless? The question dissolves once you are in the zone. For that’s what you have become, a being freed from fixed forms. Lee’s insights, of course, apply not only to the martial arts but to other sports and even life. What he didn’t, and couldn’t, say is how to get into the zone.

He wasn’t being evasive. No one can take you by the hand to the promised land. In Tao Te Ching, an ancient Taoist text, Lao Tzu begins by saying, “The Tao (the path) that can be told is not the eternal Tao.”  For the next 5,000 characters, the Chinese sage went on an allegorical carousel, alluding to the Tao but never quite saying what the path or way is. Evidently, enlightenment in life—and by the same token, the zone in sports—is not to be grasped intellectually. If the zone is a place, you must find it yourself. No one can draw a map for you.

That hasn’t stopped legions of sport psychologists from trying. In the US, where athletic prowess can buy the American dream, an entire industry has sprung up to cater for athletes wishing for permanent residence in the zone. Much of it is pseudo-science.

But because it is so lucrative, an army of quacks is actively pushing services and psychological aids to those in need. I have seen on the net a range of products advertised—DVDs with such titles as Sports Psychology, Hypnosis for Golfers. And if you are a baseball player, no worries, you can always avail yourself of 101 Ways to Break a Hitting Slump for a mere US$129.95. That is a modern miracle without the clumsy participation of the divine, Viagra for those unable to penetrate the zone.

Whether it works is another matter. To be fair, the emphasis by top sport psychologists on mental preparation is not to be sneered at. Done properly, it is as important as physical training. Removing stress, for instance, goes a long way toward clearing stumbling blocks. But restoring psychological balance is only half the story. The rest is about reaching a state of intense focus. Therein lies the rub: no amount of visualisation and meditation can produce self-transcendence, and no psychologist can wave a wand to summon the zone.

Does that mean there is nothing athletes can do except hope? Not quite. Although entering the zone is largely accidental, some activities, to paraphrase a Zen master, make you more accident-prone. You can prepare the ground by engaging in certain activities.

As Cooper points out, readiness for the zone depends on the cultivation of three components: skill, devotion and immersion. So these preconditions must be satisfied to enter the zone:

—The athlete must have a mastery of the core skills to be equal to the task or challenge at hand. Without perfect technique, he simply is not worthy;

—He or she must wholeheartedly love and commit to the sport;

—Immersion is likely only if the other two conditions are met. With complete mastery, the athlete can anchor his conscious mind in technique so as to distract it from making ‘noise’. Passion for the sport is a precursor to enjoyment and hence total absorption in the activity. 

For those disinterested in sports, here is something to think about: if the zone in sports is a spiritual path that leads to self-transcendence and joy, imagine the bliss from entering the zone in life. Personally, I am planning to reread my tattered copy of The Way of Zen by Alan Watts in the hope that it may provide clues.

Posted in Miscellaneous | Tagged , , , , , , , , , | 9 Comments

Wall Street: Money Never Sleeps

To read this article in Chinese, click 中文版面 at the top of home page

Someone reminded me I once said greed is good. Now it seems it’s legal—Gordon Gekko

It has all the ingredients of a good movie. If I may plagarise Marlon Brando: it could have had class; it could have been a contender. As it is, the movie is a let-down.

I had high hopes for this film. The first Wall Street defined the 1980’s, capturing as it did the greed-is-good ethos of the sharks in suits then ruling the citadel of finance. My longing was heightened by the subtitle of the sequel, Money Never Sleeps. It has a conspiratorial allure to it, hinting at undreamed of corporate maneuverings. So I was looking forward to an epic story of the mother of financial storms, a tale that would illuminate the inner workings of capitalism.

Sadly, director Oliver Stone returned to Wall Street and couldn’t find much inspiration to add to the first effort. Maybe it isn’t surprising. An American liberal, Stone sees finance as being driven purely by the voracious greed of alpha thugs. He had filmed it once in part one and given us his take on greed. Doing it again, even with style, would have been repetitive.

The way Stone gets around this problem is to take the banking vortex swirling out of control as a backdrop to the story. The drama is then filled by a plot almost tangential to the financial chaos. Apparently repentant, Gordon Gekko (Michael Douglas), the villain now out of jail after serving a sentence for insider trading, would like to reunite with his leftist daughter Winnie (Carey Mulligan), who had disowned him for past transgressions. To worm his way into her favour, he needs the help of her boy friend, Jake Moore (Shia LaBeouf).

As it turns out, Jake, an up-and-coming trader in Wall Street with ‘green’ pretensions, also needs Gekko’s insider knowledge to even the score with Bretton James (Josh Brolin), a malevolent banker who has ruined Jake’s world-weary mentor. Meanwhile, Gekko is promoting his book, Is Greed Good?, on a tour. Stone spins his story around the dealings of these characters. Overall, the result is somewhat disjointed, a mish-mash of family drama, revenge tale, coming-of-age story, Wall Street treachery and morality tale.

In making sense of the financial malaise, Gekko gives us his version of Econ 101, warning students on his lecture circuit that “the mother of all evil is speculation. It’s a global disease”. (Has the former asset stripper reformed himself?) He goes on to prophesy that the bubble, fueled by the indebtedness of the American people, is destined to pop.

When the bubble does burst and the dominoes start falling both metaphorically and visually on screen, we get to see sombre men in dark suits resembling Mafia dons debating the weighty matter of bank bailouts and plotting the downfall of their enemies. That is the sum total of Stone’s musings on one of the biggest crashes in history, and they seem cobbled together from Newsweek headlines.

There is, of course, method to the apparent rambling. Behind it all, Stone has a trump up his sleeve. The diverse elements and plotlines are spun together and set up for a purpose: he wants to tell a Machiavellian tale. Is there, Stone asks, a limit to what Gordon Gekko would do? We know what Gekko is capable of in wheeling and dealing, but how far would he go in risking what he cherishes?

It appears that he would do just about anything to feed his greed and ego. Having won a partial reunion with his daughter, Gekko casually betrays her trust to secure his comeback in the Wall Street jungle. Far from sacrosanct, family ties and commitments, to a man like Gekko, are dispensable stakes to be bartered away in a deal if necessary. That is supposed to be the overarching theme, Stone’s last word on greed: it knows no limits.

Had the film ended on this note, it would have been unacceptably bleak to audiences used to light Hollywood dramas. Maybe Stone also has turned mellow over the years. In a final twist that seems contrived, Gekko redeems himself by returning to his daughter the trust fund intended for a green project. The family reunites in a happy ending despite the onset of the Great Recession.

As drama, the film is too loose to pack a punch. As an account of the financial disaster, it fails miserably. Crises do not spring from the moral frailties of the Gekkos of this world. Greed does play a part, but capitalism doesn’t play by the rules of melodrama—it isn’t simply about good guys versus bad guys. It is by and large impersonal, thriving on processes and flows, and it is a hungry beast forever wrecking and rebuilding its feeding ground for the next binge. It would take a director with a radically different outlook to capture its essence.

If you want to know how the crash happened, this movie isn’t for you. Still, it has its moments, primarily when Michael Douglas is in the foreground, playing it up to the hilt, filling the screen with his presence. Is greed good? No, but it has a seductive allure.

Posted in Movies | Tagged , , , , , , , | Leave a comment

Economics in Crisis

I found a flaw in the model that I perceived is the critical functioning structure that
defines how the world works
—Alan Greenspan

Financial markets around the world may seem to have stabilized 18 months after the big crash, but don’t let that fool you into thinking it is back to business as usual. The crash of 2007-9 not only wiped out tens of trillions (US$) in asset values and brought the world economy to its knees, the resulting shock waves also led to intense soul-searching among mainstream economists and the policymakers influenced by them.

At stake are not only some arcane academic theories, but whether financial markets and the world economy should be run in much the same way as before, with governments keeping a hands-off approach, or a different arrangement needs to be set up.

The questions uppermost on the minds of orthodox economists are appropriate given the scale of the calamity: How did they get it so wrong and why didn’t they see it coming? Unfortunately, there is nothing in their worldview or models suggesting that a crash of the magnitude recorded and a full-blown recession are even remotely possible, let alone a prediction of these events.

Although a handful of academics did warn of an impending disaster they were lone voices largely ignored as cranky Cassandras. So when markets dived and the economy went into a freefall, economists were in a state of stunned disbelief.

Bubble in academia
It wasn’t always so bad. For a long time, orthodox economists were a happy bunch. They believed they had discovered the Holy Grail of economics. The contentious debates in past decades had been settled, or so they thought. With the Federal Reserve pursuing monetary policy in line—or at least not out of step—with their models, everything appeared to be under control. Inflation was largely tamed, the economy grew at a steady pace and recessions seemed to be a thing of the past.

While there were a few ‘hiccups’ in financial markets along the way these were seen as no more than a blip on the road to progress. Free market reigned supreme in the spheres that mattered and everything was well under heaven.

Life was good in the best of all possible worlds, and that called for a celebration. Thus, in his address to the American Economic Association in 2003, Nobel Prize winner Robert Lucas of the University of Chicago triumphantly declared: “the central problems of depression prevention have been solved.” The audience rapturously applauded. It seemed the golden age of economics had arrived.

The euphoric bubble in both academia and asset prices was ruthlessly pricked in the financial collapse. In its wake, economists began to question and even disparage the paradigm that previously went unchallenged. Bold headlines in articles published by newspapers such as The Financial Times and New York Times tell the story: ‘The Unfortunate Uselessness of Most State of the Art Academic Monetary Economics’, ‘How Did Economists Get It So Wrong?’ ‘Economics May Be Dismal, But It Is Not a Science’, ‘Did Economists Ever Get It Right?’, and ‘Needed: A New Paradigm Shift’.

Those articles aren’t puffy pieces written by hacks seeking sensational headlines. They come from respected scholars. Some, like Paul Krugman and Joseph Stiglitz, have won the Nobel Prize in economics. What the rebels are saying is that economists need to rethink much of their craft. Fundamental rupture of this kind hasn’t been seen in the past four decades, at least not in mainstream circles. We live in turbulent times indeed.

Bubble not possible?
So what is wrong with the models that are causing so much dismay and contention among the high priests of the profession? The first casualties of the shake-out are the efficient markets hypothesis (EMH) and the macroeconomic models known as dynamic stochastic general equilibrium (quite a mouthful huh?). At the heart of EMH is the idea that prices of securities or assets accurately reflect everything we know about their values (that’s the ‘strong’ version of the theory).

In that sense, markets are said to be efficient. Couple it with EMH’s sister, the idea of rational expectations among investors, and you end up with the notion that financial and property markets are basically self-regulating and inherently stable. Given that markets reflect fundamental value, asset-price bubbles can’t be entertained even as a possibility.

Widely accepted by economists and central bankers, such a view was never seriously questioned by its proponents till the financial earthquake brought down the house of cards. Its foundation is now revealed to be downright faulty. EMH, dreamed up by American academics to reduce the complexity of markets to something that can be handled in a simple model, is a blatant over-simplification of reality. It assumes away uncertainty, crowd manias and imperfect information.

Besides its disconnect from reality, EMH is riddled with internal inconsistencies. If market prices reflect fundamental values and investors are fully informed and rational, why is there so much trading between punters? If the theory holds true, there shouldn’t be any trade at all as market participants would share the same view about prices—asset markets have already priced in values—and markets would grind to a halt. Active trading in itself only implies that markets are inefficient.

Dissenting economists have also pointed to the mismatch of EMH with empirical data. Moreover, small changes in assumption would lead to wildly different conclusions. Even small information asymmetries, as Stiglitz has shown, would make markets inefficient. These findings, however, were simply brushed aside as no more than curious anomalies.

As late as 2007, Eugene Fama, the father of EMH, said “the word ‘bubble’ drives me nuts,” insisting that property prices couldn’t be over-inflated because rational house buyers are careful when it comes to a big investment. The same logic was behind policymaking at the Fed. Both Alan Greenspan and his successor, Ben Bernanke, have rejected calls to rein in US housing prices on the grounds that there was no bubble. Now they know better.

Alice-in-wonderland economics
If EMH is a disaster, macroeconomics doesn’t fare much better. As Willem Buiter, professor at the LSE and a former member of the Bank of England’s Monetary Policy Committee, rightly points out, the neoclassical models imbued with the theory of rational expectations “have turned out to be self-referential, inward-looking distractions at best.” Research has been driven by the internal logic and aesthetic puzzles of established research programmes, rather than by a desire to understand how the real economy works—much less how it works during times of instability.

It may seem strange to outsiders, but in the ‘complete markets’ theories concocted by orthodox economists, intertemporal budget constraints, by assumption, don’t exist; nor do default and insolvency as a result. In this Alice-in-Wonderland world, questions about illiquidity and insolvency can’t even be posed.

That’s not all. It was clear that the dynamic stochastic general equilibrium (DSGE) macro models couldn’t accommodate non-linearity and uncertainty in the real world. To get round the deep conceptual and technical problems, economists stripped them of the pesky non-linearities so as to make them ‘work’. Buiter couldn’t put it better when he said, “They took these non-linear DSGE models into the basement and beat them with a rubber hose until they behaved.”

In doing so, they have turned their toolkits into eunuchs incapable of handling systemic shocks. It thus came as no surprise that no analysis was available of the systemic effects that would unroll after any significant defaults in financial markets. In short, DSGE is nothing more than a fancy math model because it excludes things that might undermine financial stability.

As if that isn’t unrealistic enough, the DSGE models used by the Fed, according to a Santa Fe Institute blog, left out banks and derivatives, much less sub-prime mortgages and housing. No wonder their predictions weren’t even good enough to be wrong. They were simply non-existent.

Fixation
The central affliction of the neoclassical paradigm is clear: the fixation on smoothly functioning markets and equilibrium blinds its practitioners to what could happen when markets become dysfunctional; by ruling out that very possibility, they cannot conceive of any mishap. Put simply, orthodox economics is innately incapable of offering insights into crises because it precludes a theory of crisis.

Indeed, economists haven’t even bothered to seriously study financial meltdowns, the only notable exceptions being Hyman Minsky and, lately, Nouriel Roubini who called the collapse a couple of years before it occurred. The blatant neglect can only be explained by economists’ ideological blinkers and their blind faith in markets.

If macroeconomics can’t tell us about the possibility of crises, it also has nothing constructive to say about solutions to a recession. Casey Mulligan of the University of Chicago said: “Employees face financial incentives that encourage them not to work…..decreased employment is explained more by reductions in the supply of labour (the willingness of the people to work)…..and less by the demand for labour”.

In other words, millions of jobless workers in America (and elsewhere) are opting to take a long vacation from work right now. That is obviously an absurd conclusion, but it is inevitable once you take seriously the idea of perfectly functioning markets. Unemployment can only be voluntary if demand for labour is assumed to equal its supply.

Dazzled by math
You must be wondering how economics got into such a muddle. Indeed, how could those questionable notions gain popular acceptance in the first place? In the famous New York Times article entitled ‘How Did Economists Get It So Wrong?’ Krugman provided part of the answer: “As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth.”

Beauty, as we all know, is in the eye of the beholder. To most economists eager to prove themselves the intellectual equals of theoretical physicists, it is epitomized in simple axioms dolled up in equations. The mathematically elegant approach succeeds in quantum physics, allowing the likes of Stephen Hawking to unveil the mystery of the cosmos.

When attempted in economics, the results are far less assured because simple, universal models can only be pulled off if you sever such things as Wall Street greed, herd instinct, beliefs, perceptions and social norms that have a bearing on human behaviour, imperfections of markets and uncertainty.

That is precisely what economists did when they erected the EMH, DSGE and rational expectations trio. But no amount of math can hide the naiveté. As one scientist, who in his late 40’s studied an MBA, said of the economics courses he was taught, “The mathematics was used to dress up something very banal.”

Still, the paradigm enables its disciples to build careers in academia. Professors get tenure at prestigious universities by ‘proving’ theorems without having to shed light on the economy. The exercise becomes a self-contained intellectual game or jigsaw puzzle with the paradigm taken for granted, in much the same way ‘normal’ science is pursued, as described in Thomas Kuhn’s seminal work.

Generations of economists have been raised on the orthodox staple. As undergraduates, they sit in lecture halls, transfixed by what appears to be scientific inquiry on the whiteboards. Some are dazzled by the math, and certainly few feel able to object in the face of the formidable-looking calculus. The math overwhelms what resistance they have to the basic tenets. Those who go on to complete their PhDs take the tenets as articles of faith.

Not only are academics bewitched by the math, Wall Street also swears by quantitative methods, hiring a horde of PhDs in mathematics and physics—known quaintly as quants—whose job it is to build math models for financial engineering and trading purposes.

It is worth quoting the remarks of a quant on a FT blog: “Sitting in a portfolio theory class filled with other scientists…. we laughed it up, [but] we didn’t just walk out of the classroom assuming it was all complete hogwash. Most understood that economists could only develop these silly, simplified models because they simply had no choice….Provide quants with something they can use, and you have struck gold. I doubt if [critics are] rich yet.”

In other words, quants knew the models were deeply flawed, but they went ahead regardless, as it was the only way of making money. This mindset is a stark case of ‘enlightened’ self-interest arrogantly ignoring the risks that could bring the house down. Yet it is not uncommon among quants and other ‘masters of the universe’ working at investment banks and hedge funds. It serves as a reminder that math could be abused with disastrous consequences.

Prestige and power
Over the years, academics from different intellectual traditions have been gradually elbowed out until dissenters became nearly extinct. Keynesian economics, once the competing paradigm, was considered passé. According to Lucas, “at research seminars (even back in1980), people don’t take Keynesian theorizing seriously anymore; the audience starts to whisper and giggle to one another.” If anything, the sneering complacency only swelled over time.

Meanwhile, funding for both teaching and research purposes has been plentiful for the economics departments or faculties that bent with the prevailing winds. For recognition, orthodoxy was the only way to go. The fawning and showering of money by Wall Street—in the form of lucrative consulting and sponsored speeches—also made it hard to turn away from the crowd.

Of course, the resurgence of the neoclassical orthodoxy has been intricately bound up with shifting politics. Led by Margaret Thatcher and Ronald Reagan in the 1970’s, the swing to the right in the political spectrum has since gained ground and spread nearly everywhere. The creed that idolizes free market lends neoliberalism legitimacy, and it is, in turn, upheld as the only feasible economic philosophy. The invisible alliance has conferred prestige and authority on mainstream economics. (For an excellent account, read A Brief History of Neoliberalism by David Harvey.)

Economic orthodoxy, the Trojan horse deployed in the neoliberal onslaught, has been more than helpful to its ally in reshaping the world order. In this brave new world, free capital markets, for instance, are de rigueur, permitting financial corporations to profit handsomely, and impediments such as regulation must be removed.

So it came to pass that the Glas-Steagall Act, put in place in the wake of the 1929 crash to separate commercial and investment banking to prevent a bubble from recurring in the US, was scrapped 60 years later after sustained lobbying by Wall Street.

An important lesson from economic history was simply deleted. When regulators stopped regulating because conventional economic wisdom said that must be so, the result was an open invitation to an orgy in toxic sub-prime derivatives which eventually broke the financial system, exposing the fragility of free-market fundamentalism.

Paradigm shift?
Now that orthodoxy is revealed to be the emperor without clothes, prominent economists are calling for a paradigm shift. A change in paradigm is, of course, never easy. It is a rarity that happens maybe once in a couple of centuries in the sciences, which should tell us something about how dominant worldviews are essentially static. In economics resistance to change is likely to be just as strong.

Thomas Kuhn, the philosopher of science who studied the rare occurrences, has mapped out in broad brush strokes an apparently clear-cut account of the milestones in physics. In his canvas of scientific revolutions, an existing paradigm periodically would be challenged by a new, competing paradigm. When the anomalies confronting the established model build up to a crisis, a tipping point occurs and the new paradigm would replace the old.

We can deduce from Kuhn’s exposition an important idea: crises bring about change. Often, fundamental upheaval only emerges from a crisis or catastrophe. History lends support to this thesis, whether in scientific paradigm shifts, political revolutions, or social and personal transformations.

Economics likewise has arrived at a crisis point. Existing models are riddled with anomalies. A paradigm shift seems almost inevitable. Don’t underestimate the resistance to change, however. In the current minefield where a potent web of professional opposition, vested interests and politics are intertwined, the process of change is going to be complex and the outcome far from certain. Powerful forces are already marshalling the troops for what is likely to be a long, drawn-out battle.

Within academia, the clash has begun in earnest. Their faith unshaken by the crisis, the defenders of orthodoxy are locking horns with a growing number of disbelievers. In a recent skirmish giving a taste of things to come, John Cochrane of the University of Chicago took aim at Krugman, the chief offender who earlier ruffled a few feathers with his barbs at the profession.

The empire strikes back
In a paper entitled How Did Paul Krugman Get It So Wrong?, Cochrane countered with considerable verve, arguing that the EMH remains intact despite the financial collapse: “It’s fun to say we didn’t see the crisis coming, but the central empirical prediction of the efficient markets hypothesis is precisely that nobody can tell where markets are going—neither benevolent government bureaucrats, nor crafty hedge-fund managers, nor ivory-tower academics. This is probably the best-tested proposition in all the social sciences.”

The point, however, is not so much that economists couldn’t predict the collapse—though a few did using non-standard models. It is rather their staggering inability to take on board the idea of financial and economic crises, as noted earlier. And if mainstream economics offers no clue to instability, what good does it do? Cochrane is also disingenuous since finance professors undoubtedly had sold Wall Street and central banks on the notion that bubbles don’t exist and markets are inherently stable.

If he really believes everyone got it wrong about EMH, he and his colleagues could have warned others of the dire consequences. This they didn’t do. Maybe the EMH should now come with a warning label: use it at your own peril. But then if financial markets are not necessarily stable, as Cochrane now appears to be saying, they ought to be providing models of disequilibrium. Again, that would be welcome, but we haven’t seen anything of this ilk from the Chicago School. Nor are we likely to, given its ideological bent.

Cochrane also argues that contrary to Krugman’s view, macroeconomists have done a great deal of useful work to shed light on the economy: “Pretty much all we have been doing for 30 years is introducing flaws, frictions and new behaviours and especially new models of risk, and comparing the resulting models, quantitatively, to data.”

He is probably right about the amount of work predicated on the existing paradigm. But Cochrane couldn’t claim that the effort had produced startling insights into the unfolding of a crisis or how it might be unleashed, despite all the “flaws and frictions” introduced. What’s more, the standard macro models favoured by economists, as pointed out earlier, largely ignore the possibilities of shocks from financial markets. Clearly, the work produced hasn’t been, for the most part, germane.

What really exasperates Cochrane is the charge that economists mistake beauty for truth or what he calls “Krugman’s Luddite attack on mathematics”. To him, math isn’t the issue. Rather, “the problem is that we don’t have enough math. Math in economics serves to keep the logic straight, to make sure that the ‘then’ really follows the ‘if’, which it frequently does not if you just write prose.”

The quest continues
So Cochrane still prefers the models that got us into trouble. He is also attacking a straw man. Nobody is against math per se. What we don’t need is the kind of math that reduces the economy to abstractions that are useless in making sense of market failures and their causes.

To take up his line of reasoning, the problem is that the ‘then’ only follows the ‘ifs’ which in existing models bear little relations to the real world. The ‘then’ is hence totally undependable. And no amount of math can disguise the poor ‘prose’ (underlying conjectures) behind it. That just won’t do anymore.

Yes, we still need math, but of the kind that helps elucidate the real economy. It won’t be easy because the models need to grapple with a host of complications and it certainly won’t give us the Theory of Everything. Instead, economists have to settle for an eclectic salad of partial theories and insights, empirical facts and hunches. This may be a let-down for some, but admitting you don’t know much is a good start. It may eventually generate some real knowledge.

Cochrane pours scorn on Krugman’s suggestion of revisiting Keynes for his insights into economic depressions. To him, that’s a step backward: “Science that moves forward almost never ends up with where it started. Einstein revises Newton, but does not send you back to Aristotle.”

Isn’t Cochrane flattering economists a little in comparing them to Einstein? Is economics a science in light of the mess we are in? The answers to those rhetorical questions needn’t be spelt out. In the dismal science, we may indeed need to look back for ideas deleted by economists who share a collective amnesia in recalling crises and recessions.

Stiff resistance
In his attempt to salvage a sinking ship, Cochrane defends his neoliberal bedrock by falling back on the familiar mantra: “The case for free markets never was that markets are perfect. The case for free markets is that government control of markets, especially asset markets, has always been much worse….Krugman at bottom is arguing that the government should massively intervene in financial markets”.

Cochrane obstinately insists that unregulated asset markets are the only option. But that is precisely the Pandora’s box that launched the freefall. To recap the events that unfolded, the financial storm began in the US property market, and it was fully unleashed in a run on the minimally regulated shadow banking system gorging on toxic, highly leveraged sub-prime securities and derivatives. That was the epicenter of the financial crisis before it spread to commercial banks.

In his version of the collapse, Cochrane prefers not to see it as a crisis of financial markets. That is an obvious obfuscation designed to paper over the cracks in free-market fundamentalism. If the crisis teaches us anything, it is that unfettered financial markets are a recipe for disaster. Regulation, rather than “massive intervention”—the bogeyman Cochrane conjures up to spook us—is indeed necessary to prevent a replay of the meltdown.

Cochrane’s defence of orthodoxy is indicative of what to expect in ongoing clashes which look likely to drag on. The faithful have one thing in their favour. Despite the growing defection from their camp, the rebels don’t have a complete and coherent competing paradigm to bring to the table. The search for a candidate will take time.

A paradigm shift, of course, is not simply about settling an economic argument. It has enormous economic and political ramifications for the beneficiaries of the current orthodoxy. Among them are major corporations, the rich and the powerful, as well as sympathetic politicians in the halls of power. Neoliberal orthodoxy legitimizes their mode of operation. Without it, their hold on the existing world order would be tenuous at best. In the struggle for supremacy, they will do everything in their power to defend the ideology that allows them to maintain their wealth and position.

The massive lobbying campaign earlier this year by Wall Street and its political allies aimed at watering down the regulations proposed by the Obama administration is just one instance of corporate maneuvers. Stiff resistance to change is only to be expected. Already, the fight has spilled into the political arena.

 

Posted in Economics, Political Economy | Tagged , , , , , , , , , , , , | 1 Comment

Industrial Policy: How The Economist Misleads its Readers—And the Way Forward

Neoliberals are vigilant, always on the look-out for any wayward move. In an August issue of the news magazine, The Economist briefly surveys what is happening around the world, uncovering what it sees as an alarming trend toward industrial policy in Europe, the US, Japan and elsewhere. It lists examples of governments supporting private companies in a bid to promote the growth of selected sectors and companies (that’s what industrial policy amounts to in rich countries). Throughout the story it lectures the big bad State for being naughty and not learning from past lessons.

Free markets
Why is it naughty? Because it is making the big mistake of dabbling in markets, instead of backing off and letting business take care of itself. That’s why. Sound familiar? Essentially, The Economist’s assault on industrial policy can be broken-down into three related parts:

—Industrial policy, or any government policy for that matter, does more harm than good. The numerous attempts by governments everywhere to intervene have nearly always failed and ended up in the dustbin of history. It is a shameful waste as scarce resources and taxpayers’ money are sunk into a financial black hole.  

—Industrial policy entails picking winners and aiding them. That could only backfire because government couldn’t possibly be smarter than markets and usually backs the wrong horse. Similarly, protectionism in developing countries doesn’t work. 

—As the flipside to that, since markets know best it’s more efficient to let business decide who the winners will be. To illustrate this ‘home truth’, The Economist goes on to say: “no bureaucrat could have predicted the success of Nestlé’s Nespresso coffee-capsule system—just as none foresaw that vacuum cleaners and tufted carpets …..would have been some of America’s fastest growing industries in the 1970s.”     

In short, The Economist’s position is that free markets—commonly defined as those without regulation or government intervention—are always best. And intervention by government such as industrial policy or regulation is doomed to fail because the market is no longer free. (I am belabouring the point as there seems to be some confusion among the public on basic definitional issues.)        

The Economist cites as examples companies that had been picked in the past by governments and had since fallen by the wayside—Minitel (a French communications network), British Leyland (car producer), etc. In Spain the solar energy project backed by the state is struggling: “some green industrial policies have backfired already. The fixed-price subsidy system for solar energy has been a disaster,” costing the government huge sums of money. 

Although it mentions a few cases of success, The Economist’s overall thrust is that there are far more losers than winners in intervention or industrial policy. Take Britain, for example. Its “long list of disasters, from cars to semiconductors, is etched in the public’s memory. France’s biggest blunder has been its attempt to construct an info-tech industry.” On the strength of the argument summarized here, The Economist triumphantly takes a bow and rests its case. Amen. 

Mercifully, at least it knows that it’s best not to lead us deep into the fairy land of neoclassical economic theory where ‘general equilibrium’ reigns supreme–forever and ever. Don’t even ask me to take you there; you will deeply regret it.     

The marathon debate
Are you convinced by The Economist’s case? I hope not because it is seriously flawed. Before taking a shot at its argument, however, let me briefly lead you through the big picture to put it in context.  

The Economist is not saying anything new. The big debate about the state has been raging among economists for more than two centuries. The quarrel is about whether it is wise for government to poke its nose in markets. You would think a super-marathon like this would have ended long before now. It hasn’t. That should tell you something about how painfully slow progress is made in big economic issues. Don’t believe anyone—Nobel Prize winners included—who tells you otherwise.

To cut a long story short, the squabble ended in stalemate with no clear conclusion either way. As you can imagine, both sides obstinately stick to their positions unwilling to give ground. In the past, many battles had been fought but maybe none was fiercer than on the free trade versus protectionism front. This clash is especially relevant to industrial policy.         

As in the big debate, both sides are caught in an eternal deadlock. In one corner of the wrestling ring are the neoliberal economists—The Economist is in this camp—clinging to their beloved model which postulates that free trade benefits every one. Facing them are the dissenting economists who hit back by insisting that because market failures are not uncommon, especially in developing countries, intervention is needed to protect ‘infant’ industry.

How to cheat in an argument
After the theoretical posturing, both sides proceed to bash each other by showing cases that support their respective positions. The fight drags on, with no end in sight as the evidence does not definitively favour one side or the other. But they continue to fight anyway, selectively citing examples to support their assertions.

The free traders would go through the data and point to failures in the African and South American countries where protectionism was a disaster, proclaiming that there’s no alternative to free trade and markets. The non-conventional economists respond by pulling out detailed studies on several fast-growing countries such as Taiwan, South Korea, Brazil and, in earlier periods, Japan, the US and European countries, where protected industries had become winners, thereby ‘proving’ their claim that protectionism works.

In this context, it is worth pointing out one thing to set the record straight. It is a myth that western countries had developed through free trade. Ha-Joon Chang, a Korean political economist teaching at Cambridge, has shown in his books that most of them had industrialized through infant industry protectionism (a form of industrial policy).  

In its jabs at industrial policy, The Economist is perpetuating the same trick, using the age-old tactic of showing selective evidence. By giving detailed coverage to the losers and almost ignoring the winners, it creates the impression that industrial policy is hopeless. So beware when you read economics articles and books or when officials here in Hong Kong make sweeping statements about the efficacy of free markets.  

I, too, can play the game of giving examples that prop up a theory. I could re-emphasize success stories in state intervention and ignore the failures, but it just isn’t fun anymore. Moreover, it’s foolish to fall into the old trap and perpetuate the pointless contest. Going down that road won’t convince the disbelievers; nor would it move the debate forward.  All through this article, I only bring up cases in passing to clarify or dispute the claims made by The Economist. Those examples are enough to show that there are many success stories in industrial policy.

Besides selective use of evidence, The Economist resorts to other tricks to mislead and misinform. It is not above firing a cheap shot if that serves its purpose. In trying to show that China’s economic success rests entirely on free markets and private business, it comments: “the likes of Li Shufu, who runs Geely, the car firm that bought Volvo, are entrepreneurs, not bureaucrats.”

No one disputes that private enterprise is an important part of China’s success. That isn’t what the debate is about. It’s about whether the state plays a pivotal role in the Chinese economy while allowing business room to operate. The way The Economist sees it, government (bureaucrats) and markets (entrepreneurs) are diametrically opposed. That’s simply not the case. 

Half-truths
The Economist is also guilty of telling half-truths. Rather defensively, it shows a small part of the story while covering up the bigger picture. For instance, it cites as example the mistake made by MITI (The Ministry of International Trade and Investment in Japan) to stop Honda expanding from motorbikes into cars. (Bad boy, MITI; that puts the score at government 0 markets 1).   

But it conveniently omits mentioning that MITI was instrumental in laying the groundwork for Japan’s economic take-off in the post-war period. It omits to tell how the mighty Honda, Toyota, Mitsubishi, Sony, etc. were given a strong helping hand by the state both before and after they began their aggressive export drive. I leave the revision of the final score to you.

Being a severe critic, The Economist jumps at every chance to scold the ‘bad boy’. It tells us that “Japanese industry, which has a leading position in nuclear power, got a shock when South Korea unexpectedly won a contract to supply four reactors to the United Arab Emirates. One reason was deemed to be lack of marketing support from government ministers.” 

Another cheap shot! Is that supposed to be a disaster?  So Japanese bureaucrats screwed up a deal. That can happen to anyone, private companies included. Also, since the Koreans scooped the contract, shouldn’t the Korean government get a pat on the back?  That’s not all. In its account, The Economist focuses on the slip-up without placing it in the wider context. It ‘forgets’ to point out that both the Japanese and Korean nuclear power industry had received heavy government backing before turning into major players on the international stage.   

Learning to walk
The Economist admits that in Brazil “the likes of Petrobras (oil), Vale (mining) and Embraer (planes) were indeed created by the government.”  It then hastens to add: “they have all flourished because they were privatized, to a degree, and forced to compete with foreign firms in the 1990s. Part-privatization and competition created in a short time what decades of industrial policy had failed to do.” 

Once again, this type of interpretation is inaccurate and misleading. It downplays the importance of the protectionist period when the Brazilian companies were struggling to walk before they could run. At the same time it over-emphasizes the role of opening up to foreign competition and privatization. The implication is that if only government does away with industrial policy (learning to walk is unnecessary) and forces the companies to compete internationally right from the beginning (just start running), then all would be well.

That may be so to neoliberals who regard as sacred the ‘laws’ of free markets, but it is an absurd prescription for any developing country. The simple truth is: You can’t run before you have learned to walk. In other words, it takes time to build up competitiveness. It is no coincidence that nearly all the Asian and South American export powerhouses have pursued some form of industrial policy before their overseas expansion.

(Hong Kong is the only exception but then unique historical factors made it possible for the territory to leap straight into international markets in the 1950s. HK is of course no longer a real exporter as nearly all production by local companies is done in China. Its demise as a production centre is due to the free-market leaning of the government and the rapid growth of China’s production capability. In the absence of an industrial policy, there had been no enticement for HK companies to climb the industrial ladder, and the only option was relocation to the mainland to take advantage of low wages.)      

Without an industrial policy, developing countries find it hard to press ahead. The past two decades saw unrelenting waves of trade liberalization and privatization across the world under the globalization banner, forcing nearly everyone to join the race. Yet no developing country has been able to follow the footsteps of the mega stars—China, Brazil and the other Asian ‘tigers’. Simply pushing companies to compete internationally, as recommended by neoliberal economists, doesn’t work.  

To be fair, I must add that other economists who believe toddling ‘babies’ (the protected industries) eventually grow into great runners if given enough time are also mistaken. Many remain stunted and never grow up especially if they aren’t properly fostered. Protectionism doesn’t always work. Industrial policy is thus all about striking a balance, a delicate balance between nurturing the infant and inducing it to run at the right time. I will come back to this point later.

A country’s development, of course, is a lot more than adopting an industrial policy. In nearly all the developed nations, the state had always played a key role, orchestrating the economy and society in a bid to move the country forward. That is obvious to anyone who studies history or political economy, and it is now slowly sinking in, even among economists. Justin Lin, a Chinese economist, says: “the historical record indicates that in all successful economies, the state has always played an important role in facilitating structural change.”

The statement in itself is nothing new, at least not to those who read history. But coming from the chief economist of the World Bank, which has all along been a champion of free markets, it signals a welcome break from the old deadlock I mentioned earlier. Let’s now turn to China, a living example of dynamic structural change.               

China’s economic miracle
It is no exaggeration to say that since China woke up some 30 years ago, it had made colossal strides, so much so that it is now beginning to shake the world. If you are not convinced just read or watch foreign news media with international coverage. The Economist (in fact almost all analysts) takes China’s status as a giant for granted. 

Where we differ is in the interpretation of its dramatic rise. To neoliberals like The Economist, “the overwhelming reason for China’s miracle is that the state released its stifling grip and opened the country to private enterprise and the world.”  Really? Need I say this is another confusing half-truth that misinforms more than it enlightens. So if China could achieve a miracle by opening up, surely the same would happen to other countries that follow the same road.   

The last time I checked, I didn’t spot any other country that has been clocking up an average 8% GNP growth over the past 30 years, although a lot of developing countries are just as, if not more, open than China to private enterprise and the world. Did I miss the miracle countries or something?  Am I making an unfair comparison? 

What about Russia? The country also shook loose of the “stifling grip” of the state and began restructuring round about the time China opened up. In fact, Russia went further even than China in embracing markets, subjecting itself to ‘shock therapy’ and extensive privatization. This prescription, formulated by neoliberal economists for the Russian government, was designed to turn Russia into a free-market powerhouse. The therapy shocked the patient alright because the economy was in a semi-comatose state for several years before beginning to recover. 

In privatization Russia did get rid of a large part of state assets, off-loading them to former KGB agents at rock-bottom prices. The windfall profits turned these ‘entrepreneurs’ into billionaires now living off rents from the privatized semi-monopolies. Meanwhile, the poor at the bottom of the heap got little to show for the radical economic reforms. In terms of performance, Russia is not even close compared to China and is certainly no miracle economy. Why didn’t the miracle happen there?

Why didn’t it happen everywhere in developing countries that opened up?  The Economist would be hard-pressed to find an answer to these questions. Common-sense observations indicate that markets alone isn’t enough to generate extraordinary success. There is something special about the forces at work that are propelling China forward at breathtaking speed. 

The grey dragon
Although central planning had been dropped (after Deng Xiaoping took the helm in 1978) it was replaced by a different set of controls and measures. State intervention is still substantial and extensive. For this reason, China’s development has been described as state-led.

That is clearly contrary to the textbook free-market model and makes nonsense of The Economist’s simplistic assertion that the Chinese economy soared after the government released its grip. In reality, the state allows markets to operate while playing a strong directive role in the economy. The Chinese dragon is neither black (state-controlled) nor white (free market); it is grey! That is what confuses neoliberals like The Economist.

While neoliberal dogma prefers to set things in terms of black or white, policymakers would do well to recognize the developmental path of China. Instead of denying that intervention can work, they can learn much from studying the dynamics of how markets and government accommodate each other.  

None of this is meant to suggest that the Chinese government has been perfect in balancing between freedom for enterprises and the need to steer them in strategic directions. Indeed, mistakes were made, some pet projects failed, corruption is a problem and red tape time-consuming. But overall, the state has got the important things right, as borne out by China’s economic performance.

Unable to reconcile China’s success with strong state intervention, The Economist simply turns a blind eye to anything that contradicts its position. It refuses to admit or mention that the government has made extensive use of industrial policy. But it is undeniable that the Chinese government:

—actively creates and subsidizes selected industries to climb the industrial ladder;

—intentionally undervalues the currency (renminbi) to discourage imports (this is a form of protectionist barrier) and promote exports;

—provides incentives such as investment and subsidies to successful companies who start to export (after they have learned to ‘walk’). 

This type of industrial policy, plus the other extensive controls and regulations, would be condemned as grave errors by The Economist and neoliberals, yet China surges forward.                  

New chapter of competition
Indeed, the emergence of the dragon is testing the cherished free-market model to its limits. In the 1980s China began exporting cheap textiles, toys and plastic household items. From this humble beginning, it has since been making inroads into nearly everything—from cars and ships to airplane wings and parts, electronic appliances and semiconductors, rocket launchers and machine tools. The list is endless. Against the dragon’s onslaught, western manufacturing is crumbling.    

What is scary to the west is the speed at which China moves up the industrial ladder. Starting from labour-intensive production, it has moved on to capital-intensive, medium-tech industries, and now shifts gears and moves into high tech, mounting raids on that exclusive domain of the developed countries. All this within the space of 30 years. And the Chinese juggernaut shows no sign of slowing. Complete de-industrialization of the west now looms on the horizon.     

No wonder governments—from Bonn to Washington and Tokyo—are deeply worried.  While their economies stutter along China powers ahead at top speed, challenging them on every front. Competitive pressures are mounting to a critical point, forcing governments to accept that free markets have not helped much in coping with the dramatic advances of China.

That is the underlying force compelling the west lately to promote industry with the aid of industrial policy. As usual, economic reality, rather than sermonizing about markets, is dictating changes. It is understandable, too, that The Economist tells governments off for ‘misbehaving’, but it can’t stop the battleground from shifting to new terrain. More state intervention is on the way in the new chapter of intensifying competition.    

New approach
What conclusions can we draw about industrial policy? Clearly, there have been successes as well as failures. Industrial policy can work, sometimes spectacularly as in China and other East Asian countries (not to mention many western countries before they industrialized). It has failed miserably too in other cases. Endless theorizing and squabbling about the efficacy of free markets, free trade or state intervention is therefore futile. There is no silver bullet or magic prescription. To move the age-old debate forward, that must be accepted as a starting point.   

Once this is recognized, we can step out of the deadlock and ask a fresh set of questions. Why does intervention work in some cases and not in others? Why was industrial policy or protectionism viable in some countries/industries but not in others?

These can be modified to a pose more general questions: Under what conditions does intervention/industrial policy work?  What are the circumstances that would make failure likely?

This pragmatic approach is more rewarding than slinging mud at each other as economists have been doing. Answering those questions will give a better understanding of what it takes to plan and implement an effective industrial policy, pointing the way forward in policymaking.       

Tentative ideas
I don’t pretend for one minute to have the complete answers to the questions. As far as I know, this is still largely uncharted territory. Way back in my post-graduate days I had done a little thinking and research in this area while completing a study for the United Nations on a related but different topic. At that time only a handful of scholars were working on linked issues. The paper I wrote is lost but I remember a few ideas. Here are some of them.

Protectionist or industrial policy in developing countries could work if certain conditions are met:

—the set goals have to be realistic. The country’s industrial capability must be taken into consideration before deciding to foster a sector by means of import barriers or subsidies. Over-ambitious industrial policy usually ends in disaster. It would be crazy, for example, to build a petrochemicals plant in a country with no experience in chemical engineering. 

—a gradualist approach is best to progress the protected sector from the production of simpler parts and components to more sophisticated parts or processes. The progression must be carefully planned in advance; bottlenecks and technical problems need to be anticipated before the project begins;   

—every measure must be taken to ensure that the protected sector (infant) ‘grows up’ to compete internationally; tariffs in place to protect the companies are to be eventually phased out over a period of time, inducing the companies not to depend on protection; subsidies for exporters could be provided as an incentive for them to begin exporting as soon as possible;

—all relevant expertise in production, engineering, economics, logistics, etc. must coordinate closely as a team to work out a feasible plan and identify likely problems right from the beginning; it needs to continually monitor the project(s) and liaise with the protected companies to ensure progress; the team needs to be attached to a government department/authority with power to act and assist;

—commitment on the part of the government bureaucracy to industrial policy must be elicited if possible.        

Those are some of the tentative ideas I came up with after a quick survey of selected sectors. I won’t list the rest. Very often, industrial policy failed because even basic conditions listed here were not met or thought through before projects began.

As to industrial policy in developed countries, protection isn’t really a relevant option, and chances of failure might even be higher. The same approach—asking the questions posed above—should also lead to interesting answers, though I have not explored this field in any detail.

A step in the right direction
More recently, Lin, the World Bank chief economist, has offered suggestions in his paper on how developing countries can pursue an efficient industrial policy. Essentially, Lin’s idea is that a country must stick close to its “comparative advantage” in protecting industry. For example, low-income countries, which have a comparative advantage in labour-intensive production (because they have cheap labour), are advised to focus on this area and not deviate too far from it (into capital-intensive or high-tech industries).

His proposal is in line with the first and third (he also discussed this) conditions I listed above, though Lin’s suggestion is dressed up in the language of economics. The six-step process he outlines in his paper goes into details on how to single out the sectors that fit a country’s comparative advantage and should be targeted for protection. All of this is a step in the right direction. The other conditions listed above have less to do with economics than with project planning and administration, but they are also important to ensure success of industrial policy.

At last, some progress is made (if the World Bank follows Lin’s suggestions) and some economists are taking a pragmatic approach. But that is only a start. Much more research needs to be done to understand the conditions under which industrial policy would work (or fail). The conditions I outlined are far from complete.

The question as to how far a country can deviate from its comparative advantage and take on more ambitious projects to climb further up the rungs of the industrial ladder is open to debate. Lin and Chang have discussed this recently at length. In my opinion, the answer depends on subjective judgment and the economics tradition or ‘school’ one follows.  

Conclusion
To sum up, The Economist‘s story on industrial policy does more to mislead than to inform by telling many half-truths and giving selective examples that back its ideological position—government can do nothing right; free markets are always best. The most instructive lesson you can learn from it is how to cheat in an argument by copying its tricks.

In China state intervention has been substantial and extensive. Its success is testing the free-market model to its limits as western manufacturing crumbles against the dragon’s onslaught. Governments in the west are now reinstating industrial policy in a desperate attempt to stay ahead in the race. 

The state had played a pivotal role in nearly all successful economies in the past. Industrial policy has also worked spectacularly in China and other East Asian success stories. There is thus little doubt about the critical role of the state in the development of an economy. While that much is clear it would be a big mistake to conclude that intervention is the silver bullet. For it clearly has failed miserably in many instances too.

Universal statements about the efficacy of free markets or government intervention are therefore indefensible. A new approach is needed to break free from the age-old deadlock theorists have been trapped in.          

Instead of arguing endlessly about whether free markets are better than intervention or vice versa, economists should move on and look at the conditions under which government intervention or industrial policy is likely to work or fail. (Actually, I know I am asking too much but that’s another story.) I have made a few suggestions along those lines, as has Justin Lin, but they are far from complete.     

                                                      ———————-

Posted in Economics, Political Economy | Tagged , , , , , , , , , , , , , , , , , | 9 Comments

Is economics relevant?

Let me say a few things about economics. Most people yawn when economics is discussed. It seems academic—too macro, sometimes abstract, and far removed from what’s happening on the ground. The way it is packaged and presented may appear to be objective and technical, maybe even boring. But neoliberal economics—the type that is espoused by most economists— isn’t simply about technical issues.

Behind the façade of impartial technicality there is an in-built bias. Free-market supporters are invariably pro-business; never pro-worker or pro-poor (at least I have never come across one). The more freedom is given to business, so the theory goes, the better it is for everybody. What is good for the rich must be good for you. Not surprisingly, neoliberalism has been co-opted as the ideology of the rich and the powerful.             

So when I argue against the neoliberal worldview that everything should largely be left to markets (i.e. no government regulation or intervention) to decide what’s best for us, I am not just discussing a technical issue; I am challenging a hidden agenda that in essence says: let business do whatever it wants and everything will be fine. Well, I say everything is not fine because Big Business is now practically in charge. And the world is in a mess.

I have nothing against markets as such; nor am I agitating for a socialist revolution. What deeply disturbs me is the way free markets allow business to dominate, the way big business is pushing us toward one catastrophe after another. We have seen how free capital markets allowed big investment banks and hedge funds to whip up a storm in the American sub-prime fiasco and pushed the world to the brink of financial destruction. It won’t be the last; the way things are moving, another financial collapse is not far off, and the next one will probably be even more destructive.

As Eddy Lee points out in his blog (if you can read Chinese look for the three articles on economics and those on climate change: http://blogger.etpress.com.hk/eddylwc/), unfettered markets have already damaged our eco-system. Uncontrolled carbon emissions threaten irreversible climate change, moving the human race closer to extinction. That’s the danger we are facing. Predictably, big business that benefits from carbon emissions is now orchestrating behind the scene a lobbying campaign and an offensive against regulation by sponsoring scientists to deny man-made global warming.       

Same old issue
Bringing the issue closer home, free markets in Hong Kong have enriched the professional classes and especially the fat cats in finance and property, while the less fortunate are being squeezed. Wealth and income distribution is getting more skewed. Despite the apparent wealth of HK, the elderly are still picking up cardboards and tin cans off the streets to scrape a living. That is sad but hardly surprising. Free markets, without a policy to redress the imbalance, create polarizing tendencies. 

Markets, left entirely to themselves, are dangerous. That’s the reason why I discuss economics: to warn people about the threats free markets pose. And it is the reason why I keep criticizing neoliberals. In what follows, I will focus on the holes in their argument. Though the argument revolves around industrial policy—not a subject that is close to your heart—the underlying issue is still the same: whether or not we should let markets dictate everything.      

In HK the government often justifies its non-action by invoking the ‘law of economics’ that markets are best left alone. A minimum wage? For years it was considered harmful to business. Raising corporate tax? Unthinkable. An industrial policy to foster a sector of the economy?  Forget it. I won’t mention the other policy issues regarded as taboo by the government. But I hope my comments on The Economist’s story and other forthcoming articles will show you that government intervention can work— in some cases astoundingly. 

So next time HK officials stand on the ‘economic high ground’ and declare free markets are best and therefore the government doesn’t need to do anything beyond building infrastructure projects like the express rail, you know it is a big lie. 

To recap, free markets in essence allow Business to do whatever it wants. That is dangerous. And neoliberals have got it wrong when they say free market is the only way (more on that in other articles).  

 

Posted in Economics, Political Economy | Tagged , , , , , , , , , , , | 2 Comments