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).  

 

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2 Responses to Is economics relevant?

  1. Skywriter says:

    while u wrote this long feature on neoliberalism , I looked at this book which is called
    浪漫自由市場,which says :「選擇的自由」是怎麼讓大家都受惠!and a master guideline to best market.
    I can’t believe it , how can a market be best with fast method, it’s market , not a meal , it’s a complicated system with politics involved.

    from Eunice

    • Bob Behull says:

      Romance of the Free Market (translation of the Chinese title) huh? Haven’t read the book, so I can’t really say much beyond making a couple of comments. I wonder if the author found it romantic to see financial markets come crashing down in 2007-9, pushing the world to the brink of financial destruction. Or was it romantic to see millions of people all over the world lose their jobs?

      Sadly, the book market is full of books about the beauty of free markets, and that has promoted the market fundamentalism which was in part responsible for the economic mess we are in. Right now, books that revile the free-market madness are best-sellers filling the shelves(at least in the west). We should ask ourselves why we didn’t see any of this type of books before the crash. Now that’s a sobering thought.

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