Economic Agendas: 1. Ha Joon Chang

Ha Joon Chang

My summary of the recommendations made for how we should develop the economy derived from Ha Joon Chang’s ‘The Bad Samaritans’ and ’23 Things They Don’t Tell You About Capitalism’. See more form the man himself on


Policy Direction

1. Neo-Liberalism Does Not Work. 3 decades shows that neo-liberal flavour of capitalism slows the economy, increases inequality and insecurity and leads to more frequent (and sometimes massive) financial crisis.Free trade capitalism doesn’t work, choose something else e.g. the Swedish model … combine elements from different systems …What that variety is depends on our goals, values and beliefs. Change economic system to something else – a variation of the free trade flavour of capitalism used in USA and UK for a kinder model such a used in Sweden and Japan (transitional) and ultimately to something fairer, recognising that no individual deserves all the rewards … prosperity should be shared but still recognizing individual effort and enterprise
2. Some financial instruments too complex to manage … no one knows for sure what the impacts will be … cause of current crisis not predicted = out of control Ban complex financial instruments we can’t be sure we can control. The market does NOT know best. Limit financial markets use of complex instruments – legislate an application process – use what’s proven and stable only.
3. Materialism and material self-interest create disparity inequality and war. Short term profit seeking is a ruin to individual companies, economies and the planet. Materialism and material self-interest are powerful motive but can go too far: Build a system that brings out the best in people. Celebrate other values – environment, community, tough jobs Focus on long-term sustainable growth.
4. Poor people are not personally responsible for being poor just as rich are not personally 100% responsible for their good fortune (the parents, the country, the laws, the immigration laws, the other workers and luck all play a part as well, sometimes, as individual effort and/or talent.People do not always get what they deserve – quite the contrary.Executive pay in USA is 300/400 times average worker pay – used to be 30 times. Is his because of greater productivity on their part? No

A taxi driver in Nigeria compared to one in Sweden … which is the better driver?

Make policy accordingly … equalise outcomes.Equality of opportunity is NOT enough – the one legged cannot go as fast as the two legged.
5. Limit financial markets. They don’t work unless there is a physical product underneath. We need to make things.Financial deregulation unbalanced the world – not enough production capacity.Money moves to havens – leaves society is poor.Profits too big and then hoarded not enough sustainable things. more acceptable levels of equity
more acceptable levels of income inequality
corp tax, cross border tax …
6. More government, less market – NOT the other way roundScandinavia – big welfare state, big government small country … very rich?Korea steel and car industries created by the state – helped transform Koreas. Venezuela state oil changing the country for the people foreigh ownership of the oil removed. 10% GDP spent on education in Cuba – max class sizes 15. Managed economy with intervention and stimulus where necessary
7. developing countries – stop kicking away the ladder and robbing these peopleAll of today’s rich countries started with government intervention and protective (import tariff) policies! Western governments telling 2nd world countries “don’t do this” to hold them back – so they don’t become competitive. Bad Samaritans developing countries – stop kicking away the ladder and robbing these people stop poverty starvation and robbery of the poor world by the rich world

Overall Philosophy

… by glorifying the pursuit of material self-interest by individuals and corporations we have created a world where material enrichment absolves individuals and corporations of other responsibilities to society. IN the process we have allowed our bankers and fund managers, directly or indirectly to destroy jobs, shut down factories, damage our environment and ruin the financial system itself in pursuit of individual enrichment
If we are to prevent this kind of thing happening again we should build a system where material enrichment is taken seriously but is not allowed to become the only goal.

Organisations – be they corporations or government departments – should be designed to reward trust, solidarity, honesty and cooperation among members. The financial system needs to be reformed to reduce the influence of short-term shareholders so that companies can afford to pursue goals other than short-term profit maximization. We should better reward behaviour with public benefits (ref reducing energy consumption, investment in training) not simply through government subsidies but also by bestowing it with higher social status.

This is not just a moral argument. It is also an appeal to enlightened self-interest. By letting short-term self-interest rule everything we risk destroying the entire system, which serves no ones interest in the long run.