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

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Sisällysluettelo Contents Содержание (Code: (1,2,3,4,5))

110001 Thing 1 There is no such thing as a free market
12000101 What they tell you
12000102 What they don’t tell you
12000103 Labour ought to be free
14000104 Piano wires and kungfu masters
16000105 Is free trade fair?
17000106 I don’t think we are in France any more
17000107 18 322: 20150728@ hgx:There is no scientifically defined boundary for free market.
1000108 but a political exercise.
190002 Thing 2 Companies should not be run in the interest of their owners
19000201 What they tell you
19000202 What they don’t tell you
20000203 Karl Marx defends capitalism
22000204 The death of the capitalist class
27000205 The dumbest idea in the world
290003 Thing 3 Most people in rich countries are paid more than they should be
29000301 What they tell you
29000302 What they don’t tell you
30000303 Drive straight on … or dodge the cow (and the rickshaw as well)
32000304 Elephant in the room
33000305 Are poor countries poor because of their poor people?
350004 Thing 4 The washing machine has changed the world more than the internet has
35000401 What they tell you
36000402 What they don’t tell you
36000403 Everyone has a maid in Latin America
38000404 Enter the washing machine
40000405 The washing machine beats the internet
41000406 The internet is beaten by the telegraph
42000407 Putting changes into perspective
430005 Thing 5 Assume the worst about people and you get the worst
44000501 What they tell you
44000502 What they don’t tell you
44000503 How (not) to run a company
45000504 Selfish butchers and bakers
47000505 We may not be angels, but …
49000506 Moral behaviour as an optical illusion?
510006 Thing 6 Greater macroeconomic stability has not made the world economy more stable
51000601 What they tell you
52000602 Fortunately, the dragon of inflation has been slain since the 1990s, thanks to much tougher attitudes towards government budget deficits and the increasing introduction of politically independent central banks that are free to focus single-mindedly on inflation control.
52000603 That’s where the money is – or is it?
53000604 How bad is inflation?
56000605 False stability
600007 Thing 7 Free-market policies rarely make poor countries rich
60000701 What they tell you
60000702 What they don’t tell you
61000703 Two basket cases
62000704 Dead presidents don’t talk
4000705 they would tell Americans and the rest of the world how the policies that their successors promote today are the exact opposite of what they used in order to transform a second-rate agrarian economy dependent on slave labour into the world’s greatest industrial power.
65000706 Do as I say, not as I did
68000707 A pro-growth doctrine that reduces growth
700008 Thing 8 Capital has a nationality
70000801 What they tell you
70000802 What they don’t tell you
70000803 Carlos Ghosn lives globalization
72000804 Chrysler – American, German, American (again) and (becoming) Italian
74000805 Why is there a home-country bias?
76000806 ‘Prince of darkness’ changes his mind
800009 Thing 9 We do not live in a post-industrial age
80000901 What they tell you
81000902 What they don’t tell you
81000903 Is there anything that is not made in China?
83000904 Computers and haircuts: why de-industrialization happens
87000905 Should we worry about de-industrialization?
89000906 Post-industrial fantasies
910010 Thing 10 The US does not have the highest living standard in the world
91001001 What they tell you
92001002 What they don’t tell you
92001003 The roads are not paved with gold
93001004 Americans just live better …
96001005 … or do they?
990011 Thing 11 Africa is not destined for underdevelopment
99001101 What they tell you
99001102 What they don’t tell you
100001103 The world according to Sarah Palin … or was it The Rescuers?
103001104 An African growth tragedy?
105001105 Can Africa change its geography and history?
107001106 Due to its 560-year rule over Finland (1249 to 1809, when it was ceded to Russia), Sweden has a significant Finnish minority (around 5 per cent of the population) and Finland a Swedish one of similar scale. And so on.
1090012 Thing 12 Governments can pick winners
109001201 What they tell you
110001202 What they don’t tell you
110001203 The worst business proposition in human history
113001204 Picking losers?
117001205 Winners are being picked all the time
1190013 Thing 13 Making rich people richer doesn’t make the rest of us richer
119001301 What they tell you
119001302 What they don’t tell you
119001303 The ghost of Stalin – or is it Preobrazhensky?
121001304 b,0150818
121001305 Capitalists vs. workers
122001306 The fall and rise of pro-rich policies
125001307 Water that does not trickle down
1270014 Thing 14 US managers are over-priced
127001401 What they tell you
128001402 What they don’t tell you
132001403 Heads I win, tails you lose
1340015 Thing 15 People in poor countries are more entrepreneurial than people in rich countries
134001501 What they tell you
135001502 What they don’t tell you
135001503 The problem with the French …
137001504 Great expectations – microfinance enters the scene
8001505 when the Nobel Peace Prize was awarded jointly to Professor Yunus and his Grameen Bank.
138001506 The grand illusion
141001507 No more heroes any more
1430016 Thing 16 We are not smart enough to leave things to the market
143001601 What they tell you
143001602 Markets may fail, but …
145001603 If you’re so smart …
148001604 The last Renaissance Man
150001605 The government need not know better
1510017 Thing 17 More education in itself is not going to make a country richer
151001701 What they tell you
152001702 What they don’t tell you
152001703 Education, education, education
153001704 We don’t need no education …
154001705 Don’t know much about history, don’t know much biology
158001706 The Swiss paradox
160001707 Education vs. enterprise
1620018 Thing 18 What is good for General Motors is not necessarily good for the United States
162001801 What they tell you
162001802 What they don’t tell you
164001803 How the mighty has fallen
1690019 Thing 19 Despite the fall of communism, we are still living in planned economies
169001901 What they tell you
169001902 What they don’t tell you
169001903 Upper Volta with rockets
173001904 There is planning and there is planning
175001905 To plan or not to plan – that is not the question
10001906 a CEO is expected to be a ‘man (or a woman) with a plan’.
1770020 Thing 20 Equality of opportunity may not be fair
177002001 What they tell you
178002002 What they don’t tell you
180002003 Markets liberate?
181002004 The end of apartheid and the cappuccino society
184002005 The curious case of Alejandro Toledo
184002006 186 3429: 20150816@ hgx:Equality of opportunity is absolutely necessary but not sufficient in building a genuinely fair and efficient society.
1860021 Thing 21 Big government makes people more open to change
186002101 What they tell you
186002102 What they don’t tell you
186002103 The oldest profession in the world?
189002104 The welfare state is the bankruptcy law for workers
189002105 190 3492: 20150816@ hgx:Job security is a thorny issue.
191002106 Countries with bigger governments can grow faster
1930022 Thing 22 Financial markets need to become less, not more, efficient
193002201 What they tell you
194002202 What they don’t tell you
194002203 Three useless phrases
196002204 New engine of growth?
199002205 Weapons of financial mass destruction?
200002206 Mind the gap
2020023 Thing 23 Good economic policy does not require good economists
202002301 What they tell you
203002302 What they don’t tell you
11002303 we need different kinds of economics from free-market economics.
203002304 Economic miracle without economists
11002305 rather than specialist knowledge in economics.
205002306 How come nobody could foresee it?
207002307 More broadly, they advanced theories that justified the policies that have led to slower growth, higher inequality, heightened job insecurity and more frequent financial crises that have dogged the world in the last three decades
208002308 How about the ‘other’ economists?
210002309 Economics does not have to be useless or harmful. We just have to learn right kinds of economics.
2100024 Conclusion How to rebuild the world economy
2100025 211 3890: 20150819@ hgx:The daunting task ahead of us is to completely rebuild the world economy.
2100026 212 3899: 20150819@ hgx:Here I will only outline some principles – eight of them – that I think we need to have in mind in redesigning our economic system.
219002601 Notes
232002602 Index
286002603 b,0150822
286002604 rem --- MyOpinion:
4002605 as I see it.
73002608 b,0150804,Chang-Things end
73002609 ### en

Muistiinpanot Highlights Примечание (Code: h)

1 (13)
Thus seen, the ‘freedom’ of a market is, like beauty, in the eyes of the beholder.
2 (13)
In other words, the free market is an illusion. If some markets look free, it is only because we so totally accept the regulations that are propping them up that they become invisible.
3 (15)
when I first moved to Britain in the mid 1980s was that one could demand a full refund for a product one didn’t like, even if it wasn’t faulty. At the time, you just couldn’t do that in Korea, except in the most exclusive department stores. In Britain, the consumer’s right to change her mind was considered more important than the right of the seller to avoid the cost involved in
4 (15)
If wages and interest rates are (to a significant extent) politically determined, then all the other prices are politically determined, as they affect all other prices.
5 (19)
Breaking away from the illusion of market objectivity is the first step towards understanding capitalism.
6 (19)
7 (24)
3?The holy grail or an unholy alliance?
8 (26)
So running companies in the interest of the shareholders does not even benefit the economy in the average sense (that is, ignoring the upward income redistribution).
9 (26)
This is not all. The worst thing about shareholder value maximization is that it does not even do the company itself much good. The easiest way for a company to maximize profit is to reduce expenditure, as increasing revenues is more difficult – by cutting the wage bill through job cuts and by reducing capital expenditure by minimizing investment. Generating higher profit, however, is only the beginning of shareholder value maximization.
10 (27)
Therefore, they have a greater stake in the long-run viability of the company than most shareholders. This is why maximizing shareholder value is bad for the company, as well as the rest of the economy.
11 (27)
12 (28)
Limited liability has allowed huge progress in human productive power by enabling the amassing of huge amounts of capital, exactly because it has offered shareholders an easy exit, thereby reducing the risk involved in any investment. However, at the same time, this very ease of exit is exactly what makes the shareholders unreliable guardians of a company’s long-term future.
13 (29)
The wage gaps between rich and poor countries exist not mainly because of differences in individual productivity but mainly because of immigration control.
14 (2)
if we are to build a truly just society.
15 (30)
So, the reasoning goes, if Sven is getting paid fifty times what Ram is paid, he must be producing fifty times more output than Ram.
16 (2)
you keep forgetting one thing: food and shelter in Sweden are 50 times more expensive sive than in India!
17 (32)
The fact that few of them do once again proves my point in Thing 1 that the boundary of the market is politically determined and that free-market economists are as ‘political’ as those who want to regulate markets.
18 (33)
However, if there are too many immigrants coming in at the same time, the receiving society will have problems creating a new national identity, without which it may find it difficult to maintain social cohesion. This means that the speed and the scale of immigration need to be controlled.
19 (33)
The rich countries also contribute to the brain drain from developing countries by more willingly accepting people with higher skills. These are people who could have contributed more to the development of their own countries than unskilled immigrants, had they remained in their home countries.
20 (35)
So we are actually back to where we started. What an individual is paid is not fully a reflection of her worth. Most people, in poor and rich countries, get paid what they do only because there is immigration control.
21 (35)
Only when we part with this myth and grasp the political nature of the market and the collective nature of individual productivity will we be able to build a more just society in which historical legacies and collective actions, and not just individual talents and efforts, are properly taken into account in deciding how to reward people.
22 (36)
The recent revolution in communications technologies, represented by the internet, has fundamentally changed the way in which the world works. It has led to the ‘death of distance’. In the ‘borderless world’ thus created, old conventions about national economic interests and the role of national governments are invalid.
23 (41)
But that was a record, and the average was more like 40 words per minute, giving us 7.5 minutes for a 300-word message. A reduction from 2 weeks to 7.5 minutes is by a factor of over 2,500 times.
24 (44)
Adam Smith famously said: ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’
25 (44)
The likelihood is that, if we assume the worst about people, we will get the worst out of them.
26 (45)
You simply cannot run a large bureaucratic organization, be it Kobe Steel or your government, if you assume that everyone is out for himself.’ This is merely an anecdote, but it is a powerful testimony to the limitations of standard economic theory, which assumes that self-interest is the only human motivation that counts. Let me elaborate.
27 (47)
Moreover, what we read in the news media these days tells us that professional managers, even the supposed champions of shareholder interest such as Jack Welch of GE and Rick Wagoner of GM, have not really been serving the best interests of the shareholders (see Thing 2 ).
28 (48)
But the bottom line is that companies, and thus our economy, would grind to a halt if people acted in a totally selfish way, as they are assumed to do in free-market not assuming the worst about their workers, the Japanese companies have got the best out of them.
29 (51)
Of course, all this is not to deny that self-seeking is one of the most important human motivations. However, if everyone were really only out to advance his own interest, the world would have already ground to a halt, as there would be so much cheating in trading and slacking in production.
30 (51)
Fortunately, the dragon of inflation has been slain since the 1990s, thanks to much tougher attitudes towards government budget deficits and the increasing introduction of politically independent central banks that are free to focus single-mindedly on inflation control.
31 (54)
Since the 1980s, free-market economists have managed to convince the rest of the world that economic stability, which they define as very low (ideally zero) inflation, should be attained at all costs, since inflation is bad for the economy. The target inflation rate they recommended has been something like 1– 3 per cent, as suggested by Stanley Fischer, a former economics professor at MIT and the chief economist of the IMF between 1994 and 2001.
32 (56)
Anti-inflationary policies have not only harmed investment and growth but they have failed to achieve their supposed aim – that is, enhancing economic stability.
33 (56)
The fact is that the world has become more stable only if we regard low inflation as the sole indicator of economic stability, but it has not become more stable in the way most of us experience it.
34 (57)
The point is that price stability is only one of the indicators of economic stability. In fact, for most people, it is not even the most important indicator. The most destabilizing events in most people’s lives are things like losing a job (or having it radically redefined)
35 (58)
Likewise, increased job insecurity is a direct consequence of free-market policies.
36 (60)
All of today’s rich countries, with the exception of Japan (and possibly Korea, although there is debate on that), have become rich through free-market policies, especially through free trade with the rest of the world. And developing countries that have more fully embraced such policies have done better in the recent period.
37 (66)
The US may have benefited from a large domestic market, but then how about tiny Finland or Denmark? If you think the US benefited from abundance of natural resources, how do you explain the success of countries such as Korea and Switzerland that had virtually no natural resources to speak of?
38 (70)
Transnational corporations, as their name implies, are corporations that have gone beyond their original national boundaries. They may be still headquartered in the country where they were founded, but much of their production and research facilities are outside their home country, employing people, including many top decision-makers, from across the world.
39 (70)
They conduct the bulk of their core activities, such as high-end research and strategizing, at home. Most of their top decision-makers are home-country nationals.
40 (71)
Ghosn, a Lebanese Brazilian return-migrant, worked in Brazil, the US and Japan for two French companies.
41 (71)
In this globalized world, the argument goes, nationality of capital is meaningless.
42 (73)
Chrysler, once one of the quintessential American companies, has in the last decade come to be run by Germans, Americans (again) and (increasingly) Italians.
43 (73)
In short, few corporations are truly transnational. The vast majority of them still produce the bulk of their outputs in their home countries. Especially in terms of high- activities such as strategic decision-making and higher-end R& D, they remain firmly centred at their home countries. The talk of a borderless world is highly exaggerated.
44 (4)
as I see it.
45 (73)
However, there are good reasons why companies act with home-country biases. To begin with, like most of us, top business managers feel some personal obligations to the society they come from. They may frame such obligations in many different ways – patriotism, community spirit, noblesse oblige, or wanting to ‘return something to the society that has made them what they are today’
46 (75)
Important though the moral and historical reasons are, by far the most important reason for home-country bias is economic – the fact that the core capabilities of a company cannot be easily taken across the border.
47 (81)
The low tradability of services means that a more service-based economy will have a lower ability to export. Lower export earnings The low tradability of services means that a more service-based economy will have a lower ability to export. Lower export earnings
48 (89)
If China is the workshop of the world, the argument goes, India should try to become the ‘office of the world’.
49 (90)
However, these economies are not what they are reported to be either. They are in fact manufacturing success stories. For example, many people think that Switzerland lives off the stolen money deposited in its banks by Third World dictators or by selling cowbells and cuckoo clocks to Japanese and American tourists, but it is actually one of the most industrialized economies in the world. We don’t see many Swiss manufactured products around because the country is small
50 (91)
for the developing countries, it is a fantasy to think that they can skip industrialization and build prosperity on the basis of service industries.
51 (91)
52 (94)
In other words, things such as taxi rides and meals are expensive in countries such as Switzerland and Norway because they have expensive workers. They are cheap in countries with cheap workers, such as Mexico and Thailand. When it comes to internationally traded things such as TVs or mobile phones, their prices are basically the same in all countries, rich and poor.
53 (94)
Based on the notion of purchasing power parity (PPP) – that is, measuring the value of a currency according to how much of a common consumption basket it can buy in different countries – this fictitious currency allows us to convert incomes of different countries into a common measure of living standards.
54 (96)
US has eight times more people in prison than Europe and twelve times more than Japan – shows that there is a far bigger underclass in the US.
55 (96)
99 1824: 20150809@ hgx:There is no simple way to compare living standards across countries.
56 (99)
There is no other way forward for Africa than being propped up by foreign aid.
57 (101)
Being landlocked, many African countries find it difficult to integrate into the global economy. They are in ‘bad neighbourhoods’ in the sense that they are surrounded by other poor countries that have small markets
58 (106)
A more serious criticism of the climate argument is that frigid and arctic climates, which affect a number of rich countries, such as Finland, Sweden, Norway, Canada and parts of the US, impose burdens as economically costly as tropical ones – machines seize up, fuel costs skyrocket, and transportation is blocked by snow and ice.
59 (107)
So it is the lack of investment in the river transport system, rather than the geography itself, that is the problem.
60 (109)
The main reason for Africa’s recent growth failure lies in policy – namely, the free-trade, free-market policy that has been imposed on the continent through the SAP. Nature and history do not condemn a country to a particular future. If it is policy that is causing the problem, the future can be changed even more easily. The fact that we have failed to see this, and not its allegedly chronic growth failure, is the real tragedy of Africa.
61 (109)
62 (113)
Moreover, since government officials play with ‘other people’s money’, they do not really have to worry about the economic viability of the project that they are promoting
63 (115)
those who are closest to the situation will have the best information and thus make the best decision. This may sound plausible but, if proximity to the situation guaranteed a better decision, no business would ever make a wrong decision.
64 (118)
If we remain blinded by the free-market ideology that tells us only winner-picking by the private sector can succeed, we will end up ignoring a huge range of possibilities for economic development through public leadership or public– private joint efforts.
65 (118)
66 (119)
many countries, the politics of envy and populist policies of the past have put restrictions on wealth creation by imposing high taxes on the rich. This has to stop. It may sound harsh, but in the long run poor people can become richer only by making the rich even richer. When you give the rich a bigger slice of the pie, the slices of the others may become smaller in the short run, but the poor will enjoy bigger slices in absolute terms in the long run, because the pie will get bigger.
67 (122)
This is where ardent free-marketeers like Ricardo meet ultra-left wing communists like Preobrazhensky. Despite their apparent differences, both of them believed that the investible surplus should be concentrated in the hands of the investor, the capitalist class in the case of the former and the planning authority in the case of the latter,
68 (126)
Last but not least, there are many reasons to believe that downward income redistribution can help growth, if done in the right way at the right time. For example, in an economic downturn like today’s, the best way to boost the economy is to redistribute wealth downward, as poorer people tend to spend a higher proportion of their incomes. The economy-boosting effect of the extra billion dollar given to the lower-income households through increased welfare spending will be bigger than the same amount given to the rich through tax cuts.
69 (128)
Executive pay and the politics of class envy
70 (128)
The real question is whether the current degree of difference is justified.
71 (133)
By flexing their economic muscle, the managerial classes have gained enormous influence over the political sphere, including the supposedly centre-left parties such as Britain’s New Labour and America’s Democratic Party.
72 (133)
Markets weed out inefficient practices, but only when no one has sufficient power to manipulate them.
73 (135)
What makes the poor countries poor is not the absence of entrepreneurial energy at the personal level, but the absence of productive technologies and developed social organizations, especially modern firms.
74 (137)
And in the most extreme case, the chance of someone from Benin being an entrepreneur is a whopping thirteen times higher than the equivalent chance for a Norwegian (88.7 per cent vs. 6.7 per cent).
75 (139)
In other words, the vast bulk of microcredit is not used to fuel entrepreneurship by the poor, the alleged goal of the exercise, but to finance consumption.
76 (140)
income was estimated to be around only $ 70 per year, even though the national average income had gone up to over $ 450. This problem is known as the ‘fallacy of composition’– the fact that some people can succeed with a particular business does not mean that everyone can succeed with it.
77 (141)
In the course of capitalist development, entrepreneurship has become an increasingly collective endeavour.
78 (8)
we will never see the poor countries grow out of poverty on a sustainable basis.
79 (143)
What they don’t tell you
80 (146)
Self-interest will protect people only when they know what is going on and how to deal with it.
81 (147)
When the Nobel Prize-winners in financial economics, top bankers, high-flying fund managers, prestigious colleges and the smartest celebrities have shown that they do not understand what they are doing, how can we accept economic theories that work only because they assume that people are fully rational? The upshot is that we are simply not smart enough to leave the market alone.
82 (148)
This means that very often the main problem we face in making a good decision is not the lack of information but our limited capability to process that information – a point nicely illustrated by the fact that the celebrated advent of the internet age does not seem to have improved the quality of our decisions, judging by the mess we are in today.
83 (148)
American economist Frank Knight and the great British economist John Maynard Keynes in the early twentieth century. Knight and Keynes argued that the kind of rational behaviour that forms the foundation of much of modern economics is impossible under this kind of uncertainty.
84 (152)
What really matters in the determination of national prosperity is not the educational levels of individuals but the nation’s ability to organize individuals into enterprises with high productivity.
85 (156)
3? How about the knowledge economy?
86 (157)
A large part of this is due to the simple fact that mechanization is the most important way to increase productivity.
87 (158)
university enrolment rate was still less than half the OECD average (16 per cent vs. 34 per cent). 8 Since then, Switzerland increased its rate considerably, bringing it up to 47 per cent by 2007, according to UNESCO data. However, the Swiss rate still remains the lowest in the rich world and is way below what we find in the most university-heavy countries, such as Finland (94 per cent),!!??
88 (159)
By hiring you as a university graduate, your employer is then hiring you for those general qualities, not for your specialist knowledge, which is often irrelevant to the job you will be performing.
89 (161)
Education is valuable, but its main value is not in raising productivity. It lies in its ability to help us develop our potentials and live a more fulfilling and independent life.
90 (162)
How Detroit won the war
91 (164)
As a result, since the 1970s, countries from all around the world have come to accept that what is good for business is good for the national economy and have adopted a pro-business policy stance. Even communist countries have given up their attempts to stifle the private sector since the 1990s. Need we ponder upon this issue any more?
92 (166)
Moreover, it highlights the conflicts between different stakeholders that make up the firm – what is good for some stakeholders of a company, such as managers and short-term shareholders, may not be good for others, such as workers and suppliers. Ultimately,
93 (168)
other words, there are many regulations that are pro- rather than anti-business. Many regulations help preserve the common-pool resources that all firms share, while others help business by making firms do things that raise their collective productivity in the long run.
94 (169)
It is about planning the right things at the right levels.
95 (171)
However, they failed to recognize that it also makes the economy more complex, making it more difficult to plan centrally.
96 (172)
One obvious solution was to limit the variety of products, but that created huge consumer dissatisfaction.
97 (173)
Other European countries, such as Finland, Norway and Austria, also successfully used indicative planning to upgrade their economies between the 1950s and the 1970s.
98 (178)
More Catholic than the Pope?
99 (180)
Without these and countless other campaigns by women, oppressed races and lower caste people, we would still be living in a world where restricting people’s rights according to ‘birth lottery’ would be considered natural.
100 (183)
h.Equality of opportunity is meaningless for those who do not have the capabilities to take advantage of it.
101 (186)
This is why the European countries with the biggest welfare states, such as Sweden, Norway and Finland, were able to grow faster than, or at least as fast as, the US, even during the post-1990 ‘American Renaissance’.
102 (186)
The medical doctor said: ‘What was the first thing that God did with humans? He performed an operation – he made Eve with Adam’s rib. The medical profession is the oldest.’‘No, that is not true,’ the architect said. ‘The first thing he did was to build the world out of chaos. That’s what architects do – creating order out of chaos. We are the oldest profession.’ The politician, who was patiently listening, grinned and asked: ‘Who created that chaos?’
103 (189)
welfare state has effectively given everyone a guarantee to be hired by the government – as an ‘unemployed worker’, if you like – with a minimum wage.
104 (192)
The interesting thing, however, is that the two fastest-growing economies in the core OECD group during the post-1990 period are Finland (2.6 per cent) and Norway (2.5 per cent), both with a large welfare state.
105 (193)
In the same way, people can accept the risk of unemployment and the need for occasional re-tooling of their skills more willingly when they know that those experiences are not going to destroy their lives. This is why a bigger government can make people more open to change and thus make the economy more dynamic.
106 (193)
107 (194)
The speed gap between the financial sector and the real sector needs to be reduced, which means that the financial market needs to be deliberately made less efficient.
108 (201)
And this is why James Tobin, the 1981 Nobel laureate in economics, talked of the need to ‘throw some sand in the wheels of our excessively efficient international money markets’.
109 (202)
In the present circumstances, we need to rewire our financial system so that it allows firms to make those long-term investments in physical capital, human skills and organizations that are ultimately the source of economic development, while supplying them with the necessary liquidity.
110 (202)
Thus seen, free-market policies are doubly good, because not only are they the best policies but they are also the lightest in their demands for bureaucratic capabilities.
111 (209)
When we more closely observe the more successful firms, governments and countries, we see they are the ones that have this kind of nuanced view of capitalism, not the simplistic free-market view.
112 (211)
Winston Churchill once said about democracy, let me restate my earlier position that capitalism is the worst economic system except for all the others. My criticism is of free-market capitalism, and not all kinds of capitalism.
113 (211)
213 3919: 20150819@ hgx:Second: we should build our new economic system on the recognition that human rationality is severely limited.
114 (213)
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
115 (213)
214 3951: 20150819@ hgx:Fourth: we should stop believing that people are always paid what they ‘deserve’.
116 (213)
215 3972: 20150819@ hgx:Fifth: we need to take ‘making things’ more seriously.
117 (213)
217 3992: 20150819@ hgx:Sixth: we need to strike a better balance between finance and ‘real’ activities.
118 (216)
It took Nokia seventeen years before it made any profit in the electronics business, where it is one of the world leaders today. However, following the increasing degree of financial deregulation, the world has operated with increasingly shorter time horizons.
119 (216)
217 4003: 20150819@ hgx:Seventh: government needs to become bigger and more active.
120 (217)
At the same time, the Scandinavian examples, where a large welfare state has coexisted with (or even encouraged) good growth performance, should also expose the limits to the belief that smaller governments are always better for growth.
121 (217)
sharing risk for projects with high social returns but low private returns, and, in developing countries, providing the space in which nascent firms in ‘infant’ industries can develop their productive capabilities.
122 (217)
218 4023: 20150819@ hgx:Eighth: the world economic system needs to ‘unfairly’ favour developing countries.
123 (218)
The eight principles all directly go against the received economic wisdom of the last three decades.

Sanasto Vocabulary Словарь (Code: w)

1 grail n (24)
(the Grail or the Holy Grail) (in medieval legend) the cup or platter used by Christ at the Last Supper, and in which Joseph of Arimathea received Christ's blood at the Cross. Quests for it undertaken by medieval knights are described in versions of the Arthurian legends written from the early 13th century onward. - FIGURATIVE a thing which is eagerly pursued or sought after: the enterprise society where profit at any cost has become the holy grail. from Old French graal, from medieval Latin gradalis ‘dish’.
2 sobriquet ‘le cost killer’ (71)
3 CEO abbr (72)
chief executive officer.
4 ‘‘brownfield investment (77)
’ that is, acquisition of existing firms by a foreign firm, rather than ‘greenfield investment’, which involves a foreign firm setting up new production
5 SAPs: Social Aid Programs (104)
6 Expressions like ‘white elephant’ or ‘castle in the desert’ were invented during this period to describe such projects (110)
7 state-owned enterprise (SOE) (111)
8 And to cap it all (112)
9 teething (139)
10 fraudster n (146)
BRITISH a person who commits fraud, especially in business dealings.
11 flippancy n (147)
[mass noun] lack of respect or seriousness; frivolousness: she was infuriated by his careless flippancy.
12 upshot n (147)
[in sing.] the final or eventual outcome or conclusion of a discussion, action, or series of events: the upshot of the meeting was that he was on the next plane to New York.
13 poached by other firms ‘free-riding’ on their training efforts (168)
14 ‘indicative planning’ (173)
This is planning that involves the government in a capitalist country setting some broad targets concerning key economic variables
15 state-owned enterprises (SOEs) (174)
16 (mas Papista que el Papa) (178)
17 brainiest (188)
18 teeter v (200)
[no obj., usually with adverbial] move or balance unsteadily; sway back and forth: she teetered after him in her high-heeled sandals. - (often teeter between) be unable to decide between different courses; waver: she teetered between tears and anger. ? teeter on the brink (or edge) be very close to a difficult or dangerous situation. mid 19th century: variant of dialect titter, from Old Norse titra ‘shake, shiver’.

Yhteenvedot Reviews Резюме (Code: ###)

Ha-Joon Chang: 23 Things They Don't Tell You about Capitalism
1,5296,286,eco,eng,20150728,20150822,5,Ha-Joon Chang: 23 Things They Don't Tell You about Capitalism
20150728-20150822, 286 pages, 5* SalesInfo o eng

eng Things They Don't Tell You About Capitalism

5.0 out of 5 stars

His main trend is that countries and economies with well organized government do better than governments only lightly interferin, August 25, 2015

This review is from: 23 Things They Don't Tell You About Capitalism (Kindle Edition)

Another tremendous economics book. Literally shaking the foundations of the present Weltbild. Splinters of Chang's hammering will forcibly, or at least probably, also hit the present paradigm of economic science.

What are the real market forces? Is market economy just a battlefield of grass root forces? Chang throws 23 stones to break the old beliefs in this respect. He asks respect to government power by remarkable quantitative argumentation, but without use of snobbish scientific methods, just using common sense and well related percentages, mostly very convincing. His main trend is that countries and economies with well organized government do better than governments only lightly interfering the market process.

Very descriptive are the headings of this book, such as: There is no such thing as a free market, The washing machine has changed the world more than the internet has, Governments can pick winners, We are not smart enough to leave things to the market or Good economic policy does not require good economists.

From my nordic standpoint it is flattering and even complimentary that it seems that in all comparisons my tiny country Finland is mentioned among the exemplary models.

How persuasive as his argumentation may be, I do not get completely rid of my suspicions and confusions. On one hand Chang praises the role of government regulation: Governments can pick winners, on the other, he gives full credit to market system, if, however, in the spirit of it being the least harmful of all available systems. Communism has clearly shown its merits by ending up to complete failure. Although one of his headings is: Despite the fall of communism, we are still living in planned economies. The next heading is: Equality of opportunity may not be fair and after this: Big government makes people more open to change.

As conclusion Chang bravely says his opinion: how to rebuild the world economy. He formulates eight directives or more modestly principles as he says.

  • The first of then is drawn from a word of a surprising big authority, Winston Churchill, paraphrasing just what I already cited above: 'capitalism is the worst economic system except for all the others'. In the light of what we have read it is not surprising that Chang's criticism is of free-market capitalism, and not all kinds of capitalism.
  • Second: we should build our new economic system on the recognition that human rationality is severely limited.
  • Third: while acknowledging that we are not selfless angels, we should build a system that brings out the best, rather than worst, in people.
  • Fourth: we should stop believing that people are always paid what they ‘deserve’.
  • Fifth: we need to take ‘making things’ more seriously.
  • Sixth: we need to strike a better balance between finance and ‘real’ activities.
  • Seventh: government needs to become bigger and more active.
  • Eighth: the world economic system needs to ‘unfairly’ favour developing countries.
    • Who could dispute these? Every one of them is worth pondering and referring to Chang's argumentation throughout the 23 stone hard pieces of text in his book. No way of avoiding full five stars.

      I myself in front of a completely different present view of the state of my country's economy compared to Chang's am planning to cook up a new utopistic general economic theory. I have decided to base it on only two corner stones: Adam Smith's Wealth of Nations and Keynes's General Theory. Keeping strictly to these two. Being ready to mend and change, if trying to present anything in conflict with these. Now having read Chang's 23 Things, I have decided to ad this book as the third corner stone to my utopy. Three corner stones for an utopistic structure are more than enough, particularly as the structure is ready done, lacking just the start, as says a wisecracking proverb of my homestead Savo.


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