Chang-Things-ajk$0#8
1,5296,286,eco,eng,20150728,20150822,5,Ha-Joon Chang: 23 Things They Don't Tell You about Capitalism
ama,https://www.amazon.com/Things-They-Dont-About-Capitalism-ebook/dp/B0040QDMBE/ref=cm_rdp_product_img
eng,https://www.amazon.com/gp/review/R2DUH7UQVHNH6A?ref_=glimp_1rv_cl
9 141: 20150728@ hgx:Thus, what we were told by the free-marketeers – or, as they are often called, neo-liberal economists – was at best only partially true and at worst plain wrong. As I will show throughout this book, the ‘truths’ peddled by free-market ideologues are based on lazy assumptions and blinkered visions, if not necessarily self-serving notions. My aim in this book is to tell you some essential truths about capitalism that the free-marketeers won’t.
9 150: 20150728@ hgx:The book shows that there are ways in which capitalism should, and can, be made better.
212,2,Thing 1 There is no such thing as a free market
213,3,What they tell you
219,3,What they don’t tell you
227,3,Labour ought to be free
235,h,Thus seen, the ‘freedom’ of a market is, like beauty, in the eyes of the beholder.
244,h,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.
252,3,Piano wires and kungfu masters
269,h,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
278,h,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.
288,3,Is free trade fair?
313,3,I don’t think we are in France any more
18 322: 20150728@ hgx:There is no scientifically defined boundary for free market.
19 340: 20150728@ hgx:Recognizing that the boundaries of the market are ambiguous and cannot be determined in an objective way lets us realize that economics is not a science like physics or chemistry, but a political exercise.
348,h,Breaking away from the illusion of market objectivity is the first step towards understanding capitalism.
349,,b,0150728
354,2,Thing 2 Companies should not be run in the interest of their owners
355,3,What they tell you
361,3,What they don’t tell you
369,3,Karl Marx defends capitalism
405,3,The death of the capitalist class
448,h,3?The holy grail or an unholy alliance?
449,w,grail n. (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. <ORIGIN> from Old French graal, from medieval Latin gradalis ‘dish’.
477,h,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).
478,h,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.
505,h,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.
506,,b,0150730
507,3,The dumbest idea in the world
513,h,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.
30 529: 20150730@ hgx:Running companies in the interests of floating shareholders is not only inequitable but also inefficient, not just for the national economy but also for the company itself. As Jack Welch recently confessed, shareholder value is probably the ‘dumbest idea in the world’.
529,2,Thing 3 Most people in rich countries are paid more than they should be
530,3,What they tell you
542,3,What they don’t tell you
543,h,The wage gaps between rich and poor countries exist not mainly because of differences in individual productivity but mainly because of immigration control.
30 544: 20150730@ hgx:Their high productivities are possible only because of the historically inherited collective institutions on which they stand. We should reject the myth that we all get paid according to our individual worth, if we are to build a truly just society.
550,3,Drive straight on … or dodge the cow (and the rickshaw as well)
559,h,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.
32 577: 20150730@ hgx:So Sven’s extra human capital cannot explain why he is paid fifty times more than Ram is. - Only Chag, you keep forgetting one thing: food and shelter in Sweden are 50 times more expensive sive than in India!
586,3,Elephant in the room
595,h,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.
604,h,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.
613,h,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.
614,3,Are poor countries poor because of their poor people?
35 630: 20150730@ hgx:Even in sectors where rich country individuals are genuinely more productive than their counterparts in poor countries, their productivity is in great part due to the system, rather than the individuals themselves.
639,h,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.
649,h,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.
656,2,Thing 4 The washing machine has changed the world more than the internet has
657,3,What they tell you
658,h,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.
662,3,What they don’t tell you
670,3,Everyone has a maid in Latin America
698,3,Enter the washing machine
734,3,The washing machine beats the internet
753,3,The internet is beaten by the telegraph
754,h,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.
770,3,Putting changes into perspective
44 788: 20150730@ ytransportation are so revolutionary that now we live in a ‘borderless world’, as the title of the famous book by Kenichi Ohmae, the Japanese business guru, goes.
44 789: 20150730@ hgx:What has determined the degree of globalization (in other words, national openness) is politics, rather than technology.
44 799: 20150730@ hgx:I have made this point deliberately provocatively by pitting the humble washing machine against the internet, but my examples should have shown you that the ways in which technological forces have shaped economic and social developments under capitalism are much more complex than is usually believed.
799,,b,0150801
805,2,Thing 5 Assume the worst about people and you get the worst
806,3,What they tell you
807,h,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.’
811,3,What they don’t tell you
812,h,The likelihood is that, if we assume the worst about people, we will get the worst out of them.
819,3,How (not) to run a company
836,h,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.
836,3,Selfish butchers and bakers
862,3,We may not be angels, but …
869,h,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 ).
48 870: 20150801@ hgx:Self-interest, to be sure, is one of the most important, but we have many other motives – honesty, self-respect, altruism, love, sympathy, faith, sense of duty, solidarity, loyalty, public-spiritedness, patriotism, and so on – that are sometimes even more important than self-seeking as the driver of our behaviours.
883,h,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.
904,3,Moral behaviour as an optical illusion?
936,h,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.
948,2,Thing 6 Greater macroeconomic stability has not made the world economy more stable
946,3,What they tell you
948,h,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.
956,3,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.
965,3,That’s where the money is – or is it?
986,3,How bad is inflation?
996,h,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.
1032,h,Anti-inflationary policies have not only harmed investment and growth but they have failed to achieve their supposed aim – that is, enhancing economic stability.
1033,3,False stability
1042,h,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.
1064,h,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)
1074,h,Likewise, increased job insecurity is a direct consequence of free-market policies.
60 1085: 20150801@ hgx:The free-market policy package, often known as the neo-liberal policy package, emphasizes lower inflation, greater capital mobility and greater job insecurity (euphemistically called greater labour market flexibility), essentially because it is mainly geared towards the interests of the holders of financial assets.
61 1107: 20150801@ hgx:Our obsession with inflation should end. Inflation has become the bogeyman that has been used to justify policies that have mainly benefited the holders of financial assets, at the cost of long-term stability, economic growth and human happiness.
1110,2,Thing 7 Free-market policies rarely make poor countries rich
1111,3,What they tell you
1119,h,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.
1120,3,What they don’t tell you
1129,3,Two basket cases
63 1149: 20150801@ hgx:Despite all the supposedly anti-developmental policies and institutions, China has been one of the world’s most dynamic and successful economies over the last three decades, while the USA in the 1880s was one of the fastest-growing – and rapidly becoming one of the richest – countries in the world. So the economic superstars of the late nineteenth century (USA) and of today (China) have both followed policy recipes that go almost totally against today’s neo-liberal free-market orthodoxy.
1150,3,Dead presidents don’t talk
66 1203: 20150801@ hgx:The dead presidents don’t talk. But if they could, 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.
1204,3,Do as I say, not as I did
1213,h,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?
1256,3,A pro-growth doctrine that reduces growth
70 1278: 20150801@ hgx:To sum up, the free-trade, free-market policies are policies that have rarely, if ever, worked. Most of the rich countries did not use such policies when they were developing countries themselves, while these policies have slowed down growth and increased income inequality in the developing countries in the last three decades. Few countries have become rich through free-trade, free-market policies and few ever will.
1279,,b,0150804
1287,2,Thing 8 Capital has a nationality
1288,3,What they tell you
1289,h,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.
1296,3,What they don’t tell you
1297,h,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.
1298,3,Carlos Ghosn lives globalization
1306,w,sobriquet ‘le cost killer’
1317,h,Ghosn, a Lebanese Brazilian return-migrant, worked in Brazil, the US and Japan for two French companies.
1318,h,In this globalized world, the argument goes, nationality of capital is meaningless.
1327,3,Chrysler – American, German, American (again) and (becoming) Italian
1338,w,CEO abbr. chief executive officer.
1348,h,Chrysler, once one of the quintessential American companies, has in the last decade come to be run by Germans, Americans (again) and (increasingly) Italians.
1358,h,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.
74 1358: 20150804@ ajk:Not very convincing argumentation against homeless capital. On the contrary: all the examples hint to the opposite, as I see it.
1368,3,Why is there a home-country bias?
1359,h,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’
1390,h,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.
1400,3,‘Prince of darkness’ changes his mind
1431,w,‘‘brownfield investment,’ that is, acquisition of existing firms by a foreign firm, rather than ‘greenfield investment’, which involves a foreign firm setting up new production
81 1473: 20150804@ hgx:While a blind rejection of foreign capital is wrong, it would be very naïve to design economic policies on the myth that capital does not have national roots any more. After all, Lord Mandelson’s belatedly found reservations turn out to have a serious basis in reality.
1485,,b,0150807
1486,2,Thing 9 We do not live in a post-industrial age
1487,3,What they tell you
1495,3,What they don’t tell you
1495,h,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
1505,3,Is there anything that is not made in China?
1537,3,Computers and haircuts: why de-industrialization happens
1612,3,Should we worry about de-industrialization?
1655,3,Post-industrial fantasies
1655,h,If China is the workshop of the world, the argument goes, India should try to become the ‘office of the world’.
1665,h,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
1686,h,for the developing countries, it is a fantasy to think that they can skip industrialization and build prosperity on the basis of service industries.
1686,,b,0150809
1692,2,Thing 10 The US does not have the highest living standard in the world
1692,3,What they tell you
1697,3,What they don’t tell you
1703,3,The roads are not paved with gold
1723,3,Americans just live better …
1749,h,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.
1749,h,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.
1770,3,… or do they?
1783,h,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.
99 1824: 20150809@ hgx:There is no simple way to compare living standards across countries.
1833,2,Thing 11 Africa is not destined for underdevelopment
1833,3,What they tell you
1837,h,There is no other way forward for Africa than being propped up by foreign aid.
1837,3,What they don’t tell you
1850,3,The world according to Sarah Palin … or was it The Rescuers?
1870,h,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
1905,3,An African growth tragedy?
1933,w,SAPs: Social Aid Programs?
1940,3,Can Africa change its geography and history?
1960,h,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.
1973,h,So it is the lack of investment in the river transport system, rather than the geography itself, that is the problem.
1987,3,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.
2021,h,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.
2025,,b,0150810
2026,2,Thing 12 Governments can pick winners
2026,3,What they tell you
2031,3,What they don’t tell you
2037,3,The worst business proposition in human history
2044,w,Expressions like ‘white elephant’ or ‘castle in the desert’ were invented during this period to describe such projects.
2058,w,state-owned enterprise (SOE),
2065,w,And to cap it all,
2085,3,Picking losers?
2097,h,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
2133,h,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.
2167,3,Winners are being picked all the time
2193,h,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.
2194,,b,0150811
2196,2,Thing 13 Making rich people richer doesn’t make the rest of us richer
2196,3,What they tell you
2196,h,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.
2196,3,What they don’t tell you
2204,3,The ghost of Stalin – or is it Preobrazhensky?
2235,,b,0150818
2236,3,Capitalists vs. workers
2256,h,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,
2266,3,The fall and rise of pro-rich policies
2312,3,Water that does not trickle down
2334,h,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.
2352,2,Thing 14 US managers are over-priced
2352,3,What they tell you
2361,3,What they don’t tell you
2361,h,Executive pay and the politics of class envy
2371,h,The real question is whether the current degree of difference is justified.
2438,3,Heads I win, tails you lose
2459,h,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.
2470,h,Markets weed out inefficient practices, but only when no one has sufficient power to manipulate them.
135 2481: 20150818@ hgx:When the managerial classes in the US and, to a lesser extent Britain, possess such economic, political and ideological power that they can manipulate the market and pass on the negative consequences of their actions to other people, it is an illusion to think that executive pay is something whose optimal levels and structures are going to be, and should be, determined by the market.
2489,,b,0150815
2490,2,Thing 15 People in poor countries are more entrepreneurial than people in rich countries
2490,3,What they tell you
2497,3,What they don’t tell you
2497,h,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.
2497,3,The problem with the French …
2529,h,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).
2540,3,Great expectations – microfinance enters the scene
139 2560: 20150815@ hgx:The ascendancy of microfinance reached its peak in 2006, when the Nobel Peace Prize was awarded jointly to Professor Yunus and his Grameen Bank.
2560,3,The grand illusion
2570,w,teething:kasvukipu
2582,h,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.
2592,h,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.
2603,3,No more heroes any more
2613,h,In the course of capitalist development, entrepreneurship has become an increasingly collective endeavour.
144 2645: 20150815@ hgx:Unless we reject the myth of heroic individual entrepreneurs and help them build institutions and organizations of collective entrepreneurship, we will never see the poor countries grow out of poverty on a sustainable basis.
2648,2,Thing 16 We are not smart enough to leave things to the market
2648,3,What they tell you
2648,h,What they don’t tell you
2656,3,Markets may fail, but …
2678,3,If you’re so smart …
2710,h,Self-interest will protect people only when they know what is going on and how to deal with it.
2710,w,fraudster n. BRITISH a person who commits fraud, especially in business dealings.
2722,w,flippancy n. [mass noun] lack of respect or seriousness; frivolousness: she was infuriated by his careless flippancy.
2722,h,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.
2722,w,upshot n. [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.
2732,3,The last Renaissance Man
2732,h,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.
2744,h,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.
2775,3,The government need not know better
2802,2,Thing 17 More education in itself is not going to make a country richer
2802,3,What they tell you
2809,3,What they don’t tell you
2809,h,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.
2809,3,Education, education, education
2829,3,We don’t need no education …
2859,3,Don’t know much about history, don’t know much biology
2886,h,3? How about the knowledge economy?
2907,h,A large part of this is due to the simple fact that mechanization is the most important way to increase productivity.
2918,3,The Swiss paradox
2918,h,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),!!??
2941,h,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.
2963,3,Education vs. enterprise
2973,h,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.
162 2987: 20150815@ hgx:Our overenthusiasm with education should be tamed, and, especially in developing countries, far greater attention needs to be paid to the issue of establishing and upgrading productive enterprises and institutions that support them.
2987,,b,0150816
2991,2,Thing 18 What is good for General Motors is not necessarily good for the United States
2991,3,What they tell you
2998,3,What they don’t tell you
2998,h,How Detroit won the war
3030,h,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?
3039,3,How the mighty has fallen
3071,h,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,
3113,w,poached by other firms ‘free-riding’ on their training efforts.
3113,h,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.
3126,2,Thing 19 Despite the fall of communism, we are still living in planned economies
3126,3,What they tell you
3133,3,What they don’t tell you
3133,h,It is about planning the right things at the right levels.
3133,3,Upper Volta with rockets
3174,h,However, they failed to recognize that it also makes the economy more complex, making it more difficult to plan centrally.
3185,h,One obvious solution was to limit the variety of products, but that created huge consumer dissatisfaction.
3195,3,There is planning and there is planning
3195,w,‘indicative planning’. This is planning that involves the government in a capitalist country setting some broad targets concerning key economic variables
3205,h,Other European countries, such as Finland, Norway and Austria, also successfully used indicative planning to upgrade their economies between the 1950s and the 1970s.
3215,w,state-owned enterprises (SOEs).
3237,3,To plan or not to plan – that is not the question
176 3248: 20150816@ hgx:In other words, a CEO is expected to be a ‘man (or a woman) with a plan’.
178 3282: 20150816@ hgx:Without markets we will end up with the inefficiencies of the Soviet system. However, thinking that we can live by the market alone is like believing that we can live by eating only salt, because salt is vital for our survival.
3284,2,Thing 20 Equality of opportunity may not be fair
3284,3,What they tell you
3293,3,What they don’t tell you
3293,h,More Catholic than the Pope?
3303,w,(mas Papista que el Papa).
3336,3,Markets liberate?
3336,h,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.
3357,3,The end of apartheid and the cappuccino society
3388,h,h.Equality of opportunity is meaningless for those who do not have the capabilities to take advantage of it.
3398,3,The curious case of Alejandro Toledo
186 3429: 20150816@ hgx:Equality of opportunity is absolutely necessary but not sufficient in building a genuinely fair and efficient society.
3441,2,Thing 21 Big government makes people more open to change
3441,3,What they tell you
3451,3,What they don’t tell you
3451,h,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’.
3451,3,The oldest profession in the world?
3451,h,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?’
3490,w,brainiest
3492,3,The welfare state is the bankruptcy law for workers
190 3492: 20150816@ hgx:Job security is a thorny issue.
3502,h,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.
3545,3,Countries with bigger governments can grow faster
3555,h,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.
3577,h,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.
3578,,b,0150819
3582,2,Thing 22 Financial markets need to become less, not more, efficient
3582,3,What they tell you
3586,3,What they don’t tell you
3589,h,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.
3589,3,Three useless phrases
3631,3,New engine of growth?
3676,3,Weapons of financial mass destruction?
3697,w,teeter v. [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. <PHRASES> ? teeter on the brink (or edge) be very close to a difficult or dangerous situation. <ORIGIN> mid 19th century: variant of dialect titter, from Old Norse titra ‘shake, shiver’.
3702,3,Mind the gap
3729,h,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’.
3740,h,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.
3745,2,Thing 23 Good economic policy does not require good economists
3745,3,What they tell you
3745,h,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.
3754,3,What they don’t tell you
204 3754: 20150819@ hgx:Insofar as we need economics, we need different kinds of economics from free-market economics.
3754,3,Economic miracle without economists
205 3776: 20150819@ hgx:possible explanation of the East Asian experience is that what is needed in those who are running economic policy is general intelligence, rather than specialist knowledge in economics.
3797,3,How come nobody could foresee it?
3831,3,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
3848,3,How about the ‘other’ economists?
3869,h,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.
3880,3,Economics does not have to be useless or harmful. We just have to learn right kinds of economics.
3890,2,Conclusion How to rebuild the world economy
211 3890: 20150819@ hgx:The daunting task ahead of us is to completely rebuild the world economy.
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.
3899,h,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.
213 3919: 20150819@ hgx:Second: we should build our new economic system on the recognition that human rationality is severely limited.
213 3930: 20150819@ hgx:Third: while acknowledging that we are not selfless angels, we should build a system that brings out the best, rather than worst, in people.
3941,h,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
214 3951: 20150819@ hgx:Fourth: we should stop believing that people are always paid what they ‘deserve’.
215 3972: 20150819@ hgx:Fifth: we need to take ‘making things’ more seriously.
217 3992: 20150819@ hgx:Sixth: we need to strike a better balance between finance and ‘real’ activities.
4003,h,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.
217 4003: 20150819@ hgx:Seventh: government needs to become bigger and more active.
4013,h,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.
4023,h,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.
218 4023: 20150819@ hgx:Eighth: the world economic system needs to ‘unfairly’ favour developing countries.
4044,h,The eight principles all directly go against the received economic wisdom of the last three decades.
4055,3,Notes
4291,3,Index
5296,,b,0150822
rem --- MyOpinion:
74 1358: 20150804@ ajk:Not very convincing argumentation against homeless capital. On the contrary: all the examples hint to the opposite, as I see it.
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#eng Things They Don't Tell You About Capitalism</h3>
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.<ul>
<li>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.</li>
<li>Second: we should build our new economic system on the recognition that human rationality is severely limited.</li>
<li>Third: while acknowledging that we are not selfless angels, we should build a system that brings out the best, rather than worst, in people.</li>
<li>Fourth: we should stop believing that people are always paid what they ‘deserve’.</li>
<li>Fifth: we need to take ‘making things’ more seriously.</li>
<li>Sixth: we need to strike a better balance between finance and ‘real’ activities.</li>
<li>Seventh: government needs to become bigger and more active.</li>
<li>Eighth: the world economic system needs to ‘unfairly’ favour developing countries.</li>
<ul>
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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