Genre: Globalization
Author: Ha-Joon Chang
Title: 23 Things They Don’t Tell You About Capitalism (Buy the Book)
Summary
It is said that “capitalism is the worst economic system except for all the others,” a concept that Ha-Joon Chang embraces fully in his book 23 Things They Don’t Tell You About Capitalism. Capitalism has done much for the world, providing decades of economic growth and giving humanity the highest standard of living it has ever seen, but Chang argues that the dogmatic free-market version of capitalism that has dominated the last thirty years leaves much to be desired, and is the culprit for slowing growth, financial crises, growing income inequality, and many other ills facing the world today.
The idea that markets, if left alone, will produce the most efficient and just outcome is simply not feasible, and has not delivered on its promises. In 23 short essays, Chang explores various aspects of how capitalism really works in today’s society and presents ways in which it can be made to work better.
One pillar of capitalist ideology Chang attacks is the notion that a “free market” exists at all. Every market, he argues, has some rules and boundaries that restrict freedom of choice. Whether a market is “free” or not is in the eye of the beholder.
Child labor laws, for instance, are a restriction on markets, but because we agree with them morally, we tend to disregard the intrusion. Differences in the understood levels of government restrictions between countries lead to imbalances and inequities such as workers in China receiving low wages and unacceptable working conditions.
Government regulation is also present in ways that are vital to the very functioning of markets, including patents, copyrights, and the enforcement of contracts. It is generally believed that government interventions such as these are within the acceptable boundaries of “free markets,” but Chang argues that the very existence of these boundaries proves that the very notion of a free market is rife with ambiguity and that striving toward a nebulous idea of a perfectly government-free market is counterproductive.
Chang gives several examples of free market policies actively damaging the global economy. For example, contrary to most narratives, growth in poor countries has actually slowed as a result of recent market liberalization policies. Removing government support prevents the flourishing of new industries in poor countries, and many forget that government subsidies played a large role in the early development of now-rich countries like the US.
The free market idea that companies should be run purely in the interests of shareholders is also damaging. Shareholders are often the most transient stakeholders in a business, and their interests are often not in line with the broader economy.
Deference to shareholders, Chang argues, has led to too much focus on short term profits at the expense of long term growth, and an undue preference toward cash distributions rather than productive reinvestment.
A major reason why free markets fail to work as advertised is that human rationality is severely limited. While people in theory always act in their best interests – and thus the best interests of the economy as a whole – in practice, this is far from the case.
In instances where people will act in predictably irrational ways, it can be beneficial for the government to intervene. Chang’s biggest example of this is financial regulation. Humans do not have the capacity to rationally assess complex financial instruments and thus, without regulation, are prone to creating unsustainable situations such as those that preceded the 2008 financial crisis.
Chang’s essays also explore the failures of so-called “trickle-down economics” and the economic benefits of an increased welfare state. Rather than providing a disincentive for work, he argues, welfare spending provides a backstop that actually encourages risky business activity, as individuals are less afraid of a huge decline in living standards should their risks not pay off. A strong welfare state is like bankruptcy in this regard – it provides security in the event of failure as well as promotes second chances.
Going forward, one question remains: how do we fix the economy? The truth of the matter is that there is no easy fix; however, the following eight principles should guide our thought process when redesigning and rebuilding our economic system.
- Capitalism is the best economic system;
- We should build our new economic system on the recognition that human rationality is severely limited;
- We should build a system that brings out the best, rather than worst, in people;
- We should stop believing that people are always paid what they ‘deserve’;
- We need to take ‘making things’ more seriously;
- We need to strike a better balance between finance and ‘real’ activities;
- Government needs to become bigger and more active;
- The world economic system needs to ‘unfairly’ favor developing countries;
The past three decades have shown us that current free-market economics do not work. If we do not make immediate and drastic changes to the current conditions of billions suffering in poverty and insecurity, especially in developing countries, we will inevitably meet the same global disaster we witnessed in 2008. Difficult choices may lay ahead for the global economy, but with change comes hope.
INTRODUCTION
“Capitalism is the worst economic system except for all the others.”
– Ha-Joon Chang, 23 Things They Don’t Tell You About Capitalism
The current global economy is a mess. Unprecedented amounts of fiscal and monetary stimulus are currently preventing the 2008 financial recession from turning into a total global collapse; a false recovery based on loose monetary policies has led to new financial bubbles; and most importantly, the real global economy is starved of money as can be seen throughout the Eurozone.
This global “failure” has created huge budget deficits that will eventually force governments to reduce, if not cut, public investments and welfare entitlements significantly – negatively affecting economic growth, poverty, and social stability.
This catastrophe, Chang argues, has ultimately stemmed from the free-market capitalism ideology that has dominated the world for the past 30 years. The idea that markets, if left alone, will produce the most efficient and just outcome is not feasible and the results of such policies has been shown to be the polar opposite of what was originally promised: slower growth, rising inequality and heightened instability in nearly all countries.
The problem, however, is that in most rich countries, such as the US and Germany, these “failings” have been masked by enormous credit expansions which have in essence negated any economic decline. Furthermore, the few developing countries that have managed to produce quality growth since 1980, such as China and India, have done so by refusing to introduce full-blown free-market policies into their economy.
That said, Ha-Joon Chang is not a socialist nor is his book 23 Things They Don’t Tell You About Capitalism an anti-capitalist manifesto.
Rather, it is an attempt to educate the non-specialist reader about the ‘truths’ of neo-liberal economics. Ha-Joon Chang is currently an economics professor at Cambridge University where he is considered one of the leading heterodox economists of our time.
He has consulted for such entities as the World Bank, EIB, and UN, and has written eleven books, many to controversial, yet high praise. 23 Things They Don’t Tell You About Capitalism is a collection of 23 short essays in which Chang argues that while capitalism is “the best economic system humanity has invented,” the free-market version that has dominated the past three decades has proven unsuccessful, if not an utter failure.
The book is an attempt to equip the reader with a basic understanding of how capitalism really works in today’s society and present ways in which it can be made to work better. However, Chang points out that many of the issues discussed in this book are not simple problems and as a result, do not have simple answers.
Therefore, while we may not be able to find an immediate solution, it is our duty as active economic citizens to confront these issues in order that we might first understand them before ultimately enacting changes for the betterment of society as a whole.
THERE IS NO SUCH THING AS A FREE MARKET
What They Don’t Tell You
Free markets do not exist. Every market has some rules and boundaries that restrict freedom of choice. As Chang puts it, “a market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them.” Free-market proponents attest that when a government interferes with market participants, it prevents resources from being used in their most efficient manner.
For example, placing a cap on housing rents would cause landlords to lose incentive to maintain properties. The problem here is that ‘free’ is a highly subjective word; how ‘free’ a market is cannot be objectively defined.
Government has, is, and always will be involved in markets whether it be for social, protective, or regulatory reasons.
Government involvement in markets is analogous to performers who fly through the air on piano wires: while necessary, we choose not to see them. Such things as child labor laws and slavery, while obviously morally wrong, are restrictions placed on the “free market” by the government.
Is Free Trade Fair?
In almost all cases, regulations imposed by the government (piano wires) are only ‘noticed’ when we either do not endorse the moral values behind them or they negatively affect our financial state. For example, let us examine the issue of labor laws. The underlying dispute is nothing more than a moral question of free trade vs. fair trade.
In China, workers are often paid unacceptably low wages by global standards to work in inhumane conditions for long hours.
According to free-market economics, this should be welcomed, as it is the standard dictated by the market. Until the workers, as a collective body, choose not to go to work thereby forcing their employer to improve conditions in order that the company might stay profitable, conditions will remain at a minimum.
While immoral, this ultimately allows China to create an unfair price advantage over all other countries. Therefore, the US and other developed countries impose artificial barriers such as restrictions on import of ‘sweatshop’ products under the premise that products are obtained from unjust and unethical means.
While most Americans would agree with this regulation, the fact remains; according to free-market economics, government does not have the right to dictate wages and working conditions and therefore cannot place any restrictions on Chinese ‘sweatshop’ imports if markets are to grow in the most efficient manner. However, this still leaves us with one final question: at what point do free markets become morally unethical?
To Define Or Not To Define
If we were to truly live in a free market, such inherent protections as patents, copyrights, and lawsuits would not exist. After all, it is not the governments place to say who can or cannot use an intellectual idea.
A truly free market would allow creative destruction to produce the highest quality product based on an idea in its most efficient manner. In reality, this is not possible; markets and society would fall into chaos without some form of order, protection, and regulation.
Furthermore, markets are ever-evolving systems (i.e. emerging markets) that require ever- evolving levels of protection and regulation. The process of re-drawing market boundaries, then, is a continuous and ever-evolving procedure that directly conflicts with the free-market idea that market boundaries can be scientifically defined.
Realizing that markets are ambiguous and not objective leads to the fact that economics and markets are not a science but rather a subjective political exercise. This, in turn, gives rise to the notion that market objectivity is nothing more than a simple illusion upon which free-market capitalism is founded.
FREE MARKET POLICIES ARE BAD FOR THE ECONOMY
Poor Countries Can Never Become Rich
According to neo-liberal economists, countries that have tried to develop through state interventions such as government subsidies and state ownership have produced stagnant, if not negative, growth. Thankfully, though, since the 1980s, these countries have switched to free- market policies that have helped them to mature in much the same way as rich countries such as Britain and the US.
However, contrary to popular belief, the performance of these developing countries during state-led development was superior to what has been achieved in recent decades (3% income growth per capita in the 1960s and 1970s to 1.7% between 1980-2000). Moreover, almost all of today’s rich countries, albeit with a few exceptions, have become rich through a combination of protectionism, subsidies, and government involvement; in essence, everything opposite the free-market policies they promote.
For example, Alexander Hamilton, while attempting to develop an economic strategy for the United States, wrote Report on the Subject of Manufactures, in which he argues that ‘industries in their infancy’, such as those in the US, need to be protected and nurtured by government until they can stand on their own feet. Thus, neo- liberal economists cannot argue that developing regions should adopt free-market economics when the US, the pioneer of the free-market, has already proven that protectionism is the key to growth.
With examples such as Latin America where growth rates have dropped to a staggering 1.1% between 1980 and 2009 from 3.1% in the ‘60s and ‘70s, it should come as no surprise that free-market policies have made few countries rich today and will make few countries rich in the future.
Americans Just Live Better… Or Do They?
According to free-market economists, the US has enjoyed the highest standard of living in the world due to the superiority of the free-market system. However, due to the high level of inequality plaguing the US, this statement does little to accurately portray average living conditions within the country. In order to truly understand the living conditions in the US, we must look at three things:
- health indicators and crime statistics;
- purchasing power parity (PPP); and
- income per hours worked.
First and foremost, the US ranks thirtieth in the world in overall health statistics.
Furthermore, the US has eight and twelve times more people in prison than Europe and Japan, respectively.
These two statistics support the notion that a much larger portion of the US population is underclass and that the US has one of the greatest levels of living inequality in the world. While the US may have the eighth highest per capita income in the world, the reality is that this income is disproportionately distributed among a select number of people, leaving everyone else to live at a much lower standard.
Secondly, the fact that the US’s PPP income is roughly equal to its market exchange rate income is proof that the higher average standard of living in the US is built on the poverty of many. While people in the US have the ability to buy many more goods and services with their money than someone in say, Switzerland, this is due to the cheaper cost of production and services that result from higher immigration levels and poorer employment conditions.
The lack of job security, welfare support, and unionization in the US, as compared to its European counterpart, explains how the US can maintain one of the highest PPP incomes in the world, thus giving the illusion that Americans have the highest standard of living in the world.
Last but not least, it should be noted that Americans work over ten percent longer than their European counterparts and nearly thirty percent longer than the Dutch and Norwegians, all of whom have higher per capita incomes than the US according to the World Bank.
An argument can be made that this increase in work hours is not due to an enjoyment of the work, but rather a necessity to work longer.
With higher competition due to job insecurity and lack of a welfare provision, workers may feel that they are required to work long hours in order to maintain their current positions in a company.
Therefore, it would follow that the longer work hours in the US actually contribute to the reduction in average living standards in the US.
Nevertheless, there is no exact science to compare living standards across countries, and while different people will always have different views on how to compare living standards, non- income dimensions such as those discussed above should not be ignored if we are to truly build a country where people genuinely ‘live well’.
Companies Should NOT Be Run In The Interest Of Their Owners
Shareholders own companies. The free-market idea behind this is that companies work in the interest of their owners, therefore, companies work for shareholder interests, which are profits. By maximizing profits, a company is also maximizing its social contribution in the most efficient manner possible.
The problem with this belief though, is that shareholders are the most liquid of the company owners, and therefore care the least about the long-term future of the company. In many cases even, shareholders prefer corporate strategies that maximize short-term profits, thus maximizing dividends and share value.
These strategies are rarely in the best long-term interest of the company. Thus, running a company for the shareholders often reduces its long-term growth potential.
Modern capitalism can trace its roots to the idea of limited liability.
Without the personal protection afforded to entrepreneurs by limited liabilities in the early 1900s, a successful global economy based on the roots of large corporations would never have emerged. However, without the threat of unlimited loss, people no longer had the same driving incentive to make the company profitable.
This gave rise to two new things: the professional manager and the idea of shareholder value maximization. The problem with shareholder value maximization, though, is that to maximize value, a company must use profits to pay shareholders or buy back its own shares at the expense of reinvestment in growth opportunities. The problem with public shareholders can be traced to the lack of risk involved with owning the company.
Running a company in the interest of the floating shareholder in not only unfair but also inefficient to both the global economy and the company itself. While the free-market belief in limited liability has allowed for the amassing of huge amounts of capital and economic growth, it has also allowed for the severe restriction in corporate and market potential; and until we allow long-term stakeholders such as governments and state-owned banks to have significant voting rights within limited liability corporations, markets will continue to underachieve.
HUMAN RATIONALITY IS SEVERELY LIMITED
We’re Not Smart Enough To Leave Markets Alone
Free-market economics state that investors are rational, and as such, act only in their best interest and thus in the interest of the economy as a whole. Any actions by an outside force (government) to restrict these choices will undoubtedly produce inferior results. The problem here is that people do not necessarily know what they are doing, let alone what is best for them. This is due to the presence of a factor termed by 1978 Nobel Prize winner Herbert Simon as ‘bounded rationality’.
It is the idea that our minds have a limited ability to process certain amounts of information at one time and we are only able to make rational decisions by subconsciously restricting our options in order to reduce the complexity of the problem at hand. Thus, in something as complex as the financial market, the government must act as the subconscious regulator for all. This is not because governments know best, but rather because we cannot begin to comprehend problems within the market unless our choices are first minimized.
Even if investors are considered rational, it is still possible for rational investors to act irrationally, and in doing so, make choices that hurt both themselves and the market. It is the government’s job, in this situation, to reduce the possibility that things go wrong based off these decisions in order that the market as a whole might be preserved.
The problem with the free- market ideology is not that individual rational actions can lead to a collective irrational outcome (market failure), but rather that we, as investors, are not even rational to begin with. Furthermore, if we are to believe that the free-market rationality assumption no longer holds true, we must begin to rethink the role of governments within the market, specifically the need for regulations to a certain extent.
Government Regulations Are Good
Taking Simon’s theory of bounded rationality to be true, we can now see that government regulations work not because the government knows better than the regulated, but rather because they limit the complexity of the activities, which enables the regulated to make better decisions.
Taking the 2008 world financial crisis as an example, our ability to make good decisions had become overwhelmed due to the fact that our deregulated financial sector had been allowed to create too many complex financial instruments that could not be fully understood. Therefore, if we are to avoid another financial meltdown like that in 2008, we must severely restrict freedom of action in the financial market.
Complex financial instruments such as financial derivatives should be banned until they can be explicitly shown to benefit society in much the same way that drugs are approved by the FDA. Unless we humbly realize our limited mental capability and deliberately restrict our choices by creating restrictive regulations, we will never be able to cope with the complexities of the financial market.
Markets Are Too Efficient
The problem with markets today is that they are too efficient. According to free-market economists, the efficiency of its financial markets is the key to a nation’s prosperity. However, with the rise in financial ‘innovations’ and new complex financial instruments, the financial sector has become more efficient at generating short-term profits rather than long-term gains. These ‘innovations’ have made the overall economy much more unstable and have led to a speed gap between financial investments and real sectors that are looking to produce long-term development.
This gap, which has come about due to the ability of investors to respond too quickly to change, must be reduced by deliberately making markets less efficient if we are to avoid a complete financial collapse.
The second reason for the 2008 financial crisis resulted from the intense financial deregulation that occurred in the early 2000s.
The problem was that the financial sector became so attractive so quickly that many companies with no ties to the financial sector, such as GE and GM, became dependent on their newly expanded financial arms to stay profitable. For example, in 2003, 45% of GE’s profit came from GE Capital while a staggering 80% of GM’s profits came from GMAC.
This financial boom led to an extremely disproportionate growth in the financial sector as compared to its underlying economy. In 2007, it was not out of the ordinary for a country’s financial assets to be 500 to 900% of its GDP. The result of this disproportionate growth was an unsustainable financial sector balancing on roughly the same foundation of real assets as when it started.
Still, this is not to say that the financial sector and financial derivatives are bad, but rather that they need to be regulated. Financial capital is vital to developing capitalism; it gives liquidity to non-liquid industrial capital. However, it is this same liquidity that that makes it so dangerous for the rest of the market.
Having the ability to move large amounts of capital in short periods of time fuels impatience, which, in turn creates irrational movement within the market and economic instability. Furthermore, long-term investments are cut down to satisfy short-term ‘impatient’ capital. The cumulative result of all these actions is ultimately a slowing of economic growth. Therefore, it can be seen that free-market financial deregulation does not actually produce faster growth as promised, but rather, yields the complete opposite.
That said, the speed gap between finance and the real economy should not be reduced to zero. The entire purpose of finance is that it can move faster than the underlying real economy. However, if the financial system moves too fast, i.e. too efficiently, it could derail the real economy. Therefore, government must place regulations on the financial industry in order to maintain a feasible balance between finance and the real market so as to allow for long-term investments while still providing the necessary level of liquidity.
MAKING RICH PEOPLE RICH DOESN’T MAKE EVERYONE RICH
Trickle-down Economics Has Failed
Free-market philosophy states that rich people are responsible for investing in and creating jobs. It is their insight and knowledge that allows them to spot and exploit market opportunities, thus creating a larger overall economy that benefits everyone.
There are two serious problems with this argument. The first is that giving the rich a larger slice of the pie does not in fact make the entire pie bigger; and secondly, top-end wealth creation rarely trickles down to the poor in an economy.
History has shown that the dreaded ‘over-taxation’ of the rich has not destroyed capitalism as would be expected by trickle-down economics, but rather has produced stronger growth.
For example, following the Second World War, between 1950 and 1973, the US experienced rapid growth in progressive taxation and social welfare spending; yet it still had economic growth of roughly 3%, which it has since been unable to match.
Since the 1980s, most rich countries have touted a program of upward income redistribution by trimming the welfare state and increasing financial deregulation. These changes have created huge speculative gains for companies as well as astronomical salaries for CEOs and managers.
They have allowed companies to produce massive profits by exploiting monopoly powers and decreasing job security, which have all acted to put downward pressure on employee wages. This pressure has resulted in a major increase in income inequality throughout the rich countries.
The EPI estimates that between 1979 and 2006, the top one percent of earners in the US more than doubled their share of national income, rising from 10% to 22.9%. The ILO found that in 41 of the 65 richest countries, inequality rose between 1990 and 2000. This income inequality is proof that trickle-down economics does not work and is nothing more than a simple upward redistribution of income, rather than a way to make everyone richer.
Trickle-up Economics Will Work
All the upward redistribution of wealth and inequality that has resulted from trickle-down economics may have been justifiable had it led to overall accelerated growth. The problem, however, is that it has done the complete opposite.
According to the World Bank, since the 1980s, global economic growth has slowed to a rate of 1.4% per year from over 3% in the 1960s and ‘70s. In short, we have given the rich a bigger portion of the pie without actually increasing the rate of growth of the entire pie as was originally promised by free-market advocates. Consequently, there are two ways to fix this problem.
The first solution is for government to create regulations that require the wealthy to use a certain percentage of their income on investments.
A major flaw in capitalistic trickle-down economics is that even when upward income redistribution creates more wealth, there is no guarantee that the poor will benefit from those extra incomes as the wealthy are not required to use their extra income for investment opportunities.
Since 1980, the investment-to-national-output ratio has continuously fallen, which means that regulations must be put in place to force a downward redistribution of wealth. This can come in the form of minimum investment to income ratios as described above or an increase in taxes and transfer fees.
In essence, if we want our national economy to grow, we are going to need a governmental pump of the welfare state to make the water at the top trickle down to everyone else in any significant quantity.
The second and best way to boost the economy is to directly redistribute wealth downward, as poorer people tend to spend a higher proportion of their income. However, this can be a very fragile mechanism, and as such, must be done in the right way and at the right time.
The benefits of increasing welfare spending far outweigh the so-called ‘benefits’ of trickle-down economics.
For example, additional discretionary income may encourage lower level workers to invest in education and health, which in turn will raise productivity and ultimately economic growth. Furthermore, greater income equality will lead to more social peace, thus reducing industrial strikes and crime rates, thereby encouraging investments, and ultimately, total wealth.
Therefore, history has shown us that upward redistribution of wealth will not accelerate investments and growth. It will take either public policy measures forcing the rich to deliver greater amounts of investments or the development of a stronger welfare state to provide downward redistribution of wealth if we are to produce any sort of sustainable economic growth in the future.
BIG GOVERNMENT IS BETTER
A Welfare State Is The Best State
Free-market economists tout that big government is bad for the economy. In their opinion, welfare makes poor people lazy and deprives the rich of an incentive to create wealth thus creating a less dynamic economy. However, the fact of the matter is that a well-designed welfare state can actually encourage people to take chances with their jobs and be more, not less, open to change.
For example, large welfare states, such as Sweden and Norway, where people were not worried about a decline in living standards if they lost their job were able to grow faster than the US due to their lack of trade protectionism, which allowed foreign competition to create the most efficient method of production.
Still, not everything about welfare is good; welfare can stigmatize recipients if not applied in the correct fashion. That is why the key to welfare success is creating universal programs, such as those seen in Sweden and Finland, rather than targeted programs like those seen in the US.
Welfare is a lot like bankruptcy; it gives people a second chance, thereby making them more open to change and risk.
This risk causes people to be bolder in their initial career choices and more open to job changes later on in life, thus creating a much more dynamic economy.
If we remove this protective ‘netting’, people often become ingrained from an early age in the ‘safest’ profession; that is, whichever career will provide them the best pay with the most job security. What ends up happening, as seen with the medical profession spike in South Korea over the last fifteen years, is that people end up going into a career they do not love, and as a result, hurt both the profession they choose to go into and the one they chose not to go into.
This is a lose-lose situation for both the individual and the economy as a whole. Welfare gives people something free markets can never give: security; and it is this security, which makes a welfare state the best choice for creating an efficient and dynamic global economy.
The Government CAN Pick Winners
A second point free-market advocates make is that large governments do not work because they cannot make informed business decisions and ‘pick winners’ through industrial policy. What these neo-liberal advocates do not tell you is that having more detailed information does not guarantee better decisions and what is good for an individual firm might not be as good for the national economy as a whole. Therefore, the government picking winners against market signals can often improve national economic performance, especially if done in close collaboration with the private sector.
While history has shown that government can pick spectacular losers, such as Britain and France’s ill-fated venture into Concorde, it has also shown that it can, and more often than not, does pick winners.
For example, in 1965, South Korea hatched a plan to build an integrated steel mill despite not producing a single raw material for the process within the country. While this plan seemed incredibly outlandish and kept almost every investor from lending the country money, South Korea was able to garner enough funds from Japan’s reparation payments to fund the steel mill project.
Beginning production in 1973 under the newly created state owned enterprise POSCO, the steel mill quickly became the most cost-efficient producer of low-grade steel in the world, and today is the fourth-largest steel producer in the world.
Thus, the question is not about whether government can pick winners, as they obviously can, but how to improve their percentage of winners. Governments, and private firms, will fail in picking winners occasionally; it is in the very nature of risk-taking entrepreneurial decisions that they do fail.
However, by minimizing this failure, national economies will be able to grow at much faster rates. To do this will require integration of both the private and public sector working seamlessly for the betterment of the national economy as a whole. The reality is that if we remain blinded by the free-market ideology that tells us that only the private sector can pick winners, we will end up ignoring a huge range of possibilities for economic development through public leadership and public-private joint efforts.
CONCLUSION
Going forward, one question remains: how do we fix the economy? The truth of the matter is that there is no easy fix; however, the following eight principles should guide our thought process when redesigning and rebuilding our economic system.
- Capitalism is the best economic system;
- We should build our new economic system on the recognition that human rationality is severely limited;
- We should build a system that brings out the best, rather than worst, in people;
- We should stop believing that people are always paid what they ‘deserve’;
- We need to take ‘making things’ more seriously;
- We need to strike a better balance between finance and ‘real’ activities;
- Government needs to become bigger and more active;
- The world economic system needs to ‘unfairly’ favor developing countries;
The past three decades have shown us that current free-market economics do not work. If we do not make immediate and drastic changes to the current conditions of billions suffering in poverty and insecurity, especially in developing countries, we will inevitably meet the same global disaster we witnessed in 2008. Difficult choices may lay ahead for the global economy, but with change comes hope.
Britt always taught us Titans that Wisdom is Cheap, and principal can find treasure troves of the good stuff in books. We hope only will also express their thanks to the Titans if the book review brought wisdom into their lives.