My friend Will is a thoughtful, logical thinker who got interested in the Oxford professor, born in Korea, Ha-Joon Chang, the author of several books on economics. I read Chang's "The Bad Samaritans" and thought it a worthwhile book. My friend is recently retired and read Chang's "23 Things They Don't Tell You About Capitalism". Will summarized 20 of Chang's 23 points. They relate to life in the US and I thought they might be of interest to readers of this blog.
I will post the first three of Will's summaries and put the rest on a web page where you can continue with them if you want.
Thing One is, there's no such thing as a "free market." That's a pretty easy demonstration. Every market operates within political constraints.
Who wants to bring back 9-year-olds working 15 hours a day? What about buying and selling organs, or entire human beings? Should there be no regulations on food safety or drug efficacy? Should businesses be free to bribe judges? Those who advocate less regulation by saying "let the free market decide" are arguing that additional power should be handed to those with more money, since the market operates on a one-dollar = one vote principle. That is a political position, not an economic one.
Thing Two is, companies should not be run in the interest of their owners. This chapter is harder to summarize in one paragraph than Thing One was. The conventional story is that the owners (shareholders) take a risk by investing, and if the company fails they will lose the entire investment. Thus they are entitled to maximize their profit from their investment. However, there are other stakeholders such as employees and suppliers. Maximizing share prices and dividends often impairs the long-term growth and stability of the company, but the shareholders can easily take their profit and run. Most advanced countries other than the U.S. and the U.K. have acted to reduce the power of free-floating shareholders. In France and Germany, the government, or government-owned banks, are large shareholders. In Japan, unions have formal standing in company governance. If I haven't presented the argument well enough, I recommend you get hold of Chang's book.
Thing Three is more uncomfortable than One and Two: Most people in rich countries are paid too much. Free-marketeers tell you that pay rates reflect relative productivity, and non-market interferences such as minimum wage laws just create inefficiencies and injustice. Chang compares the case of a Swedish and an Indian bus driver. The Swede makes about 50 times as much per hour. Is the Swedish driver 50 times better?
Certainly not: the Indian driver has to has to dodge rickshaws, stray cows, and bicycles piled high with crates. The pay in rich countries is higher because of immigration controls and because of different histories that have led to better technology and infrastructure.
To continue reading Will's summaries of Chang's points, go to