01 September 2010

The myth that free market's evils are offset by wealth that it generates

An excellent article by Ha-Joon Chang in the Guardian, let me quote his main point:
"We have to question an assumption that has dominated economic thinking over the last three decades – namely, the belief that maximising market freedom is the best way to generate wealth."
[....]
"Sadly that assumption has been proved wrong. After three decades of deregulation and tax cuts for the rich, growth has slowed down, rather than accelerated, in almost all countries. The world economy, which was growing at about 3% in per capita terms in the "bad old days" of widespread regulation and punitive taxation for the rich in the 1960s and 70s, has grown at about half that rate in the last three decades. In Britain, average annual per capita income growth rate was 2.4% in the 60s and the 70s, when the country was allegedly suffering from the "British disease"; but it fell to 1.7% during 1990 to 2009, after it is supposed to have been cured of the disease thanks to Margaret Thatcher's heroic struggle in the 1980s."

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