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Ha-Joon Chang

South Korean economist

Ha-Joon Chang (Hangul: 장하준; hanja: 張夏准; born 7 October 1963) is a South Korean institutional economist specialising in development economics. Currently a reader in the Political Economy of Development at the University of Cambridge, Chang is the author of several widely discussed policy books, most notably Kicking Away the Ladder: Development Strategy in Historical Perspective (2002). In 2013 Prospect magazine ranked Chang as one of the top 20 World Thinkers.

We are not smart enough to leave things to the market.

Quotes

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  • Contrary to the conventional wisdom, the historical fact is that the rich countries did not develop on the basis of the policies and the institutions that they now recommend to, and often force upon, the developing countries. Unfortunately, this fact is little known these days because the 'official historians' of capitalism have been very successful in re-writing its history.
    • "What is Wrong with the 'Official History of Capitalism'?", in Edward Fullbrook (ed.), A Guide to What's Wrong with Economics (2004), p. 280
  • 95% of Economics is common sense deliberately made complicated.
    • Lecture at the RSA about his book 23 Things They Don't Tell You About Capitalism (September 2010).

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (2008)

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  • The Korean economic miracle was the result of a clever and pragmatic mixture of market incentives and state direction.
    • Prologue, p. 15
  • Britain and the US are not the homes of free trade; in fact, for a long time they were the most protectionist countries in the world. Not all countries have succeeded through protection and subsidies, but few have done so without them. For developing countries, free trade has a rarely been a matter of choice; it was often an imposition from outside, sometimes even through military power. Most of them did very poorly under free trade; they did much better when they used protection and subsidies. The best-performing economies have been those that opened up their economies selectively and gradually. Neo-liberal free-trade free-market policy claims to sacrifice equity for growth, but in fact it achieves neither; growth has slowed down in the past two and a half decades when markets were freed and borders opened.
    • Prologue, p. 17
  • Corruption exists because there is too much, not too little, market.
    • Prologue, p. 18
  • Countries are poor not because their people are lazy; their people are 'lazy' because they are poor.
    • Prologue, p. 18
  • Ricardo's theory is absolutely right—within its narrow confines. His theory correctly says that, accepting their current levels of technology as given, it is better for countries to specialize in things that they are relatively better at. One cannot argue with that. His theory fails when a country wants to acquire more advanced technologies—that is, when it wants to develop its economy. It takes time and experience to absorb new technologies, so technologically backward producers need a period of protection from international competition during this period of learning. Such protection is costly, because the country is giving up the chance to import better and cheaper products. However, it is a price that has to be paid if it wants to develop advanced industries. Ricardo's theory is, thus seen, for those who accept the status quo but not for those who want to change it.
    • Ch. 2: 'The double life of Daniel Defoe; How did the rich countries become rich?', The double life of the British economy, p. 47
  • Rich countries have 'kicked away the ladder' by forcing free-market, free-trade policies on poor countries. Already established countries do not want more competitors emerging through the nationalistic policies they themselves successfully used in the past.
    • Ch. 2, Learning the right lessons from history, p. 61
  • I have a six-year-old son. His name is Jin-Gyu. He lives off me, yet he is quite capable of making a living. I pay for his lodging, food, education and health care. But millions of children of his age already have jobs. Daniel Defoe, in the 18th century, thought that children could earn a living from the age of four.
    Moreover, working might do Jin-Gyu's character a world of good. Right now he lives in an economic bubble with no sense of the value of money. He has zero appreciation of the efforts his mother and I make on his behalf, subsidizing his idle existence and cocooning him from harsh reality. He is over-protected and needs to be exposed to competition, so that he can become a more productive person. Thinking about it, the more competition he is exposed to and the sooner this is done, the better it will be for his future development. It will whip him into a mentality that is ready for hard work. I should make him quit school and get a job. Perhaps I could move to a country where child labour is still tolerated, if not legal, to give him more choice in employment.
    • Ch. 3: 'My six-year-old son should get a job; Is free trade always the answer?', p. 65
  • Producers in developing countries entering new industries need a period of (partial) insulation from international competition (through protection, subsidies and other measures) before they can build up their capabilities to compete with superior foreign producers. Of course, when the infant producers 'grow up' and are able to compete with the more advanced producers, the insulation should go. But this has to be done gradually. If they are exposed to too much international competition too soon, they are bound to disappear.
    • Ch. 3, Poor theory, poor results, p. 73
  • As South Korea shows, active participation in international trade does not require free trade. Indeed, had South Korea pursued free trade and not promoted infant industries, it would not have become a major trading nation. It would still be exporting raw materials (e.g., tungsten ore, fish, seaweed) or low-technology, low-price products (e.g., textiles, garments, wigs made with human hair) that used to be its main export items in the 1960s.
    • Ch. 3, More trade, fewer ideologies, p. 82
 
Trade is simply too important for economic development to be left to free trade economists.
  • The importance of international trade for economic development cannot be overemphasized. But free trade is not the best path to economic development. Trade helps economic development only when the country employs a mixture of protection and open trade, constantly adjusting it according to its changing needs and capabilities. Trade is simply too important for economic development to be left to free trade economists.
    • Ch. 3, More trade, fewer ideologies, p. 83
  • History is on the side of the regulators.
    • Ch. 4: 'The Finn and the elephant; Should we regulate foreign investment?', ‘More dangerous than military power’, p. 96
  • All the alleged key causes of SOE [State-Owned Enterprise] inefficiency—the principal–agent problem, the free-rider problem and the soft budget constraint—are, while real, not unique to state-owned enterprises. Large private-sector firms with dispersed ownership also suffer from the principal-agent problem and the free-rider problem. So, in these two areas, forms of ownership do matter, but the critical divide is not between state and private ownership—it is between concentrated and dispersed ownerships.
    • Ch. 5: 'Man exploits man; Private enterprise good, public enterprise bad?', The pitfalls of privatization, p. 116
  • There is no hard and fast rule as to what makes a successful state-owned enterprise. Therefore, when it comes to SOE management, we need a pragmatic attitude in the spirit of the famous remark by China’s former leader Deng Xiao-ping: 'it does not matter whether the cat is white or black as long as it catches mice.'
    • Ch. 5, Black cat, white cat, p. 121
  • As water flows from high to low, knowledge has always flowed from where there is more to where there is less. Those countries that are better at absorbing the knowledge inflow have been more successful in catching up with the more economically advanced nations. On the other side of the fence, those advanced nations that are good at controlling the outflow of core technologies have retained their technological leadership for longer. The technological 'arms race', between backward countries trying to acquire advanced foreign knowledge and the advanced countries trying to prevent its outflow has always been at the heart of the game of economic development.
    • Ch. 6: 'Windows 98 in 1997; Is it wrong to 'borrow' ideas?', John Law and the first technological arms race, p. 127
  • The historical picture is clear. Counterfeiting was not invented in modern Asia. When they were backward themselves in terms of knowledge, all of today's rich countries blithely violated other people's patents, trademarks and copyrights. The Swiss 'borrowed' German chemical inventions, while the Germans 'borrowed' English trademarks and the Americans 'borrowed' British copyrighted materials—all without paying what would today be considered 'just' compensation.
    • Ch. 6, The lawyers get involved, p. 134
  • The days are over when technology can be advanced in laboratories by individual scientists alone. Now you need an army of lawyers to negotiate the hazardous terrain of interlocking patents. Unless we find a solution to the problem of interlocking patents, the patent system may actually impede the very innovation it was designed to encourage.
    • Ch. 6, The tyranny of interlocking patents, p. 128
 
The foundation of economic development is the acquisition of more productive knowledge.
  • The foundation of economic development is the acquisition of more productive knowledge.
    • Ch. 6, Harsh rules and developing countries, p. 142
  • Inflation is bad for growth—this has become one of the most widely accepted economic nostrums of our age. But see how you feel about it after digesting the following piece of information.
    During the 1960s and the 1970s, Brazil's average inflation rate was 42% a year. Despite this, Brazil was one of the fastest growing economies in the world for those two decades—its per capita income grew at 4.5% a year during this period. In contrast, between 1996 and 2005, during which time Brazil embraced the neo-liberal orthodoxy, especially in relation to macroeconomic policy, its inflation rate averaged a much lower 7.1% a year. But during this period, per capita income in Brazil grew at only 1.3% a year.
    If you are not entirely persuaded by the Brazilian case—understandable, given that hyperinflation went side by side with low growth in the 1980s and the early 1990s—how about this? During its 'miracle' years, when its economy was growing at 7% a year in per capita terms, Korea had inflation rates close to 20%-17.4% in the 1960s and 19.8% in the 1970s. These were rates higher than those found in several Latin American countries ... Are you still convinced that inflation is incompatible with economic success?
    • Ch. 7: 'Mission impossible?; Can financial prudence go too far?', There is inflation and there is inflation, p. 149
  • There is a big logical jump between acknowledging the destructive nature of hyperinflation and arguing that the lower the rate of inflation, the better.
    • Ch. 7, There is inflation and there is inflation, p. 150
  • History shows that, at earlier stages of economic development, corruption is difficult to control. The fact that today no country that is very poor is very clean suggests that a country has to rise above absolute poverty before it can significantly reduce venality in the system. When people are poor, it is easy to buy their dignity—starving people find it difficult not to sell their votes for a bag of flour, while under-paid civil servants will often fail to resist the temptation to take a bribe. But it is not just a matter of personal dignity. There are also more structural causes.
    • Ch. 8: 'Zaire vs Indonesia, Should we turn our backs on corrupt and undemocratic countries?', Prosperity and honesty, p. 166
  • Corruption often exists because there are too many market forces, not too few.
    • Ch. 8, Too many market forces, p. 170
  • Unlike what neo-liberals say, market and democracy clash at a fundamental level. Democracy runs on the principle of 'one man (one person), one vote'. The market runs on the principle of 'one dollar, one vote'. Naturally, the former gives equal weight to each person, regardless of the money she/he has. The latter give greater weight to richer people. Therefore, democratic decisions usually subvert the logic of market.
    • Ch. 8, Democracy and the free market, p. 172
  • Democracy and markets are both fundamental building blocks for a decent society. But they clash at a fundamental level. We need to balance them.
    • Ch. 8, Democracy and the free market, p. 174
  • Culture changes with economic development.
    • Ch. 9: 'Lazy Japanese and thieving Germans; Are some cultures incapable of economic development?', Lazy Japanese and thieving Germans, p. 196
  • Markets have a strong tendency to reinforce the status quo. The free market dictates that countries stick to what they are already good at. Stated bluntly, this means that poor countries are supposed to continue with their current engagement in low-productivity activities. But their engagement in those activities is exactly what makes them poor. If they want to leave poverty behind, they have to defy the market and do the more difficult things that bring them higher incomes—there are no two ways about it.
    • Ch. 9, Defying the market, p. 210
  • Global economic competition is a game of unequal players … Consequently, it is only fair that we 'tilt the playing field' in favour of the weaker countries. In practice, this means allowing them to protect and subsidize their producers more vigorously and to put stricter regulations on foreign investment. These countries should also be allowed to protect intellectual property rights less stringently so that they can more actively 'borrow' ideas from more advanced countries.
    • Ch. 9, Tilting the playing field, p. 219

23 Things They Don't Tell You About Capitalism (2010)

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  • Assume the worst about people and you get the worst.
    • Thing 5
  • Making rich people richer doesn't make the rest of us richer.
    • Thing 13
  • We are not smart enough to leave things to the market.
    • Thing 16
  • Financial markets need to become less, not more, efficient.
    • Thing 22

Economics: The User's Guide (2014)

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Prologue. Why Bother? Why do You Need to Learn Economics?

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  • [J]argons that facilitate communication within the profession makes its communication with outsiders more difficult. ...[A]ll technical professions have an incentive to make themselves look more complicated... so they can justify the high fees... for their services.
  • [E]conomics can never be a science in the sense that physics or chemistry is. There are many different types of economic theory, each emphasizing different aspects of a complex reality, making different moral and political value judgments and drawing different conclusions. ...[E]conomic theories constantly fail to predict real-world developments... not least because human beings have... free will, unlike chemical molecules or [other] physical objects.
  • [E]very responsible citizen needs to learn some economics... such... that one becomes aware of the different types of... arguments... and... judge which... makes most sense in a given... circumstance... in light of... moral values and political goals...
  • I try to reveal the assumptions underlying... theories so... readers can make... judgements about their realism and plausibility.
  • I... tell... how numbers in economics are defined and put together... not as... objective as... weight or... temperature...
  • I try to explain... how to think, rather than what to think.

Ch. I. Life, the Universe and Everything. What is Economics?

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  • [M]ost economists were caught completely by surprise by the 2008 global financial crisis. ...[T]hey have not been able to come up with solutions to the ongoing aftermaths ...[E]conomics seems to suffer from a serious case of megalomania—how can a subject that cannot... explain its own area... claim to explain (almost) everything?
  • When Becker titled... The Economic Approach to Human Behaviour, he was... declaring... economics is about everything.
  • Money is a symbol of what others in your society owe you, or your claim on particular amounts of the society's resources.
    How money and other financial claims... are created, sold and bought is... financial economics. ...[C]laims ...a lot of economics is (or should be) about those.

Ch. 4. Let a Hundred Flowers Bloom. How to 'Do' Economics.

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Note: Hundred Flowers Reference, See Mao Zedong: On the Correct Handling of Contradictions Among the People (1957)

How to build a new society after the Covid 19 crisis (June 24, 2020)

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| SOAS University of London. A Creative Commons License video source posted (July 17, 2020) for the earlier virtual webinar.
Also see: COVID-19 pandemic by country and territory
  • [I]n the United States... official unemployment is at... 15-16% but if you count the... number of people who have become newly unemployed, counted by... unemployment insurance claimants, basically American unemployment rate is nearly 30%. ...During the Great Depression the only other economic crisis comparable in scale... the highest unemployment rate in the US was in 1933... at 25%.
  • [W]e are talking about a huge crisis... It's been all encompassing because in other crises usually there's one bit of the economy that goes wrong... Oil prices go up, housing bubble collapses and so on, but this time... it's everything. It's about demand... production... the financial market... global supply chain... [A]s a result... the changes that we had to make... the kind of policies that governments have introduced to deal with this have been very very different and comprehensive compared to previous comparable crises.
  • [T]he few changes that this crisis has brought about... their consequences, and what countries do in order to deal with them will depend on how long this crisis continues, and how effective the solution[s]... are likely to be. These are things that I don't have the expertise to predict: ...When is the vaccine coming out ...if there will be an effective cure..? [I]s there going to be a similar outbreak? ...I'm just ...assuming that this crisis will probably last another two, three, maybe five years... [A] lot of society will try to go back to the pre-pandemic way as much as possible, but... if we are going to be—even if we wanted—able to go back to the old ways... it will take a few years.
  • [T]his crisis... has affected the way we produce things... [F]ace-to-face services have been devastated, restaurants, theaters, international tourism, things that require close proximity of the provider and the customer, has been hit very hard... Different societies are trying to deal with this in different ways... [Y]ou see these pictures of Asian restaurants that have... put the tapes on the tables... shields, [etc.]... [T]hese services will not recover the previous levels any time soon.
  • This means that... there is a general fall in demand, so the level of activities in every sector is lower, but this means that in relative terms, sectors that produce multiple goods are likely to expand, partly because it's easier to maintain the level of production in those sectors, but also because when people do not spend money on these face-to-face services, they will spend money on other things... There's already a sign that the demand for electronics goods... is rising, so... there will be a shift from services to manufacturing and agriculture in the coming years.
  • But also within manufacturing there are some sectors where the method of production will have to be changed... Labor intensive industries... In the US and Germany meat processing factories have been sources... such that people work in close proximity... and these become the hotbed of the spread of infection, so... they'll... need to restructure their production.
  • There are concerns that the global value chains that have been built in the last few decades of globalization have become too concentrated, so if something goes wrong in one place, the whole chain is affected... It was already happening, but now.... people are saying... we need to do something about it.
  • [I]t's a fantasy ...to reshore or bring back home the bulk of manufacturing that have migrated to China and other developing countries ...[I]t just cannot be done, but... people are already thinking about ways to diversify the sources of procurement and production so that... [when] one part of the system goes wrong, the other part is able to cope.
  • Another important change is that some of the key tenets of neoliberalism have been undermined by this crisis... [F]irst... this view that the less state there is the better... has been totally exposed, as countries that have had their government intervening, oddly to test, trace and isolate the infected people, such as South Korea, New Zealand, Denmark, Vietnam... have minimized the spread of disease... [I]n Vietnam officially the death toll from Covid-19 is zero. ...[E]ven if you do not believe that... number it is very very low. In contrast the UK, the US, Brazil, countries that have refused to take quick public action, trying to believe that the greater economic freedom... the better... have had to... go into severe lockdown, and despite that, have produced a huge number of infected people and death.
  • When these numbers keep climbing they just become statistics, but I ...don't understand how, in the UK... US... Brazil, people think it is OK to have hundreds of people die every day, if not thousands. ...In South Korea ...despite it being one of the countries that got hit the earliest, the death toll is still below 300 ...In the UK ...there are days when that number of people die in a day... So it has exposed the total failure of this laissez-faire approach, when it comes to issues like this. Also, what countries have done to deal with this crisis... in... at least the short to medium term, if not the long term, have... destroyed this neoliberal... article of faith that the best thing that the government can do is to provide law and order and invest in the social infrastructure, and maybe a bit of basic education...
  • Thirdly and probably... a bit even more importantly, this crisis has made us think "What is really important?" ...[I[n the neoliberal system of thinking... that question doesn't even exist... because... in that system... something's value is... determined by the market. ...[T]his has been one of the key themes of the market economy where they have argued that there is no ethical system that can tell you what is more important and what is less important... [A]ll of these ideas about the productive and unproductive labor that the Classical and Marxist economists have struggled with... are... nonsenses. If someone is that valuable, the market will make... sure... that person gets paid better... [W]hen progressive economists try to argue that there are some services that are essential, that are part of human rights... market economists... poo poo the idea. But now... the UK government is talking about key workers... the American government is talking about essential employees, and most of them are people who, in the market paradigm, were not very valuable... because these were people like—medical doctors are exceptions here—but... nurses... care home workers, people working in supermarkets, delivery people... people who have worked at very low wages, and therefore according to logical market economics... are not very valuable for society. But now we realize that without these people the society cannot be the same. We have also realized more broadly the importance of care work, unpaid care work and child care, household management, mostly done by women. These have been literally valued at zero because it's not marketed. Now we realize that without this care economy... product sector.., society cannot even exist...
  • [F]inally... this crisis has made us realize that... unless everyone is safe, no one is safe...
  • In the US... because it has a very weak welfare state and weak labor rights, a lot of workers... couldn't take sick leave if they were ill, because if they don't work they don't get paid. ...[T]hese people had to go out... contributing to the spread of this disease... [W]hen something like this happens, it's not like... some fancy cancer drug... very expensive, and only rich people can buy and perhaps survive... [and] everyone else dies... Even if you are the most powerful, the richest people, you cannot avoid this thing, and... taking collective action to slow down the spread of disease... has made very important differences...
  • Also in the process, realizing that if we all... reduce our activities... cities like New Delhi... which has never seen... clear sky for many years... can have... blue sky... made people realize that we should and could do a lot more to fight climate change.
  • [T]hese big shifts ...making people really think about what is more important in our life, and the realization that we are all bound in a common destiny... [T]hese things are going to fundamentally influence the way that we design new society after this crisis. ...[A]t the global level ...this has been... an interesting experience because... you see that... there is no clear relationship between a country's level of income and how they have managed this... [T]he US, the UK, countries that used to lecture other countries on how to run their society, what kind of values they should uphold, how to manage the government... [T]hey have been shown to be in complete disarray. ...[T]his will be an opportunity where... a lot of developing countries' people overcome this inferiority complex that imperialism, colonialism and racism have... ingrained in many peoples' minds over the last few centuries. ...[S]o-called superior societies have seen tens of thousands of deaths... Vietnam, Kerala in India, Ethiopia... countries... very very poor, or other societies... have managed to contain this disease. ...[T]his is going to change the way developing country people perceive the so-called advanced countries. What are so advanced about them... when they are willing to... let tens of thousands of people die so that... puffs can make more money.
  • [H]ow do we rebuild society? ...My answers ...have ...been contained in my analysis of the crisis.
  • Partly, concidentally... we've... seen the rise of anti-racist movement... in the US and around the world... [W]e should use this as an occasion... establishing in countries that don't have it, but also strengthening the universal welfare state that we have in some countries, using this as an occasion to push further for climate change actions... to push back these reactionary racist forces... [T]hose kind of things that are now in many peoples' minds. Perhaps... people thought those are ideally things that we want to have, but we cannot. But now we know that we can, and... if you look... countries that have taken a more solidaristic approach to this pandemic are the ones that have done better.
  • [W]e will need to rethink our priorities... not just at the individual level, but at the social level... In Britain we had these weird Thursday evenings... when we clapped for the NHS workers while the government was not willing to pay even a single more penny to them. That kind of thing has to change... We need to have the confidence to say that "Yes, there are things that are more fundamental, that are more important, that are not necessarily going to be rewarded by the market, and... the society has to find a way to make... [those] people... more rewarded, including... people who do unpaid care work at home." We need to rethink the work-life balance... [A] lot of scientists say... [as] an inevitable consequence of human encroachment in nature, we need to rethink our balance with nature, part of which is... that due to the unequal nature of many of our societies... There are a lot of countries where you have these farmers doing... slash-and-burn and... encroaching into nature when there are fallow lands that are owned by landlords. So we need to rethink all these priorities...
  • Finally we have to rethink the production system, the global supply chain, partly because of this pandemic but... no one thinks that this will be the only disease that is going to hit human society. A lot of us agree that increasing acceleration of climate change will create many other crises... extreme weather events and so on... but who knows what other crises are in store, so we need to rebuild the system to have more... resilience and robustness... Just think about airplanes, oil tankers... they can produce disastrous outcomes if something doesn't work. All these systems, including... electricity... have ways to absorb, isolate shocks and quickly bring backups [etc.]... and the economy will also have to be redesigned in that kind of way.
  • [T]o summarize... one... expansion of the universal welfare state and inclusion of the... care economy... second, rethinking our priorities, and thirdly, restructuring and redesigning the economic system so they can be more robust and resilient.
    • End of lecture. Begin Question and Answer period.
  • [T]his has been the most corrosive consequence of the recent rise of the... extreme right, but... despite all this mistrust, we have to invest in rebuilding trust in these institutions. Maybe some of the existing institutions have become so discredited, they need to be scrapped. ...Maybe some can be redeemed, but also we could try to create ...a global public information service ...[T]hat sounds overly idealistic, but... it's something that we need because these gainers from the erosion of public trust in these public institutions... also ...control the media with their money. ...[I]f ...citizens do not have... a UN information service or some global charity that provides fact checks [etc.]... Unless people have these trusted sources, they'll begin to believe whatever... and those who control the media, including things like Facebook [etc.]... through their money will... be in a position to manipulate them to their benefit. ...[D]espite people's misgivings about building yet another international organization trying to restore trust in the public institutions that have already been eroded and dilapidated .., that's the only way out because otherwise it becomes a free-for-all... [which] means all those people with money...
    • Answer to the Question: The proliferation of misinformation on a global scale is arguably a reflection of widespread mistrust in both national and international institutions and systems. What... are the longer term ramifications of the mistrust?
  • The pandemic has revealed that... poor people—people in marginalized communities—are more prone to contract the disease and die from it because of generally worse health, limited access to health care, and other things that define this unequal society. ...[A] positive way to respond to this is to accept that and find a way to reduce that inequality, and it is already happening in some countries. ...I'm not usually a cheerleader for my own country, South Korea... we have so many shameful world records... the highest suicide rate, the lowest fertility rate... name it, but South Korea has... managed the pandemic really well, first of all because... despite this general aversion to the welfare state, it has a very robust public health insurance. ...So anyone who had problems could... get tested and treated... This is how you manage to keep the death toll under 300, but in that country... because it controlled the health situation so well, it actually didn't go into full lockdown, but still, people were wary of going out and the biggest sufferers from this was... people... running small bars, restaurants, karaoke bars... [T]hese people were very hard hit and... I was... surprised [the country is] talking about universal employment insurance scheme. So... it doesn't matter what your job used to be... Countries are now talking about introducing unemployment insurance that covers people who work in any type of company, self-employed people, social platform workers, people working in the gig economy. ...[I]f it happens it will be a really progressive change...
    • Answer to the Question: The pandemic... exacerbated grave structural inequalities in various societies. Often... it takes a crisis to move reforms forward. What major interventions do you hope to see in both developed and developing countries?
  • [I]t's up to societies... especially the citizens to demand these things, to create systems that will... not only enable the country to deal with these kind of crises in the future, but... more importantly that... can make the society more equal. ...My point is, we have to start the discussion. ...We have to talk about this. ...The people have to keep banging on, "Why did you keep all those claps [applause] during those eight weeks in the spring to the nurses but then you didn't pay them any more? ...Why is the NHS so dilapidated? We have to keep pushing... otherwise the people in power are not going to do that.
  • Universal basic income... I'm not a fan... First... a lot depends on how you do it. ...Milton Friedman and Friedrich von Hayek were supportive of universal basic income. ...[T]hese are people who say, "Yea, give everyone £9,000" or whatever, and they can do whatever... with that money. They wouldn't starve to death, but everything about that is not society's problem. ...[I]f it is that kind of universal basic income which is... supported by some of the Silicon Valley billionaires, I'm 200% against it. If it is the more progressive form, I still have a problem because... having income is one thing, but... you need affordable high quality services. ...Unfortunately the supporters of universal basic income do not address this aspect... very clearly... So you convert all the... welfare entitlement... in Britain, so... your NHS service... your unemployment benefits, the amount of childhood housing benefits, convert them only to cash... then how are people going to buy these? ...[I]s the government then going to wash ...its hands and say now you can go into the private market and buy it? ...[T]hat will be a disaster, because... many of these services are... provided by the government, which is not seeking profit. Of course, a lot of it has become privatized by stealth, but at least in theory... these, NHS and other bodies that provide these social services... are not out to make money, and... they pool the customers and... get the big discounts. There's a scale of economy provision. Instead of single hospitals going to a pharmaceutical company... to buy diabetes drugs for 5,000 people, the NHS can go to these companies... for 17 million people. ...[T]he kind of discount you get.... it's a totally different planet. So... these services are going to be very expensive... even when you give them the same amount of money, they will be able to buy less.
  • [T]his is what's happening in the US. ...The US spends 17% of GDP on health care, compared to 8-12% in other advanced countries, and it has the worst health record in the rich world. ...Part of it is ...because of greater inequality, but a lot of it is because... the treatments are expensive. That COVID-19 test which you can get for free in South Korea, in some American communities, you have had to pay $3,000...
  • [W]hen it comes to basic income, please do not just look at the demand side, but also look at the supply side. ...Whatever amount of income they're going to give you... how are they going to provide those basic social services? Some proposals are progressive, but some are not. Some haven't even thought about this. You need to look at both aspects.
  • Opportunity is literally what it is called... [I]f you don't make something out of it, it's not going to produce anything by itself. ...[I]t's very important for citizens to demand, organize, talk about it... How we want to change the society having seen that... we don't all need to be in the office to become efficient workers, can we change the way we organize work? ...Can we work more often from home, if not completely? Can we, in that way, reduce greenhouse gas because fewer people will not be commuting..? All of these things need to be discussed, but... unless we make demands, voice our concerns, it's not going to happen. ...In ...different industries ...the biggest losers will be people who provide face-to-face services. ...[T]his will be a huge problem for many developing countries especially, because a lot... rely heavily on tourism... [T]hat's going to be dead for a few years. Also in developing countries we have this huge informal sector, many of which involve face-to-face services. So when these people do not have customers, how are they going to cope? So in terms of the industry mix... it will depend on the country, but broadly speaking this will negatively affect poor or developing countries with a big service sector, especially informal sector, and countries like the US and the UK which rely on a lot of services, and countries which have a greater strength in manufacturing and material production are going to be relatively better off. So that's my prediction.
  • [Modern monetary theory or Keynesian economic policies...] I'm not a macroeconomist but... those kinds of macroeconomic thinking will become more influential. I wouldn't say dominant because... the current macroeconomic approach [is] a weird mixture of... fiscal conservatives and monetary abandon ...dominant because it serves the powerful interests, so I don't know whether ...the rise of Keynesianism or the monetary theory—which is... certain—will be sufficient to replace the existing [system]... [It is] not just in terms of macroeconomic policy I mentioned that is going to see change. ...[W]e are going to see big changes in the way that we... manage the welfare state, which has implications for taxation policy. ...We are going to see big changes in the structure of production, which will has ramifications for industrial policy and trade policy. So... it will be in all kinds of areas and hopefully... it will also spill into our approach to fighting climate change. So... it's not just going to be in the macroeconomic area that the conventional wisdom and prevailing orthodoxy are being hit. It's across all areas, reflecting partly the all-encompassing nature about this crisis. So... there will be significant changes, but... whether one economic theory becomes dominant, or at least widely accepted, is in big part a political question. So a lot will depend on how things unfold and how the political elite respond to this.
    • Answer to the Question: You mentioned that this crisis has revealed the shortcomings of market fundamentalism and that the state is likely to increasingly intervene in and steer markets in the future. Do you think MMT or Keynesian economic policies will dominate in the post-CORONA years to come?
  • [A] lot of developing countries are dependent on primary commodities, and especially those that are dependent on oil have been devastated because oil demand has collapsed as a result of the pandemic. ...[I]t is important for developing countries to diversify... production structure to avoid this... Easier said than done... Ecuador, under Rafael Correa, tried for about 10 years to shift the production structure. The pull of the oil was so strong that by the end of his term, it was a bit lower, but the dependence was still very high. ...[I]n the next few years, because of the pandemic... primary commodities... (material products) might actually become more important in relative terms... [T]he overall level of demand will be lower... but... in relative terms, at least, primary commodities are going to fare better than... services. The point... is... what happens in the long run will really depend on what you do with the income that you earn from primary commodities. ...[L]uckily a lot of countries have been thinking about industrializing using more active industrial policy... so something might happen in some countries and... some... are already doing... very impressive things... Ethiopia has converted a lot of its garment making facilities—basically investments from east Asia: South Korea, China, Taiwan—into factories producing [medical] personal protection equipment... [I]t has converted... passenger jet planes into cargo planes and is doing more cargo business.
  • So... even a relatively poor country can make this as an opportunity to upgrade its economy... I know that [in] the current situation [it] is... difficult to think about the future but... they really need to think... If you have been reliant on tourism heavily... If you're a Caribbean island state there might be very little you can do but if you are some country... you will have to a) think about ways to make tourism safer... but b) more importantly you need to find a way to get out of tourism and start doing something else.
  • [F]inally, linking that into the reorganization of the global value chain... [I]n many cases, unless the crisis really persists for 3, 4, 5 years... as soon as things become okay people will just say "Well, let's forget about it because reorganizing the value chain requires investment, hard work... Let's just go back to the old ways." So it's not certain... that... reorganization will happen, and even if it...[does], it will happen only in limited areas... [E]ven if the US wants to bring all the lost manufacturing production in... key sectors back home, it cannot do it. ...[T]hey don't have the supply network. They don't have the correct infrastructure. They don't have the necessary supply of technicians. ...[E]ven if it wanted, Apple cannot bring factories in China to California to make the mobile phones.
  • So... there will be only a limited degree of reorganization, but... in the long run countries and industries that do it in a more sustainable way, making the network more robust, more dispersed, more resilient, will reap the benefit. But let's not underestimate the... seduction of immediate gains. So... despite all this hullabalu the final reorganization will be rather limited. I'm not saying that it shouldn't be done, but my guess is that it will be done in a limited way, because every time there's some disaster... When there was the famous Fukushima earthquake, the problem with the nuclear reactor... there were some sectors that saw... the end of the supply for... intermediate materials because there was one Japanese company that was supplying 70% of the world... Every time that happens, like the earthquake in Taiwan... several years before, everyone says... we have to change the supply chain... make it less concentrated... less complicated, and then... 2 years later we are back to square one. So I'm not too sure about how much change will happen to the global value chains. ...[T]he taste for global free trade will be diminished somewhat, but... on that we should... change the conversation, because... we—especially those who are concerned with the fate of developing countries, like the people that source—we need to talk about intelligent trade in a completely different way. ...[I]t's not just a simple dichotomous problem of free trade versus protectionism. ...[T]here are many different ways of organizing international trade. ...There are many ways of regulating trade. Protectionism is only one way. ...[W]e do it with foreign direct investment ... with government procurement programs... with, in the case of the US, defense policy, so... we need to change the conversation in a more nuanced way...
  • [W]e have to work to make it what we want. It's not going to automatically happen, but... in an ideal world we want greater social protection, greater recognition of the importance of the care economy... restructuring of our production and supply networks into something more dispersed, resilient and robust, but... whether these things are necessarily going to happen. ...[T]his is my wish list but it's up to all of us, everyone to demand another world and fight for it.

Quotes about Chang

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  • Ha-Joon Chang has examined a large body of historical material to reach some very interesting and important conclusions about institutions and economic development. Not only is the historical picture re-examined, but Chang uses this to argue the need for a changing attitude to the institutions desired in today's developing nations. Both as historical reinterpretation and policy advocacy, "Kicking Away the Ladder?" deserves a wide audience among economists, historians, and members of the policy establishment.
  • Chang only looks at countries that developed during the nineteenth century and a small number of the policies they pursued. He did not examine countries that failed to develop in the nineteenth century and see if they pursued the same heterodox policies only more intensively. This is a poor scientific and historical method. Suppose a doctor studied people with long lives and found that some smoked tobacco, but did not study people with shorter lives to see if smoking was even more prevalent. Any conclusions drawn only from the observed relationship would be quite misleading.
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