Wednesday, March 11, 2009

A Sentimental Education

The video of Amy Goodman's interview with economist Ha-joon Chang is worth watching. Having read Chang's Kicking Away the Ladder and Bad Samaritans, I was curious to see him speak. But the site provides links to the audio alone, as well as a transcript of the interview.

Asked about President Obama's defense of his "recovery package" last Friday in Columbus, Ohio, Chang commented:
I agree with this sentiment, but the people he put in charge of the economy, like Paul Volcker and Larry Summers, I mean, these are people who actually created this problem. You know, Volcker is, if you like, the godfather of monetarism in this country. And Larry Summers, when he was at the World Bank as the chief economist and then when he was at the Treasury later, I mean, was going around the world preaching to other countries that they have to deregulate their financial market, open up their borders to the American and other rich country financial flows. Now, what they are doing now isn’t what they were doing before, but if they have started believing in something else, they should come clean and apologize, don’t you think? I mean, because these are the people, with others, who created these problems.
Chang pointed out the effectiveness of nationalization in developed countries around the world, and argued that America should "play by the capitalist logic. If the taxpayers are paying the money, you have to nationalize them. You know, I mean, the whole problem, people say, is that all these bankers were playing with other people’s money. So now, I mean, that they are being paid by the taxpayers, it is only right that the taxpayers control these companies. If they don’t want this money and they don’t want to be nationalized, they should go bankrupt."
Well, basically, the myth is that America has been founded on the free market; the government has done very little; it has thrived under free trade. But actually, if you look at the history, this is actually the country that has succeeded most with protectionist policies. This is a country which has huge industrial policy, only that it’s called research funding in defense industry and research funding in health research. It actually spends, in proportional terms, a lot more money than Japan or European countries in supporting research and development, thereby steering the industries into certain directions. So let’s put it this way. I mean, this country has to basically come to terms with what it has done. I mean, it has been haunted by this ideology that, “Oh, we never did anything other than free market and free trade.” It’s time to give that up.
Despite Obama's call in his inaugural sermon for Americans to "give up childish things," the myth of free markets and free trade is one childish thing you'd have to pry from his cold, dead fingers. Toward the end of the interview, Chang mentioned the Marshall Plan, and it occurred to me that the Marshall Plan (whose official name is the Economic Recovery Act of 1948) is often brought up by people who want to prove the benevolence of the US. That can be debated, apparently, but it was also a massive government intervention in the international economy, of exactly the kind that Obama is making now. It would be interesting to ask conservatives who oppose Obama's stimulus plan as "socialism" what they think about the Marshall Plan.