Sunday, April 18, 2010

Robert Manne's co-editor now admits he was wrong about the free market

Though, if John Carroll can learn from his mistakes and have the honesty to admit them, it does make you wonder why Robert Manne cannot and hasn't.

Instead, once he has assumed a position you can expect Manne to defend it no matter what.

But here is Carroll's letter from this morning's The Australian:

MICHAEL Stutchbury refers disparagingly to a book, Shutdown, that I co-edited with Robert Manne in 1992 ("Goodbye to the notion neo-liberalism caused the global financial crisis," 17/4). My view today, with the benefit of hindsight, is that Shutdown was basically wrong. I was principally troubled in 1992 with Australia's escalating international debt, and the consequent foolishness of running down local manufacturing (which would also aggravate the already high unemployment rate). My prediction was that an economic crisis loomed.

The reality turned out to be just the opposite: nigh on two decades of unprecedented economic growth. Moreover, industry policy in 1992 to encourage local manufacturing would have been almost entirely doomed once Chinese export production got into full gear -- something that could not have been foreseen then. [I could be wrong, but hadn't China already started to liberalise its own economy by then? If so, how could the export success of a country possessed of not tens, but hundreds of millions of low paid workers not be foreseen?]

To me now, the past two decades support the maxim: if in doubt, trust the free market.

Moreover, if the GFC signals anything it is to beware irresponsible government. In the US, it was a government agency that kept interest rates unnaturally low; it was a president (Bill Clinton) who leaned on government subsidiaries, Freddie Mac and Fannie Mae, to offer mortgages to people who would never repay them; and it was a series of Washington administrations that cavalierly lifted their own deficit spending until it became a potentially crippling 10 per cent annually of American GDP.

John Carroll, Fitzroy, Vic

But the funny thing about the continual contributions by Manne to discussions about economics is one thing that he has had the honesty to admit, and that is that he has 'no competence in economics whatsoever'.

As you can see from this snippet from Shutdown, where he and Carroll "declared that economic reform had failed in Australia and that ‘the most important contemporary example of economic success is Japan'."

Of course nobody these days holds up Japan, (currently suffering from deflation), and its model of regulated corporatist capitalism as a success.

But whereas Caroll shows he can learn from experience and admit when events prove him to be wrong, no such nimbleness of mind can be seen when it comes to Manne.

Posted via email from Garth's posterous

No comments: