Low wages and revolutions

[marmar]

from the Asia Times:



Low wages and revolutions
By Henry C K Liu


No economy, whether modern or ancient, monarchist or democratic, capitalist or socialist, can rely solely on market forces to meet all the needs of society or to direct the development of the nation toward a desired destiny.

A properly regulated market performs many important economic functions that are necessary for any economy, feudal, capitalist or socialist. However, market forces, when unregulated or undirected by government, as neoliberals advocate for capitalist market economies, naturally allocate resources most efficiently toward efforts and investments with the highest potential return on capital rather than where it is needed most by the nation and its people.

The Washington Consensus has been largely discredited since the Asian Financial Crisis of 1997 as an effective strategy for economic development for developing economies. Its 10 propositions are:
1) Fiscal discipline;
2) Redirection of public-expenditure priorities toward fields offering high economic returns;
3) Tax reform to lower marginal rates and broaden the tax base;
4) Interest-rate liberalization;
5) Competitive exchange rates;
6) Trade liberalization;
7) Liberalization of foreign direct investment (FDI) inflows;
8) Privatization;
9) Deregulation; and
10) Secure private-property rights.

These propositions add up to a wholesale reduction of the central role of government in the economy and its primary obligation to protect the weak from the strong, both foreign and domestic. Generally, highly efficient markets, particularly modern financial markets, aside from their fault of misallocating financial resources based on maximum return on capital, do not produce sustainable or balanced financial or economic outcomes if left unregulated by government. .............(more)

The complete piece is at: http://www.atimes.com/atimes/Global_Economy/MF10Dj01.html

[raccoon]

1. K&R. nt

[bhikkhu]

2. Greenspan's "Self-regulating Markets" model

Which even he admitted (before congress, and looking befuddled) to be a failure.

I suppose its worth recalling that the regimen our economists aggressively advocated and instituted around the globe has been proven unstable and faulty.

Especially worth remembering because Reagan applied the same model, and its been the centerpiece of the republican's mythology of an economic plan for a generation, and still is.