JIM COOMBS. Trickle Down – My Hat !

The orthodoxy of the Neoliberal Economics (Let’s call it Nasty prehistoric Unfair capitalism, NPUC for short) asserts in the face of universal contradictory evidence, that giving capitalism free reign benefits the poor and the weak. Pull the other one!

When I was a fresh-faced boy, I met, with my father, the Oxbridge Hungarian economist Thomas Balogh. Later, as an economics undergrad before the Friedmanite takeover, I sighted a book by Balogh on my father’s bookshelf, entitled “Unequal Partners”, which was a quite persuasive debunking of the then current Theory Of International Trade, which asserted that the “developing nations”, as we used to call them, got great benefit from our exploitation of them (their cheap labour, lack of market power). That was back in the ‘60s. (Amusingly, I had the two volumes on my shelf and a feminist friend thought it was about marital relations!) Trickle Down didn’t work in trade, and so it is always when market power of the rich and politically influential is pitted against the weak and the poor. So the NPUC folk (aka “neoliberal economics “ (whatever that really means)) should be seen as what they are: nasty prehistoric and unfair.

If we return to the “Economic Question”, the optimal allocation of scarce resources to competing needs, that cannot seriously be done on the basis of highest bidder wins. “Optimal” suggests “best”, best suggests value judgements of what is better for the community served by the decision. So the claim that it is “good business” and “turns a profit” is hardly enough, and often the reverse of optimal. While Thomas Malthus may have been before his time, we are now faced with a huge population of which a sizeable proportion are starving or with little option when it comes to nutrition: consider that as you bite into your avo on toast. Cape Town is running out of water, more than a quarter of the world’s population would be lucky to have a reliable supply of water, let alone reticulated water and sewerage. Even in the USA, as McKinley has rightly identified, nearly half the population is poor, undernourished and deprived of adequate health care – in the boastfully Richest Country in the World. So much for unregulated capitalism and Free Enterprise.

Man-made climate change is incontrovertibly, scientifically proven, as far as that is possible, real, so doing anything to make it worse (even for Jobs and Growth) is inimical to the health and survival of us all (even the Indians who’d like electric light), so anything which increases carbon emissions should, as a matter of reason, be not permitted. Pascal’s Wager to be good in case the church was right, has less force than our need to at least give climate science the benefit of the doubt. Not just putative damnation, but scientifically predicted extermination of us all.

As I said last time, “good government” is that which promotes the good and discourages or bans the bad, out with pokies and online betting, quack “complementary medicines” and private health insurance and in with universal health care, out with four pillars banking and in with Nicholas Gruen’s rejig of the Reserve Bank, both get better results at less cost, so why not. Even Ross Gittins is on side. Not a trickle in sight, just doing what’s best, and discouraging the bad. In the USA, declaring the NRA as an enemy of the people would be a good start. McKinley is right: to do as the Americans do is doomed to failure for us, as it is for them.

But will it be bad for “business”? Yes, for the Military Industrial Complex which Dwight Eisenhower warned us of, as he left the Presidency, but they are the gun-runners and the merchants of death. Good Government would have no more of them, wouldn’t any sane thinking person think, even over there?

Jim Coombs is a nearly retired magistrate and economist.


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2 Responses to JIM COOMBS. Trickle Down – My Hat !

  1. Wayne mcMillan says:

    Thanks Jim, your Dad would be proud of you. The General Theory of the Second Best is another example of neo-classical confusion and ad hocery. “If one optimality condition in an economic model cannot be satisfied, it is possible that the next-best solution involves changing other variables away from the values that would otherwise be optimal.” ala Lipsey and Lancaster.

  2. michael lacey says:

    good article!

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