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What's Our Economy For?

Entry 1572, on 2013-09-16 at 20:25:09 (Rating 2, Politics)

What is our economy for? That was a question which stood out in a recent radio program I heard about Brian Bruce, a film maker who worked on a show called "Mind the Gap" which was primarily about the increasing gap between rich and poor. A previous show he had made, called "Inside Child Poverty" caused some controversy during the 2011 New Zealand general election, so he has a history of making politically relevant material.

Some other questions the show asked included: "do you think you pay too much tax and others don't pay their fair share?" (answer: sort of, and yes, I don't mind the amount of tax I am paying but I would like to see big corporations and the rich pay their fair share as well) and "Do you work all week and still can't make ends meet?" (answer: I am paid above the average and survive OK but I don't have much left over for anything extra and I think it's a poor reflection on our society that many people can't survive).

So despite the fact that these issues aren't necessarily a huge concern to me directly they should be directly concerning to the majority of people (who are negatively affected by current economic policies) and indirectly to everyone (because ultimately an unfair society cannot survive).

The show claims to have talked to people from all walks of life about what has gone wrong with our economy, and to have sought advice from Nobel Prize winning economists and world experts on how to get things right.

Of course, some people will claim that there is nothing much wrong with the economy and some will even claim that we need a more extreme form of what has already got us to where we are today. A similar thing would apply to economists: there are different schools of economics with some claiming neo-liberalism is the best economic model and others advocating a model with more intervention from government.

But, as I have said in previous blog posts, there does seem to be a general trend away from extreme neo-liberalism, laissez-faire economics, and totally "free" markets. All I can say is it's about time. It has been clear for years now that the model has only benefitted the top few percent of the population and claims that if we hadn't followed it the country would have been totally bankrupted are devoid of any real evidence.

So while the program (which I haven't seen but have heard reports on) seems to have been a bit biased it does reflect a reality which more people are beginning to understand.

The Labour Party members, who were competing for leadership of the party at the time, certainly seemed to have identified with the message. Shane Jones said the TV program showed that "all the world's leading economists" (not actually true) thought the gap was growing (which is a fact but one which some people try to justify). And David Cunliffe also railed against the inequality portrayed in the program.

So the next Labour leader (who we now know is Cunliffe) is very aware that we need to reverse some of the damage neo-liberalism has caused. If Labour are the main party in the next New Zealand government (and they certainly should be) we can look forward to some balanced, fair policies which don't follow the simplistic ideology of neo-liberalism.

As I implied with my initial statement, we need to decide what the economy is for. Is the economy something which we must all be subservient to? Something which we work for with some vague idea that it will provide all we need? Something which is a natural or ideal consequence of human activity? Or is it a tool which we should shape to benefit the majority?

I don't think the economy, or markets, or anything else are free or natural or the highest ideal which we should aim for. All markets - even those labelled as "free" - are just human inventions shaped by political and social forces. Change the forces and you change the market.

We need to change the "free" market into something which makes the participants free and the market the tool which creates that freedom, instead of the other way around which we have now: we are all slaves to the market. As I said, all we can do is hope that this happens, and hope is better than nothing.

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