Thursday, October 22, 2009


Over at The Brussels Journal, Belgian philosopher/economist Martin de Vlieghere, of the Belgian/Flemish pro free market think tank WorkforAll, published a very good article about the re-emergence of utopian socialism, which he co-wrote with businessman Paul Vreymans. Some exerpts:


From the desk of Martin De Vlieghere on Thu, 2009-10-22 17:17

"Jeffrey Sachs is senior economist at the UN and author of the bestseller "Common Wealth" and the controversial Time essay "The Case for Bigger Government". In a recent interview for the Belgian Journal ‘De Tijd” Jeffrey Sachs blames “unbridled American market capitalism” for the financial crisis and pleads in favor of the Swedish social model as an alternative. His ideological argument is revealing for the dominant utopian-socialist mind at the top of the UN.

The fact is that the Swedish social model, which Sachs would like to introduce, has not the only the largest Size of Government of Western World, but also the weakest economic performance of the OECD. In 1970, Sweden still was the fourth wealthiest nation in the world. Thirty years later, Sweden had fallen to rank 17 with catastrophic social consequences. In the meantime the U.S. consistently managed to remain the second or third for more than half a century. So there is not much socio-economic wisdom to be learned from the Swedish Social Model.

Sachs also argues that "unbridled capitalism" is the cause of the current crisis. The reality is that during the last twenty years central planning progressively intruded Western economies who now bear the burden of governments spending 40% to 55% of GDP. Entrepreneurs face ever more crippling restrictions, licensing schemes, quotas and price and quality controls. Businessmen endure tens of thousands of pages of new rules and regulations each year, all written in a lawyers slangy that totally undermines the legal certainty of the free market and which transformed business into a gamble on the next political caprice and on judicial interpretations of the legal jargon. Size of government, computerized control and dirigisme has now reached a level plan economists of the Soviet Union could only dream of. Not the capitalistic system failed, but excessive dirigisme is to blame for the crisis."


"Sachs also belongs to the side of the climate fixers who take the controversy over the global warming trend for a "global consensus" and continue to believe that human action caused the trend and may even reverse it. According to Sachs Southern Europe will soon dry out and cause a massive flow of refugees to the north. The bombastic climate alarmism in the run up to the Copenhagen Climate Conference next month must be understood as an ultimate attempt to convince conference goers to step into the global emissions bureaucracy.

CO2 Emission rights are a totally fictitious but legally indispensable commodity for most production processes. Politics will determine its degree of scarcity and the regional allocation, thereby disconnecting production costs from market reality and cause massive distortions. The global ETS scheme is not only fraud sensitive. Scarcity and allocation being the result of political decisions, inside knowledge are likely turn the ETS scheme into one big swindle with grave counter-productive effects. The Soviet debacle learned to what systemic waste the falsification of competition and the elimination of market forces can lead. High subsidies for extremely low productive windmills and solar panels in the Western World for example are causing awfully suboptimal use of scarce resources worldwide. Under free market conditions much more productive use would be found in developing countries. "

A long time ago already I dismissed Sachs as a serious economist. That this man enjoys the standing that he has, that he can advocate seventy-year old mechanisms that have proven not to work, that he emphatically maintains that the only way for poor countries out of what he dubs the 'poverty trap' is.... even more massive aid by rich countries... speaks bookmarks of the West's intellectual crisis. An he indeed made a strong case for bigger government in TIME - I was very glad that by that time (early 2008), I had already ended my subscription to that leftist rag. Sachs is a classical example of an ivory tower wackademic totally disconnected from reality. And speaking of the 'poverty gap': no matter how many titles he has and no matter how senior his position as economy czar at the UN, I'll take Dambisa Moyo's "Dead Aid" over "Common Wealth" any time.


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