Continuation of notes made by Karthik Chandra during Conference 2014.
The full 25-pages notes are posted in http://efnasia.org/wp-content/uploads/2015/10/EFN-Asia-2014-Conference-Report.pdf
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Day 2: November 7, 2014
Session 5: ‘The most radical form of egalitarianism is
equality before the law’
Dr. Tom Palmer
Executive Vice-President for International Programmes
Atlas Economic Research Foundation, USA
• Introduction about the Occupy Wall Street – background
and the demands behind this movement – started by a group of disgruntled
students mostly from privileged backgrounds and having incoherent demands and
philosophy. In particular, their demands were based on the concept of ‘99% and
the 1%’, which proved to be a very popular meme and this entire Occupy Wall
Street movement quickly caught popular imagination.
• Focus on the meme ‘99% vs. 1%’ - originally started by
the students who were essentially anti-globalization. The irony of it is that
it quickly became popular across the globe as the rallying cry of the Occupy
Wall Street.
• The global inequality has consistently reduced over the
past 20 years and is still falling. But, within countries, the inequality is
increasing/at elevated levels.
• Impact of immigration on inequality within countries
should be carefully understood and decoded: for instance, the US allows lot of
immigrants (from poor Latin American countries and especially those with poor
education and hailing from very poor economic backgrounds) and therefore the
income inequality within USA is much higher (i.e. Gini coefficient is much
higher for USA). In contrast, the European countries (eg. France, Germany,
etc.) have much lower immigrations (due to comparatively more restrictive
immigration policies vis-à-vis the USA) and also have lower inequality i.e.
lower Gini coefficients. The lesson from this is that we can have (a
lower equilibrium) equality by making others lives worse.
• But, the current debate on inequality (Eg: Thomas
Piketty’s Capital) never focuses on global inequality but mostly on inequality
within countries. Tom Palmer pointed out the conceptual faults and defects in
his book’s thesis.
• Made a strong case of why people like Piketty are less
egalitarian than someone like himself who is a ‘hardcore capitalist’. In
essence, the question is why does inequality in possessions still amount to
more egalitarianism?
• The reason he says is that those who advocate equality
usually are advocates of unequal political power. “egalitarian societies”
(socialist/communist) survive on unequal political power (eg: communist Soviet
Union’s ‘blat system’ or communist China ’guanxi’ system) : putative equal
allocation of resources in such systems is not through free market pricing but
through exercise of unequal political power. Paradoxically, this results in
final unequal allocation of resources and all consequential harmful outcomes.
This is true of all totalitarian systems whether they are rightwing or
leftwing.
• Usually, the state’s interventionist policies in the
name of egalitarianism (Eg: subsidies to special interest groups) serve to
transfer wealth from the unorganized majority to the organized minority. This
is nothing but predatory and rent-seeking behavior by the organized minority.
That is why capturing political power assumes so much importance, especially in
heterogeneous societies; the powerful few control the levers of redistribution
to favored groups.
• On the other hand, and paradoxically, the so called
unequal/capitalist societies actually give a greater opportunity to achieve
equality/egalitarianism in outcomes by allowing a freer, more open allocation
of resources based on market prices.
• At the heart of creating a more just and egalitarian
society is the concept of equality before the law – where we have ‘rule of law’
and not ‘rule of men’. Only such a system would allow the less privileged to
get a chance to move ahead in life.
• Therefore, aspirational claims to equality would be realized
only with market-based provisioning of equality of opportunities. Eg: The rise
of Dalit entrepreneurs in India. Prior to 1991, they had notional, paper based
equality rooted in Indian Constitution and the law. But only after free markets
expanded are they having a real shot at prosperity.
• Equality of opportunity, equality to access, equality
to power, equality before law…this is the real equality that we should aspire
for and not mere notional equality that attempts not just
redistribution/reallocation of resources: ostensibly, from rich to the poor,
but actually by tearing down the rich – and not lifting the poor.
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Session 6: Special Session
‘The ASEAN Economic Community (AEC): Opportunities and
Challenges for SMEs’
Organized by SEANET (Southeast Asia Network for
Development)
‘Why SEANET is needed?’
MC: Wan Saiful Wan
Jan
• The AEC is coming up in 2015. But, there are growing
calls for protectionism and also not much demand for pro-market policies and
concerted effort by forces. Most pro-trade
organizations are focused on local and national issues. But anti trade
organizations are well organized. SEANET hopes to fill this gap and meet this
requirement.
Yam Tunku Zain Al
Abidin ibni Tuanku Muhriz
President, IDEAS, Malaysia
• IDEAS organisation is committed to promoting free
market policies and pro growth approaches in the ASEAN region.
• Overview of the history and background of the ASEAN
group.
• Among these countries, fears among SMEs and labour
group exist that big corporations would dominate the AEC region. However, they
actually would greatly benefit from greater opening of the markets in various
countries. Eg. SMEs would benefit from greater access to institutional finance,
greater ease of doing business and accessing larger markets thanks to lesser
regulations and hurdles and better property rights.
Dr. Kriengsak
Chaeronwongsak
President, Institute of Future Studies for Development, Thailand,
Senior Fellow, Harvard University
• The benefits of AEC are multiple and spread across
various sectors: (1) unified, single, huge market and production base, (2)
coherent and integrated external policy.
• The benefits of AEC for entrepreneurs are clear. The
most to gain from AEC are the large, established businesses. However, SMEs too
would need to be ensured better opportunities; for this, several steps must be
taken (none of which are protectionist and anti-markets and therefore lack
fidelity to principles of liberalism and free market economics). It is
important that the potential benefits to SMEs are articulated effectively.
• In general, among the SMEs, after the AEC is formed,
the small and the large enterprises would survive; but it is difficult to
foresee how medium enterprises would survive in this new, changed world.
Small-scale enterprises can leverage their competitive advantage of mobility,
nimbleness and flexibility (i.e. lack of inertia) in this new system and then
be better prepared than medium enterprises to face the changed market.
• On the opposite spectrum, large companies would have
deeper pockets and greater access to capital. But the medium enterprises are
neither fast-and-nimble nor have access to huge capital. Hence the threat to
medium enterprises in the new AEC dispensation: they should either scale up or
scale down to survive.
• At the same time, there should be a concerted effort to
ensure that SMEs and small players do not “lose out” in the new, liberalized
market dispensation. They justifiably need hand-holding and capacity building
so that they are prepared for the new, upcoming market scenario.
• One key aspect is access to institutional finance by
the SMEs: we need to ensure that banks are free from political interference and
nepotism/favouritism so that they are not forced to end up with the burden of
non-performing loans after lending to undeserving candidates.
-------------See also:
EFN Asia 44: Day 2 of Conference 2014, November 10, 2015
EFN Asia 45: Growth, Inequality and the Philippines, November 14, 2015
EFN Asia 56, Conference 2014 in Hong Kong, part 1, March 28, 2016
EFN Asia 57, Conference 2014 in Hong Kong, part 2, March 29, 2016
EFN Asia 58, Conference 2014 in Hong Kong, part 3, March 30, 2016
