John Ibbitson's Anglo-Saxon Illusions
By Stephen Moore at Apr 01, 2009
Writing in today's Globe, John Ibbitson responds to critics of a mythical 'Anglo-Saxon' economic model, arguing that despite the current temptations of social democracy, the 'Anglo-Saxon' model will return to favour once more, because 'history has proved it works.'
Brazil's Luiz Inacio da Silva and France's Nicolas Sarkozy feature as challengers of this Anglo-Saxon model of capitalism, characterized by Ibbitson as 'investment-friendly, export-oriented, low-taxed and minimally regulated.'
While Lula argues sharply that the current economic crisis has exposed the ignorance of those who until recently claimed to know it all, Sarko touts state intervention, regulation, social programs and automatic stabilizers.
Not so fast, says Ibbitson. While the occasional excesses of a Thatcher or a Reagan are to be regretted, 'highly regulated, wealth-distributing and state-controlled' economies have been out-performed by the Anglo-Saxon kind since the 18th century.
The only major problem with Ibbitson's argument is that he doesn't know what he's talking about: this mythical Anglo-Saxon model has never existed, and certainly isn't responsible for the economic development of the US and the UK from the Industrial Revolution on.
Ha-Joon Chang, in his 2008 book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, carefully demonstrates that major industrial economies like South Korea, the US and the UK have grown and developed by means of government intervention and protectionism.
To take but one example, Chang shows that the US economy was expanding greatly at the same time that it was one of the most protectionist economies on earth (55). Concludes Chang:
But history tells us that, in the early stages of their development, virtually all successful countries used some mixture of protection, subsidies and regulation in order to develop their economies. Th history of the successful developing countries . . . shows that. Furthermore, the history of today's rich countries also confirms it . . . [.] (61)
A much different historical analysis than Ibbitson's, but one friendlier to the facts.
The reference to "early stages" is an important one, and helps explain both the title of Chang's book and Lula's dismissal of the know-nothing know-it-alls among the 'Anglo-Saxons.'
Having achieved wealth and development themselves by means decidedly un-Anglo-Saxon, those running the economies of the US, UK and other nations have repeatedly forced on less-developed countries the very mimimally regulated, 'free-market' prescription they themselves have historically ignored.
The results have been predictable for those on behalf of whom Lula speaks: weak growth, slow development, lost prosperity.
Chang terms this 'kicking away the ladder': having climbed to the heights of development and prosperity, the wealthy kick the ladder away so those beneath have no chance to follow.
It's as though the biblical Good Samaritan, far from following Christ's narrative, had come upon a fellow human in need and applied salt to his wounds instead of balm, carried him off to a den of thieves for another beating instead of to an inn for a chance to rest and recover.
A Bad Samaritan indeed.
It's worth comparing Chang's analysis of the historical development of global economies--their real development, not the Anglo-Saxon fairytale--with the conclusion of Ibbitson's column in the Globe:
The recession will end, growth will resume and emerging economies will move closer to the Anglo-American model, because history has proved it works. This truth should be beyond debate, although it's a heck of a job getting some people to see it.
Ibbitson's quite right that it's a 'heck of a job getting some people to see the truth'--he's one of them, since his 'Anglo-Saxon' illusions stand on the other side of a huge gulf from the factual record.
"Emerging economies"--indeed all economies--in search of a model proven by history would do well to acquaint themselves with that record, and to ignore the historical hoax of John Ibbitson's Anglo-Saxon Illusions.