Free enterprise: A welcome competition of ideas
By Michael Reksulak
This shout woke up the audience.
“You can’t pound the table with a blog entry,” boomed the voice of MIT economics professor Simon Johnson through the seminar room while his fist pounded the podium.
He was, at that moment, emphasizing the importance of a recent publication by his fellow panelist, Stanford economist Anat Admati. The title of her book is “The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It,” and Johnson believes that it will be an eye-opener about our current banking industry to many non-experts and, yes, “experts” alike.
His oratorical fireworks, which featured a number of thought-provoking calls to action targeted at “fixing the banking system,” occurred during this week’s INET (Institute for New Economic Thinking) conference in Hong Kong .
No fewer than four Nobel Laureates are on the guest list. The conference organizers gave it the theme “Changing of the Guard?” As those of us invited to attend could quickly tell, the question mark at the end is representative of the agenda.
INET and its sponsors aim to bring together scientists, business managers, regulators and politicians to question what they describe as economic orthodoxy in order to tackle the immense socio-economic challenges ahead. (A number of sessions have been taped and are available at: http://bit.ly/Z65SVl.)
How difficult this is when put to the test was made clear by a questioner during the opening address, who said he, frankly, had not heard much new or concrete. His call to the organizers, who had invited just such critical questions, was to work toward answers that can truly guide societies toward more sustainable growth pattern.
Some of his suggestions would be anathema in the U.S. (which he readily acknowledged), such as having to curtail the freedom to own a car (or at least to make it very expensive) in order to solve congestion problems across Asia.
However, once one thinks this through and imagines what a world would look like in which every country on earth has the same per capita car-ownership as we do here in the U.S., this kind of thought-provoking suggestions seems a lot more credible.
INET (with a reported endowment of $150 million) is part of an experiment that attempts to bring new perspectives to the discussion of our global challenges, may that be Asian influenced thinking or from those who feel that their viewpoints are not getting heard in the political discourse.
One opinion expressed in discussions by fellow attendees was that the success of this experiment would depend on how quickly INET’s sponsored research program can produce actionable answers and alternatives.
Just questioning the “status quo” may be intellectually satisfying, but it wouldn’t be much more and it would be intellectually dishonest. Why? Because there are many researchers in the so-called “mainstream” who ask exactly the same questions, if sometimes with less fervor.
However, no matter what one thinks of some of the more radical ideas proposed at this conference, one lesson is clear: The science of economics should welcome the competition of ideas.
After all, such a marketplace holds the promise for more efficient answers.
Even better, if they are shouted out to the world, given how prominently the “auctioneer” features in the current paradigm of an “invisible hand” guiding us to equilibrium outcomes.
Dr. Michael Reksulak teaches economics and public finance in Georgia Southern University’s College of Business Administration. He may be reached by email at email@example.com.
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