• Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • 23 Things They Don't Tell You About Capitalism Pt.5

    Ha-Joon Chang: US does Not have the highest living standard -   April 18, 2011
    Members don't see ads. If you are a member, and you're seeing this appeal, click here


    Share to Facebook Share to Twitter

    the name says it all...real news - yusuf
    Log in and tell us why you support TRNN


    Ha-Joon Chang, a Korean national, has taught at the Faculty of Economics, University of Cambridge, since 1990. In addition to numerous articles in journals and edited volumes, Ha-Joon Chang has published 13 authored books (four of them co-authored) and 9 edited books (six of them co-edited). His main books include The Political Economy of Industrial Policy (1994), Kicking Away the Ladder -- Development Strategy in Historical Perspective (2002), and Bad Samaritans -- Rich Nations, Poor Policies, and the Threat to the Developing World (2007), and 23 Things That They Don't Tell You About Capitalism (Penguin, 2010, and Bloomsbury USA, 2011). By 2011, his writings will have been translated into 21 languages.


    23 Things They Don't Tell You About Capitalism Pt.5PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I'm Paul Jay. We're continuing our series on the book 23 Things They Don't Tell You About Capitalism, and we're up to Thing 10. Thing 10 is: The US does not have the highest living standard in the world. Most people think it does. So what's the story here?

    HA-JOON CHANG, UNIV. OF CAMBRIDGE: Well, you know, this idea that the US is--

    JAY: Number one.

    CHANG: --yeah, number one, I mean, has persuaded a lot of people of the world, if we want to be like them, we need to adopt American-style free-market capitalism. But actually when you look at the numbers closely, actually, the story's a lot more complicated. Now, just look at the published dollar income. Actually, the US isn't the richest country anymore. I mean, Norway has far higher per capita income than the US, and six or seven other European countries. But economists, to reflect the local differences in labor cost and so on have introduced this idea of purchasing power parity, which basically tells you how much you can buy in different countries with the same dollar of your money. And when you use that purchasing power parity income, it turns out that the United States, except for Luxembourg with 400,000 people, the United States has the highest purchasing power parity income per capita. So a lot of people on that basis say, well, this is still the best country. But one thing that we all have to remember is that the Americans work much longer than people in other comparably rich countries. Depending on which country you compare it with, Americans work 10 to 30 percent longer than the people in France, Sweden, and so on.

    JAY: So this is longer hours in a day, less vacation time.

    CHANG: Yeah. Exactly. Yeah. So the annual total working hours, say.

    JAY: So if you take a more holistic view of standard of living, what do you get?

    CHANG: Yeah. If you use that measure, even in purchasing power parity terms, the United States is only about seventh or eighth richest country in the world. So per hour's work, actually, countries like France and so on have much higher income. I mean, they have more leisure time, which adds to their quality of living. So you may even argue that the difference is actually even bigger than what is indicated by simply comparing purchasing power parity income. And, of course, let's not forget that the United States is far more unequal than other comparably rich countries.

    JAY: Yeah, because if you're talking standard of living in the United States, there's the world of people with health care, the world of people without health care.

    CHANG: Exactly, yeah. Exactly, yeah. So the average number--of course, the average number nowhere gives you the whole picture, but the average number in the US is even more distorted than [crosstalk]

    JAY: Give us a couple of outstanding examples.

    CHANG: Yes. I mean, having unequal coverage of social security, including health care, I mean, the Americans are spending, actually, far more money on health care, but they have apparently no better health indicators. I mean, America spends 13, 14 percent of GDP on health care. Countries like Sweden spend less than 10 percent. The Swiss have a higher health standard, I mean, judged in terms of life expectancy and so on. The US is a very unequal society. It has a much higher crime rate. On per capita basis, the United States have 12 times more people in prison than in Japan, eight times more people in prison than European countries. So this is a consequence of, you know, unequal society.

    JAY: Well, in that respect, the US is number one.

    CHANG: Yes. Well, you have to be number one in something.

    JAY: Something, yeah. Okay. Then we're going to move on. Alright. Number 11: Africa is not destined for underdevelopment.

    CHANG: Yes. A lot of people have recently argued that, look, Africa has this, I mean, what they call growth tragedy. In the last 30 years, it basically has not grown at all on per capita basis. So the living standard has been stagnant for the last 30 years. And they tried to explain this by the fact that Africa has a poor climate, which creates, say, tropical diseases, bad geography in the sense that a lot of them are landlocked and therefore make--it makes--it is difficult for them to trade with the outside world. I mean, they talk about--the African countries having too much ethnic diversity, which leads to a lot of conflict. And so they try to explain this as the sort of structural outcome. You know, Africa is destined not to develop, because they have bad geography, bad [crosstalk]

    JAY: Okay. So what's wrong with that?

    CHANG: Well, the problem is that, you know, a lot of these things are actually the, if you like, consequences rather than the causes of underdevelopment. You know, I mean, just think about it, that the same Richter scale 7.0 earthquake hits Haiti, you have 200,000 people dead. The same kind of earthquake hits Mexico, probably you have 20,000 dead people. That same earthquake hits Japan, two people die. So, actually, the suffering from natural conditions is the consequence rather than the causes of underdevelopment. You know, I mean, it's not as if the rich countries do not have, actually, those structural constraints.

    JAY: It's like health care. Tuberculosis if you're poor, you die. Tuberculosis if you're rich, you live.

    CHANG: That's right. Yeah. And, you know, I mean, just think about it. I mean, even being landlocked, you know, I mean, two of the richest countries in the world, Switzerland and Austria, are landlocked. Of course, when I say that, people point out that there are good river navigation system that link them to the outside world. A lot of African countries have very good river systems. It's only that they don't have the money to develop [crosstalk]

    JAY: Well, that's the real thing. The amount of capital investment in Africa is miniscule compared to the population. On the other hand, the natural resources of Africa perhaps surpass the rest of the globe.

    CHANG: Yeah. Well, I mean, I don't know about the latter point. I mean, I'm not actually sure that they have better natural resources [incompr.]

    JAY: No, in terms of unexploited natural resources, I think--.

    CHANG: Right. Unexploited, yes, yes, that's true. But--yes, I mean, that's exactly my point. I mean, all those so-called structural constraints look like structural constraints only because you haven't got the ability to overcome those things.

    JAY: But how does that change, though?

    CHANG: Well, I mean, you have to get the economy moving, I mean, have to generate investment, have to develop infrastructure, have to develop production capacities, and all of those things have become, actually, more difficult in the last 30 years in Africa because they have been put under all these programs administered by the IMF and the World Bank, which actually discouraged these countries from doing those things.

    JAY: Yeah. I mean, it's a combination. In the first years after World War II you have the Cold War put in kleptocracies and dictators, 'cause the only issue that the West cared about in Africa, that there wouldn't be national liberation movements that somehow would be allied with socialism. And now you have the IMF and structural adjustment policies.

    CHANG: Yeah. No. But, you know, what is even more sad is the fact that even in those days of the, I mean, US-supported puppet governments and so on in the 1950s and '60s, Africa actually was able to grow quite decently. I mean, in the '60s and '70s, African countries grew at about 1.5, 1.6 percent per year in per capita terms. In the last 30 years, the growth rate has fallen to 0.2 percent. And the reason is because in the '60s and '70s Americans were not so insistent on these countries using free trade, free market policies. So I would argue that a lot of the growth problems in Africa should be actually attributed to those things, because if anything, those structural constraints should have been even more severe in the old days.

    JAY: Okay. Let's do one more in this segment. Twenty-three things. We're up to 12: Governments can pick winners.

    CHANG: Yes. I mean, there's this widespread belief that government cannot pick winners. I mean, they just don't know what's going on in the business world. How do you expect these people to, you know, be able to support--I'm sorry, choose particular industries that might be a winner in the long run? First of all, against this argument, I point out in the book that there are many, many examples where the government successfully pick winners.

    JAY: For example?

    CHANG: Yes. I mean, for example, in the late 1960s, the South Korean government set up this state-owned enterprise in steel, which is known as POSCO. Now it's a privatized company. But it set up this state-owned steel company against the advice of the World Bank, against the advice of just about everyone, because it believed that a good industrialization program requires a good, efficient steel producer. And it was a huge success. I mean, but, in the beginning everyone thought that this is crazy. In Japan in the 1950s, when the Japanese government was trying to promote the auto industry, I mean, Americans laughed. You know, what are you doing? I mean, you're a country that basically exporting cheap toys and T-shirts, and you are trying to compete with us building cars? You know, that was a time when America produced something like 7 million cars in a year and Japan produced something like 70,000 cars. I mean, I forget the exact number, but--. You know. But the Japanese government said, unless you have industries like automobile, you are not going to become a rich country. We have to support this through tariff protection, subsidies, and all sorts of other government measures. So there actually have been a lot of success stories of government picking winners.

    JAY: And China too, no?

    CHANG: Yeah, China is full of those.

    JAY: Which is, I find, kind of ironic is that some of the same people that keep talking about we need to learn from what China's doing and look at what China's doing, they say, oh, no, no, but government can't pick winners here.

    CHANG: Yeah. You know. I mean, I'll tell you another beautiful story. I mean, Singapore Airline, which is one of the most kind of highly rated airline companies in the world, is actually a fully state-owned enterprise. In the nearly 40 years of its operation, it has never made one penny of loss. In contrast, all the free enterprise American airline companies live on government subsidies.

    JAY: And they spend half their time eating each other for breakfast. They're far more worried about mergers than flying.

    CHANG: That's right. So these people actually use these things to justify whatever is convenient for them. You know, I mean, I just think this argument that government is always unsuccessful and the private sector always is successful--.

    JAY: Well, here's one of the arguments on that, though, is that because of the influence that certain sectors of capital have over government, especially in the United states, that the government will pick winners that are good for the people who are their financial backers.

    CHANG: Yeah, there is that political [crosstalk] issue. But this is a political issue. It's not inherent in the government policy. You know. I mean--and especially in these days, when half the US financial companies are--I mean, that should have been technically bankrupt without this bailout, someone saying that private sector is better at pick winners, I mean, it's [crosstalk]

    JAY: And aren't they picking winners with the banks is your point, obviously.

    CHANG: Exactly.

    JAY: Yeah.

    CHANG: But, I mean, of course there is that political issue. You know, the bankers have captured the US government. And, yeah, they are putting pressure on the government to do things that suit them rather than their national interests.

    JAY: So join us for the next segment of 23 Things They Don't Tell You About Capitalism. And we're going to be talking about the idea that making the rich richer makes everybody else richer. Or does it? Thanks for joining us on The Real News Network.

    End of Transcript

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at


    Latest Stories

    Ukraine Transitional Gov't Moves Militarily To Reclaim Seized Buildings
    IPCC Report Flawed By Narrow Focus on Carbon Emissions
    The Modern History of Venezuela: The Bolivarian Revolution - Edgardo Lander on Reality Asserts Itself (5/9)
    Obama Signs Directives to Reduce the Gender Wage Gap
    Eastern Ukraine Lacks Political Representation in Kiev
    Demystifying the Role of Mitigation in the Most Recent IPCC Report
    Hypersurveillance State Won't Prevent Another Boston Marathon Bombing
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Univ. of Maine Faculty Reinstated After Students Protest Against Cuts
    The Modern History of Venezuela from 1908 to 1973 - Edgardo Lander on Reality Asserts Itself (2/9)
    IMF Will Address Global Inequality, Says Managing Director Christine Lagarde
    Raising Big Banks' Leverage Ratio Good, But Not Nearly Enough
    TRNN Replay: Austerity Road to 19th Century
    Has Palestinian Maneuvering Revived Peace Talks?
    Late Jackson Mayor Lumumba's Son Wins Primary to Replace His Father, Runoff Election Ahead
    Quebecers Reject PQ and Elect a Liberal Government Representing Big Business
    TRNN Debate: Decriminalization vs. Legalization
    The Beginning of the Chavez Era - Edgardo Lander on Reality Asserts Itself (4/9)
    "Off With His Head": Court Upholds Obama's Power to Kill
    Workers at Nation's Top Hospital Strike For Fair Wages
    From Exile to Radicalization in Venezuela - Edgardo Lander on Reality Asserts Itself (1/9)
    Rwanda 20 Years Later: Genocide, Western Plunder of Congo, and President Kagame
    Ukrainian Protesters in the East Demand More Autonomy From Kiev Government
    Hunger Strikers Demand President Obama Halt His Record 2 Million Deportations
    Indian Parliamentary Elections - A Primer With Vijay Prashad
    West Looks to Carve Up Ukraine & Privatize Industries Held by Kleptocrats
    Where Are Israeli-Palestinian Peace Negotiations Headed?
    The Multiple Kingdoms of Saudi Arabia (5/5)
    Do the Afghan Presidential Elections Signify Progress?
    Republican Presidential Hopefuls Pay Homage to Billionaire Casino Tycoon Sheldon Adelson
    Will Extremist Lieberman Become Israel's Next Prime Minister?
    Why do the Saudis Want the US to Attack Iran? (4/5)
    Immigrant Advocates and Families Tell President Obama 'Not One More'
    Elections, Pipelines, and Protests - The Canada Panel
    Chris Hedges on "Israel's War on American Universities"
    Baltimore Residents Decry Lack of Affordable Housing
    Yellen Talks the Talk But Will She Walk the Walk?
    Hopkins Hospital Workers Speak Out against "Poverty Wages"
    Will Venezuela's New Floating Exchange Rate Curb Inflation?
    The European Central Bank's War on Wages is Pushing Europe's Economy to the Brink
    Supreme Court Decision Opens Floodgates for More Campaign Cash
    Charles Keating, the Financier Behind the Savings and Loan Scandal, Dies at 90
    Saudi Arabia and the al-Qaeda Monster (3/5)
    Maryland Residents Voice Opposition to Natural Gas Fracking Export Facility
    Supreme Court Ruling Gives Wealthy Individuals More Influence Over Elections
    What are the Saudis Afraid Of? - Madawi Al-Rasheed (2/5)
    Baltimore's MICA Adjunct Professors Set to Vote on Unionization
    Boycott of Israel Moving to Next Level?
    Hypocrisy Dressed Up as "Realism" Justifies American Alliance with Saudi Dictatorship
    Immigration Reform in the Shadows of Cesar Chavez's Legacy
    Leaked Senate Report Shows Use of Torture As "Ineffective"
    UN Report Says Climate Change Will Threaten Food Production Worldwide
    The Hypocrisy of US Calling for Enforcement of International Law
    How the Ecuadorian Economy Grew in a Global Recession
    'Shadows of Liberty' Trailer
    Kristina Borjesson on Why CBS Shut Down Her investigation into Flight 800 (2/8)
    Glen Ford on Racism in the American Media (3/8)
    Paul Jay on What Drives Corporate Media and What Drive The Real News (4/8)
    Creating a New Media Paradigm After Citizens United (5/8)
    Should The Left Engage with the Mainstream Media? (6/8)
    What Is the Financial Backing For The Real News? (7/8)
    Standing up to Character Assassination (8/8)
    Oligarchs, Fascists and the People's Protest in Ukraine
    TRNN Debate: Is Obamacare In the Interest of Workers?
    Too-Big-To-Fail Advantage Remains Intact For Big Banks
    Obama and the Saudi Agenda
    TRNN Replay: Investigating the Saudi Government's 9/11 Connection and the Path to Disilliusionment - Sen. Graham on Reality Asserts Itself pt 1
    The Iraq War's Real Legacy
    Petitions with 100,000+ Signatures Call for Snowden's Passport to be Reinstated
    We Need to Harness People Power - Andy Shallal on Reality Asserts Itself (4/4)
    BC Pipeline Fight and Quebec Elections - The Canada Panel
    Jonathan Schell - 1943-2014: Board Member of TRNN on Why We Need The Real News
    Teachers on Strike from the UK to Argentina
    Connecticut Poised to Become First State with $10.10 Minimum Wage
    Oil Spill Threatens Wildlife and Local Economy
    DC School Test Scores Up, But Poor Black Kids Are Doing Worse - Andy Shallal on RAI (3/4)
    Obama's Proposal To End NSA Bulk Data Collection Won't Protect Privacy
    How Google, Apple & The Biggest Tech Companies Colluded to Fix Workers' Wages
    An American Should be One that Questions Their Government - Andy Shallal on RAI (2/4)
    What's Driving Putin & Obama's Posturing on Ukraine?
    Hundreds of Students & Faculty Occupy College Campus to Fight Cuts to Public Higher Ed
    Due Process 'Impossible' In Harsh Death Sentencing Of Over 500 Muslim Brotherhood Members
    Has Anglo-American Capitalism Run Out of Steam?
    Being the "Other" in America - Andy Shallal on Reality Asserts Itself (1/4)
    TRNN Debate: Should Baltimore 'Ban The Box'?
    How Fallujah Became the Iraqi Government's New Battleground
    Why I Decided to Blow the Whistle on the NSA
    NASA Climate Predictions Show Serious Threat To Humanity
    Professor Who Teaches Israel-Palestine Conflict Accuses College of Violating His Academic Freedom
    CIA and NSA Wrongdoing Requires Independent Investigation, Says Former Church Committee Staff
    Are Tuition Breaks Enough To Combat High Student Debt And Low Graduation Rates?
    Industries Across the U.S. Are Stealing Wages From Their Lowest Paid Workers
    Who In Ukraine Will Benefit From An IMF Bailout?
    NSA Recording All International Calls From U.S.
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (2/2)
    BP Gets Green Light to Drill in Gulf, But Has Safety Improved?
    Residents Still Not Drinking Tap Water Two Months After West Virginia Spill (1/2)
    Libya's Descent Into Turmoil Three Years After NATO Intervention
    From Pipelines to Peladeau - Canadian Report
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (1/2)
    Congressional Progressive Caucus Budget Strikes Back Against Austerity
    Libya Three Years Later - Chaos and Partition
    Why Was Gaddafi Overthrown?
    Should Ukraine and West Accept De Facto Crimea Joining Russia? (2/2)
    Tony Benn Saw Socialism as the Culmination of Democratization
    Why Didn't Bush/Cheney Attack Iran and Can Obama Make and Sell a Deal? - Gareth Porter on Reality Asserts Itself (3/3)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi? (2/2)
    Crimea Referendum: Self Determination or Big Power Manipulation? (1/2)
    Sen. Graham: President Must Side with Openness About CIA and 9/11
    Manufacturing a Narrative for War - Gareth Porter on Reality Asserts Itself (2/3)
    Protesters Hit the Streets of Brooklyn to Demand $15 Minimum Wage
    Hammer: 'Moral Bankruptcy' Behind Massive GM Recall
    White House Withholds Thousands of Documents from Senate CIA Probe
    I Grew Up Believing in Time Magazine's Version of America - Gareth Porter on RAI (1/3)
    Western European Banks Vulnerable to Ukrainian Sovereign Debt Crisis
    TRNN Debate: What's Driving Inflation in Venezuela? (2/2)
    CIA vs. Senate: Who Is Obama Protecting?
    Will Tipped Workers Get Excluded Again From Minimum Wage Hike?
    TRNN Debate: What's Driving Inflation in Venezuela? (1/2)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi?(1/2)
    TRNN Replay: A Look at Who's Poised to Become No.2 at the Fed
    How Right-Wing Nationalism Rose to Influence in Ukraine (2/2)
    Netanyahu Attacks Boycott As Campaign Enters New Phase
    Moving Towards a Police State - Michael Ratner on Reality Asserts Itself (7/7)
    Fighting Reagan's Secret, Illegal Wars - Michael Ratner on Reality Asserts Itself (6/7)
    Puerto Rican Independence Movement and Cuba Further Radicalized Me - Michael Ratner on RAI (5/7)
    The Butcher of Attica - Michael Ratner on Reality Asserts Itself (4/7)
    MLK and a Radicalizing Moment in American History - Michael Ratner on Reality Asserts Itself (3/7), Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting