Among the attendees of the recent Mont Pelerin Society were Steve K, Sinclair and me. A great many issues were discussed in the debate on liberty, efficiency, their friends and enemies.
I have a piece in today’s The Australian, which summarised my view of the more important take-aways. They include
No attendees doubted market capitalism’s higher efficiency and ability to deliver growth, including for the benefit of poorer members of society. But recent developments have undermined confidence that the model will continue to prevail.
These include the resumption of growth in the size of government and a weakening of property rights by, for example, the seizure of land usages rights. In Australia, government actions to reduce greenhouse gas emissions through planning laws and measures that restrain commercial activity include the increase in regulatory intrusions and permissions, like those that resulted in the Adani coalmine taking nine years to be approved. A worldwide consequence of such measures has been a general slowdown in growth rates.
There is also evidence that more people are not seeing the benefits of the growth that has taken place. Between 1970 and 2018 the top third of US income earners increased their aggregate share of total incomes from 29 per cent to 48 per cent, with the middle third falling from 62 per cent to 43 per cent and the poorest third seeing their share drop marginally to 9 per cent. (Corrective note: These numbers describe “tiers” as defined by Pew Research. The top tier increased its share of households from 14 per cent to 20 per cent; the middle tier decreased its share from 61 to 51 per cent; the bottom tier increased its share from 25 to 29 per cent. All three tiers saw higher real median household incomes of 64 per cent, 49 per cent and 43 per cent for tiers one, two and three respectively).
Particulary among young highly educated people there is a hostility to the market economy – thus although Corbyn lost the Berexit election he got 70 per cent of the young peoples’ vote.
The politics of envy is becoming evident.
Unlike socialism of the past, the modern form of socialism sees redistribution, reserving areas from commercial activities and abolishing cheap fossil and nuclear fuel accorded a higher priority over increasing aggregate income levels. Indeed, the modern dissent from free market capitaism is often characterised by a wish to see lower living standards to allow for less use of environmental goods and resources.
Democracy, which led to or at least coexisted with the diminished government controls driving higher income levels for more than 70 years, is now turning into populism and threatens to foment a new era of declining living standards.