Paul Krugman wrote a famous paper in the 1990s outlining the myths surrounding the Asian miracle of the 20th century. Rather than it being a ‘miracle’, he presented a less dazzling critique of Asia’s economic success. He proposed that it was a combination of stringent government policy and the further adoption of free trade that was key to sustaining economic growth in East Asia. Most of this growth occurred in eight economies, collectively referred to as the High Performing Asian Economies (HPAEs) – Japan, Hong Kong, the Republic of Korea, Singapore, Taiwan, and the newly industrializing Indonesia, Malaysia, and Thailand . The relationship between public policy and economic growth is now more important than ever, and in light of the continuing economic crisis in Europe, there are a number of lessons to be learnt from the success of the HPAEs.
In an affirmation of the natural order of things, on Thursday night out at Monash University, the University of Melbourne team (composed of myself, 1st-year student Emad, and the incomparable Prof. Jeff Borland) took out a closely fought debate to determine whether the Eurozone has been a success or a failure. Across both teams there was much spirited debate over economic theory, the optimal design for policymaking interlaced with a great deal of jibing back and forth between two of the country’s most elite universities.
Amongst the many schools of economic thought, the Austrian school lies outside the economic mainstream. However, it has perhaps surprisingly punched above its weight in terms of its influence over the political and economic thought of the 20th century. Some of the most prominent and influential economists were from this particular school, such Friedrich Hayek. Hayek in particular had a large influence on the thinking of some of the great leaders of recent history such as Ronald Reagan and Margaret Thatcher.
Known for their “laissez-faire-ness” and strong individualist and libertarian undertones, the Austrian’s ultimately advocate a much broader philosophy that reaches beyond just economics. It is perhaps this point that has given them an even wider reach and audience.
It’s been over 5 years since the heights of the financial crises, and yet the global economy still appears to be in a persisting slump. Albeit of the nascent pick up in economic activity amongst the largest economies, mainly China, US and Europe, unemployment in most parts of the developed world remains high, coupled with meagre growth rates. Observing the policy response to the slow recovery only offers reasons to lament.