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Economics will always need politics. Pix courtesy of www.insurancejournal.com
Economics will always need politics. Pix courtesy of www.insurancejournal.com

THERE is irony aplenty in the Malaysian Aviation Commission’s (Mavcom) statement that the government’s intervention in commercial decision-making in the aviation sector should not become a norm.

Firstly, Mavcom is a regulatory body. What do regulators do if they don’t regulate? If the worry is about the government holding golden shares in companies, then that may be defensible. But if it is a call for no government interference at all, then it is unrealistic.

There are two reasons for this. One, there is no such thing as a free market. Every market in the world is regulated. Everywhere, politics mixes with economics. At times, this mix is an unhappy one, sometimes happy.

Strangely, free-marketeers talk as if there is a market out there that can be said to be clinically free of government regulations. And they speak and write like it is all science and no economics. There never was a free market and there never will be. What there is out there, though, is a yearning for a free market as exemplified by the call of high-tech companies in Silicon Valley.

The reason is obvious. They want the freedom to make as much money as possible out of what others own without paying for it. Personal data is just one example. Aggregation of news belonging to media companies is another.

The labour market is a good
example of how regulated the market is around the world. Many countries ban child labour for obvious reasons. Some, like Malaysia, allow their employment under certain strict conditions.

If governments had no such regulations, business owners will gravitate towards such employment as it is close to being free. Such practices were common in the 18th century. Sadly, they still are. According to the United Nations Children’s Fund, Sub-Saharan Africa has the largest number of child labourers (29 per cent of children aged 5 to 17). Elsewhere, such as the Middle East and North Africa, some five per cent of children perform potentially harmful work.

Two, if a completely free market is allowed to exist, then we must settle for permanent inequality. We think the debate is all wrong. The argument should not be between “free” and “unfree” market. Rather, it should be about what rules and regulations lead to a market that promotes shared prosperity. Obviously, not the ones like now that prosper only a few — one per cent vs 99 per cent.

The economics of today is a broken one. Even the World Economic Forum agrees. As the forum puts it, today, just one per cent of the world’s population holds over 35 per cent of all private wealth, more than the bottom 95 per cent combined. Like the economics that has led us here, the world is dismal: one in nine people go to bed hungry every night.

Do not get us wrong. We are not against capitalism. What we are against is the variety that kills shared prosperity. We have been too often a witness to the dismal effects of a profit motive that goes unregulated. The financial crisis of 2008 is the latest.

We agree that commercial decisions must be made at a commercial level. But what we disagree is that it be made in an unregulated market. Even if it is the aviation industry.

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