Economics Quotes

“95% of economics is common sense”
― Ha-Joon Chang, Economics: The User's Guide: A Pelican Introduction

“Economics is a political argument. It is not – and can never be – a science; there are no objective truths in economics that can be established independently of political, and frequently moral, judgements. Therefore, when faced with an economic argument, you must ask the age-old question ‘Cui bono?’ (Who benefits?), first made famous by the Roman statesman and orator Marcus Tullius Cicero.”
― Ha-Joon Chang, Economics: The User's Guide

“Once poor people are persuaded that their poverty is their own fault, that whoever has made a lot of money must deserve it and that they too could become rich if they tried hard enough, life becomes easier for the rich.”
― Ha-Joon Chang, Economics: The User's Guide: A Pelican Introduction

“95 per cent of economics is common sense – made to look difficult, with the use of jargons and mathematics.”
― Ha-Joon Chang, Economics: The User's Guide

“all technical professions have an incentive to make themselves look more complicated than they really are so that they can justify the high fees their members charge for their services.”
― Ha-Joon Chang, Economics: The User's Guide

“Harry S. Truman, in his typical no-nonsense style, once said that ‘An expert is someone who doesn’t want to learn anything new, because then he would not be an expert.’ Expert knowledge is absolutely necessary, but”
― Ha-Joon Chang, Economics: The User's Guide

“why do we need to make the rich richer to make them work harder but make the poor poorer for the same purpose?”
― Ha-Joon Chang, Economics: The User's Guide

“The issue of false consciousness is a genuinely difficult problem that has no definite solution. We should not approve of an unequal and brutal society because surveys show that people are happy. But who has the right to tell those oppressed women or starving landless peasants that they shouldn’t be happy, if they think they are? Does anyone have the right to make those people feel miserable by telling them the ‘truth’? There are no easy answers to these questions, but they definitely tell us that we cannot rely on ‘subjective’ happiness surveys to decide how well people are doing.”
― Ha-Joon Chang, Economics: The User's Guide

“The age-old trick of transfer pricing

Taking advantage of the fact that they operate in countries with different tax rates, TNCs [transnational corporations] have their subsidiaries over-charge or under-charge each other – sometimes grossly – so that profits are highest in those subsidiaries operating in countries with the lowest corporate tax rates. In this way, their global post-tax profit is maximized.

A 2005 report by Christian Aid, the development charity, documents cases of under-priced exports like TV antennas from China at $0.40 apiece, rocket launchers from Bolivia at $40 and US bulldozers at $528 and over-priced imports such as German hacksaw blades at $5,485 each, Japanese tweezers at $4,896 and French wrenches at $1,089. The Starbucks and Google cases were different from those examples only in that they mainly involved ‘intangible assets’, such as brand licensing fees, patent royalties, interest charges on loans and in-house consultancy (e.g., coffee quality testing, store design), but the principle involved was the same.

When TNCs evade taxes through transfer pricing, they use but do not pay for the collective productive inputs financed by tax revenue, such as infrastructure, education and R&D. This means that the host economy is effectively subsidizing TNCs.”
― Ha-Joon Chang, Economics: The User's Guide

“As the saying goes, ‘he who has a hammer sees everything as a nail’. If you approach a problem from a particular theoretical point of view, you will end up asking only certain questions and answering them in particular ways. You might be lucky, and the problem you are facing might be a ‘nail’ for which your ‘hammer’ is the most appropriate tool. But, more often than not, you will need to have an array of tools available to you.
You are bound to have your favourite theory. There is nothing wrong with using one or two more than others — we all do. But please don’t be a man (or a woman) with a hammer — still less someone unaware that there are other tools available. To extend the analogy, use a Swiss army knife instead, with different tools for different tasks.­”
― Ha-Joon Chang, Economics: The User's Guide

“Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves.”
― Ha-Joon Chang, Economics: The User's Guide

“As these contrasts show, capitalism has undergone enormous changes in the last two and a half centuries. While some of Smith’s basic principles remain valid, they do so only at very general levels.
For example, competition among profit-seeking firms may still be the key driving force of capitalism, as in Smith’s scheme. But it is not between small, anonymous firms which, accepting consumer tastes, fight it out by increasing the efficiency in the use of given technology. Today, competition is among huge multinational companies, with the ability not only to influence prices but to redefine technologies in a short span of time (think about the battle between Apple and Samsung) and to manipulate consumer tastes through brand-image building and advertising.”
― Ha-Joon Chang, Economics: The User's Guide

“... the human tendency to be seduced by a theory that supposedly explains everything.”
― Ha-Joon Chang, Economics: The User's Guide

“Joseph Schumpeter emphasized that all analysis in economics is preceded by a pre-analytical cognitive act, called vision, in which the analyst ‘visualise[s] a distinct set of coherent phenomena as a worth-while object of [his] analytic efforts’. He pointed out that ‘this vision is ideological almost by definition’, as ‘the way in which we see things can hardly be distinguished from the way in which we wish to see them’. The quote is from J. Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), pp. 41–2. I thank William Milberg for pointing me to this quote.”
― Ha-Joon Chang, Economics: The User's Guide

“Audite et alteram partem”
― Ha-Joon Chang, Economics: The User's Guide

“It always seems impossible until it is done.’ NELSON MANDELA”
― Ha-Joon Chang, Economics: The User's Guide

“The most important assumption underlying HOS is that all countries have equal productive capabilities – that is, they can use any technology they want.3”
― Ha-Joon Chang, Economics: The User's Guide

“Even in the richer countries, what happens at work can make people fulfilled, bored, valued or stressed. At the deepest level work shapes who we are.”
― Ha-Joon Chang, Economics: The User's Guide

“I would go one step further and say that the willingness to challenge professional economists - and other experts - should be the foundation of democracy. When you think about it, if all we have to do is to listen to the experts, what is the point of having a democracy at all? Unless we want our societies to be run by a body of self-elected experts, we all have to learn economics and challenge professional economists”
― Ha-Joon Chang, Economics: The User's Guide

“Once we learn that different economic theories say different things partly because they are based on different ethical and political values, we will have the confidence to discuss economics for what it really is – a political argument – and not a ‘science’ in which there is clear right and wrong. And only when the general public displays awareness of these issues will professional economists find it impossible to browbeat them by declaring themselves to be custodians of scientific truths.”
― Ha-Joon Chang, Economics: The User's Guide

“Once we learn that different economic theories say different things partly because they are based on different ethical and political values, we will have the confidence to discuss economics for what it really is - a political argument - and not a 'science' in which there is clear right and wrong.”
― Ha-Joon Chang, Economics: The User's Guide

“Under the new regime, the financial sector has become much more profitable than the non-financial sector, which had not always been the case.16 This has enabled it to offer salaries and bonuses that are much higher than those offered by other sectors, attracting the brightest people, regardless of the subjects they studied in universities. Unfortunately, this leads to a misallocation of talents, as people who would be a lot more productive in other professions – engineering, chemistry and what not – are busy trading derivatives or building mathematical models for their pricing. It also means that a lot of higher-educational spending has been wasted, as many people are not using the skills they were originally trained for.”
― Ha-Joon Chang, Economics: The User's Guide

“The view that the world has now entered a new era of the ‘knowledge economy’, in which making things does not confer much value, is based upon a fundamental misreading of history. We have always lived in a knowledge economy.”
― Ha-Joon Chang, Economics: The User's Guide

“Therefore, Simon argues, when they make their choices, human beings satisfice, that is, we look for ‘good enough’ solutions rather than the best ones, as in the Neoclassical theory.25”
― Ha-Joon Chang, Economics: The User's Guide: A Pelican Introduction

“However great an economic theory ma be, it is specific to its time and space. To apply it fruitfully, we require a good knowledge of the technological and institutional forces that characterize the particular markets, industries and countries that we are trying to analyze with the help of the theory.”
― Ha-Joon Chang, Economics: The User's Guide

“nothing is as effective as spectacular real-life cases – successful or otherwise – in persuading people.”
― Ha-Joon Chang, Economics: The User's Guide

“The inability to protect and promote their infant industries, whether due to direct colonial rule or to unequal treaties, was a huge contributing factor to the economic retrogression in Asia and Latin America during this period, when they saw negative per capita income growths (at the rates of -0.1 and -0.04 per cent per year, respectively).”
― Ha-Joon Chang, Economics: The User's Guide: A Pelican Introduction

“government of an economically backward nation, such as the US, needs to protect and nurture ‘industries in their infancy’ against superior foreign competitors until they grow up; this is known as the infant industry argument.”
― Ha-Joon Chang, Economics: The User's Guide: A Pelican Introduction

“Тем не менее наши предпочтения в значительной мере формируются социальным окружением: семьей, местом жительства, образованием, социальным классом и многим другим. Происходя из разных слоев общества, люди не просто потребляют разные вещи, они хотят разного. Этот процесс социализации означает, что мы не можем действительно относиться к людям как к атомам, легко отделимым друг от друга. Индивидуумы — как сейчас модно говорить — «встроены» в свои общества.”
― Ha-Joon Chang, Economics: The User's Guide

“Before Keynes, most people agreed with Adam Smith when he said, ‘What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.’ And some people still do. David Cameron, the British prime minister, said in October 2011 that all Britons should try to pay off their credit card debts, without realizing that demand in the British economy would collapse if a sufficient number of people actually heeded his advice and reduced spending to pay off their debts. He simply did not understand that one person’s spending is another’s income – until he was forced by his advisors to withdraw the embarrassing remark.”
― Ha-Joon Chang, Economics: The User's Guide