Article by Harjot Singh on "State Intervention: Going Back on Economics" - The Libertarian Weekly

January 01, 2017 | Harjot Singh (Student - JSLH)

Back to the 20th Century! 2016 might have been a defining year in contemporary history. Politics and Economics have not been so disruptive since the Cold War. Further, leaders seem to be interested in promoting nationalism and are interested in using hatred as a weapon to fuel popularity. While political strategy has returned to a century old ridicule, so has economics. The bottom-up approach, allowing free markets to determine their fate, with minimum state intervention (only in the case of market failure) is no longer the prevalent idea. The State is bent on turning around economics to pre-war conditions.

The world’s largest economies, namely the European Union, India, China and the United States are still facing severe state intervention. In the United States the post-financial crisis saw the government bailing out nearly all financial institutions that indulged in practices contributing to the eventual market failure, while the ordinary citizen and consumer suffered.
 
India for the first time in its seven decades of independence became the fastest growing economy. Legal barriers over businesses are in the process of being removed, and the overall process of liberalization is in its ultimate step. However, free markets, such as growing economies, can only secure investors and businesses if the state doesn’t create barriers through intervention. However, in a cash-strapped economy, with 98% of trading in cash, India’s demonetization has angered neo-liberals and ordinary businesses.
 
The first rule of free markets is to allow markets to determine for themselves their mode of transactions, and if the market wants to move from a cash based economy to an electronic payment system, then it should be given time to do so. Modi’s move began as a fight against black money and fake currency, and when that failed, he sold it as an attempt to make India an electronic based economy; it doesn’t work that way.
 
India’s competition to the North-East, China, has been interfering in the domestic economy for a long time, saving businesses and companies that should have been shut-down a decade ago. Today China’s government has to tackle the debt, which has only been growing.
 
In Europe, ultra-nationalist sentiments are threatening the pinnacle order of free markets. The European Union had increased quality of living, employment and education, while its largest contribution in my opinion was to put an end to autocratic government operating under the ambit of communism. Russia’s interests are in splitting of the European Union to assert ideological expansionism on the West’s failure.
 
The recent election of Donald Trump in the United States is a threat to the global order of progress and unity. Protectionism is an old concept and should not be used in the 21st century, for it may bring back horrors of the past; a bloody history we forgot a hundred years ago so to speak.
 
The coming five years may be the hardest for liberals to swallow, and may just push-back global economy to the 1990s. Leaders should look to align their political goals with economic progress and freedom. Instead, the new order seems to carry similar ideologies that vanished from global conversation after the collapse of the Soviet Union. Liberals must monitor their governments and if necessary, stop leaders from making this grave mistake.