BPR Interviews: Ha-Joon Chang

Dr. Ha-Joon Chang is currently a professor of Economics at the University of Cambridge. Born in 1960s South Korea, Chang used his humble upbringing as motivation to understand the financial world and has become one of the most prominent political economists today. In addition to his role as a teacher, Dr. Chang is also an esteemed author and economic advisor.

How did your interest in politics and economics come about?

I was born in 1963 at a time when South Korea was one of the poorest countries in the world. Slums were springing up all over the place, the workers were striking and being beaten by the police while the students were demonstrating [and] setting fire to themselves to protest. I really wanted to understand how and why these things work, so I decided to study economics.

Do you think that the social movement that emerged in response to the 2008 financial crisis led to a change in the way economics is taught?

A lot of economists still believe that there is nothing fundamentally wrong with their theory. Frankly, there is a lot of resistance in changing the academic curriculum, so I wouldn’t want to create any false hope, but at least there has been some change, and that brings me a little bit of optimism. I think that we are slowly getting there. I have no illusion that it’ll happen very quickly, but in the end the academia has to respond to the changes in the real world.

What is your professional opinion of Donald Trump and Hillary Clinton’s proposed economic policies?

Well, Donald Trump, I doubt whether he has any real policy to talk about. I mean, of course, he has the standard right-wing mantra of cutting taxes for the rich people so that they can invest more and create more jobs and wealth, but the trickle-down economics experiment has been shown not to work in the last thirty years. Trickle-down in theory is not logically wrong, but it has been proven not to work so I don’t understand how people can believe that it’s going to work this time. And he has other policies like – what do you call it – the penny plan? So basically you cut government spending by one percent every year and at some point, it will balance the budget, but why do you have to balance the budget all the time? This is something I don’t understand – people say we have to have a balanced budget every year, but I mean if you have to balance it every year, why not every quarter, why not every month or every day?

So then how would you propose to fix the economic problems that the U.S. now faces?

What the U.S. needs is to, first of all, reform the financial and corporate system in such a way that there are more productive things which would create jobs and even income for ordinary Americans. What’s happening now is that corporations in America especially have turned into ATMs for shareholders. Shareholders put pressure on the company to deliver short-term profit and what do the companies do to meet that? They have to sacrifice long-term growth of the company, or short-term profit, and so they don’t invest in machines, technology, and skilled workers. In the short run, this raises their profit because they’re not spending. But in the long run, this will hurt the company because it loses its competitiveness, the technology gets outdated, [and] workers become demoralized because they are low skilled. Don’t forget, American CEOs get paid at least twice more, sometimes up to twenty times more, than CEOs in other countries in return for destroying the company in the long-run and squeezing the living standard of American workers. Without reforming the system, I don’t think we’ll have the dynamic and fair society that we used to have.

You’ve previously stated that in order to prevent another financial crisis like the one we saw in 2008, we must build an economic system in which “material enrichment is not allowed to become the only goal.” Could you explain how this system would work in a capitalist country like the United States?

Well before getting to the center of that question, I want to say that there are many different ways of implementing capitalism. The American way is one way, but Japan has a very different way, which is very different from the Swedish way, which is very different from the French way. Capitalism – if you define it as a system in which profit [as a] motive is taken seriously and there is private ownership of companies – is compatible with many kinds of running the economy. I’m not one of those people who think that material progress is unimportant, but if you let that be the only goal in society, then you create an economic system that basically self-destructs like the U.S. system did in 2008. If you build a society where material enrichment is the only goal then people become less pleasant, and society becomes more conflicted. I think that it’s very important to control those things. We actually have the knowledge to accomplish this, but it is the absence of political will to change anything that prevents the implementation of these safety measures.

Aside from material enrichment, what would you say are your personal goals?

My personal goals? I don’t know if this is really personal, but I want to know more about the world. I know it’s a very basic urge, but I enjoy reading about other countries and cultures, and people who think differently from me. I enjoy visiting other places and learning different things. Quite a while ago, somebody asked me, “If you could have one superpower, what would it be?” I said I want the power to learn languages quickly, because if you learn another language, you have another world. At a very personal level, my curiosity about the world and my desire to know about other people is pretty strong. At a slightly less personal level, I have been trying at least for the last ten, fifteen years to engage in public debates and I try to influence public opinion about how the economy should be run. I think that’s one contribution I can make as an economist. I’m not actually saying that all economists should engage in public debate because, you know, it’s impossible. But, as it happens, given my interest and temperament, I think I want to make contributions by being [engaged] with different people and being involved in public debates. I guess that’s my ultimate goal for life.