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Bad Samaritans
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Learn the key ideas of the book by Ha-Joon Chang

Bad Samaritans

How the free market is destroying poorer countries

In Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, Ha-Joon Chang highlights the weaknesses of the free market, and explains how Western economic ideas hinder the growth of developing countries. Behind their charitable generosity, advanced nations push struggling countries to adopt detrimental and short-sighted economic policies. The author analyses these mechanisms, and proposes solutions to change tack and fix this, for good.

Bad Samaritans
Read in 18 min.
Listen in 23 min.

South Korea is often seen as an example of neo-liberal victory, but there is actually a much more complex system behind the country’s economic development

The author was born in South Korea in 1963, at a time when the country was extremely poor. Nowadays, South Korea is a prosperous and highly developed nation with a very high per capita income, which has grown significantly as a result of an industrialisation programme introduced in the 1970s. This programme led to the formation of many new companies, an increase in the design and manufacture of cars, and a rise in exports.

Economic development has become something of an obsession for Koreans, but what are the reasons behind the country’s success? Many argue that the answer is very simple: Korea followed the rules of the free market. The country kept inflation low, it encouraged private enterprise and free trade, and it opened up to foreign investment while minimising state intervention. In short, it rigorously and systematically implemented the principles of neoliberalism. According to the author, however, this is not entirely accurate, because the government only supported a few select companies, which benefited the private sector, by introducing customs barriers, subsidies, and other state intervention schemes. What’s more, the government owned all the banks through which it channelled credit. Finally, state-owned companies seized every opportunity to launch major projects, such as POSCO, a company that later became a leader in the steel production industry.

The South Korean government’s approach to private companies has always been very practical, rather than ideological. If they were inefficient, the state either took them over, restructured them, and then sold them, or else they turned them into state-owned enterprises. In addition, the state kept almost complete control over the amount of foreign currency in the country. It is therefore fair to say that South Korea’s achievements were the result of the government’s relatively flexible stance: while it did not rely completely on the free market, in contrast to the standard approach of most communist countries, it did not obstruct it either. In essence, the state only intervened if necessary. So, it is not quite the neo-liberal triumph that many make it out to be, and shows that the situation is actually much more complex than it would appear.


The key ideas of "Bad Samaritans"

South Korea is often seen as an example of neo-liberal victory, but there is actually a much more complex system behind the country’s economic development
Developed countries intervene in the economic systems of poorer countries by implementing policies that often turn out to be ineffective
We often mistakenly think that countries become rich because they embrace liberalism
Several trade agreements were signed in the 1980s that encouraged free trade, but they weakened the already fragile economies of poor countries
For a long time, Finland’s economic policy restricted foreign capital intervention, and this enabled the country to become strong and competitive
Vilifying state enterprises can be narrow-minded, because they often have many characteristics in common with private companies
Rich countries often refuse to help poor nations, because they believe they are corrupt, but corruption does not necessarily make a country irredeemable
Neo-liberalists maintain that the combination of democracy and free markets leads to economic growth, but this theory is not entirely correct
Saying that some countries will inevitably fail economically simply because of their culture is misguided and discriminatory
In order to achieve wealth, poor countries need to challenge the market and focus on their manufacturing industries
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