US Case and The Need for Alternative Political Economy Model*
by Iqra Anugrah**
On September 15th 2008, world witnessed the bankruptcy of Lehman Brothers, the global financial firm which has become the backbone of US Economy for many years. This bankruptcy gave a huge damage not only for Lehman Brothers, but also for US Economy and many other countries in the rest of the world, from Iceland to Hongkong.
As the result of this crisis, Bush administration immediately injected the bailout budget for restructuring US Economy. Many non-interventionist states also did the intervention to its economy. Countries that adopt the principle of welfare state could handle this crisis better, such as European countries. Some countries could do nothing, and they just declared the bankruptcy of their economy.
I bet if Milton Friedman knows this chaotic condition, he will resurrect from his grave, and feel hundreds regrets for everything that he said. This case, for me and many other people outside there, proves one thing: we cannot rely only on market mechanism alone to run our economy. The role of state in economy is still relevant, and will be relevant in the future, especially in terms of welfare and basic needs provision and in case of emergency, which is happening in US now.
The staunch defenders (or blind followers ?) of market mechanism will say that market has its own self-correction mechanism, and state has no right whatsoever to intervene economic activies. But they forget one fundamental thing: market, and human actors within it is not perfect and clean from any mistakes. They often make mistakes. US case has proven the imperfect sides of fundamentalist market mechanism with minimal government. US experience is a momentum that showed the relevance of welfare state and social government, and now we realize that welfare provision, free healthcare and education, stable currency markets and keynesian economics are alternative ideas which are worth to be seen and implemented.
The non-interventionist era has ended. Welcome back alternative ideas, welcome back welfare state. Welcome to the club!
*published at The Mountain Times Vol. VIII November 2008, an independent student newspaper of Ritsumeikan Asia Pacific University (APU)
**2nd year student of College of Asia Pacific Studies (APS), Ritsumeikan Asia Pacific University (APU)