Roy Morgan Update: Left, right, center, they're crossing paths to the free market

Tue, 09/16/2008 10:23 AM  |  Business

First, there was Bear Sterns. Then, Freddie Mac and Fannie Mae. And now, the buzz is on about the future of Lehmann Brothers. Which American icon is next in line to be rescued? An airline or an automobile maker, perhaps. Where will the line be drawn, who will draw it and by whose authority?

What socialists bluntly call "nationalization", capitalists euphemistically call "bailouts". Regardless of the politics, the money in question is always the people's.

The difference is that one calls a spade a spade, the other a shovel. Today, it would seem that a new world order is emerging, albeit involuntarily.

Communist China is almost as capitalist in its actions as any other country, while billions in U.S. Treasury bonds help finance the war in Iraq. A capitalist United States is doing the unimaginable, going down the socialist path by using taxpayer funds to prop up private investments.

Common sense would lead us to conclude the rich make money from their shares when times are good, only to leave it to the common man to bail them out and protect their assets when things turn south.

Free market champions and defenders of its tenets have some explaining to do. Even the nimblest spin doctors will find that a daunting task, with all the evidence piling up around us.

In the court of world opinion, the hypocrisy, the double standards, the conflict between word and action are all too much to accept in silence.

There appears to be little or no shame when it comes to tired, old doomsday scenarios conveniently trotted out to supposedly protect countries from collapse. Fear is an effective weapon to use on the innocent, even if they happen to be your fellow citizens.

The reality is that, if Freddie Mac were allowed to die, millions of people would wind up owning homes worth very little. Shareholders who had allowed their board to run amok would pay the price, individually.

The market would take the immense pain, absorb it collectively, and correct itself. How else is it supposed to be in the free market?

Any aspersions cast on the motivations of the Bush administration -- or its ex-Goldman Sachs Secretary of Treasury -- make ideological supporters bristle with rage. The old shareholders and employees of Enron must be wondering why no one came to their aid. Or could it be that anything other than financial services are too low-brow to save?

The same people would find it difficult to believe that Putin is immensely popular in Russia, that the pride of the Chinese, the self-confidence of the Indians today is second to none. They all have been, still are and for a very long time will be, "mixed economies".

State-owned and private enterprises co-exist. The United Kingdom is revisiting its past with the bailout of Northern Rock, while the United States is seemingly at a crossroads. The prudent thing to do would be to stop lecturing the world from some imaginary high ground and just get on with the job.

For more than a decade, the people of Indonesia paid a heavy price at the behest of a World Bank wielding its own ideological stick in the aftermath of the Asian economic crisis. A mixed economy then, as now, it was philosophically easy for this country to embrace its broken banks, keeping them afloat until they were ready for sale.

That process of mergers and acquisitions continues, to this day. Who bailed whom out, to whose benefit? How has the little old lady in Makassar gained from the years of public funding?

It shouldn't be too difficult to understand that people in developing countries depend on their governments for much more than their counterparts in affluent economies. All you have to do is ask, then listen.

Eighty-seven percent of all Indonesians, young and old, urban and rural, continue to believe "it is the government's duty to support those who can't find work".

There are many fending for themselves and scrounging around for scarce resources, while 79 percent believe "the gap between rich and poor is growing", a perception gradually on the rise.

Three out of four Indonesians believe the "fundamental values of our society are under serious threat", not only their religious beliefs. Not even the most shallow politician can afford to ignore these views in a democracy, let alone a true leader.

To the overwhelming majority, "globalization brings more problems than it solves". At the local marketplace, Indonesian farmers cannot compete with the imported but subsidized soybean -- in a country where it is eaten at almost every meal.

To the country's farmers, this is not an imaginary threat. For as long as the playing field is uneven, WTO goals will remain elusive. For similar reasons, mixed economies are here to stay for a very long while -- for the survival of the ruling elite, if for no other good reason. Progress is being made at different speeds in different countries.

Democracy is alive and well in many developing countries. Indeed, the Indonesian tiger -- like the Indian elephant -- is making slower economic progress than the Chinese dragon, largely because the former are democracies. The difference between them needs to be recognized and appreciated. There is indeed a cost to freedom and to fundamental human rights.

These conclusions are based on findings from Roy Morgan Single Source, the country's largest syndicated survey with over 27,000 Indonesian respondents annually, projected to reflect almost 90% of the population over the age of 14. The survey is used by more marketers and advertising agencies than any other survey in the country.

The writer can be contacted at Debnath.Guharoy@roymorgan.com

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