LETTERS: by Peter GoldingNews Weekly
, January 11, 2003
Twice in recent months (News Weekly
, October 5 and December 14) Colin Teese has used the comparison of economic growth rates between 1960-80 and 1980-2000 to assert the failure of free market economics.
How strong is this argument? Let me start with an analogy of two groups.
At the beginning of a given year, Group A has 10 members and Group B has 50. During the course of the year Group A increases its membership from 10 to 30 and Group B from 50 to 100.
Which group has been the more successful? That depends on which way you look at the figures.
While Group B has been the more successful numerically, its 50 new members represents a 100 per cent increase. Group A has recruited only 20 new members.This, however, represents a 200 per cent increase.
The point is that growth rates expressed in percentage terms are meaningless unless we know the starting point.
The economic growth rates for the period 1960-80 may have appeared very strong because in 1960 many countries, particularly in Europe, still had not fully recovered from the Second World War and their GDP figures were poor. It is possible that the growth rates achieved from 1960-80 were off a low base and were unsustainable irrespective of which economic model was in place from 1980-2000.
Mr Teese needs to provide more detail and analysis before his argument can be regarded as watertight.Peter Golding,