Bardonomics

Photo: Singapore Tourism Board In the mid-1960s, they were overrun by poverty and hopelessly underdeveloped. Within 25 years, their citizens ranked among the wealthiest in the world, and their cities buzzed with life. Among the most stunning economic growth stories in modern history is that of the Four Asian Tigers: South Korea, Taiwan, Singapore and Hong Kong.   All four economies are today robust and highly developed, and although serious economic inequality inevitably persists, extreme deprivation has long since been cast into the annals of the past. How did these four East Asian countries generate such astounding growth? For much of the 1980s and the 1990s, there persisted a consensus view among economists that the growth of these economies could overwhelmingly be ascribed to open economic policies and a minimal role for the government.   With regard to manufacturing—particularly relevant in the East Asian context—neoclassical economists, those with an ideo...

Photo: AFP/SCMP Economists await interest rate pronouncements with a degree of speculation, anticipation and angst perhaps only matched by graduating high schoolers awaiting college admission decisions. And, if I dare extend the analogy, the Federal Reserve and the Bank of England are in the Ivy League of central banks—making their pronouncements particularly large events.   On November 2, in a move that markets had largely predicted, the Bank of England’s Monetary Policy Committee voted 7-2 to raise its base rate from 0.25% to 0.5%. It was the first increase in a decade. Across the Atlantic, the Federal Reserve in America has increased rates four times since the financial crisis, and markets have assessed that there is a 98% chance it will do so for a fifth next month. Its interest rate currently stands between 1.00% and 1.25%.   Why has the Bank of England lagged behind the Federal Reserve in increasing the cost of borrowing? The primary reasons have been a str...