This year, the Nobel Prize for economics went to two American professors and one British-Cypriot academic.The award brings plaudits and 10 million Swedish kronor (HK$11.4 million) to each of its laureates, but an examination of the real world indicates that the prize has a shaky basis in reality. If nothing else, the committee awarding the prize should take a few basic courses in economics and history.
The economics prize is not actually a Nobel Prize at all. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was first awarded in 1969. At that time, the successful global economies were mainly in the West, with the United States and Europe being the dominant players. The rest of the world,including Asia and South America, were “undeveloped economies” at best.
But 40 years later, the world is experiencing a historic shift from West to East. The great economic successes since 1969 are certainly not the United States or Europe. In this span, the US went from the largest creditor nation in the world to not just the largest debtor nation in the world, but the largest debtor nation in the history of the world. That U-turn may deserve a prize, but one that brings embarrassment rather than prominence.
Today, most major international creditor nations are found in Asia – economies like China, Japan, South Korea, Singapore, Hong Kong and Taiwan. Yet, of the 67 recipients who have received the economics prize, 52 are affiliated with US institutions and 14 have European affiliations. One was from the Hebrew University of Jerusalem. So despite the huge economic growth of Asia during a period of relative and absolute decline in Europe and America, no economist from an Asian institution has been lauded. Not a single one.
Singapore has been the greatest economic success of the past four decades, but former prime minister Lee Kuan Yew and Dr Goh Keng Swee, a former deputy prime minister who died in May,have never been acknowledged by Stockholm. And Dr Goh even held a degree from the London School of Economics.
China has also experienced huge economic success during this time, yet neither Deng Xiaoping nor any of his economists were ever awarded the prize.
In fact, one esteemed Nobel laureate published a paper in 1994 titled “The Myth of Asia’s Miracle” in the journal Foreign Affairs. The same winner proclaimed loudly in 2009 that it was untrue that huge amounts of Western assets had moved to Asia.Perhaps he had to try to cover for his 1994 paper. He has not returned his award. (This same laureate insisted this year that Fannie Mae and Freddie Mac had nothing to do with the mortgage and housing collapse.)
I am sure that all of the winners are intelligent and probing people, but real results are the bottom line in economics.
Another recipient was implementing his and his co-winner’s theories in Long Term Capital Management when they won in 1997.
A year later, Long Term Capital Management collapsed in a crash that many claimed would have ruined us all but for the massive bailout by the US government and the Federal Reserve.
The two 1997 laureates have not returned their awards either.
I don’t want to dwell on possible geniuses or charlatans who have won the prize. My main point is the lack of reality reflected in the winners. It is clearly a process of Western academics politicking among themselves and the Swedes.
Perhaps someone should examine the selection process in another article, but the facts are that Asian economies have boomed since 1969 yet no one from an Asian institution has ever won the prize. So why pay any attention at all? Who needs it? It may well be that Asia should worry it is peaking if and when prizes start moving East. Or perhaps someone in Asia should establish an Economics Prize for the Real World.
And don’t even get me started on the Peace Prize.