Category Archives: Neoliberalism

The Mother of all Blunders – Bryan Gould. 

“Neoliberal economic policies have failed, and an important aspect of that failure has been that most of such new wealth as has been created has gone to the richest people in society.”

Jim Blogger, former NZ Prime Minister

Jim Bolger headed a government that set about cutting taxes and therefore public services, and weakening trade unions, policies often seen as the hallmarks of neo-liberalism, and that is to say nothing of Ruth Richardson and her boast of delivering “the mother of all budgets”.

It is beyond dispute that the countries which have enjoyed the best economic outcomes have been those – like the Scandinavian countries – which have at the same time most stoutly resisted the growth of inequality.  As for the rest, the application of neo-liberal policies has meant a poorer economic performance, accompanied by greater social division.

We do not have to choose, in other words and as is so often asserted, between social justice and economic success.  The former is an essential element in producing the latter and is not just a “luxury” we can do without.

Or, to put it in another way, the failure of neo-liberal policies is largely attributable to their inevitable tendency to exacerbate inequality and to foster a lack of concern for the less fortunate.

And a moment’s reflection will tell us why that is so.  An economy will always be more successful if it engages with and uses all of its productive capacity – and that means its human resources – rather than leaving some of them under-used and undervalued.

The loss and damage we sustain, if we fail to take account of the interests of the whole of society, creates not only a weaker economy, but a more divided and unhappier society.

In today’s politics, it is the right that is ideologically driven while it is the left that constantly seeks merely pragmatic solutions to pressing problems.  The left’s difficulties in attracting majority public support suggest that solutions to problems will stand a better chance of being accepted if they are seen to be grounded in a coherent analysis of what has gone wrong.

It may be that, in their anxiety to gain support from the “middle ground”, the left has too easily been frightened away from developing such an analysis.  Surprisingly, they seem reluctant to engage in an ideological debate and prefer to leave the territory uncontested.

If Jim Bolger can do it, and link outcomes to policy frameworks, why not the left?  But, if there were to be a next time, Jim, could you please see the light and find the road to Damascus a little sooner?

Bryan Gould

How a Ruthless Network of Super-Rich Ideologues Killed Choice and Destroyed People’s Faith in Politics – George Monbiot. 

Neoliberalism: the deep story that lies beneath Donald Trump’s triumph.

The events that led to Donald Trump’s election started in England in 1975. At a meeting a few months after Margaret Thatcher became leader of the Conservative party, one of her colleagues, or so the story goes, was explaining what he saw as the core beliefs of conservatism. She snapped open her handbag, pulled out a dog-eared book, and slammed it on the table. “This is what we believe,” she said. A political revolution that would sweep the world had begun.

The book was The Constitution of Liberty by Frederick Hayek. Its publication, in 1960, marked the transition from an honest, if extreme, philosophy to an outright racket. The philosophy was called neoliberalism. It saw competition as the defining characteristic of human relations. The market would discover a natural hierarchy of winners and losers, creating a more efficient system than could ever be devised through planning or by design. Anything that impeded this process, such as significant tax, regulation, trade union activity or state provision, was counter-productive. Unrestricted entrepreneurs would create the wealth that would trickle down to everyone.

This, at any rate, is how it was originally conceived. But by the time Hayek came to write The Constitution of Liberty, the network of lobbyists and thinkers he had founded was being lavishly funded by multimillionaires who saw the doctrine as a means of defending themselves against democracy. Not every aspect of the neoliberal programme advanced their interests. Hayek, it seems, set out to close the gap.

He begins the book by advancing the narrowest possible conception of liberty: an absence of coercion. He rejects such notions as political freedom, universal rights, human equality and the distribution of wealth, all of which, by restricting the behaviour of the wealthy and powerful, intrude on the absolute freedom from coercion he demands.

Democracy, by contrast, “is not an ultimate or absolute value”. In fact, liberty depends on preventing the majority from exercising choice over the direction that politics and society might take.

He justifies this position by creating a heroic narrative of extreme wealth. He conflates the economic elite, spending their money in new ways, with philosophical and scientific pioneers. Just as the political philosopher should be free to think the unthinkable, so the very rich should be free to do the undoable, without constraint by public interest or public opinion.

The ultra rich are “scouts”, “experimenting with new styles of living”, who blaze the trails that the rest of society will follow. The progress of society depends on the liberty of these “independents” to gain as much money as they want and spend it how they wish. All that is good and useful, therefore, arises from inequality. There should be no connection between merit and reward, no distinction made between earned and unearned income, and no limit to the rents they can charge.

Inherited wealth is more socially useful than earned wealth: “the idle rich”, who don’t have to work for their money, can devote themselves to influencing “fields of thought and opinion, of tastes and beliefs”. Even when they seem to be spending money on nothing but “aimless display”, they are in fact acting as society’s vanguard.

Hayek softened his opposition to monopolies and hardened his opposition to trade unions. He lambasted progressive taxation and attempts by the state to raise the general welfare of citizens. He insisted that there is “an overwhelming case against a free health service for all” and dismissed the conservation of natural resources. It should come as no surprise to those who follow such matters that he was awarded the Nobel prize for economics.

By the time Thatcher slammed his book on the table, a lively network of thinktanks, lobbyists and academics promoting Hayek’s doctrines had been established on both sides of the Atlantic, abundantly financed by some of the world’s richest people and businesses, including DuPont, General Electric, the Coors brewing company, Charles Koch, Richard Mellon Scaife, Lawrence Fertig, the William Volker Fund and the Earhart Foundation. Using psychology and linguistics to brilliant effect, the thinkers these people sponsored found the words and arguments required to turn Hayek’s anthem to the elite into a plausible political programme.

Thatcherism and Reaganism were not ideologies in their own right: they were just two faces of neoliberalism. Their massive tax cuts for the rich, crushing of trade unions, reduction in public housing, deregulation, privatisation, outsourcing and competition in public services were all proposed by Hayek and his disciples. But the real triumph of this network was not its capture of the right, but its colonisation of parties that once stood for everything Hayek detested.

Bill Clinton and Tony Blair did not possess a narrative of their own. Rather than develop a new political story, they thought it was sufficient to triangule. In other words, they extracted a few elements of what their parties had once believed, mixed them with elements of what their opponents believed, and developed from this unlikely combination a “third way”.

It was inevitable that the blazing, insurrectionary confidence of neoliberalism would exert a stronger gravitational pull than the dying star of social democracy. Hayek’s triumph could be witnessed everywhere from Blair’s expansion of the private finance initiative to Clinton’s repeal of the Glass-Steagal Act, which had regulated the financial sector. For all his grace and touch, Barack Obama, who didn’t possess a narrative either (except “hope”), was slowly reeled in by those who owned the means of persuasion.

As I warned in April, the result is first disempowerment then disenfranchisement. If the dominant ideology stops governments from changing social outcomes, they can no longer respond to the needs of the electorate. Politics becomes irrelevant to people’s lives; debate is reduced to the jabber of a remote elite. The disenfranchised turn instead to a virulent anti-politics in which facts and arguments are replaced by slogans, symbols and sensation. The man who sank Hillary Clinton’s bid for the presidency was not Donald Trump. It was her husband.

The paradoxical result is that the backlash against neoliberalism’s crushing of political choice has elevated just the kind of man that Hayek worshipped. Trump, who has no coherent politics, is not a classic neoliberal. But he is the perfect representation of Hayek’s “independent”; the beneficiary of inherited wealth, unconstrained by common morality, whose gross predilections strike a new path that others may follow. The neoliberal thinktankers are now swarming round this hollow man, this empty vessel waiting to be filled by those who know what they want. The likely result is the demolition of our remaining decencies, beginning with the agreement to limit global warming.

Those who tell the stories run the world. Politics has failed through a lack of competing narratives. The key task now is to tell a new story of what it is to be a human in the 21st century. It must be as appealing to some who have voted for Trump and Ukip as it is to the supporters of Clinton, Bernie Sanders or Jeremy Corbyn.

A few of us have been working on this, and can discern what may be the beginning of a story. It’s too early to say much yet, but at its core is the recognition that – as modern psychology and neuroscience make abundantly clear – human beings, by comparison with any other animals, are both remarkably social and remarkably unselfish. The atomisation and self-interested behaviour neoliberalism promotes run counter to much of what comprises human nature.

Hayek told us who we are, and he was wrong. Our first step is to reclaim our humanity.

Evonomics.com

Europe’s Centre-Left Risks Irrelevance – Sheri Berman. 

JUST LIKE NEW ZEALAND’S, LABOUR NEEDS TO WISE UP!

Europe today is in crisis. Economically, much of the continent suffers from low growth, high unemployment and rising inequality, while politically, disillusionment with the European community as well as domestic institutions and elites is widespread. Partially as a result, right-wing populism is growing, increasing political instability and uncertainty even further. Although many have noted a correlation between the rise of populism and the decline of the social democratic or centre-left, the causal relationship between them has not been sufficiently stressed. Indeed, to a large degree the failures of the latter explain the surprising popularity of the former.

The historical role of the centre or social democratic left

Although the decline of social democracy and the rise of populism have become particularly noticeable since the financial crisis that began in 2008, the roots of both lie much earlier, in the 1970s. During this decade economic and social/cultural changes began unsettling long-standing voting and political patterns. Economically, the postwar order was running out of steam, and a noxious mix of unemployment and inflation hit Europe. However, social democrats lacked well thought out plans for getting economies moving again or for using the democratic state to protect citizens from the changes brought by ever-evolving capitalism.

Such plans, of course, had been precisely what social democracy had offered after 1945. Back then, social democrats had not only insisted that it was possible to reform and even improve capitalism – they devised concrete policy proposals for accomplishing this task. These policies enabled governments to contain and cushion the most destructive and destabilising consequences of markets without fettering them entirely. In contrast, during the late twentieth and early twenty-first centuries, social democrats offered either rearguard defences of socioeconomic policies that may have made sense decades ago but which are now out of touch with the realities of a changing global economy, or else watered-down versions of neoliberalism (such as the English “Third Way” or the German “Neue Mitte”) that left many citizens wondering why they should bother to vote for the social democratic or centre-left at all.

The absence of a distinctive, effective social democratic response to economic problems allowed a neoliberal right that had been organising and thinking about what it saw as the drawbacks of the postwar order to begin freeing capitalism from many of the restrictions that had been placed on it beginning in the 1970s. And this unfettered capitalism, in turn, not only helped create the financial crisis of the early twenty-first century, it also drove many voters to the populist right which explicitly promised to reign it in and protect “true” citizens from its harshest effects.

At the same time that European economies were changing, so were European societies. Social and cultural changes unleashed in the late 1960s threatened traditional identities, communities and mores, a process further exacerbated by growing immigration. Together these trends helped erode the social solidarity and sense of shared national purpose that had supported the social democratic postwar order and helped to stabilise European democracies in the decades following the Second World War.

Historically, social democrats recognised and indeed promoted social solidarity and a sense of shared national purpose, identifying these as necessary to the legitimacy of high taxes and a strong welfare state. During the last decades of the twentieth century, however, this basic fact was all too often forgotten or wished away by a centre or social democratic left that lacked distinctive, effective responses to the social, cultural and demographic changes that weakened the sense of solidarity and shared national purpose across one European country after another.

The absence of a distinctive, effective social democratic response to growing diversity allowed the extreme or multicultural left to become the loudest left-wing voice on this issue. This camp tends to see society as divided into irreconcilable groups, with different values and traditions all around. Efforts to find common ground or ease differences, in this view, are undesirable and counterproductive.

This emphasis on the “politics of recognition” – as opposed to the centre-left’s traditional emphasis on the “politics of redistribution” – was bad for the left and bad for democracy. It led many intellectuals away from a focus on economic issues and fragmented the left in a way that makes it hard to build majority coalitions and win elections. It also makes it almost impossible to generate the social solidarity or shared sense of national purpose that is necessary to support the rest of the centre-left agenda or healthy democracy more generally. And of course, a stress on the primacy of racial, religious, or sexual identity over class or even national identity, along with the implicit and often explicit denigration of those worried about the rapidly changing nature of their societies, has also helped to drive many voters to the nationalist, populist right.

The current crisis

It is now fairly commonplace to note the support given by traditionally left or social democratic voters to the populist right. This connection was on obvious display in the Brexit referendum, where many traditional Labour strongholds and supporters voted to leave the EU, and it has been a prominent feature of elections across the continent as working-class voters in particular have flocked to right-wing populist parties. And of course, a version of this was present in the United States, where Donald Trump garnered disproportionate support from less-educated and working-class voters. What is still worth stressing, however, is the causal connection between the failures or missteps of the centre or social democratic left and the rise of right-wing populism.

During the decades following the Second World war, centre-left and social democratic parties offered attractive solutions to the economic and social challenges facing European democracies. They promised citizens an economic order that neither erased capitalism (as many on the far left desired) nor gave it free rein (as classical liberals and contemporary neoliberals favour). Instead, they promised citizens the benefits of capitalist economic dynamism and innovation as well as to shield them from capitalism’s sometimes destructive effects.

The centre or social democratic left also promoted social solidarity and a sense of national purpose – welfare states would protect the health and well-being of all citizens and government would commit itself to creating an equal and prosperous society that benefited all. By the last decades of the twentieth century, however, the centre or social democratic left no longer had convincing responses to the most pressing economic and social challenges facing European societies, and voters accordingly began looking for other political alternatives.

For many former or traditionally left voters, the most attractive alternative turned out to be the populist right, which offered simple, straightforward solutions to citizens’ economic and social fears. Economically, the populist right promises to promote prosperity, via increased government control of the economy and limits on globalisation. Socially, the populist right promises to restore social solidarity and a sense of shared national purpose, by expelling foreigners or severely limiting immigration; diminishing the influence of the European Union, and protecting traditional values, identities and mores.

For those who bemoan the rise of the populist right, the challenge is clear: you can’t beat something with nothing and if the left can’t come up with more viable and attractive solutions to contemporary problems than those offered by its competitors it can expect to continue its slide into the dustheap of history.
Social Europe

John Key, The Smiling Assassin. He pulled ponytails instead of grabbing pussies – The Guardian. 

John Key’s legacy will not be defined by great policy achievements; it’s his success as the model of a neoliberal leader, a poster boy for trickle-down economics, that he will be remembered for.

Key presided over increasing and gross social inequality.

Like another poster boy for trickle-down economics, Tony Blair, the New Zealand prime minister had the Teflon gene. Even while presiding over record levels of child poverty, his popularity remained high.

Despite ignoring public preferences not to privatise state-owned enterprises, increasing the GST, and more-or-less ignoring New Zealand’s chronic child poverty, because he blamed the victims, none of it stuck.

Only because the average greedy Kiwi is not only politically naive but also has succumb to Neoliberal doctrine and decided ‘To hell with everybody else, I’m getting as much as I can for Me Me Me.’

Key was like a Tony Blair of the South Seas: a certain level of personal charisma and a socially inclusive façade allowed both Key and Blair to sell the nasty side of neoliberalism.

Never mind the hundreds of thousands of children living under the poverty line in New Zealand, a country of only four million, and him brushing off the recommendations of the government panel charged with improving their lot; Key was seen as a good guy and a safe pair of hands.

Key was a person who fitted the narrative of Neoliberalism perfectly, he was a man of his time. He came of age at a time when a Neoliberal coup turned the more-or-less socialist mixed economy of New Zealand on its head.

As financial markets were deregulated and the Keynesian social consensus dismantled, Key began his ascendency to banking-money heaven.

The heart of the Key narrative, like the Trump narrative, is money.

They both have a personal story about business acumen and the notion that making money is the high art of society and the hallmark of good character.

It’s no coincidence that this “good with money” story has found such great traction and continues to propel wealthy business people into political power. In New Zealand, and many other countries, including Australia, the UK and the US, there’s a powerful narrative that says that running a government is very much like running a company; you must balance the books first of all.

Equating the values of entrepreneurship and fiscal discipline with the judgment required to legislate in the public interest is crude nonsense.

But this money story not only has currency, it is the currency of the reigning monetarist fiscal discourse.

Many of the opponents of neoliberalism, including those who tried to unseat Key, still haven’t figured out how to counter the “money story”.

Labour parties around the world have long been experiencing an identity crisis: they are divided between their complicity in creating a neoliberal society, their adoption of Keynesian responses to the global financial crisis and the ideological opposition to neoliberalism among their ranks, in the form of, for example, Jeremy Corbyn and Bernie Sanders.

Until you pull that money story apart, and New Zealand Labour still need to do this, people do buy into it, and they kept voting Key in because they believed in the equation that “good with money” equals “morally upstanding”.

People don’t want this bubble popped.

The Guardian 

Those who claim to be on the side of freedom while ignoring the growing imbalance of economic and political power in America and other advanced economies are not in fact on the side of freedom. They are on the side of those with the power. – Robert Reich

As economic and political power have once again moved into the hands of a relative few large corporations and wealthy individuals, “freedom” is again being used to justify the multitude of ways they entrench and enlarge that power by influencing the rules of the game.

These include escalating campaign contributions, as well as burgeoning “independent” campaign expenditures, often in the form of negative advertising targeting candidates whom they oppose; growing lobbying prowess, both in Washington and in state capitals; platoons of lawyers and paid experts to defend against or mount lawsuits, so that courts interpret the laws in ways that favor them; additional lawyers and experts to push their agendas in agency rule-making proceedings; the prospect of (or outright offers of) lucrative private-sector jobs for public officials who define or enforce the rules in ways that benefit them; public relations campaigns designed to convince the public of the truth and wisdom of policies they support and the falsity and deficiency of policies they don’t; think tanks and sponsored research that confirm their positions; and ownership of, or economic influence over, media outlets that further promote their goals.

Robert Reich, from his book ‘Saving Capitalism’

Gareth Morgan ‘overwhelmed’ at support for new party as hundreds sign up. 

Gareth Morgan’s new political party already has more than 750 paid members – with the entrepreneur saying he has been blown away by the response.

Morgan launched the Opportunities Party (Top) on Friday, saying problems like inequality and housing affordability could be solved but not by “establishment” politicians.

He plans to gauge public reaction to his campaign before registering the party next year.

Political parties need 500 financial members to register, and that mark was surpassed by Top within 24 hours of launching.

“I thought would take us months to get those kinds of numbers, particularly given I haven’t released any policy yet!”

People that follow and support you pretty much know what the policy is going to look like Gareth. Good Luck, this will hopefully turn out to be a defining moment in New Zealand’s political history. We urgently need to rethink our social economic policy’s for the betterment of the 90% and the long term survival of our economy. 

NZ Herald 

The terminus of our species? – Rutger Bregman. ​

The Lesson of Neoliberalism. 

Some argue that these days, it hardly matters anymore who you vote for. Though we still have a right and a left, neither side seems to have a very clear plan for the future.

In an ironic twist of fate, the neoliberalist brainchild of two men who devoutly believed in the power of ideas (Hayek & Friedman) has now put a lockdown on the development of new ones. It would seem that we have arrived at “the end of history,” with liberal democracy as the last stop and the “free consumer”as the terminus of our species.

By the time Milton Friedman was named president of the Mont Pèlerin Society in 1970, most of its philosophers and historians had already decamped, the debates having become overly technical and economic. In hindsight, Friedman’s arrival marked the dawn of an era in which economists would become the leading thinkers of the Western world. We are still in that era today.

We inhabit a world of managers and technocrats. “Let’s just concentrate on solving the problems,”they say. “Let’s just focus on making ends meet.” Political decisions are continually presented as a matter of exigency – as neutral and objective events, as though there were no other choice.

John Maynard Keynes observed this tendency emerging even in his own day. “Practical men, who believe themselves to be quite exempt from any intellectual influences,” he wrote, “are usually the slaves of some defunct economist.”

When Lehman Brothers collapsed on September 15, 2008, and inaugurated the biggest crisis since the 1930s, there were no real alternatives to hand. No one had laid the groundwork. For years, intellectuals, journalists, and politicians had all firmly maintained that we’d reached the end of the age of “big narratives” and that it was time to trade in ideologies for pragmatism.

Naturally, we should still take pride in the liberty that generations before us fought for and won. But the question is, what is the value of free speech when we no longer have anything worthwhile to say? What’s the point of freedom of association when we no longer feel any sense of affiliation? What purpose does freedom of religion serve when we no longer believe in anything?

On the one hand, the world is still getting richer, safer, and healthier. Every day, more and more people are arriving in Cockaigne. That’s a huge triumph. On the other hand, it’s high time that we, the inhabitants of the Land of Plenty, stake out a new utopia. Let’s rehoist the sails. “Progress is the realisation of Utopias,”Oscar Wilde wrote many years ago. A 15-hour workweek, universal basic income, and a world without borders…They’re all crazy dreams –but for how much longer?

People now doubt that “human ideas and beliefs are the main movers of history,”as Hayek argued back when neoliberalism was still in its infancy. “We all find it so difficult to imagine that our beliefs might be different from what they in fact are.” It could easily take a generation, he asserted, before new ideas prevail. For this very reason, we need thinkers who not only are patient, but also have “the courage to be ‘utopian.’” Let this be the lesson of Mont Pèlerin. Let this be the mantra of everyone who dreams of a better world, so that we don’t once again hear the clock strike midnight and find ourselves just sitting around, empty-handed, waiting for an extraterrestrial salvation that will never come.

Ideas, however outrageous, have changed the world, and they will again. “Indeed,” wrote Keynes, “the world is ruled by little else.”

Rutger Bregman, from his book ‘Utopia for Realists’