Posts Tagged ‘Neoliberalism’

Neoliberalism vs. nationalism in France

April 24, 2017

The French election on Sunday narrowed the field to two candidates—Emmanuel Macron, a neoliberal defender of globalization, and Marine Le Pen, a blood-and-soil nationalist, in the run-off election May 7.

Macron is an Obama-like outsider, who offers a vaguely-defined hope and change and, in fact, was endorsed by Barack Obama, but who actually represents France’s financial establishment.

Le Pen is usually described as the “far right” candidate.  She promises to protect France from what she calls the twin threats of globalization and Islam.

But she also is in favor of locking in France’s 35-hour work week, lowering the retirement age to 60, bolstering public services and reducing income taxes on low-income workers

Macron is in favor of flexibility on the 35-hour work week, industry deregulation, reduction of government spending and cutting corporate taxes.  So which is the right-winger?

He favors CETA—the Canadian-European Free Trade Agreement—which, like NAFTA and the defunct proposed Trans-Pacific Partnership Agreement, would restrict business regulation in the name of protecting free trade.  So who is the left-winger here?

Le Pen would replace the Euro with a “nouveau franc,” reestablish border controls and repeal certain European Union laws.  If the EU refused to cooperate, she would call for a referendum on whether France should secede.  If the French voted to stay in the EU, she would resign.

Macron wants to strengthen the Euro and France’s ties with the EU.   He generally favors current French policy on immigration.  Le Pen would restrict immigration to 10,000 persons a year and kick out all unauthorized immigrants, as well as all Muslims on terrorist watch lists.

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Neoliberalism and Its Discontents (1)

April 13, 2017

What follows is notes for the first part of a talk for the Rochester Russell Forum scheduled at Writers & Books Literary Center, 740 University Ave., Rochester, NY, at 7 p.m. Thursday, April 13.

Neoliberalism is the philosophy that economic freedom is the primary freedom, economic growth is the primary goal of society and the for-profit corporation is the ideal form of organization.

It is the justification for privatization, deregulation and the economic austerity currently being imposed on governments by lenders.

Neoliberalism has its roots in classical liberalism, which arose in the 18th and 19th centuries.  Classic liberals said that the purpose of government is to protect human rights, including religious, intellectual, political and economic freedom.   They fought the absolute power of kings and the privileges of aristocrats and demanded the right of individuals to determine their own fates.

Classical liberalism came to be supplanted in the early 20th century by a belief that government regulation and welfare could, if well thought out, enhance human freedom by giving individuals more choices.   A graduate of a public school or university, for example, has more options than a person unable to afford an education, so taxing the public to pay for public schools and universities would be a form of liberation.

Neoliberalism is a backlash against social liberalism.  Neoliberalism affirms that freedom of enterprise is the only important freedom.   Its well-known adherents include Friedrich Hayek, Ludwig von Mises and Milton Friedman.

It came into widespread acceptance in the 1980s, as a reaction against the manifest failures of central economic planning and as a way to break the political gridlock of the welfare state.  Ronald Reagan and Margaret Thatcher were both strongly influenced by the neoliberals.

Neoliberalism’s strongest adherents are to be found among economists, journalists, financiers, Silicon Valley executives and right-of-center parties in the English-speaking world and western Europe, and in international institutions such as the International Monetary Fund, World Bank and European Central Bank, which enforce neoliberal policies on debtor countries.

It is more of an implicit philosophy than a credo, a series of assumptions that has come to permeate our society.

What follows is my attempt to understand the logic behind these assumptions.

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Neoliberalism and its discontents (2)

April 13, 2017

What follows is notes for the second part of a talk for the Rochester Russell Forum scheduled at Writers & Books Literary Center, 740 University Ave., Rochester, NY, at 7 p.m. Thursday, April 13.

Neoliberalism has generated an antithesis—blood and soil nationalism, which holds that the supreme human value consists of the ties of loyalty and customs among people of common ancestry who live in the same place.

Blood and soil nationalism is not fascism, although it can fit very well with fascism.  It is not racism, although it can fit very well with racism.

The difference is that fascism and racism are international movements.  They are disconnected from the culture and heritage of any particular place.

Loyalty to a heritage and a way of life, to kindred who live in a particular place, is the most natural feeling in the world.   It is wrong to devalue this feeling.

The problem is that, for many people, local cultures and heritages have already been hollowed out by the consumer culture promoted by the mass media of entertainment and advertising.  What is left is a hollowed-out version of patriotism consisting of loyalty to your own group and hatred of some other group you see as a threat.

People embrace this hollow nationalism as a way of giving a meaning to their lives that the neoliberal consumer and advertising culture does not provide.

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How I became radicalized

September 14, 2016

For most of my life, I thought my country was fundamentally sound and moving in the right direction.

I knew there were serious problems and injustices in American life, but I thought that these were aberrations, contrary to our democratic ideals, which under our democratic system would be reformed over time.

radicalismstock-photo-fake-dictionary-dictionary-definition-of-the-word-radicalism-180290102I rejected the Communist belief that the crimes of capitalism are systemic, while the failures of Communism are failures to correctly understand or follow Marxist doctrine.

But my own beliefs were the mirror image of this.  I believed that the crimes of Communist countries were the inevitable result of a bad system, while the crimes of Western countries were aberrations that could be corrected.

The first step in my radicalization was the passage of the USA Patriot Act in October 2001.  I was shocked at how fundamental liberties, such as habeas corpus and trial by jury, could be simply wiped off the blackboard, and the majority of Americans would see nothing wrong with this.

I always thought of torture as the ultimate crime against humanity, because it destroys the mind and soul while leaving the body alive.   Torture became institutionalized, and even popular—possibly because of the illusion that it would be limited to people with brown skins and non-European names.

But I still thought of this as an aberration, part of a scheme by Dick Cheney, Donald Rumsfeld and others to restore executive power that had been lost after the Watergate hearings.  I voted for Barack Obama with great enthusiasm in 2008, not because I believed he would be a strong reformer, but because I thought he would restore the country to normal.

I soon learned that there was a new normal, one that was different from what I thought it was.

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How neoliberalism feeds political correctness

September 14, 2016

Maximillian Alvarez, a graduate student at the University of Michigan, wrote in the current issue of The Baffler that the real driver behind “political correctness” on American university campuses is the neoliberal idea that students are customers, and that the job of the university is to give the customers what they want.

education-in-liberal-artsThe traditional idea of the university was that the professors were the custodians of knowledge, that their job was to impart knowledge and wisdom to students and that their work should be judged by their peers.

The neoliberal idea of the university is that professors are vendors and students are customers, and that the measure of a university’s success is the ability to maximize enrollment and tuition.

Alvarez wrote that the conflict over “political correctness” is a conflict over which of the university’s customers are more important—the students and parents, or the wealthy donors.  (In the case of public colleges and universities, there is a third customer—the businesses that depend on public institutions to provide vocational training.}

Here’s what Alvarez had to say:

When professors today say they fear their students, they’re really saying that they’re afraid their students’ reviews and complaints will get them fired.

What professors fear are the changing administrative policies that have pinned the fate of their job security to the same unstable consumer logic behind Yelp reviews and the reputation economy.

The image of the wise, hard-nosed professor who upends her students’ assumptions about the world, who provokes and guides heated debates in class about subjects that may offend as much as they enlighten, rests on a whole host of factors that no longer enter into the crabbed, anxiety-driven working life of the casually employed academic.

Nor do such factors typically emerge in our debates about political correctness at universities.

Three in particular are worth highlighting.

First, tenure for faculty is disappearing—and along with it the sort of job security that once made university teaching an attractive long-term career.

Now the lion’s share of college teaching jobs goes to part-time (adjunct) instructors and non-tenure-track faculty.

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Brexit: the revolt of the losers

June 28, 2016

The dominant neoliberal economy sorts people into winners and losers.  Brexit is a revolt of the losers.

The winners are the credentialed professionals, the cosmopolitan, the affluent.  The losers are the uncredentialed, the provincial, the working class.

Losers are revolting across the Western world, from the USA to Poland, and their revolt mostly takes the form of nationalism.

The reason the revolt takes the form of nationalism is that the world’s most important international institutions—the World Bank, the International Monetary Fund, and the European Central Bank—are under the control of a global financial elite that does not represent their interests.

17149339-Abstract-word-cloud-for-Neoliberalism-with-related-tags-and-terms-Stock-PhotoI don’t fully understand the decision-making process in the European Union, but looking at its web site, my impression is that public debate is not a part of it.

The only vehicles for exercising democratic control, at the present moment in history, is through democratic national governments.  I am in favor of international cooperation, and I don’t know how I would have voted on Brexit if I had been British, but I certainly can understand Britons who don’t want to be at the mercy of foreign bureaucrats and the London governmental, banking and intellectual elite.

Democratic nationalism is the only form that democracy can take until there is a radical restructuring of international institutions.  Without a strong progressive democratic movement, the only alternative to neo-liberal globalization is right-wing anti-democratic populism as represented by Donald Trump, the United Kingdom Independence Party, Marine le Pen’s National Front in France, Greece’s Golden Dawn and others.

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Why a profitable company laid off 1,400 people

March 28, 2016

carrier2WTTVIndianapolis

In February, 1,400 employees of Carrier Air Conditioner in Indianapolis were told their jobs were being transferred to Mexico to cut costs.

It turns out that, according to the annual report of United Technologies, its parent company, that Carrier was a profitable and growing business segment.  In 2015, it was UT’s best-performing division in the company.

So why mess with it?  UT management hoped to boost the company’s stock price by cutting costs.  Managers say they plan to keep on cutting costs for the indefinite future, evidently without regard to

All this runs contrary to the way I was taught in college that a capitalist free enterprise system is supposed to work.

I was taught that the duty of corporate management is to ensure that the corporation survives and is profitable into the indefinite future.  This goal is achieved by making good products and at a reasonable price, and provide good customer service.  To do this, it is necessary to re-invest a good portion of the profits in the business.

UT management’s philosophy is evidently the opposite—to take money out of the business and give it to the passive shareholders.

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The New York Times evidently had a good article on this, which unfortunately is behind a pay wall.  David Dayen summarized its conclusions in an article for Salon.

Last year, Carrier produced a significant chunk of total profits for its parent company, United Technologies.  Of $7.6 billion in earnings in 2015, $2.9 billion came from the Climate, Controls & Security division, where Carrier resides.  Profits from this division have expanded steadily in recent years, which is not what you’d expect from a unit desperate to cut labor costs.

A look at United Technologies’ annual report reveals even more good news: Commercial and industrial products, Carrier’s category, make up over half of UTC’s $56 billion in net sales. Climate, Controls & Security had 3 percent growth in 2015, the highest in the company; it was the only division to increase its profit margin year-over-year.

“Organic sales growth at UTC Climate, Controls & Security was driven by the U.S. commercial and residential heating, ventilation and air conditioning (HVAC) and transport refrigeration businesses,” according to page 14 of the report. In other words, air conditioners – what the workers are making in Indianapolis – drove the growth of the best-performing facet of United Technologies’ business.

So why would a profitable, growing business need to ship jobs to Mexico?  Because their shareholders demanded it.

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African factory workers in deepest Iowa

March 14, 2016

Writer Paul Street reported for Counterpunch on his experiences working alongside Congolese and Sudanese immigrant workers in a Procter & Gamble factory in Iowa.

Here in and around the liberal bastion of Iowa City, a university town where wage-earners’ working class lives are all but invisible to a large local cadre of privileged and mostly white academicians, the lower end of the workplace and the job market – the factory and warehouse positions filled by temporary labor agencies, custodial jobs, taxi drivers, etc. – is crowded with immigrants.

Paul Street

Paul Street

It is chock full of nonwhite people who feel fortunate to have any kind of job that helps them escape danger, misery terror, and oppression in far-away places like the Democratic Republic of the Congo, Rwanda, Sudan, Honduras, Mexico, and Haiti.

Does anyone really believe that Iowa City’s giant Procter & Gamble plant – my low-wage, finger-wrenching workplace between from September of 2015 through February of 2016 and the origin point for many of North America’s leading hair-care products – is crawling with Congolese and Sudanese workers, along with a smattering of Central Americans, Caribbean islanders, marginal whites, Black Americans, and Africans from other states, because P&G (the nation’s 25th largest company and its top consumer packaged goods firm by far) is nobly committed to racial and ethnic diversity and a world without borders?

Of course it isn’t.  P&G reserves its better paid and more “skilled” and secure “career” production jobs almost completely for non-Hispanic whites.  These “plant technician” jobs require no more than a GED (high school equivalency) degree and start at around $20 an hour.

Street said P&G relies on Staff Management / SMX, a temporary help agency, to provide its lowest-paid workers.  They get $10 to $11.85 an hour.  SMX gets an additional fee—Street heard that it was $6—on top of that.

The work includes filling boxes on rapidly moving assembly lines with shampoo, conditioner and mouthwash bottles, building and wrapping pallets at the end of never-ending packaging-assembly lines, putting stickers on one shampoo or conditioner bottle after another, and more and worse.

It’s all performed in exchange for inadequate wages (far lower than they ought to be thanks to the SMX rake-off) and at constant risk of being sent home early and without warning since there’s often “no more product today” (that’s called “labor flexibility” and it’s no small problem for workers who already paid for a full day’s worth of child care).

He himself quit because, he found after five months of pulling apart tightly glued boxes, he could no longer clench and un-clench his fists.  The function in his hands returned after a week off the job.

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Les Leopold on runaway inequality

January 2, 2016

I grew up and spent my early working years in the golden age of capitalism, which was from 1945 to 1976.  Almost anybody—as least, any white American man—who was willing to work could get a decent job sufficient to support a family.

Then a lot of things turned bad as once.  Worker pay no longer kept pace with productivity, but the pay of CEOs and wealthy investors grew much faster.   Manufacturing declined and high finance expanded.  Hourly wages declined and debt increased.  What went wrong?

LesLeopoldRunawayInequality51uuYumpldL._SX319_BO1,204,203,200_I recently finished reading a book, RUNAWAY INEQUALITY by Les Leopold (recommended by my e-mail pen pal Bill Harvey) that explains what happened as well as anything I’ve come across.

He blames America’s current woes on the adoption of what he calls the Better Business Climate model of economic policy.

This model is based on the argument that the key to economic prosperity is economic growth, that economic growth depends on investment, and that investment depends on business profitability, and that the way to increase business profitability is lower taxes, lower social spending and fewer regulations.

0.9265We used to call this Reaganomics.  Now we call it neoliberalism.   Many people thought it was a plausible response to the economic stagnation and high inflation of the late 1970s.  I myself thought it was worth a try (more fool I).  I wouldn’t have objected to making rich people richer if everybody else had benefitted in the long run.

But this isn’t how things worked out.  Instead:

  • Wage increases stopped keeping pace with productivity.
  • The CEO-worker wage gap took off.
  • The financial sector grew at the expense of manufacturing.
  • Wall Street profits skyrocketed.
  • The income gap between the super-rich and the rest of us widened.
  • Corporate debt, consumer debt and government debt rose.

What went wrong?

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The case for a global debt writedown

November 18, 2015

Debt that can’t be repaid, won’t be.
==Michael Hudson

Since the 1970s, every economic recovery has been weaker than the one before.  Michael Hudson, in his new book, Killing the Host, said the reason is that, with each recovery, there has been a greater overhang of debt, which drains resources from the real economy of tangible goods and useful services.

The current economic recovery has been a recovery of the financial markets, not a recovery of jobs and wages of ordinary people.   United States and European Union economic priority has been to protect bond-holders and creditors from loss.

HudsonKillingtheHost41Jz7lQkwrLHudson argued that this is unsustainable.   Either there will be a planned write-off or write-down of global debt, or there will be a financial collapse, like the one that began the Great Depression of the 1930s.  Either way, the debt will be wiped out.

His preference is for what he called a Clean Slate, as was done in West Germany in 1947 as part of a currency reform.  Basically, most German debts were canceled, except for employer wage contracts and bank accounts below a certain maximum amount (since wiping out bank debt means wiping out bank savings).

This, together with tax reform, the lifting of wage and price controls and the 1953 forgiveness and restructuring of German public debt, made possible the German economic miracle.

As Hudson admitted, this is pretty strong stuff and unlikely to be accepted.  An alternative is the enforcement of an old New York law, going back to Revolutionary times, against fraudulent conveyance.  This means that a debt is void if the lender knew in advance that it couldn’t be paid back.

If Snidely Whiplash lends money to Mrs. Innocent Goodbody, a poor widow living on Social Security, with her $250,000 house as collateral, with the expectation she won’t be able to keep up the payments and he’ll be able to foreclose on the house—that’s an example of “fraudulent conveyance.”

This applies to the subprime mortgages and “liar’s loans” prior to the 2008 financial crash.  Another concept, “accounting fraud,” applies to the bad loans that were given high debt ratings, securitized and sold to the unwary.  Canceling debt originating in fraudulent conveyance and accounting fraud would have a huge impact.

Hudson said that home mortgages could be scaled back to what is necessary to amortize a property based on its assessed value.  Or mortgages could be scaled back to 25 percent of the borrower’s income, which is what conservative lending practices require in the first place.

Congress in fact authorized a program to do just that as part of the 2008 bank bailout.  But Timothy Geithner, Obama’s Treasury Secretary, declined to implement it.

All this disrupt the financial markets and the economy generally, but Hudson wrote that it would clear the way for a good economic expansion, based on investment in the real economy, as happened in Germany.

Anyhow, he wrote, the alternative is more foreclosures, more economic hardship, more government bailouts until it becomes absolutely clear that that the debts are unpayable.   In the end, debt that can’t be paid, won’t be.

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The assumptions and logic of neoliberalism

November 14, 2015

There is no such thing as society.  There are only individuals, and their families.      ==Margaret Thatcher

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Neoliberalism is the philosophy that economic freedom is the primary freedom, economic growth is society’s primary goal and the for-profit corporation is the ideal form of organization.

It is the justification for privatization, deregulation and the economic austerity being imposed on governments by lending institutions.

What follows is my attempt to understand the thinking behind neoliberalism.  I welcome comments, especially from those who think I am wrong or unfair.

17149339-Abstract-word-cloud-for-Neoliberalism-with-related-tags-and-terms-Stock-PhotoGovernment is by definition coercive.  All governmental authority is ultimately backed by armed force.  The role of government should be limited to protection of life and property and enforcement of contracts.   

Private enterprise is by definition free choice.  Privatization by definition increases freedom.  All income deriving from the private sector, and not involving force or fraud, is earned income.

Most people are good judges of their individual self-interest and bad judges of the common good.   People generally make good decisions as consumers and poor decisions as voters.  Consumer choice is more meaningful than the right to vote.

Free markets, though the law of supply and demand, coordinate individual choices without the direction of any particular people or group of people.  The free market is more impartial and just than any system of planning or regulation could be.

A capitalist dictatorship that protects property rights is better than a socialist democracy that attacks property rights.

Economic growth is the key to increasing economic well-being.  Growth is produced by capital—that is, by investment in machines, factories and other human-made goods that generate new wealth.  

In a free enterprise economy, capital is invested by private individuals based on the law of supply and demand.  Whatever diminishes the ability of individuals to accumulate wealth or respond to the signals of the free market diminishes capital and retards economic growth.

Money spent on welfare and charity may temporarily alleviate distress, but it will not cure poverty.  Only capital investment and economic growth will do that. 

Capital investment and economic growth should take precedence over public education, public health, the environment and other so-called pubic goods, because they are the means of generating the wealth that pays for the public goods.

Banks, investment firms and financial markets are the key institutions of society.  They must be preserved in order to support investment and economic growth.

Monetary obligations are absolute.  Any person, organization or government that borrows money has an absolute obligation to pay it back, no matter what the sacrifice.  People who don’t repay their debts or fulfill their contracts are parasites on the system.

Inequality is a good thing.  To break up accumulations of wealth that have been acquired by legitimate means is not only unjust because it destroys the just reward for achievement.  It destroys the capital by which new jobs and wealth are created.

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The international record of neoliberalism

November 14, 2015

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‘Debt that can’t be paid, won’t be’

November 3, 2015

The world’s peoples and governments, including us Americans, collectively owe more money than ever can be repaid.  How we got to this point and what it means are the topics of a book I finished reading last week, KILLING THE HOST: How Financial Parasites and Debt Bondage Destroy the Global Economy by Michael Hudson.

Classical economists distinguished between earned and unearned income, between hard-working laborers and merchants and what they called “rentiers,” people who “got rich in their sleep” by collecting income from land or financial assets.

They condemned what they called “rent-seeking,” which was the attempt to set up as toll-keeper for some part of the economy.

HudsonKillingtheHost41Jz7lQkwrLA great deal of 18th and 19th century economic thought was devoted to how to shift income away from landlords, monopolists and holders of financial assets, and into the hands of those whose efforts created real wealth.

In his book, economist Michael Hudson told how this distinction came to be forgotten in the 20th century, and what followed.

Operations of finance, insurance and real estate sector of the economy came to be regarded as equivalent to the production of actual goods and services, and the bidding up of prices of financial assets came to be regarded as equivalent to increase in real wealth.

All income came to be regarded as “earned” income.  The result is that more and more of the economy consists of the transfer of wealth from the real economy to the financial sector, but our economic blinkers keep us from seeing it.

There are many ways to increase financial wealth without increasing real wealth.  Corporations that use their profits to buy back stock increase the stock price and enrich shareholders, for example.  But unlike investment in machinery, research and development or new products, stock buybacks do not make the corporation itself more valuable or more viable.  Rather they drain the institution of needed resources.

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Increased ‘productivity’ in education

October 5, 2015

TeacherJobGap5xnfRJSource: Economic Policy Institute.

Blogger Duncan Black thinks these figures indicate that Americans should stop cutting public school teachers’ wages and benefits, reducing their job security and making them scapegoats for all the ills of society.

But according to the neo-liberal philosophy that prevails in U.S. industry, the decline in the number of teachers is a good thing, not a bad thing.

A neo-liberal would tell you that fewer teachers with lower salaries teaching larger classes is by definition an increase in productivity (but that the best way to achieve this is through privatization).

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The fate of the arts and sciences

August 15, 2015

Everybody knows that the percentage of [college] students majoring in English has plummeted since the 1960s. 

But the percentage majoring in the physical sciences—physics, chemistry, geology, astronomy and so forth—has fallen even more, by some 60 percent.

As of 2013, only 1.5 percent of students graduated with a degree in one of these subjects, and only 1.1 percent in math.

At most colleges, the lion’s share of undergraduates major in vocational fields: business, communications, education, health.

But even at elite institutions, the most popular majors are the practical, or as [David] Brooks might say, the commercial ones: economics, biology, engineering and computer science.

It is not the humanities per se that are under attack.  It is learning: learning for its own sake, curiosity for its own sake, ideas for their own sake.

==The Neoliberal Arts by William Deresiewicz in Harper’s magazine.  Available to subscribers only.