NEOLIBERALISM (NEOCONSERVATISM)

By jk 6/07

Updated 12/08

There is an evil afoot, neoliberalism (called neoconservatism by U.S. media).  It is neither new nor liberal.  It is a theory of unregulated economics (laissez faire capitalism), expanding debt, and the privatization of government services.  Milton Freedom, of the University of Chicago’s School of Economic, has won a Nobel prize in economic for his contributions to neoliberal economic theory.  Neoliberalism is back by the multinational corporations and international banks, The international corporations and banking have found this theory useful for promoting their financial goals, and through the IMF (International Monetary Fund), WTO (World Trade Organization), and the World Bank have effectively promoted them.  In the U.S. their goals have been sufficiently realized so as to produce a second age of the robber barons.  The flat worlders (from a book The World is Flat by Thomas Friedman) have been the principle contributors to the politicians and parties that support the removal of economic and trade restrictions, and the social safety nets.  They even plan to privatize government services such as the water works, social security, post office, schools, and even the military.  Bit by bit they have been accomplishing these goals. 

Money talks and bull shit walks.  Political contributions are just one of four tools; treaties, loans and the corporate media are the other three. In the third world they make loans through the WTO, IMF, and World Bank to those governments who support at least in part their agenda which consists of opening up the resources, the media, the utilities, the banking, the borders, and their very market places to foreign buy outs and competition.  They call it deregulation.  The flat-world policies are also packaged as international treaties with acronyms such as NAFTA, CAFTA, AFTA, MEFTA, etc., which are signed by both underdeveloped and developed nations.  (The Iraq war is about MEFTA—opening up the Middle East markets including the oil fields).  In NAFTA there are 900 pages of clauses.  Among them are clauses requiring the overriding of national environmental, safety, drug, labor, commerce, and tariff laws; and NAFTA sets up their own court system to accomplish this!  National sovereignty has been sold.  Today’s new Robber Barons are not the monopoly capitalists like Rockefeller, Gould, and Morgan, but a much bigger global fish.  Business ethics hasn't changed, only monopoly capitalism is now played upon a board that covers our planet.

These flat-world (neoliberal) policies have resulted in the out sourcing of jobs, the flood of cheap tariff-free goods, the flood of undocumented workers, the reduction in the pay for skilled and unskilled labor, the breaking of unions, the reduction of social services, and a shift of the tax burden from corporations (many of whom have moved to tax-free heavens and avoid U.S. taxes) and the rich to the bottom 98%. In the past 35 years productivity has gone up over 45%; yet real wages (including benefits) have gone down, way down.  Why aren’t workers getting a share of their increased productivity?  Family income has remained level because now two earn the income of one.  In 1950s, there were very few working mothers. Through their media, the new Robber Barons paint a rosy picture, but the facts thunder a different storm.   

In the pursuit of their short-term and global interests, the neoliberals have us revisiting 1930:  they have brought about the economic collapse.  Their Federal Reserve policy[i] of flooding the banks with funds based on their 10% equity requirement has led to unsound loan policies through their need to turn these funds over.  Most of these loans have been bundled and sold to other institutions which have but 3% equity at most.  World wide speculative banking and shadow banking bubbles have burst.  Almost every developed nation has a very high total debt.  In the U.S. it is over 360% of GDP.  It is more than was held by those nations that have had an economic crisis in the last 2 decades (Mexico, Argentina 1995, Thailand, Hong Kong, Malaysia, South Korea Laos and the Philippines during the 1997 Asian Financial Crisis).  Servicing government debt is now the second biggest item (over $412 billion in 07) in our budget.  It is funds that should have stimulated our economy.  Our nation is being bought up by foreigners made fat by our trade deficit ($817 billion in 06, and rising).  The manufacturing foundation of our economy has been eroded to less than 12% of employment[ii].  Now the entire developed world is imploding. 

From 10/26/00 to 7/15/08, the dollar has depreciated against principle foreign currency the EURO by 48% (26% since 1/02/06 to 8/23/08).  The principle cause is the need to sell t-bills—the falling dollars entails more T-bills per Euro.  In 2006 the total value of the EURO in circulation surpassed the USD.  U.S. prices rise because foreign goods and resources take more dollars. 

This drop in the dollar keeps foreign dollars in this country.  Property and securities become a bargain when foreign currency is strong.  Our government must sell new T-bills to raise the funds to replace those that have matured.  Foreign corporations, nations, and banks hold over $2 trillion in T-bills. Moreover with their trade surplus they are buying our industries.  Our instability is making the Euro the global currency.  But the flat worlders have a global agenda. 

Since 1972 disposable income of workers has steadily dropped[iii], even though their productivity has increased 45%--where has this gain gone?   The U.S. now ranks 4^th in GDP per capita, yet is 92^nd in distribution of key benefits—UN stats.  All this has occurred to our nation because neoliberal policies have rolled back the wisdom that got us out of the Great Depression and carried us forward following WWII: tariffs, limited immigration, and unions.  A prosperous working class buys lots of durable goods, while those at the top primarily speculate in the markets.

The multinational corporations have been changing through political alliances, the soil of government regulations; thus like a foreign weed they are chocking out native industries mainly with their cheap imports.  These corporations, many of them homegrown, are no more American than Toyota and Shell Oil.  They have moved their corporate head quarters off shore to avoid taxes, and their factories overseas for its cheap labor.  Yes, a flat world is good for them, but not for our nation.

The market place needs regulations:  regulations for safe and effective drugs, clean air and water, safer work places, honest advertising, product safety, accurate news reporting, etc.  Capitalism needs tariffs, regulations, and unions to assure a decent wage, medical benefits, retirement benefits, and decent working conditions.  It needs to regulate industries to prevent price fixing, and of banking to assure sound policies.  All these regulations affect costs, and business is about maximizing profits.  There is a fundamental conflict between short-term profits and long-term economic growth.  And there is a conflict with the public weal.  But the treaties our government has signed have done away with tariff laws, environmental laws, labor laws, etc.  NAFTA is about globalization. 

Neoliberals tell us of the virtues of unrestricted capitalism.  They promise developed nations cheap goods and more technocratic jobs, and they promise the third world peoples more manufacturing jobs through exports tariff free to the developed nations and technocratic jobs based upon outsourcing by the developed nations.  They promised better pay, cheaper goods, a strong economy, and whatever else needed to sell globalization.  They and the politicians whom are in their fold (Bush 1 & 2, Reagan, and Margaret Thatcher being the most brazen) have no regard for the truth.  They haven’t delivered prosperity even though productivity is up over 45%.  Low wages in the third world continue and we too are heading that way.  Thirty years of stagnation and worse proves the case against them.  

Where is our 2-party system? in bed with the Robber Barons.  The Democrats passed NAFTA, and Bush & Chaney sleep with Wolfowitz—whom they made head of the WTO.  The combination of political donations and corporate media has made political success dependent upon the support of the neoliberal Robber Barons.   

Greed is greed, and what benefits one group comes at an expense to the remainder of society.  They have fed the people a false data basis.  Our corporate media have sold the public on the virtues of neoliberalism and the elimination of economic regulations.  The nation’s richest 1 percent of the population holds financial wealth (which excludes equity in owner occupied houses) that is more than four times as much as the bottom 80 percent of the population.  Through their media the economic and social consequences of globalization are given a false face, and the masses have been lulled by their message into believing that their greed is in our best interest.   Propaganda and advertising work. 

A start towards a cure would be kick big business out of politics through campaign reform funding and out of the media by turning it over to educators.  (This article is on the web at http://skeptically.org/wto/id13.html).

           

*   Source for federal spending:  http://nationalpriorities.org at http://nationalpriorities.org/index.php?option=com_content&task=view&id=285&Itemid=333

NNP figures in billions for fiscal budget 08:  military $598, health $428, and debt $412.