Greg Fingas's blog "Accidental Deliberations" often has posts containing links to many excellent mainstream and alternative political articles, essays and analyses. A while back there was a link to this article from the Roosevelt Institute: "The Empirical Failures of Neoliberalism." I just wanted to mention it here. Some choice quotes:
Advocates of deregulation promised both more efficient markets and economic growth (as measured by gross domestic product) that would “trickle down” to benefit the economy as a whole. Such an approach, they promised, would be like a rising tide that lifts all boats. Contrary to the theory, however, regressive policies, including lower tax rates for corporations and the already wealthy, deregulation, and privatization, have resulted in slower growth, greater income inequality, wage stagnation, and decreased labor market mobility.
...
Little to no improvement in relative mobility—the ability of people to rise up and down the economic ladder at a faster clip—may be the most important indictment of the deregulatory agenda. Using the ladder as analogy, if the distance between the rungs of a ladder are increasing, the ability of people to climb the ladder needs to increase. In a dynamic economy, the rich could more easily see their incomes fall, and the poor and middle class could more easily climb up the economic ladder. Today, however, the US ranks poorly on economic mobility among advanced economy countries. Over 10 years, starting in 1994, more than 93 percent of people starting out at the bottom 20 percent of income did not rise to more than the middle-income group. In comparison, 80 percent of those starting out in the top income group remained in the top or second to top after 10 years (Stiglitz 2015). Rates of relative mobility have gotten worse. Research shows that the rate of mobility has declined from the mid-century period, and unsurprisingly, the greater inequality experienced in the US since 1980 seems to have decreased economic opportunity. What progress America achieved in improving income mobility has stopped, and the country has become more socially rigid.
...
A marketized approach to labor policy argues that investment in human capital—i.e., education and “upskilling”—is the solution for economic inequality. In other words, if workers want higher wages, they can increase and adapt their skills, education, and ability to work in the marketplace. Therefore, the theory views inequality as an individual problem best solved by individualized solutions rather than as a structural problem to be solved by policies that redefine economic outcomes. It is clear that skill and education gaps do not sufficiently explain economic inequality—nor do more skills and education solve for it. Notably, research shows that unequal access to education is a result of inequality as much as a driver of it.
...
According to a theory promoted by Gary Becker, unbiased employers, consumers, and/ or producers would have a competitive advantage by employing, buying from, or selling to people of color and women. Eventually, market competition would close the wage and wealth gaps. This assumption, along with the assumption that wages represent human capital, implies that any racial inequality persists due to individual choices: individual failings like lack of skill, education, or effort, or individual discrimination on the part of an employer or consumer. Recent research by leading thinkers studying racial inequality has exposed the shortcomings of this theory by analyzing data on employment, income, and wealth disparities for people of color. At every level of education, people of color experience higher rates of unemployment, are paid less than their white counterparts, have fewer assets than their white counterparts, and accrue less wealth. The myth is debunked particularly by examining one metric of inequality: wealth. At every level of income and educational attainment, white households have more wealth than Black and Latinx households (Darity et al. 2015). Additionally, Black households headed by someone with a full-time job have less wealth than white households headed by an unemployed person, and Black households headed by a college graduate have less wealth than white households headed by someone without a high school degree.
...
For nearly half a century, neoliberals have argued that deregulation of the financial sector would lead to a more efficient—i.e., less rent-seeking—and resilient financial sector. Instead, we got higher financial profits, more extraction, and the 2008 financial crisis.
...
A growing body of work identifies the links between concentration or market power and declining capital investment. The valuation of equity over the book value of the firm itself, known as “Tobin’s Q” in financial literature, has doubled since 1980. If Tobin’s Q gets too high, competition and investment should bring it down. A Tobin’s Q greater than one implies that a firm is more profitable than its investment and assets and should therefore invest more. If it doesn’t, someone else should come in and invest in a similar way to drive down those profits. This hasn’t happened, which is shown by the fact that this value has consistently increased in recent decades. Even as real interest rates have fallen dramatically, firms remain profitable. The rates of return for firms should be a combination of interest rates and risk factors specific to their business. So, if interest rates fall, rates of return should fall as well. Yet this hasn’t happened. As Gauti Eggertsson has found, there’s been a decrease in the real rate of interest, which has fallen by roughly half since 1980. During this time, however, the measured average return on capital has remained relatively constant. Normally, investments would pick up to make up the difference; firms would expand their businesses to take advantage of the high profits, and other firms would rush in to compete away those rents. Yet here too, investment remains low as a percentage of profitability. Together, all of these factors—high profits, low interest rates, and weak investment—point to a significant market power problem that jeopardizes the macroeconomy (Eggertsson, Robbins, and Wold 2018).
And so we see that by all measures, in all areas, neoliberalism has failed. Neoliberalism was around for decades before Margaret Thatcher and Ronald Reagan. It was the resurrection of older, 19th Century liberal economic precepts, performed by Friedrich Hayek in the 1940's, after his precious liberal theories had been thoroughly discredited in the 1930's and 1940's. In his book The Road to Serfdom, Hayek argued that while all the economic growth and well-paying unionized jobs and the stability produced by activist government economic policies might seem beneficial, the reality was that by some weird sort of alchemy that he could effectively describe, government powers to do things for the people would inevitably lead to government powers to do things to the people. Plus, regulations, restrictions of any sort that prevent wealthy individuals from being complete assholes are an intolerable affront to the human spirit.
This argument didn't go down to well with most people at the time, but as capitalists continued to chafe and grumble under the limits on their power and selfishness during the 1950's and 1960's, Hayek was joined by many more missionaries of the capitalist, neoliberal faith. Two notable fellow cult members were Ludwing von Mises and Milton Friedman. Capitalism was also able to claim credit for the prosperity of this period, and did so, even though the prosperity was mainly the result of limiting the philosophy's hegemony.
The strains of the contradictions of post-1945 capitalism that arose in the 1970's were exploited by capitalist ideologues to push for a set of policies that added up to giving more and more to the capitalists to make them wealthier and more powerful, following which the capitalists would "invest" in "job creation" and pull us all out of the crisis. As we see from the Roosevelt Institute's survey of the results, this did not happen. We made capitalists more wealthy and powerful of course. But the capitalists did not go on to merrily invest their money in job creation. In fact, they mainly pursued job destruction. Factories were closed and shipped overseas to countries where death-squads could prevent workers from unionizing. White collar jobs were shed by private-equity vultures buying up the shares of vulnerable companies through borrowing and paying off those loans by selling off those companies' assets. The public sector was gutted as the tax-cuts failed to produce the economic dynamo of job creation, but instead produced continuous deficits (as did the use of high interest rates to manufacture recessions to destroy inflation by destroying the economy). These massive debts were used to justify austerity.
Neo-liberalism failed to produce prosperity. It even failed to produce stability. Financialization is the inevitable response to a falling rate of profit. Profits fall in a mature economy. Large, oligopolistic firms do not like falling profits. So they pursue neo-liberalism to escape the costs of regulations, unions, taxes and so on. But there's only so much that can be gained from those policies. And what IS gained by those policies goes to the capitalists. The higher profits from reducing costs goes into the bank accounts of the capitalists and their institutions. They aren't going to invest it in a new factory in the US-Mid-West to build spark plugs with well-paid, unionized workers. No. They will "invest" it into buying back their own stocks, or speculating in currencies, or buying up firms to strip-mine their assets, or "investing"it in derivatives speculation. So much loose capital sloshing around in so few hands leads to speculative runs on Tech Stocks, Real Estate and financial products based on real-estate, the privatization of profit-producing areas formerly run by the pubic sector.
It's all failed. The capitalist titans require constant subsization via public sector bail-outs and money creation. Wages are stagnant. Employment is precarious. Inequality has skyrocketed. People are angry. Hard times makes people more conservative. Fascism is on the rise. And capitalist insanity makes our societies incapable of responding sanely to the crises of global warming and even pandemics. I sure hope that the geniuses on the left-wing who are working on these issues come up with something soon.
No comments:
Post a Comment