Neoliberalism Debunked

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Economic Line Wins

The fundamental beliefs of neoliberalism all represent extreme simplification of complicated processes with one goal in mind: To establish that the needs of corporations are the only focus of ‘good’ government.  This obviously extremist view has been propagated for decades to now become a strange orthodoxy that has remained largely unquestioned by economists or society at large.

Sustained economic growth is the only way to human progress

In neoliberal philosophy this growth is always defined as a global function.  The global economy must continually increase in size, or the whole system will come crashing down.  If that sounds like a Ponzi scheme[1], you’re right, that is exactly what must be created to fulfill infinite growth on a finite planet.  The finance industry has created a whole new realm of completely mythical money in order to keep the scheme going. This is the derivatives market that they have fought viciously to keep unregulated since its inception, since it is the magical space where infinite growth has blossomed into.  There is now more debt created in this world than all the resources in the world could ever repay if the current system continues.  This is the means by which the finance industry is attempting to trick the world into eternal debt slavery.  This was made possible by that policy of government deregulation after already using a fiat currency and a fractional reserve banking system.

The debt is not real and should be treated as such.

Free markets without government interference would be the most efficient and socially optimal allocation of resources

This idea relies on the myth of the ‘invisible hand’ of the market acting in outright mystical ways to control itself.  The term ‘globalism’ has been used extensively as a cover for the spread of neoliberal philosophy[2], the media message being that the global economy raises poor countries out of poverty.  The reality has seen western neoliberal countries experience static or decreasing wages as jobs are shifted to the cheaper locations in Asia, South America and Eastern Europe.  The wages and bonuses of executives of these corporations have been a notable exception to this standard. Where everybody else is told to bear with the pain for the sake of globalism; executive pay accounts for the vast majority of pay increases in a western corporation – with US corporations the most inequitable.  This has been a feature of neoliberal governments worldwide and a hallmark of the culture of greed.[3] Simply put, the executives are deemed by those in control to be the most valuable employees of the company as they guarantee delivery of profits to the shareholders.

Who are these ‘shareholders’ we are all working to benefit?

The problem is, ‘those in control’ ARE the executives handing themselves ever increasing salaries and bonuses.  They are also a significant proportion of the shareholders for whom they purport to work.  Which leads to another important question; who exactly are these shareholders that we are told all corporations must dedicate their existence to serving?  We are led to believe by mass media that anybody can buy shares, therefore most people do benefit from this system.  The truth is very different.

“The top ten percent have 81% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate”[4]

This statistic is from the US in 2010 goes to explain completely the often quoted statistic that the rich suffered more than the poor in the crash of 2008.  The truth is the top ten percent of the population bore the brunt of the share market crash because they owned almost all the shares.  As of 2013, they have now largely recovered, whilst the fortunes of the majority of the population have not.  For the majority, life has got worse.

The same trend is true in Australia with just 38% of the population owning any such investment and of those, the majority are held by people in the top ten percent of income earners – about 15% of the total population.[5]  This shows that Australia is not as extreme in terms of this wealth inequality, but not for a lack of effort by increasingly neoliberal governments.

So we do not see any socially optimal or efficient allocation of resources, we see a permanent flow of wealth to the top that then gets hoarded and transported to offshore accounts as soon as possible.  There is at least $21 trillion hidden offshore globally in 2013, untaxed and kept for the wealthy hoarders.[6] If this money had been used to provide living and reasonable wages for the population as a whole instead, we would have a significantly happier global society today.  This also puts lie to the idea that the western world must suffer as the rest of the world improves their quality of life.  There is no need; there are plenty of resources to bring the world to a social and economic equity.

What is a ‘free’ market?

The reality is that as companies have become larger and spread around the world, they have been able to dedicate more and more resources to guaranteeing that the market is not free, but is entirely under their control.  This has been achieved by:

  • Anti-competitive behavior across every industry creating many environments where a dozen companies are allegedly competing, but are all actually owned by one larger organization that sets pricing as required.[7]
    • This involves price fixing to drive competitors either out of business or so close to the wall that a buyout can be enacted cheaply.
  • Regulatory capture across many countries where a supposed neoliberal uses government handouts, subsidies and legislation to create artificial monopolies.
    • Ignoring the fact that this clashes with the philosophical desire for a free market is an integral part of the modern movement; hypocrisy is key to neoliberalism.
  • Capture of mass media outlets globally that are then corrupted to reinforce neoliberal ideals of greed and selfishness over empathy and social concerns.

If the neoliberals really wanted a free market, the government would be required to heavily regulate any company that became large enough to act in this way.  The regulation would take the form of removal of all government support in favour of forcing them to compete effectively in the marketplace through innovation.  Their philosophy of ‘free market’ only refers to freedom from interference from the government; it is not concerned with the inevitable result of the corporate control of society through debt slavery in what is being called neofuedalism.

‘The Shock Doctrine’ is one of many sources that shows clearly the lie of ‘trickle down economics’ that are meant to occur after destroying unions and allowing labour to be used from the cheapest source in a global economy.  What has actually happened is the extreme concentration of wealth in the hands of those very few corporations followed by the creation of artificial debt laid on the shoulders of the people to create permanent slaves.  The system works very well if you are one of the 1% at the top and very badly for everyone else.  This has always been the intended result; it just isn’t put forward in the sales pitch.

Wealth Hoarding

 

Governments should mainly function to provide the infrastructure to advance the rule of law with respect to property rights and contracts and maintain a national defence force. 

This element is borrowed directly from the classic liberal economics approach that seeks to restrict the intrusion of government into daily life.  This is the core of the argument to provide either zero or minimal social welfare within the country; the idea is that people should work and earn their way to buy whatever they need or want.  The problem with this idea is that neoliberal governments understand that rapid removal of social welfare programs would likely cause extreme voting backlash.  The secondary issue is that neoliberal economists have a wide array of opinions of this ranging from near anarchism to authoritarian extremes.

The resulting systems have been equally diverse, from totalitarian dictatorships in South America and Asia to western social democracies, we have seen a wide spread of programs implemented attempting to reach this goal.  The common feature of all of them has been either the gradual reduction or elimination of social welfare programs.  This has been combined with an equal increase in subsidies, tax exemptions and legal loopholes for large corporations to not only avoid tax, but actually claim taxpayer’s money in benefits.[8] Whilst the stated aim of the neoliberal philosophy is to encourage free markets and reducing the size of governments; the reality has been the implementation of a corporate welfare system where taxpayer’s money is redirected upwards to add to profit margins.[9]  Those profit margins are then distributed to shareholders and investors, so the flow of money from the poor to the rich is accelerated.

Rethinking Unions 

Neoliberal philosophy has no place for unions.  These organizations represent worker’s interests in large groups, something that corporations have no interest in tolerating.  This would mean providing fair wages and working conditions for employees instead of cutting every cost.  These cost cutting measures applied to salaries are said to be to deliver profit to shareholders, however the first destination has become corporate executive salaries.  The next destination is executive shareholdings and then other shareholders.  Workers have no place within this system.  An ideal worker to the psychopathic corporation is a slave who must work for just enough food and care to stay alive until replaced.  This philosophy has resulted in an unrelenting attack on unions by all neoliberal governments, often blaming them for the problems created by neoliberal practice.

The truth is that unions have lost a lot of their previous influence and importance because they achieved most of their initial goals between 1950 and 1970.  Since then people have accepted that we have a two day weekend, an eight hour day as standard full time work and that full time work should provide a living wage.  We also have paid annual leave for a month in Australia.  All of these assumptions are being actively undermined by the neoliberal media, demonising unions and the idea that there is more to life than work.  Unions need to reinvent themselves for the new millenia, showing the danger of corporate domination of the wages process for workers as seen in the US and UK.

The trickle-down nonsense

The idea is that infinite growth and profits provide benefits for everybody via the infamous ‘trickle down effect’ – one of the greatest articles of faith of neoliberalism.  The fact that the evidence uniformly shows this is not true is steadfastly ignored by the neoliberal orthodoxy.  When you look at annual GDP for a neoliberal country, there is indeed more wealth generated each year.  The problem is that it is being deliberately harvested and hoarded by an increasingly small percentage of the population.  Wealth inequality tells the complete story that puts the lie to ‘Austerity’ as being anything but a tightening of the grip on power by the very rich.[11]  It does not promote confidence in the market, it does not improve the outlook of any country that adopts this policy and it serves to cripple the economy for a longer period of time.[12]  What it actually brings is horrific job insecurity and a workforce too scared to rock the boat as they take on longer working days for less reward.[13]  This problem is more extreme in countries that have adopted neoliberal principles for longer periods of time.  The US is currently has an extreme of wealth inequality that shows the rising fortunes of the country have almost entirely benefitted just 10% of the population.[14]

US Income Distribution

Figure 6: US Income distribution showing the change around 1983 when Reagan’s neoliberal policies took effect.[15]

Oz Wealth Inequality

Figure 7: Australian Wealth Inequality.[16]

Whilst these figures show the growth of inequality is not nearly as extreme in Australia, it does show the effect of the Howard government introducing further neoliberal reforms starting in 1996 and continuing for a decade afterwards.  The most alarming element of this trend is that both the Australian Labor and Liberal Coalition have implemented a series of neoliberal policies since 1983.  These have not been as extreme as in other countries thanks largely to the strength of the union movement and resistance of Australian culture to the neoliberal agenda.  This has been exemplified by the trend since the early 1990s to vote away from these two parties.  A hostile senate has been the standard since the late 1980s when many people realised the Labor party were betraying their egalitarian principles to follow the neoliberal agenda pushed by the US and UK governments at the time.  When the Liberal coalition gained control of the senate in 2004, they used it to push more extreme neoliberal workplace reforms, “Workchoices” and resoundingly lost the next election in a defeat so broad that it meant the Prime Minister also lost his seat in parliament.  Those reforms were acting to dismantle unions in all workplaces and were made according to ‘Right to Work’ laws passed across the US.  Those laws have been found to be very effective at both destroying unions and reducing wages for employees; whilst increasing wages for business owners.[17]

Australians have resisted the neoliberal agenda for decades, but this has only led to an increasing onslaught of tactics to try and fool the public into supporting policies that will not benefit them.  Led by the experience of neoliberal governments in the US and UK, Australian conservatives have sought to use the media to create social division and a culture of fear.  This has been to establish conditions more favourable for further neoliberal reforms that will only increase income inequality and lower living standards for the majority of citizens.

Education and Healthcare

The neoliberal attack on education system stems from the central idea that any social services are the preserve of private effort.  Individuals should pay for what they want, it should not be provided as a community benefit.  This idea has no foundation in reality and represents a complete failure to understand the principles of society and community.  It is beyond the finances of the vast majority of individuals to fund a school.  It is well beyond the finances of poor communities to do the same.  Providing an education system from a broad tax base is the only reasonable and equitable solution.  This was operating in Australia in the 1970s, but has been steadily subverted with each passing decade as successive neoliberal governments have crippled the public system with poor funding whilst providing incredible profit margins to private schools instead.

The secondary problem is that the system of education needs to be reviewed entirely to deliver a different kind of graduate.  The current system has been tilted to train obedient workers to fight each other for increasingly fewer jobs across society.  The idea of entrepreneurs, creative workers, critical thinkers and collaborative organization is simply ignored and avoided.  Yet, it is these very professions that offer the greatest advantages to Australia in the changing economy of the new century.  There are examples in the Finnish system that provide guidance towards producing better results for all students and as a result for Australia as a whole.  There are few private schools in Finland (and little desire for them) because the public system receives all the public investment and private schools cannot charge extra fees.

How Schools Kill Creativity

The neoliberal attack on healthcare comes from the same source as that on education – user pays is the only way.  This fails for the same reason, individuals can’t afford to pay for a whole health system.  The method of government funding private health insurance means only that taxpayer’s money goes to fund private profit margins instead of helping the people.  If the private health insurance rebate provided by the Australian government were redirected back to the public health system, the most significant funding issues would disappear.

Change perceptions of public and community good to individualism and individual responsibility. The change is ‘for their own good’

This has been the job of global mass media corporations to sell and they have been disturbingly effective.  Using Orwellian double speak strategies they have managed to cast many disadvantaged groups as the enemy of hard working, ‘good’ people everywhere.  This has involved the creation of a culture of fear and hate for all things foreign and different.  Scared people don’t think very well. When you’re permanently scared of losing your job that is your only means of supporting yourself and your family, you don’t want to do anything to displease your bosses. When you have to work sixty hours a week just to have somewhere to live and something to eat, you don’t have time to think.  This makes the population extremely vulnerable to easy slogan based messages of fear and hate; this is the true state of the ‘working poor‘.  This places the blame for your suffering and fear on ‘them’ and exonerates the neoliberal governments from any involvement.  They claim that implementing neoliberal principles is the only way to beat ‘them’ and make life better for you.

Austerity is a Lie

At the same time that corporate welfare increases in many forms, people in genuine need are told that there is no budget to help them.  They are told that ‘Austerity’ is the only way forward to improve their lives.  They are told it is more important to give taxpayer’s money to the rich than it is to use it to benefit society as a whole. The poor are then demonised, then dehumanised to represent the ‘other’ that can justifiably be reduced to slavery – because its what ‘they’ deserve.  The truly disturbing part of this strategy is that the use of commercial mass media to promote this goal has created the environment for the middle class to vote against their best interests because they do not identify themselves as the ‘poor’ and thus they must be rich.  This sleight of hand has worked for a few decades in the US and UK, even as more and more people slide from middle class prosperity into part of the ‘working poor’.  A new underclass who work part time jobs for below survival wages and thus still need government support.  This is not a choice, this is the situation forced upon them by a failing economy that simply cannot produce enough jobs for the available workers.  Even this over worked underclass do not perceive themselves as the demonised ‘poor’ and many support the neoliberal regimes thinking things will get better one day once the ‘crisis’ is over.  The fact is, the only crisis is the one created by the neoliberal government to increase corporate profit margins which only benefit the extremely rich – the 1%.

The problem with the whole process is they are lying to the population from start to finish.  There are other ways, there are many better ways; there is no justification to persecute disadvantaged members of society. This website is dedicated to exploring the many better ways we could be running our society, join us on the journey.

The aim of neoliberal governments is to create a population dominated by fear and hate, whilst placing themselves as the only possible solution. [18]  This is to make social control easier in order to herd the masses into an existence of permanent debt slavery – neofeudalism.  The increasing similarity between western neoliberal conservatives and totalitarian dictators running a police state is disturbing.[19]

There Is No Alternative (TINA): This is the only way to run a good society that enjoys all the benefits of infinite growth and profits.

First proposed by Margaret Thatcher in the UK as the basis for her ‘conviction’ politics, this has been an example of the principle that a lie repeated often becomes accepted as the truth.  There are always other choices and the only people who accept and push this singularity of truth are religious zealots.  It is certainly true that ‘trickle down economics’ was called ‘voodoo economics’ in the 80s, since there was absolutely no evidence of the idea being true – it was and is an article of faith of the neoliberal agenda.  The fact of growing income inequality shows clearly that this view has no basis in fact or evidence and should be dismissed as the lie that it is.

The stated aim of neoliberal philosophy to benefit all business is never met or acted upon, small businesses and startups have suffered immensely under neoliberal governments.[10]  The benefits government offers are soaked up by corporations to allow them to actively undermine competition, prevent innovation and generally ensure the market is not free.  This does not provide an environment that allows small businesses to start and flourish. The source of this hypocrisy seems to be the conflict between the culture of greed and any genuine economic theory.  This economic theory of greed is that I want ‘more’ and having ‘more’ makes it easier for me to get ‘more’ – and the government should help me get ‘more’ because my selfish greed is good for everyone.  There’s no more to it than that in action.

Trickle Down Economics

 



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