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  1. #1
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    Default The Economy and Neoliberalism and other stuff

    I am starting this thread because neoliberalism plays such an important part in the economy and influences everyone life and thinking so much and yet so many people do not really understand it. I did not find Wikipedia much help when I tried to understand the how and why of neoliberalism worked when people blamed it for the increase in child poverty etc.

    https://en.wikipedia.org/wiki/Neoliberalism

    Neoliberalism or neo-liberalism is the 20th-century resurgence of 19th-century ideas associated with economic liberalism and free-market capitalism.

    A small group of passionate advocates created the Mount Pelerin Society in 1947: Friedrich von Hayek, Ludwig van Mises, Milton Friedman, and even for a time Karl Popper. The neoliberal movement remained on the margins of both policy and academia until the troubled years of the 1970s. Then it began to move centre stage particularly in US and Britain, nurtured in well financed think tanks such as the Institute of Economic Affairs in London and the Heritage Foundation in Washington, as well as the University Of Chicago where Milton Friedman dominated. Neoliberal theory began to exert a practical influence in a variety of policy fields.

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    Child Poverty, Care and Neoliberalism

    Victim blaming and poverty
    • but ‘structure rules’: If 10% of jobs are poorly paid and insecure, 10% of the workforce will be in poorly paid and insecure jobs, no matter how hard people work or seek work.

    • Lack of solidarity with/compassion for those on benefits, including from those who are themselves on benefits* * Shildrick, T. and MacDonald, R. (2013) ‘Poverty talk: how people experiencing poverty deny their poverty and why they blame “the poor”’, Sociological Review, 61, 2, 285–303.
    • The ‘belief in a fair world’ . . .

    Neoliberalism and the interdependence of poverty and riches

    • Declining share of national income going to labour since 1990 (in the UK). Stagnation of incomes since 2008 + austerity policies.
    • But economic inequality is not simply a matter of differences, but of relations between the poor and riches.
    • Neoliberalism promotes ‘rentier capitalism’: i.e. expands flows of unearned income deriving from control of assets, e.g. rent and capital gains, relative to earned income from producing goods and services
    • The housing market and house/land price inflation are sources of unearned income for home owners and private landlords, ‘locking-in’ support for more of the same – important constituency of regressive conservative policies
    • Property-led growth redistributes income and wealth from the asset poor to the asset rich.

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    Best definition of neo-liberalism I’ve come across -

    “Neo-liberalism is not an ideology, with a programme and list of demands, just a bunch of powerful people doing things in their own self interest.”
    “What the wise man does in the beginning, the fool does in the end”

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    Quote Originally Posted by winner69 View Post
    Best definition of neo-liberalism I’ve come across -

    “Neo-liberalism is not an ideology, with a programme and list of demands, just a bunch of powerful people doing things in their own self interest.”
    I thought that was socialism in NZ.
    Last edited by Raz; 30-10-2020 at 04:48 AM.

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    The Washington Consensus is a useful contribution IMO. One of the big problems I see with negativity around neoliberalism is cherrypicking points to suit the narrative, without recognising that at least some aspects might actually be good.

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    Quote Originally Posted by Raz View Post
    I thought that was socialism in NZ.
    Socialism is a negative word ...better to call it organised compassion and empathy
    “What the wise man does in the beginning, the fool does in the end”

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    You continue to dig your hole deeper moka. I'm not sure if those are your words, or if you have lifted them from somewhere (probably should acknowledge them if you have), but it is clear neoliberal policies were a response to a situation that had turned to custard and that living standards were already in decline.

    There is certainly a case to be made that neo-liberal policies exacerbated the problem by increasing the wealth gap/ power imbalance, but the cause of the economic woes of the '70s point far more to interventionism and protectionism alongside the shenanigans of the OPEC cartel.

    The numbers lifted out of extreme poverty worldwide in the last 30 years suggest less interventionism has got some things right (I don't think Capitalism should be completely unfettered) but a side effect is a bigger wealth gap....have a look at the "Mathew Principle"....it would appear to be part of the nature of things.


    I've reposted this from the Lab/NZ First government thread, which is where I criticised moka's position on the history and effect of neo-liberal policies in NZ.

    Certainly a good discussion to be had. I believe there always needs to be a tension between Capitalism and Socialism to get the balance correct. Things will seldom be in balance, but as long as it doesn't over correct one way or the other we are on the right track.

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    Quote Originally Posted by artemis View Post
    The Washington Consensus is a useful contribution IMO. One of the big problems I see with negativity around neoliberalism is cherrypicking points to suit the narrative, without recognising that at least some aspects might actually be good.
    https://www.intelligenteconomist.com/washington-consensus/

    The Washington Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury. A British economist named John Williamson coined the term Washington Consensus in 1989.

    The ideas were intended to help developing countries that faced economic crises. In summary, The Washington Consensus recommended structural reforms that increased the role of market forces in exchange for immediate financial help. Some examples include free-floating exchange rates and free trade.

    These are the ten specific principles originally set out by John Williamson in 1989:Low government borrowing.


    1. Low government borrowing. The idea was to discourage developing economies from having high fiscal deficits relative to their GDP.
    2. Diversion of public spending from subsidies to important long-term growth supporting sectors like primary education, primary healthcare, and infrastructure.
    3. Implementing tax reform policies to broaden the tax base and adopt moderate marginal tax rates.
    4. Selecting interest rates that are determined by the market. These interest rates should be positive after taking inflation into account (real interest rate).
    5. Encouraging competitive exchange rates through freely-floating currency exchange.
    6. Adoption of free trade policies. This would result in the liberalization of imports, removing trade barriers such as tariffs and quotas.
    7. Relaxing rules on foreign direct investment.
    8. The privatization of state enterprises. Typically, in developing countries, these industries include railway, oil, and gas.
    9. The eradication of regulations and policies that restrict competition or add unnecessary barriers to entry.
    10. Development of property rights.

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    Quote Originally Posted by winner69 View Post
    Best definition of neo-liberalism I’ve come across -

    “Neo-liberalism is not an ideology, with a programme and list of demands, just a bunch of powerful people doing things in their own self interest.”
    Your definition is exactly why I started this thread because it doesn’t say much about neoliberalism as an economic policy. It sounds bland and benign but the effects of neoliberalism are anything but that.

    Here is a definition from David Harvey - A Brief History of Neoliberalism page 2

    Neoliberalism is in the first instance a theory of political practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong property rights, free markets, and free trade.

    The role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee, for example, the quality and integrity of money. It must also set up those military, defence, police, and legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets.

    Furthermore, if markets do not exist (in areas such as land, water, education, health care, social security, or environmental pollution) then they must be created, by state action if necessary.

    But beyond these tasks the state should not venture State intervention in markets (once created) must be kept to a bare minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit.

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    Quote Originally Posted by winner69 View Post
    Socialism is a negative word ...better to call it organised compassion and empathy
    Socialism, as the Mount Pelerin Society members defined the term, was synonymous with any effort by citizens to get the government to act in ways that either cost money to support anything other than police and military functions or encroached on private property rights.
    Democracy in Chains by Nancy McLean page 196

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    All this neo-liberalism and socialism - I think we really need a revolution
    “What the wise man does in the beginning, the fool does in the end”

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    Simon Wilson says it better than me – “then along came a pandemic and what did neoliberalism turn out to be? Useless. In fact, worse than useless.”

    https://www.nzherald.co.nz/nz/politi...U/?&ref=topbox

    AND WHAT about the extraordinary world of economics, where two astonishing things happened this year? First, governments put themselves colossally in debt. To themselves.
    And second, many of those same governments stepped up to lead in a time of national emergency.


    Does this mean neoliberalism is now dead? The theory of political economy that says governments should balance their books, cut taxes, cut services and above all get out of the way of private enterprise, has run rampant through the world for the past 40 years. A business has "no social responsibility beyond making a profit", said the economist Milton Friedman, and boy did the titans of business take that to heart.
    Failure to cope well with Covid, both economically and in terms of human misery, correlated closely to state failure. Where the public health infrastructure and/or political leadership were missing, the disease ran riot.

    Neoliberalism should have been dead even before this: the moral bankruptcy exposed by the Iraq War and the global financial crisis (GFC) should have seen to that.
    But if there's one thing capitalism is good at, it's adaptation. Millions of lives were ruined by the GFC, but the banks bounced back, so did the sharemarket and so did property.

    We know from the GFC that a society in thrall to the profiteering of capitalism will fail its citizens, over and over. This is not a failure of personal ethics or political leadership, although both can make everything worse, nor is it a quirk of circumstance. It's baked into the system.

    And now we confront the same problem, again. Neoliberalism doesn't work but the Government doesn't seem to know what to do about it. It's not about ending capitalism, but it is about choosing a better way to make it work.
    Because, despite 40 years of neoliberals telling us history has ended and there is no alternative, that's not true. There is a better way.

    Post-Covid, it involves the creation of a new, high-wage, low-carbon economy, with Government support for the companies and industries that will lead the way, as South Korea did with Samsung and Hyundai. In our case, hi-tech sustainable agriculture is high on the list.
    It also involves a fairer tax system, higher welfare payments and a welfare system that seeks to help and not punish those who need it.

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    Quote Originally Posted by winner69 View Post
    All this neo-liberalism and socialism - I think we really need a revolution
    Be careful what you wish for winner.

    https://www.nzherald.co.nz/world/us-...J534JCEUBTWXU/
    US election: Is America on the brink of a second Civil War?

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    Need not greed. I was reading an article on Karl Polanyi and I came across this example of ‘socialism for the rich and capitalism for the poor.’ In 1795 a law was introduced to help workers who did not earn enough to feed their families. However many employers capitalized on the situation and reduced wages, knowing the parish would make up the difference.

    To capitalize means to take advantage of an opportunity.

    Capitalize – capitalism – unfair – exploitation. At the heart of capitalism lies exploitation, taking advantage of people, looking for opportunities to exploit people and situations for profit.
    So like now with the wage subsidy that was designed to help workers some employers use social welfare to help their business. Capitalism means socialized costs, privatized profits.

    Socialism, meanwhile, is most often used in modern English to refer to a system of social organization in which private property and the distribution of income are subject to social control.

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    Quote Originally Posted by moka View Post
    Need not greed. I was reading an article on Karl Polanyi and I came across this example of ‘socialism for the rich and capitalism for the poor.’ In 1795 a law was introduced to help workers who did not earn enough to feed their families. However many employers capitalized on the situation and reduced wages, knowing the parish would make up the difference.

    To capitalize means to take advantage of an opportunity.

    Capitalize – capitalism – unfair – exploitation. At the heart of capitalism lies exploitation, taking advantage of people, looking for opportunities to exploit people and situations for profit.
    So like now with the wage subsidy that was designed to help workers some employers use social welfare to help their business. Capitalism means socialized costs, privatized profits.

    Socialism, meanwhile, is most often used in modern English to refer to a system of social organization in which private property and the distribution of income are subject to social control.
    Socialism NZ style - giving $100m to Maori to buy votes, to tribes sitting on billions of dollars of assets and resources.

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    Quote Originally Posted by Balance View Post
    Socialism NZ style - giving $100m to Maori to buy votes, to tribes sitting on billions of dollars of assets and resources.
    Many of those maraes are Emergency Civil Defence Centres ......need a bit of an upgrade ...so all NZers benefit to keep us safe.
    “What the wise man does in the beginning, the fool does in the end”

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    Quote Originally Posted by winner69 View Post
    Many of those maraes are Emergency Civil Defence Centres ......need a bit of an upgrade ...so all NZers benefit to keep us safe.
    All the more reason why the Maori should not have allowed them to fall into disrepair in the first place.

    But that’s socialism - whatever they can take from the state, they will - especially for their votes. Never mind that it cultivates a perpetual pathetic welfare dependency mindset which is the single biggest curse of their race.

    It’s not like there are not thousands of unemployed Maori who could do their bit for the cultural heritage?

    A real shame really but suits the government to maintain a high level of state dependency for their voting base - truly socialism in action!
    Last edited by Balance; 16-11-2020 at 12:31 PM.

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    Quote Originally Posted by moka View Post
    Need not greed. I was reading an article on Karl Polanyi and I came across this example of ‘socialism for the rich and capitalism for the poor.’ In 1795 a law was introduced to help workers who did not earn enough to feed their families. However many employers capitalized on the situation and reduced wages, knowing the parish would make up the difference.

    To capitalize means to take advantage of an opportunity.

    Capitalize – capitalism – unfair – exploitation. At the heart of capitalism lies exploitation, taking advantage of people, looking for opportunities to exploit people and situations for profit.
    So like now with the wage subsidy that was designed to help workers some employers use social welfare to help their business. Capitalism means socialized costs, privatized profits.

    Socialism, meanwhile, is most often used in modern English to refer to a system of social organization in which private property and the distribution of income are subject to social control.
    Oh my moka....that's a pretty pinko definition of Capitalism. At least now some of your thought processes are being put into perspective.

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