The neoliberal era is ending. What comes next?
thecorrespondent.com
thecorrespondent.com
Economist Russ Roberts does a great job addressing most of the points in this article [0].
Although Hayek and Friedman may have been intellectually very interesting, I have a hard time believing they had much influence on the trajectory of public policy (at least, not nearly as much as OP's article implies).
Speaking anecdotally, I studied economics in my undergrad, and I never encountered Friedman or Hayek in my curriculum. In fact, I can count the number of students I met familiar with their ideas with one hand.
[0] https://medium.com/@russroberts/the-economist-as-scapegoat-9...
And I am not only talking for spreading this silly not notions of invisible hand adjusting markets and utopia will arrive.
Those people destroyed south American countries in their little free market playgrounds. And all they 'learnt' was that those models failed because the markets were not free enough.
Friedman was literally the economics advisor to Ronald Reagan, both in campaign and during the entire administration. All the "Reaganomics" policies of the 80s were greatly influenced by his theories. That's as much influence an economist could have on public policy besides actually being the president.
UBI is the ultimate neoliberal mechanism. Provide money directly to people to let the market work rather than a massive bureaucracy. Carbon taxes are also very neoliberal for a similar reason.
In fact, I think carbon taxes are the true neo-liberal litmus test. A socialist doesn't trust the market so thinks that heavy regulation is better than a carbon tax. Conservatives either disagree with the goal of the carbon tax or are just allergic to taxes in general. If you're pro-carbon tax you're probably ideologically somewhat neoliberal.
Politically neoliberalism was supposed to be this great compromise ground between liberals and conservatives that gave them both what they want.
In reality, it got totally co-opted by conservatives and corporate interests. It's way too easy to pay lip service to the "liberal goals" while concentrating on the "conservative means". Even somebody who truly has liberal goals in mind is only acting through the conservative means.
Ironically it's the conservatives who abandoned this compromise position first with the Tea Party and Trump.
Now neoliberalism is just a swear word that means "corporate shill".
Remember the quote from the Communist Manifesto? "We got nothing to lose but our chains". At the time that was written it was certainly true for most workers, and we know of the revolutionary decades that followed. This perception can certainly take hold again, and there's no reason why revolutionary times wouldn't follow again.
https://www.nytimes.com/2019/08/19/business/business-roundta...
Nearly 200 chief executives, including the leaders of Apple, Pepsi and Walmart, tried on Monday to redefine the role of business in society — and how companies are perceived by an increasingly skeptical public.
Breaking with decades of long-held corporate orthodoxy, the Business Roundtable issued a statement on “the purpose of a corporation,” arguing that companies should no longer advance only the interests of shareholders. Instead, the group said, they must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” the group, a lobbying organization that represents many of America’s largest companies, said in a statement. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country
Neoliberal in the last 30 years meant laughing and deriding your fellow citizens because they lived in a state that was hollowed out by globalization and money concentrating in the states that exploited cheap labors.
Neoliberals are dead? Thank goodness!!! We welcome back nationalism
Sure, something will change even after vaccine, but not to such significance as the article's author is saying.
Hopefully this will include slow down of climate change. Some things are better even now, for example destruction of ozone layer and the hole over Australia/Antarctica, it's smaller now then was in 90's.
The US is the opposite. The results speak for themselves.
I'm saying in a higher trust culture, you'll see better compliance on everything we ought to be doing even without imposing strict rules. That's an advantage, and it means how strict the rules are doesn't necessarily match how people changed their behavior.
That's all.
One example: financial privacy.
The AML regime started in the 1970s with the passing of the Bank Secrecy Act, and accelerated after the 911 attack.
Many developed countries instituted programs in the 1990s and 2000s to begin overtly mass surveilling all private economic interactions, or deputizing banks to do so. For example, FINTRAC was created in Canada in 2000.
Financial privacy is a cornerstone of financial liberty. Without it, power concentrates in the hands of the state, which is what we see, with Washington D.C. real median household income increasing 66% over the last 20 years, while the rest of the US saw it increase 5.23%.
Another example: healthcare.
Many developed countries created national healthcare programs in the 1960s, like the US with Medicare in 1966.
These programs steadily grew in size in the decades since.
Regulations in the US healthcare system steadily increased since the 1970s as well. This expansion of regulations was so significant that it caused the number of hospital administrators to increase 3,200% between 1975 and 2010, compared to a 150% increase in the number of physicians:
https://www.athenahealth.com/insight/expert-forum-rise-and-r...
Yet another example: occupational licensing. Only 5% of jobs in the US in 1950 required an occupational license. Today that number is around 29%.
And another example: land-use rights. In major cities, regulations on land-use have accumulated since 1960:
https://eml.berkeley.edu//~moretti/growth.pdf
>>As described by Glaeser (2014), since the 1960s coastal US cit- ies have gone through a property rights revolution that has significantly reduced the elasticity of housing supply: “In the 1960s, developers found it easy to do business in much of the country. In the past 25 years, construction has come to face enormous challenges from any local opposition. In some areas it feels as if every neighbor has veto rights over every project.”
No less than the White House's Council of Economic Advisors has blamed this rise in restrictiveness in housing in major coastal metropolises for rising rental rates, and spatial misallocation of labor, leading to lower wage growth and increased income inequality:
https://nlihc.org/resource/obama-administration-releases-hou...
Government spending also massively rose, as a percentage of GDP, since the 1970s.
In the US, social welfare spending increased at an annualized rate of 4.8% between 1972 and 2011:
https://fivethirtyeight.com/features/what-is-driving-growth-...
The end result is a much higher fraction of economic output being redistributed by government, and thus controlled by political forces.
In the US at least, any broad-based measure of how regulated the economy is, or how much of it is constituted by government spending, shows the economy moving away from market-based liberalism and towards centralized government throughout the last 50 years.
If you ask most of the MAGA folk about what era they think America was greatest and most of 'em will cite the 1950s. When you point out what the tax rates were back then they're generally incredulous and figure you're making it up.
> If there was one dogma that defined neoliberalism, it’s that most people are selfish. And it’s from that cynical view of human nature that all the rest followed – the privatisation, the growing inequality, and the erosion of the public sphere. [...] Now a space has opened up for a different, more realistic view of human nature: that humankind has evolved to cooperate. It’s from that conviction that all the rest can follow – a government based on trust, a tax system rooted in solidarity, and the sustainable investments needed to secure our future.
This is naive and, in my opinion, false. At the outset, I should say that I am a fan of Kissinger and his realpolitik, but even if I weren't, you needn't look further than China or Russia to easily counter that thesis. This idea of a kumbaya moment is cute and sounds good from the ivory tower of your typical Oxbridge academic, but the real world is nasty and grim. And people, for the most part, will act selfishly. Capitalism (and the markets) function based on the same premise. I don't really see that changing.
> The going assumption – on both sides of the political aisle – is that most wealth is “earned” at the top by visionary entrepreneurs, by men like Jeff Bezos and Elon Musk.
The air-quotes around "earned" are unfair. I mean, a ton of people use Amazon, or Facebook, or have Teslas, or what-have-you. Is Bregman trying to imply that this wealth isn't really earned? I don't really get it. Yes, there's a disparity, but I remain unconvinced that this disparity is somehow immoral. Bregman throws shade at Bezos but, as it turns out, Mazzucato (quoted by Bergman) mostly criticizes big pharma. There's a difference between tech and pharma, and the author disingenuously throws the baby out with the bathwater.
Let me tell you a quick story. I have a branch in my family who was entirely wiped out (save for one boy) in the genocide in Timor-Leste, which killed 150,000 to 200,000 people (if that doesn't seem that much to you, the population of Timor was 688,000). That invasion was approved by the US (Kissinger and Ford met with Suharto on the eve of the invasion to give the OK), financed by the US, with troops trained by the US and armed by the US. The reason? The people of the freshly liberated country were on the verge of holding their first democratic elections, choosing a left-wing party, and declaring independence.
So pardon me if I'm not "a fan of his realpolitik". Disgusting mass murderers is what they are, it's not because they wore a suit that murder becomes something else. "Ivory tower" indeed.
I believe OP was supporting the idea of realpolitik as the theory which explains diplomatic relations. Whether the outcomes of this theory are just is not under consideration. The OP understands that nations negotiate under these realpolitik principles.
The west is in decline and it may take the rest of the world with it. If you want to survive learn useful skills, become more self-reliant, and protect you and yours. Utopia is impossible, unlimited wealth and happiness is impossible, matter cannot be created or destroyed, only transferred.
We just lack the will to do what's required because we're used to comfortable lifestyles and are unwilling to take risks.
Maybe that wouldn't have happened if the government hadn't forced businesses to close? As in, if you make it illegal to go to work, people will be without a job.
> In the 2008 financial crisis, it took two whole years for the country to reach even half that number.
Morale of the story: the government could in 3 weeks destroy the economy to a level that in the 2008 crisis took 2 years for the private market to achieve.
Scary, and I'm not sure it speaks for more government.
Unfortunately, this is not what the pro-state pro-intervention crowd that dominates HN wants to hear. I long for the old days of the libertarian hackers...
Now people will still die + their families will be without a job.
This virus has a higher mortality than the flu, indeed. But the jury is still out to see if the current scenario will be better that the alternative (after you factor in suicides, depressions, overdoses, etc)
But personally, I would have much preferred to live in the alternative world where the virus would have spread freely and we'd already be in herd immunity (and with the economy not destroyed)
If you think fear from COVID-19 would not have crippled the economy, well, maybe we’ll get the opportunity to see if that’s true in some localities. I’ll firmly bet on No, it totally would still, especially as the severity increases.
The states caused our deaths. New York and others shoved the elderly (an at risk population) into nursing homes. This isn’t due to good or bad responses from the Feds. The state governments are what killed us. https://www.cnn.com/2020/07/02/opinions/steady-death-rate-co...
Ultimately the disease was going to infect us. The only question was “could we slow the spread of the disease in such a way that we don’t overwhelm the medical system?”
Two reasons to believe fear of the virus would not have, by itself, crippled the economy:
1. If people were that afraid they would have been sheltering in place before the government ordered them to do so, but they were not doing that, and they only started doing that when the government ordered them to.
2. The behavior of people after the lockdowns ended.
People don't tend to fear something until it's tangible to them. When one of their family members or best friends gets ripped apart and then dumped into a grave, it will become a lot clearer very fast what kind of danger it can pose to oneself.
>2. The behavior of people after the lockdowns ended.
Some people are behaving that way, but I'm pretty sure it's mostly limited to America where we've decided wearing a mask is a political statement. (There are exceptions, but they are also often other places with similar or worse anti-science/medicine sentiment.) It's hard to even know what the outbreak would look like if both businesses and all ordinary people went back to normal. I know the economies have not recovered anywhere where lockdown has ended.
On the other hand, we do know that the economies of countries that never locked down (Japan, South Korea, Singapore, Sweden) are doing better than economies in countries that did.
If countries that locked down are not recovering, that is likely a consequence of the lockdowns themselves. It's not a surprise that ordering everyone to stay at home would tank an economy.
The mortality is around 1%. So in the US alone that would leave over 3 million dead. Due to this 50 state lukewarm solution I think we'll ultimately see 1 million dead. The economy is made up of people, by the way.
> The economy is made up of people, by the way.
And there is almost always an economic boom after any plague or war. Vacuums get filled, create opportunity.
All the shutdown was intended to do was to "slow the spread" from the 18 months to 24 months, and to hopefully keep hospitals from being overwhelmed.
Once we knew how infectious it was, Covid was always expected to infect nearly everyone eventually, whether the economy was shut down or not.
Slowing the spread was to keep hospitals from being overwhelmed (flatten the curve) but it was also to minimize the number of people infected before either a vaccine or effective treatments became available. In the US a vaccine is likely still a year off, but we already know more about how to treat this than we did 4 months ago. And in another 4 months we'll likely have even better treatments and protocols.
It's not inevitable that 80% have to be infected within 18-24 months. Other countries have slowed the spread with Hong Kong, S Korea and Taiwan being 3 of the more notable examples.
Perhaps it's more a damning evidence for the unrestrained capitalism you hold so dear, that it spells catastrophe and misery if people aren't unable to keep working their bullshit jobs in the middle of the most pressing public health crisis of the last 100 years.
I can say from my experience that the economy runs a lot smoother and recovers a lot quicker if people aren't terrified about a pandemic causing them long term health implications and killing their family.
How long did it last? What did they do? Was there a mass economic decline? If so, how could it have been avoided? If not, why not? Etc.
I suspect that because these questions are not being asked, it may be the case that there are things to learn which are counter to popular narratives. I could definitely be very wrong about that. But it might be worthwhile to explore.
It may be the case that a hammer-like lockdown has largely stamped the virus out of many countries and that the US failed at that and is worse-off for it. It may also be the case that the US will build herd immunity faster and it the average infection rate and death rates will eventually converge to the same everywhere. We simply do not know yet, but people are judging as if we do.
If we look to the past, we may be able to gain insight into how it played out until completion and how it was or was not affected by regulation, local & international laws, and the layperson perspective. In the current instance, no country has yet played it out to completion so that is something we could not learn from other countries right now.
Take New Zealand. Its geographical isolation, low population density and strict national lockdown and contact tracing, led to it eliminating the virus.
However, now it has a set of policies that increase its isolation, and is stuck with them until an effective vaccine or treatment is found:
https://www.msn.com/en-us/news/world/new-zealand-beat-back-t...
In the absence of a vaccine, herd immunity is the only durable solution to the virus, and New Zealand is foregoing that solution to avoid a spike in deaths in the short term.
And indeed, the original plan, of 'flattening the curve' was tolerant of COVID19 deaths, and aiming for herd immunity.
But somewhere along the way, death from COVID19 became politically intolerable in the US, and now any rise in deaths leads to a call to re-lockdown, even when COVID19 cases are well below ICU capacity.
https://en.wikipedia.org/wiki/Spanish_flu#Transmission_and_m...
That's what is happening now in a lot of states that reopened. The lockdowns only delayed it. We wasted the opportunity of the lockdowns and didn't develop widespread testing, so as a result the lockdowns have done nothing except add government-enforced destruction of the economy on top of the damage the virus is doing.
Looking at the chart at https://www.worldometers.info/coronavirus/, the US is 27th, with most of the countries above it being much smaller ones which are not an apples-to-apples comparison because there's more of them to cherry-pick and the wealthiest few can massively increase their per-capita numbers just by ponying up money and buying a disproportionately large share of global supply of consumables. The only large countries above the US are Russia (extremely fishy), the UK (whose press has been pushing about as hard on the narrative that our testing is behind the rest of the world as the US media has), and Spain. About a quarter of the countries above the US on the list don't even have 100k people, and only the ones I listed have much above 10 million. (New York State - population 19 million - would also easily beat the UK, Russia and Spain if it were a country.) It's also well ahead of the well-publicised testing success stories like South Korea and Germany.
Current testing rate in tests per day per capita is even more impressive: https://ourworldindata.org/coronavirus-testing
Incidentally, the US was one of the countries the UK press used to point at in order to convince us that our coronavirus testing was falling masssively behind the rest of the world and our government was failing us.
I mean, yes, it is killing some old people, but not all. And it is killing some younger people, but not all.
It’s mortality rate might be similar to the regular flu.
But the kicker, is that Spain just announced that they detected the virus in their frozen waste water from January 2019. This is almost a whole year before China even detected it in December 2019.
So it’s possible that this virus has been circulating around the world for a lot longer than we even realized. And if Spain’s announcement is legitimate, then, this means we have no clue where this virus could’ve originated.
So your American-centric, politicized explanation is misinformed.
Also, the US had more than three weeks of lockdowns.
>>and decades of being socially unprepared for a crisis such as this.
What kind of social preparations would have prevented the economic cataatrophe that occurred?
> What kind of social preparations would have prevented the economic cataatrophe that occurred?
I never said anything would be prevented, but there's plenty lacking that could have helped. The people that are struggling right now were struggling before, this has just exasperated it immensely. Put it this way: it took weeks to get a single check out to Americans in need and they haven't seen anything since. Are these not things that could be improved?
Taiwan and South Korea never instituted a lockdown. They instituted mask-wearing and aggressive contact tracing and did so early-on.
It could also be true that not acting early only leads to economic devasatation if the govermment's response to a high death toll is to institute lockdowns. In Sweden, the government did not respond to the high per capita death rate with a lockdown. In the EU and the US, most states did.
>Put it this way: it took weeks to get a single check out to Americans in need and they haven't seen anything since. Are these not things that could be improved?
So more personal savings is the kind of preparation that you're referring to, that would have lessened the damage? Well it's a well known fact in Economics that a social safety net reduces the personal savings rate.
One reason China has a personal savings rate of 40% is that it has very little in the way of a state-administered social safety net.
So to encourage people to better prepare with respect to personal savings, the West should have reduced its social welfare spending, instead of massively increasing it over the last 50 years.
I share your feelings... I cam up in tech the early 90's, I can hardly recognize the hacker and free software communities any more
Very sad that authoritarianism is replacing individualism, free thinking and libertarian ideals that gave us soo much prosperity
Indeed, very sad. This is not what I signed for.
So I'm not sure I want to be in tech anymore. This is not my type of people, and not my ideals. I feel I was born too late to taste this spirit of freedom I can only read about, but not experience.
We need to incentivize not working, thus not spreading the virus, in the short term. We also should take this opportunity to force the Great Unwinding, let value-less businesses fail and the market return sane levels and not these QE-fueled, post-2008 crazytown numbers.
The virus has affected the economy. There was no escape from that. With no enforced closures people, for example, aren't going to restaurants because of the pile of bodies. Sociapaths may wish everyone ignored the piling up of the bodies and acted exactly as they would have without all those dead bodies but that's simply not how humans behave. Some fantasy that letting everything rip would have had the economy unaffected is just delusional.
So now we look at how to minimise the effect on the economy. (1) overreact early. (2) testing and contact tracing (3) quarantine (4) mask wearing. Taiwan. South Korea. Japan. Hong Kong. These are the models worth understanding.
The government does national defense. This fight against the virus that is killing us is national defense. The problem was hopelessly incompetent government. Becuase, as a libertarian, this is exactly when you need the government. There's literally no other option. It's the same as property rights enforcement. It's the same as pollution control.
As a libertarain I do not feel I have the right to discharge firearms at random in the street. I do not feel the laws against and punishments for doing so infringe on libertarian principles at all.
And so it goes for steps 1 through 4. Don't harm others for your own comfort. The end. Wear your mask when going inside anywhere that isn't your home like a genuine libertarian. This way we minimise the economic cost of the virus.
This way we save the most lives - more important to me.
(And maybe consider that being libertarian has nothing to say about being sociopathic, that's kind of the point, but we can choose not to be as well. That pile of bodies, each of them was loved and is a person who is missed. Taring libertarians as not caring about that at all s^%ts me. There are socialists who also don't care and irk me similarly).
People just don’t want to hide in their homes from this. If they had been doing that, the lockdown orders would have been unnecessary and superfluous.
It’s fair to say that the virus would have damaged the economy, but it’s just not reasonable to believe that damage would have been as bad as, or worse than, the damage caused by the virus plus the lockdowns.
"Pro-state pro-intervention"? If there's anything even most hardcore (but sensible) libertarians think should be the job of the state would be catastrophe management (and defence against invasion and the like).
>By “difficult”, Lewis means three things:
> It’s difficult to change the world. You have to make sacrifices.
> Many revolutionaries are difficult. Progress tends to start with people who are obstinate and obnoxious and deliberately rock the boat.
> Doing good doesn’t mean you’re perfect. The heroes of history were rarely as squeaky clean as they’re later made out to be.
>Lewis’s criticism is that many activists appear to ignore this complexity, and that makes them markedly less effective. Look at Twitter, which is rife with people who seem more interested in judging other tweeters. Yesterday’s hero is toppled tomorrow at the first awkward remark or stain of controversy.
#MeToo is going to burn itself out. It's a witch-hunt. The only good that could come from it would be a society where failures aren't permanent brands, but I don't think that's going to happen. The twist that cancel culture prevents change is ironic. Then again, I wonder if the people who are super into cancelling were the type to revolt to begin with?
And, yes, these two groups do share the distinction of being publicly criticised.
But "let's just stop complaining" as a strategy to support the good revolutionaries, and to start doing so by giving sexual predators a break, is almost too incoherent to be intended in all its cynical might.
Plus, obviously, the "difficult revolutionary's" modus operandi is to complain/"cancel"/whatever: how, exactly, do you want them to be "difficult" and changing-things while not annoying you and refraining from exerting any power?
What do you think a "truly liberal economy" means exactly? Liberalism is a political ideology, not an economic system.
For example, https://en.wikipedia.org/wiki/Panic_of_1873.
Blaming the state for something a bunch of bankers lobbied for is a bit rich.
You want to fix things in america? Take money out of politics. Get rid of the myopic two party system.
Political decisions arent on a sinle spectrum and ignoring this leads to an unavoidable escalating osciliation between too extremes when the majority wants anything but that outcome.