The United States current societal and economic conditions can be directly attributed to neoliberalism. These days, the term ‘neoliberal’ is often used a slur – without any context given. Most people know that it is something inherently bad, but rarely do you ever find people discussing any details. If you do happen to see anything of substance, it’s likely from an academic or think tank; written with the assumption that the reader already has a deeper understanding of what it entails.
Today, we’re going to explore a little bit about what neoliberalism is and how it has shaped our world. I will go ahead and state that I am vehemently opposed to neoliberalism. So, it’s likely that my personal views will slip through – sorry, not sorry.
“What’s irritated me about the whole direction of politics in the last 30 years is that it’s always been towards the collective society… And therefore, it isn’t that I set out on economic policies; it’s that I set out really to change the approach. If you change the approach, you really are after the heart and soul of the nation. Economics are the method; the object is to change the heart and soul.”
– Margaret Thatcher
Margaret Thatcher was imperative in entrenching neoliberalism. When engaging in common discussions with others, you’ll likely hear people refer to governments as businesses or citizens as mere taxpayers or consumers. People will generally speak in the languages of markets rather than politics, morality, or civics. It is ingrained in our consciousness that civil servants are motivated by money rather than the well-being of society. Often, schools are preparing children for the workforce rather than participation in a democracy.
Individualization has overtaken any sense of communal responsibility. And with that, any ills that a person may suffer is a failure of themselves and not of society. It is widely accepted that luck plays no role in one’s successes. That context is non-existent.
Margaret Thatcher would be extremely pleased. In the quote from her above, she states that she wants to change the heart and soul of the nation. And as we can see, there’s evidence all around us that she’s succeeded – and not just the UK. With neoliberalism in full effect, the wealthy and elite can pilfer the public coffers and we’ll all be none the wiser.
The Four Elements of Neoliberalism
Peak neoliberalism is achieved via four elements:
These are what we will call the DLPA agenda. The context in which are used and implemented can be different for specific countries, but they by and large follow the same core concepts.
DEREGULATION
Deregulation boils down to two simple ideas: not issuing new regulations and rolling back existing regulations. Neoliberals are obsessed with profit seeking and thus have a very favorable view of markets. Because of this, they believe that a free market will succeed in policing any fraud or bad behavior on its own.
To achieve the ideal market scenario, almost all restrictions and regulations must be stripped away. But there are two important regulations they insist be enforced: private property rules and contract protections. Funny how they only seem to care about themselves, huh?
Once in office, the Reagan administration immediately rescinded rules that required seat belts and/or airbags be built into new vehicles. They justified it by claiming there was no additional safety by including them. Then also in Reagan’s first term, the administration brought strip-mining and hazardous waste enforcements down 62% and 50% respectively.
But this is certainly not just a right-wing phenomenon. Bill Clinton played a massive role in the normalization of neoliberalism within the democratic party.
The Telecommunications act of 1996 played a major role in deregulating the telecom sector. It allowed massive consolidations of TV and radio stations, increased cross-ownership of cable and broadcast networks, and brought upon higher cable prices.
And the Gramm-Leach-Bliley Act of 1999 deregulated the financial sector by repealing parts of Glass-Steagall. As little as one year later, banks were able to lobby Congress to exempt complex financial products called “over-the-counter derivatives” from regulation. This played a direct role in the 2008 crash.
In the UK, Labour Party leader and Prime Minister Tony Blair was instrumental in bringing the neoliberal ideology front and center in the party. For decades, the party had advocated for public ownership to share wealth more equally. However, Blair argued that the means and ends of politics were different. That economic equality did not require common ownership. This lead Blair officially removing the mandate from the Labor Party manifesto by dropping Clause IV in 1995.
LIBERALIZATION
Liberalization is a direct counterpart to deregulation. The overall goal of liberalization is to unleash an unrelenting force of capital, people, services, and flow of goods. The overarching idea is that any individual entity must enter a free market to obtain their wants and needs. A historian of Thatcherism once stated, “The citizens have to be forced to be free and enterprising, otherwise there is no guarantee they will be so.”
Neoliberals strive for globalization to expand upon their profits; thus, foreign countries are often forced to open borders for trade and to deregulate internally. The overall thought process is that by dropping trade barriers between nations, it would enlarge the overall economic pie. And that the gains of doing so would be able to offset any of the “losers” that this process may create.
As so many things have come to play out, this has almost never been the case. Record profits have been earned, but instead of assisting with the so called “losers” of these sorts of deals, corporations have recirculated the money; further deepening their stranglehold on society.
Trade agreements put in place to bring liberalization upon the world often had safeguards built in, but they are rarely acted upon or enforced. For example, labor and environment protections are almost never acknowledged and Trade Adjustment Assistance (offers to retrain workers) were largely ineffective and inadequate; all while profits soared.
And with the creation of the World Bank and the International Monetary Fund, the west can by and large bend emerging nation states to their will. Using the ‘Washington Consensus’, the World Bank and IMF promote the DLPA agenda. And when a country needed or wanted an international loan, the IMF strictly enforced the Washing Consensus, which consisted of 10 key aspects:
- Fiscal discipline
- Reduce public spending
- Tax reform
- Financial liberalization
- Competitive exchange rates
- Trade liberalization
- Foreign direct investment
- Privatization
- Deregulation
- Property rights
PRIVATIZATION
Neoliberals value choice and “freedom” above all else when it comes to markets. Because of that, they believe that democratic governments should under no circumstances provide any public services to their citizens. That instead of the services being a public good, private actors should tend to them. And if the government insists that the services be provided free of charge, they should do so by subsidies via vouchers and/or tax credits.
In 1987, Reagan created the Privatization Commission. The goal of the commission was to “end unfair government competition and return government programs and assets to the American people.” I would like us to just stop for a moment and think this through a little bit.
Who owns a program/service that is provided by the federal government? Who exactly has a say in how these programs operate? Effectively, we do as voters. We cannot control every minute detail, but we can convey our messaging through the electoral system.
When these programs are in the hands of a private entity, we are essentially powerless. Sure, we can voice our displeasure to our representatives, but at that point it’s likely too late. In this highly partisan political climate, there’s almost no chance we would ever be able to reclaim control of these services.
Also again, neoliberalism is not just in the realm of the GOP. Good ole Bill Clinton tasked VP Gore with ‘reinvigorating the government’, which included privatization. Here’s some of the services that were stripped away from government control: seafood inspection, mine safety accreditation, background checks for government contractors, petroleum reserves, and airport control towers.
Reagan’s former privatization czar, Ron Utt, claimed that Clinton had “the boldest privatization agenda put forth by any American president to date.” And in 2006, Robert Poole (co-founder of the think tank Reason Foundation) stated that “the Clinton administration’s privatization successes exceeded those of Reagan.”
AUSTERITY
The final piece of the neoliberal puzzle is austerity. A quick description would be that austerity is when a government stops public funding. This includes both fiscal and monetary policies. Due to the idea that tax cuts are necessary, it is also believed that spending cuts need to be paired to “balance the budget”. I personally believe it’s more of the fact that neoliberals can only thrive if people are forced to engage within their precious markets. So, they will do everything in their power to make sure that happens.
Neoliberals utilize three policy goals to achieve austerity:
- Focus monetary policy strictly on inflation and not both inflation and unemployment
- Implement tax cuts for the wealthy – a continuation of supply side economics with the believe that the wealthy will spark economic growth
- Small governments – this is mostly rhetoric and carried through with the guise of “balanced budgets”.
Reagans first term spending cuts were spectacular (not in a good way). In almost every aspect of society, there were spending cuts:
- Education
- Art
- Economic development
- Trade adjustment assistance
- Space program
- Food stamps restrictions
- Tighten welfare requirements
- Means-test school meals
- Cap Medicaid payments to states
But unsurprisingly, Reagan still wanted to increase defense spending. While the defense contractors started to see dollars being thrown their way, the working class and the poor had to pay the price.
Along with Reagan’s overall spending cuts, he followed through on his plan to reduce taxes. The top marginal rate was dropped from 70% to 50% and capital gains tax dropped 28% to 20%. The Reagan administration initially planned on using these tax cuts to force further cuts in spending, but the result was that federal deficits ballooned and wealth inequality drastically increased.
But there were a few in the Reagan administration that didn’t fall for this charade. Vice President, George H. W. Bush, called his economic plan “voodoo economics” in his primary campaign. And OMB director David Stockman said that this was all just a “Trojan horse to bring down the top rate” and that the rosy outlook was “premised on faith”. And as we have seen, these ‘trickle down economics’ were just that, a Trojan horse.
Well, there you have it: deregulation, liberalization, privatization, and austerity, the DLPA agenda. These are the basic policies for neoliberalism. This ideology has completely devastated the poor and working class across the globe.
The neoliberal ideology had the goal of keeping the traditional liberal mindset of care and compassion for the downtrodden, but to remove the bureaucracy of the government from the equation. What may have started as a legitimate belief that true good could come from this, ended up being a tremendous shift of wealth upwards, along with massive social fractures in society.
With so many people feeling the effects of the neoliberal ideology, they needed somewhere to place the blame. Politicians, think tanks, and the mass media knew exactly what to do. Instead of shaming the system that brought them unlimited wealth and power, they would turn the people against each other – a simple divide and conquer technique.
With the masses of people fighting social and cultural battles, the elite are free to further strengthen their stranglehold on society.
