Neo liberal economics, austerity and cuts; We need to ask ourselves is this how the future must be?

By AM Tuesday, June 12, 2012

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Today TPQ features guest writer Mick Hall asking questions of austerity programmes. The piece first featured in Organized Rage.

Today neo-liberal economics can basically be described as Thatcherism on steroids and are principally designed to channel wealth to the richest 1% of the population. It's no surprise the whole wretched business has ended in tears for the 99% of the world's population. Indeed in many ways neoliberalism has achieved its aim as today the '1%' have become enriched beyond avarice whilst the rest of us are increasingly on our uppers.

We need to ask ourselves is this how the future must be, do we want to live in a society where 50% of young people are kept out of work in order to bring down a manageable deficit? A society in which the rich have to be made richer to work harder, while the poor have to be made poorer in order to work harder?

As economist Ha Joon Chang recently pointed out:

a tiny minority (often called the 1% but more like the 0.1% or even 0.01%) control a disproportionate, and increasing, share of everything – not just income and wealth but also political power and influence through their control of the media, thinktanks, and academia?

Or will we find the collective courage to say enough! There is a better way?

It is worth considering why people whom the progressive economist Paul Krugman called ‘respectable and serious people,’ within almost all western governments, have made such a hash of overseeing their economies.

True, at the highest political level, the Thatchers, Blairs and Camerons of this world have been corrupted by various multi-national corporations, hedge, and sovereign wealth funds. Whose great wealth helped place these people in the positions of power, which then enabled them to use the law to deregulate the markets and neuter much of the power of the trade unions, one of the main engines of European and US prosperity between the years 1945 and 1979. During this period the power and influence of the unions made them one of the main bulwarks against inequality, by spreading the profits of productivity and shackling some of the more exploitative tentacles of capitalism.

Indeed in the three decades which followed WW2, unemployment rates in the major western economies were between 0% and 4%, despite increasing labour market regulation. There were more unemployed people during the 19th century, when there was effectively no regulation on hiring and firing. Which makes a nonsense of Cameron's, 'we will make a bonfire of red tape to help kick start the economy.'

Nevertheless corruption alone does not fully explain why by the mid 1990s almost the entire mainstream political class had brought into Neo-liberal economics as a viable theory. How could this have happened when all the warning signs were already in place? Yes, neo-liberalism can reboot an economy, but at what cost?

Until the late 1970s no ‘respectable and serious people’ would give house room to the reactionary economic theories of Milton Friedman and his Chicago boys. It would take the bayonets of a brutal military dictatorship's to first put them into practise, and the fact that Friedman and his acolytes at the University of Chicago, accepted an invitation from such a blood stained and undemocratic source, should tells us all we need to know about the morality of both the Professor and his sordid theory.

Fresh from helping to pauperise the Chilean masses and bolstering the Pinochet dictatorship, and with help from powerful rightwing members of the US business and media elites, in 1981 Friedman became President Ronald Reagan’s economic guru. For the US political right and their corporate financiers Friedman had two things going for him, firstly he was not John Maynard Keynes, secondly his ‘Chicago Boys’ had saved their ‘bacon’ in South America, especially in Chile and Argentina.

From the day Reagan appointed the Professor as his main economic adviser his theory of "monetarism" gained legs throughout the West, never mind in reality it was little more than vampire economics.  Within two decades most of the US and European political, business and media elites had come to believe it was infallible, the only show in town. Anyone who challenged their monetarist guff were ridiculed, and found themselves outcasts from the mainstream. Indeed these elites became so infatuated by the media glitz the market generated they never looked under the hood, and were willing to bet their home economies on the roll of a heavily rigged dice.

These political cretins on the make, entered an end of history mode, having spent much of their time whilst climbing the greasy pole networking within the same small elite groups; university, Bilderberg, and well funded NGOs and rightwing Think Tank 'get togethers,' EU ministerial conferences, G8, G20, etc, etc. Group think set in, the market always know best, in time few of them were prepared, or even capable of thinking outside the box.

So when the excreta finally hit the fan and vampire economics became voodoo, instead of recognising they had been supporting a god that failed, they plowed on regardless, like a farmer who ploughs and seeds in a desert hoping against reality a green shoot will grow.

Despite all the historical evidence to the contrary, they went ahead with massive welfare cuts and deep austerity, claiming to believe laying off teachers, local authority workers, and civil servants en masse, would give space for the private sector to take up the slack. We now know to our cost this was more ideological rubbish. Wiser heads also pointed out austerity and welfare cuts are nothing more than big business through their political gofers exploiting the economic crises in an attempt to create a smaller state and a more obedient workforce who will accept subsistence level wages.

Surely such a world is not good enough for our children and grandchildren, thus to conclude I will repeat what I wrote above in the first paragraph. We need to ask ourselves is this how the future must be, or will we find the courage to say enough, there is a better way.