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Economy

Aug 15, 2016

Neoliberalism now the straw man target of a raging left

"Neoliberalism" has now morphed into a vague concept loaded with everything the left dislikes about market economics.

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You keep using that word. I do not think it means what you think it means.

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26 comments

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26 thoughts on “Neoliberalism now the straw man target of a raging left 

  1. Dog's Breakfast

    Sorry you weren’t able to parse the intent of the article BK. You do a good job of taking neoliberal economics that hasn’t worked and giving it another name, such as “outsourcing because the private sector always does it better’ is merely now called crony capitalism because we did it badly.

    Fact is that the underlying idea of neoliberal economics is rightly under attack because it doesn’t work. Outsourcing, almost never works, asset sales almost never works for the public benefit (Gas, electricity, telecommunications) trickle-down theory and Laffer curves, remarkably and consistently wrong. Tax cuts to the wealthy as they will invest it and make us all richer – didn’t happen, unless you were a lawyer or an accountant in the Cayman Islands.

    Essentially, the neoliberal ideas could work, in theory, but they just fall down in practice because they are ineffably wrong, on every level, in every circumstance, in the real world. State monopolies are far more effective than private duopolies, and that is the only choice we have been given. The only system that is working is the health system, that one that is a state monopoly, except where private health funds are driving up the costs for the insured.

    Superannuation – her point was not that superannuation was a neoliberal idea, but that the idea that it should be taxed so that it isn’t just another tax avoidance scheme was being attacked by, you guessed it, neoliberal dickwads.

    Rational economic theory still makes sense, but the intersection between rational economics and neoliberal economics is increasingly thin. And just as you have claimed the Farrelly re-titles things as neoliberal when the left don’t like them, you have re-titled failed neoliberal policies as other things (crony capitalism) when they didn’t work. Market failure is everywhere BK, look around.

  2. Steve Gardner

    Sorry Bernard, but your argument is as much an incoherent dog’s breakfast as you accuse Farrelly’s of being. Just look at your conclusion, where you invite your readers to attribute our “fantastic health services, popular public school systems, [and] strong retirement savings system” to the successful application of neoliberal economic policies for the last 30 years. Except that as you yourself point out in the article, the reason why our health services are the envy of the world is that we have a strong public health system, not the expensive failed one the neoliberals want us to copy from the US; our popular public school system is under constant attack from neoliberals who want to defund it completely because, you know, the State has no business educating people, and as you also point out, our successful superannuation system is also not neoliberal but social-democratic in its origins and execution.

  3. Shane Maloney

    Goodness me, what a silly article.

  4. Hunt Ian

    Oh Bernard. Will “long live neoliberalism,” or perhaps “liberal economics,” be on your last breath? Dog’s breakfast has pretty much summed up what needs to be said about this tirade against the “left”.
    Of course some really competitive markets provide improvement in products and productivity better than any known alternative. The problem that Farelly has put her finger on is market totalitarianism, the belief that markets should take care of every service and good leaving minimally low taxes to support minimally necessary functions of government.
    This has given rise to privatising and outsourcing that has done no one any good, apart from the newly minted CEOs of the newly private oligopolies, who attract appallingly high salaries, because they run a business, you know, and businesses have taken to paying appallingly high salaries to CEOs.
    Bernard expresses horror at what we might go back to. Certainly we all hope that the old imperial preference schemes will not come back and we should look bleakly on some latter day so called “free trade” deals as being too close to old preference schemes.
    The fact is, Bernard, that universities, hospitals and public schools have been damaged and starved of funds because of the low tax mantra of neo-liberalism. If you don’t think the damage is real, get seriously sick or try some time travel to compare old, cost efficient universities in the eighties with the “businesses” of today. Compare the faux competition in the so-called NEM, with real competition.
    Government instrumentalities can do very well, as Australia Post once showed. And a whole lot of institutions should be left as instrumentalities and not be starved of funds because businesses always do more with less.
    When people look at economics rationally, they recognise that markets come in all shapes and sizes and that they have limits, so that some services and goods are best delivered not into faugh competitive markets, with a whole lot of buying and selling and fraud and rip offs, but are best delivered by public instrumentalities that maintain ethical commitments to provide education up to the leading edge in the world, or medicine up to the leading edge in the world, with a commitment to cost efficiency promoted not by low tax policies but sensible thrift.

  5. Lee Tinson

    I didn’t read the offending article, but I just have to say that Bernard wrote not so long ago that we don’t have neoliberalism here: we have crony capitalism. I think we have both. The neoliberal scheme was invented by crony capitalists for their own benefit, and it works very well for them at huge cost to the rest of us.

    I went through this article of Bernard’s as carefully as I could until I got too annoyed by the cherry-picking. There was maybe some good to be had by some outsourcing and privatisation, but not, I will always say, our health and education, our utilities, roads and railways. They are a national security issue, whose control must remain with our governments. It’s not good enough to say they work better, or more efficiently in private hands. That has clearly not been the case.

    Fact is, almost NO private business operation can be trusted to look after anyone other than itself. The trickle-down benefit as described by Reagan and Thatcher (and Turnbull and maybe Keane as well) is now and always was a monstrous fraud, and that’s what criticism of neoliberalism is all about.

    Bernard’s characterisation of the US health system as well-funded is imaginative, I have to say. The reason he rightly says it doesn’t work is because the bulk of this funding is provided by private individuals in the form of premiums to private insurance companies. It doesn’t get spent on health at all.

    The reason we still have a better health system is because we are forced to fight our neoliberal government for it every day. They would destroy it if they could, as Fraser did, and replace it with an American system which wouldn’t work here either.

    Neoliberal economics is a geat big turd. Doesn’t matter how much you polish it ….

    Anyway the other commenters have said all this and more. Good on you, guys.

  6. bushby jane

    At least you have come out Bernard. Although maybe this article is just a cat amongst the pigeons written as a stir. Worked well in that case.

  7. Jeanette Weir

    Bernard could you please write an article describing how neo-libs have helped the vocational training sector. Would like to see a different slant on what I see.

    1. JMNO

      Yes, the VET sector was deregulated to provide competition to TAFE.

  8. JMNO

    Bernard writes really well on politics and political morality but when economics comes up he lurches back into purist theoretical mode, as though economics can be divorced from the people who perform economic activity and wreck the theories and the perfect markets.
    I agree with the other comments. Utilities are natural monopolies and should stay in government hands. Publicly-funded human services such as health, aged care and child care should not be outsourced to the for-profit sector who cut services, make these sectors more expensive and channel government money into private profits.

  9. Draco Houston

    “If not “neoliberalism”, then what? Back behind the tariff wall, taking us back to when buying a pair of school shoes for your kids cost a huge chunk of your weekly wage? Back to when the government controlled the exchange rate? Back to high inflation and high unemployment in a low-productivity economy? Back to the days of an engineering-obsessed Telecom that didn’t give a stuff about its “customers”, who couldn’t go anywhere else? Back to the Wran years in NSW when the state was plagued by winter blackouts because the government had failed to build enough generation capacity?”

    Just because you and the protectionists have no imagination, it doesn’t follow that protectionism is the only way out.

  10. Draco Houston

    Also, calling everything you don’t like “crony-capitalism” is just as tedious as what you complain about here.

  11. AR

    “that scene in The Lion King where Scar takes control and the Pride Lands become the deathlands, tided in misery.” … now it is definitely time to pull the covers over my head.
    I neither know nor care what this means. I can guess but don’t wish to both with Fantales facts.

  12. PHodgson

    Yes, a huge success Bernard when:
    : the top 83 individuals have come to command as much wealth as the bottom 40% of the world’s population;
    : when staff at corporations like Walmart have to supplement their wages with food stamps;
    : when, as Warren Buffet said some time ago, the rich are winning the class war … …

    Call it neoliberalism or whatever you like but, like most of the other commenters here, I think you are being a bit of a Polyanna on this one Bernard.

    Paul Hodgson

  13. Duncan Gilbey

    20 odd years of a market based telecommunications industry has left us with a broadband service that is among the slowest and the most expensive in the world.
    A government wanted to give us fibre. The market couldn’t be bothered.

  14. Angela

    “popular public schools” ! I’m astounded. Bernard Keane, do you mean government schools in Australia? Have you ever had a frank conversation with a competent and dedicated teacher working in an Australian public school? There are many dedicated teachers. The statistics on Australian education support the view that our public education system is in trouble. The percentage of school students in private education is about 35% and growing. Our PISA scores are slipping constantly. We have a high achievement, low equity education system. The changes introduced by John Howard have both increased and locked in this decline, which imperils equity, democracy, social mobility, and community cohesion in Australia.

  15. Woopwoop

    Where do I start to criticise this rant?
    The education sector perhaps, the one I know best (and I would give this piece a FAIL):
    “The core idea of neoliberalism — of freeing the individual to take full advantage of economic opportunities — relies on an effective health and education system that maximises the chances of individuals pursuing their own welfare with minimal recourse to the state.”
    But this supposes a perfectly well informed “customer”. Unlike Adam Smith’s example of tomatoes in the market place, one has no way of knowing the quality of education until it’s too late – we need government regulation! The same of course with medical treatment, woorkplace safety etc.

  16. Bob the builder

    Now I know what two straw men fighting looks like.

    1. AR

      BtB – may I steal that encapsulation, “straw men fighting”?
      As Whistler said to Wilde…

  17. old greybearded one

    Sorry Bernard, you are making less sense each week. Our diminishing once great public schools where money doesn’t do any good. That would be why we have private schools spending 50 million on new facilities and still sucking on the public tit. I cannot remember a single privatisation which did my home down a scintilla of good. I do remember when I could get the copper wire phone fixed in 2 days, not 2 weeks or a month though. That was pre privatisation and the service has never been worth pissing on since.

  18. drsmithy

    The core idea of neoliberalism — of freeing the individual to take full advantage of economic opportunities — relies on an effective health and education system that maximises the chances of individuals pursuing their own welfare with minimal recourse to the state.

    The core idea of neoliberalism is monetisation.

    After all, if something does not have a price, how could it have value ?

  19. John August

    Just as EF is loose in her use of the term “neoliberalism”, you BK are playing a game of convenience when you say that the things you do not like are “crony capitalism”. Yes, there have been good policy initiatives. But applied naively, taken to extremes, you’re going to have problems. But, actually you could say that about anything. I’m not sure I’m making a particularly potent observation. But, the thing is, everybody else seems to think they are.

  20. Northy

    This was fascinating – great to get some of these definitions a little more cleared up. I really appreciated the link back to the crony capitalism article from a few months back. Hugely informative.

  21. Steven Pecl

    WOT?! You’re basically defending neoliberalism by selecting examples of things that it hasn’t yet completely destroyed. Our public health care system, by the way, is under considerable amounts of strain, a strain which has been slowly worsening for some time. It holds a strong record off the breaking backs & good will of dedicated nurses, doctors, other allied health professionals, and other hard working staff in those hospitals. The financial and administrative attacks from neoliberalism, have merely be to some degree held at bay by the strong Unions in the health care sector and the uniquely strong public impact of strike action in the essential services sectors. Furthermore, our comparatively high wages and living standards in Australia are largely due to past hard won rights from workers and unions. If neoliberalism has positively influenced our living standard in Australia, it has only been off the backs of the oversees workers the system has exploited in developing nations. In conclusion, I’m afraid Bernard, it is you who uses the term “Neoliberalism” and may not know what it mean. I do agree, however, we have a strong element of ‘Crony Capitalism’ across The Globe at the moment, but this complements quite perfectly contemporary academics general consensus on what the term currently means.

  22. Damien Flattery

    Bernard forgot to mention the other wonderful improvement in our living standards neoliberalism has provided: the largest consumer debt in history, most of which has been, and again be, transferred from the private banks to the taxpayer.

    We have the genius of deregulated lending to thank for the fact that people have been buying stuff they can’t afford and don’t need for over three decades and counting! And when consumption hits a wall, “service industries” will boom meaning that the future is looking bright for landowners who can afford serfs!

    But this time it will be without the job security!

  23. Don Willoughby

    What can I add to the comprehensive comments so far?
    You are a “true believer” Bernard schooled in the Chicago School of Economics. If you had experienced the Great Depression and the GFC you might see the light.
    Low unemployment. Statistical trash as you know. 20 unemployed for every vacancy, underemployment rife. Less ours worked, paid at lower wages is your idea of a good outcome. Fantastic Health Services. Yep, we were great, but now we are obliged to subsidize outrageous medical procedures and horrendously priced drugs for a tiny population benefit. The end is nigh as we follow the worst and most expensive model, the USA. Costs will destroy the government funded system.
    Popular Public School Systems. Rubbish. They are shrinking for middle class Australians. We Australians gravitate our children to the Private Sector that receives unprecedented taxpayer support at the expense of the Public Sector. The only sector not fooled are the migrants.
    Strong Retirement Services. The finance industry has boomed under the compulsory superannuation scheme. That makes it “strong”, but the reality is that the tax subsidies have been sucked up by the Super Industry. Apart from the very rich the Public Purse is picking up the tab in the pension and benefits.
    Minimal Inflation. Minimal inflation is the result of a population with little disposable income moderating their “retail therapy.” No money, no buy requires cheap loans for potential business. Sorry, the Banks aren’t playing.
    See the light Bernard.

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