
Neoliberalism: Oversold? (2016) - MrsPeaches
http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm
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spamizbad
This is certainly my feeling. For me, the biggest things I wrestle with are
the contradictions that seem exist in a "Neoliberal" economy.

-Neoliberalism views competitiveness as an inherit trait, everyone must be competitive! Competition is good and produces better outcomes for all! But private actively entities strive to monopolize and reduce competition

\- so _incentives_ for competition must be continuously increased using
political means

\- Everyone wants to be wealthy, but we have to keep the tax and regulatory
burden low so we don't discourage anyone from striving for wealth, to the
point of shaving base points off of niche taxes

Basically, Neoliberalism doesn't seem to be societies natural order. It's an
ideology imposed on us that, ironically, doesn't offer you any direct benefit
if you adopt it. If I crush my competitors, I'm better off. If just accept tax
and regulations as the cost of doing business, and don't allow it to
discourage me, I stand to make more money than the "scaredy-cats" sitting on
their thumbs, waiting for deregulation to happen (and also better positioned
when the barriers are lifted).

It feels like Neoliberalism's primary benefactors are those who reject it.

~~~
mseebach
> Basically, Neoliberalism doesn't seem to be societies natural order.

That's probably right. The human instinct is tribal and quite suspicious of
outsiders, so oppressive conservative totalitarianism is probably the "natural
order" for humans, and this explains why we've had to endure so many different
instances of it, both left and right, while liberalism (both social and
economic), regardless of mind-boggling amounts of evidence in its favour,
remains suspicious in very large circles. It _feels_ wrong. Homosexuality?
That's against the natural order. Competition? That's against the natural
order.

> It's an ideology imposed on us that, ironically, doesn't offer you any
> direct benefit if you adopt it.

No, the irony is that it does indeed bring direct _huge_ benefits, and you can
see the benefits in macro numbers almost instantly. Look at China under Deng
Xiaoping. Eastern Europe is night and day between the countries that
implemented liberalism after the fall of the Soviet Union, and those that
didn't. Pinochet implemented liberal economic policies in Chile, and despite
being a horrible totalitarian despot, Chile surged ahead almost immediately,
and is still today significantly richer than South American peers with more
"natural" policies.

~~~
evanlivingston
How would you analyze the gains the gains Hugo Chavez's Venezuela made?

~~~
mseebach
Gains? I, uhh, wouldn't. (And also $100 oil).

~~~
evanlivingston
Really? Lower infant mortality, higher gdp, lower unemployment, much lower
extreme poverty, etc...

~~~
mseebach
And much lower availability of fucking _toilet paper_. Get over yourself.

(yes, I know, it's a "manufacturered shortage" and also big bad USA)

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henrik_w
From The Guardian long read today: "Neoliberalism: the idea that swallowed the
world"

[https://www.theguardian.com/news/2017/aug/18/neoliberalism-t...](https://www.theguardian.com/news/2017/aug/18/neoliberalism-
the-idea-that-changed-the-world)

~~~
mikhailfranco
See
[https://news.ycombinator.com/item?id=15048024](https://news.ycombinator.com/item?id=15048024)

------
namuol
> The link between financial openness and economic growth is complex. Some
> capital inflows, such as [...] transfer of technology or human capital [...]
> do seem to boost long-term growth. But the impact of other flows—such as
> portfolio investment and banking and especially hot, or speculative, debt
> inflows—seem neither to boost growth nor allow the country to better share
> risks with its trading partners.

I know very little about economics, but this makes a lot of sense to me.
Industries playing "zero sum games" (i.e. investment banking) _can't_ result
in overall growth because there must be a loser for every winner, but sharing
true value-creating technology will raise the GDP for everyone.

~~~
geezerjay
> Industries playing "zero sum games" (i.e. investment banking) _can't_ result
> in overall growth because there must be a loser for every winner,

Actually, that's not even remotely true. Just because a seller sells high it
doesn't mean that the ones doing the buying are being left out to dry.
Investors seeking long-term profits or cashing in dividends may be willing to
buy without many concerns regarding current short-term market trends, and
investors seeking short-term profits may be cashing out their shares to
generate liquidity to invest somewhere else.

In the US,the Dow Jones industrial average is essentially showing constant
growth for over a century, and this would not be possible if an economy was a
zero-sum game. Economies do grow, and transactions can in fact be beneficial
to all parties involved.

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lumberjack
>These findings suggest a need for a more nuanced view of what the neoliberal
agenda is likely to be able to achieve. The IMF, which oversees the
international monetary system, has been at the forefront of this
reconsideration.­

I am pleased that the IMF has arrived to this conclusion. To me it always
seemed obvious but I met a lot of economics fanatics who think that they have
it all figured out in a handful of simple rules that must be adhered to
religiously. I never understood those people.

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m52go
Since when is austerity a neoliberal policy? Or neoconservative? Or anything
from any prevailing modern style of politics?

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stan_rogers
"Neoliberal" refers to economics, not politics as such. Obviously, the two are
inextricably linked on some level, but neoliberal economics tends to be
associated with what most people would call conservative politics these days,
tending towards libertarianism.

~~~
geezerjay
> "Neoliberal" refers to economics, not politics as such.

"neoliberal" is actually an entirely political philosophy which specifically
dictates what the role of a government and state should be in a capitalist
economy.

Without the neoliberal diktats, it's just plain old capitalism.

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alexanderstears
‘Neoliberal’ is a stick to beat the dog and nothing more. I skew authoritarian
and although I’m not , I do see eye to eye with them on some axioms (chiefly
utopian ideals, and meaning preceding existence). Neoliberalism thinking is
more or less classical liberalism with some recompiling to reduce tension with
international / global interests. I haven’t spent a ton of time thinking about
it but I’d say that they probably formulate classical ideas around things like
bureaucracy and Government. It’s hard to argue against neoliberalism where
it’s successful but the term has been stolen by rent-seekers who seek rent and
call the arrangement neoliberalism.

The U.N is a great example of failed neoliberalism – by and large it’s not a
highly effective organization, but it does provide a venue for effective
actors to collaborate. It’s apparent that the U.N could be more cost-
effective. I’m sure there are a million counter examples but most of the
functional value of the U.N could be replaced by slack. Before you show me the
million counter examples, just consider, “if the U.N were using its budget
effectively, wouldn’t there be more examples of the good work they do?”.

The Marshall plan is a great example of successful neoliberalism. Say what you
will about authoritarian systems but they get one thing right about recessions
/ depressions: it’s a waste to have so many good workers sit idle. The
Marshall plan made it possible to hire Europeans to rebuild their country. The
heavily indebted, war torn nations couldn’t afford to do that themselves (at
least under capitalism – which is why it was critical to execute the plan so
that people didn’t have to revert to more communist / centrally planned
regimes) and it’s probably better to get folks back to work rebuilding their
nation than letting them stew about and wonder what a glorious revolution
would look like.

You can call austerity thinkers whatever you want, but the doctrine seems to
be correlated with multi-national corporatist favoritism and a fetishized view
of free markets. Regardless of their intentions, the people called
‘neoliberals’ have created a system where massive gains are privatized, the
rule of law is pervasive but the application of law has an impact bias, and
losses are socialized except when they aren’t in which case they seek the
pound of flesh from people who can’t say no rather than people who should have
had skin in the game. At best, this is ‘business as usual’ (at least for the
status quo that’s seen the world massively destabilized), at worst this is the
worst type of welfare / theft – coerced wealth transfer from working stiffs to
people who have entrenched interests.

We can compare and contrast two relatively similar approaches. You know who
rebuilt Japan after the war? Japanese folks did. You know who rebuilt South
Korea after the Korean war? The Koreans. You know who rebuilt Iraq?
Politically connected Americans.

Maybe the Americans were more cost-effective, but I doubt it. And even if so,
maybe it’s better if we keep the surplus value in the country. It seems like
people tend to value stability higher as they get wealthier. I imagine ISIS
would have had a harder time changing things up in Iraq if people were happier
with the status quo – better institutions, more opportunity, and surplus value
(profit) is key to making investments. The guy who started Hyundai got his
seed money from repairing jeeps for the U.S Army during the Korean war. Now,
his company employs 65k South Koreans. Entrepreneurs need a way to get to
their first success, and good neoliberals seem to value that and bad
neoliberals seem to have a bias towards “we’ll only consider the people who
are already entrepreneurs”.

But South Korea became a first world nation and Iraq became the birthplace of
ISIS. You know who bears the worst consequences of ISIS? It’s not the
Americans who got money to rebuild Iraq – although they may get some more
business.

Tl;dr and conclusion - All politics is tribal, and the fundamental political
question is that of “who is my friend, and who is my foe?”. Scarcity seems to
make people draw tighter lines around their tribe and see less in common with
their foe and that’s really bad for diverse democracies. Neoliberals seem to
pay lip service to acknowledging problems but their solutions don’t seem to
address the underlying problems so long as someone is making money off the
problem.

A neoliberal strawman might agree “rents are too high” but it’ll say “let’s
just sell public housing to developers and cut rent assistance – it’ll work
itself out”. But they won’t do things like strike down zoning laws and invest
in transportation to reduce the cost (in time / money) of getting around.

~~~
dragonwriter
Neoliberalism is an economic policy school of thought that focuses on
fostering economic development by encouraging private entrepreneurship by
limiting the tax and regulatory role of the state, it's mostly a late-20th
century reaction against the welfare state.

> The U.N is a great example of failed neoliberalism

The UN is not an example of neoliberalism, being both prior to it's emergence
and not primarily motivated by economic policy concerns.

> The Marshall plan is a great example of successful neoliberalism.

No, it's not. Again, it predates neoliberalism. And, also, as economic policy
goes, it's not really neoliberal (in fact, some of the criticism of it a the
time prefigures modern neoliberal ideology.)

~~~
alexanderstears
Obviously we're talking about two different things. But I find it hard to
believe that neoliberalism is about limiting the tax and regulatory authority
of the state when neoliberals gave the ACA to America - a policy that
increased the tax and regulatory authority of the State.

To the extent that people identify centerist DNC politicians with
neoliberalism, I'll say "that's what neoliberalism is".

