
Neoliberalism – the ideology at the root of all our problems - walterbell
http://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot
======
ef4
These stories about the triumph of Mises and Hayek fly in the face of
evidence. Exhibit A is total government spending as a percentage of GDP:

[http://www.usgovernmentspending.com/spending_chart_1900_2020...](http://www.usgovernmentspending.com/spending_chart_1900_2020USp_17s2li011lcn_F0xF0sF0lF0f_Federal_State_and_Local_Spending_In_20th_Century)

If Mises and Hayek were triumphant, government share of the economy would have
gone down, or at least remained constant. But instead it has grown
substantially.

It always surprises me how many of Reagan's critics fail to point out that
Reagan was a hypocrite who _grew_ the total size of government. His anti-
government rhetoric was rhetoric only.

~~~
api
Same with Bush. I recall reading that he grew government almost as much as
LBJ.

I suspect that both Cruz and Trump would do likewise, maybe more than Clinton
or even Sanders. Trump in particular I predict would be a big spender.

But this misses the point. The part of neoliberalism that isn't working is
free trade. It's turned into a way for domestic corporations to leverage
foreign authoritarian regimes and their oppressed populations as a sink of
cheap labor. It's becoming clear that the reciprocal side of free trade may
never come as states like China won't allow it, which makes it just a
unilateral liquidation of the American worker and American industry.

I am absolutely for free trade with free people but that rhetoric has been
used to sell something much different.

~~~
entee
I think a great many people who would consider themselves Keynesians are
rather pro free-trade. I'm thinking here of Paul Krugman who despite have
recently backed off saying trade is universaly good has been very much pro
free trade.

It's also not at all clear that free trade is the primary culprit in the
decline of manufacturing labor. Robots are way cheaper over the long term than
are even abused sweat-shop workers.

Krugman acknowledges that trade as universally positive is a bit wrong, but
even so doesn't think protectionism is necessarily the correct solution.

[http://www.nytimes.com/2016/03/28/opinion/trade-labor-and-
po...](http://www.nytimes.com/2016/03/28/opinion/trade-labor-and-
politics.html)

------
Htsthbjig
Hayek and Mises responsible?

Everybody in power is Keynesian today. Everybody. That is an ideology created
from Keynes books once he is dead. The last part is important because if you
get to read Keynes, which most Keynesians have not, you would discover what
Keynes said and what is Keynesianism is different, so it is very important
that he is dead for him to agree with the current system.

In elite schools people are Keynesian, in central banks, in Government,and the
media of course(New York Times, The Guardian,everybody) because they benefit
from it basically taking resources from the majority of people into their
pockets.

You find Austrian economist only in the private sector, but they had lost the
war so far.

We had multiple QE, zero interest rates, now into negative territory, we had
bail outs, now into bail ins(bank deposit confiscation).

That has a name and it is Keynesianism. It did not work and we are worse today
that before.

Their solution: double down. Banning cash so they could confiscate your
savings. Higher taxes. And of course making Hayek and Mises alternatives the
Scapegoat of all the mess that we suffer today.

By the way, Austrian economics and Neoliberalism are two different things.

~~~
donkalypse
I agree that everyone in power today is Keynesian. I also agree that
"Keynesian" is not what Keynes wrote.

Long term, we may be worse off. But short term, Keynesian macro economic
policy works. Collectively, society is too stupid for the alternative to work:
don't centralize and don't panic.

~~~
bubuga
> I agree that everyone in power today is Keynesian. I also agree that
> "Keynesian" is not what Keynes wrote.

You hit the proverbial nail in the head.

Sometimes it appears that the people in power picked up Keynes' book and
instead of reading "borrow and spend away in recessions, cut spending and pay
the debt during economic expansion", they just read "borrow and spend away"
and that was it.

------
entee
Generally I agree with the Keynesians, but I'm skeptical that the main
explanation for the stagnation in median wages (employment has gone up and
down, was down to 4% in the late 90's) we have observed for past several
decades is due to Neoliberalism. There are a lot of drivers including massive
technological change and the complex effects of a reduction in trade barriers
that have all played a role.

Perhaps economics is failing, but I think it's not entirely because of a
Neoliberal vs. Keynesian dichotomy, it's at least as much because the economy
is shifting and we haven't come up with a good economic paradigm for coping
with these rather important shifts.

That said, I think a more Keynesian approach to economics is well warranted.
Largely they have had a much better approach to monetary policy in the recent
crisis.

~~~
wonderlust
I'm a big proponant of the idea that what we really need is more valuable shit
to do. Higher demand is part of this, so Keynesian approach would help. But we
really, IMO, just need more things that we value enough. Higher demand for
quality goods is a start. Buying locally made items, paying for better
artists, engineers, scientists, etc. We need more projects.

Space program helps. Smart housing programs. Railroads. Microgeneration of
electricity, etc.

------
elcapitan
"Neoliberalism" \- the straw man at the root of all left wing polemic.

~~~
johnchristopher
Eh. "Communism" \- the straw man at the root of all right wing polemic. :)

~~~
AdrianB1
Have you ever lived under communism to know what is like? Can you recognize
communism when the party that promotes communist measures have not the word
"Communist" in the name?

~~~
x5n1
At the end of the day what's wrong with ideology is that people look to
ideology, just as they did to religion, to provide some sense of comfort and
security and make them feel as if things will okay in the future. Neo-
liberalism and Communism don't do that. Religion did that. That's what people
want.

~~~
fthssht
Your problem with ideology is that its not as comforting as religion? I think
ideology can help take a 10,000 foot view of highly complex situations. There
are many factors in a political or economic decision but we can easily say
that free markets have worked better through global history than communism.

~~~
x5n1
Economics is all about models. Models that are highly constrained by the
current level of technology and other variables. Variables which are in
constant flux. With big data you don't need models, you have actual real time
information about the entire system. You also have means of using that data to
make live predictions that can change all the time. Just because history says
that "free markets" worked best, does not mean that this is true any more. It
was historically a fact because you did not have big data or ways of computing
to process supply and demand properly.

~~~
bubuga
> With big data you don't need models, you have actual real time information
> about the entire system.

Your comment makes absolutely no sense.

Models are just means to predict the future based on observations made in the
present and/or in the past.

The available data, in this sense, serves only two purposes: serve as the
starting conditions to analyze how scenarios may evolve within a given degree
of accuracy, or to build correlation models to help analyze scenarios with a
given degree of accuracy.

A model is a tool that tells you how systems evolve and lets you infer what
you can expect out of them in order to make informed decisions.

> You also have means of using that data to make live predictions that can
> change all the time.

Again, this is absolute nonsense. Models are used to make decisions based on
how things are expected to be years and decades into the future. It makes
absolutely no sense to claim that you can tell how things will be in the
immediate future if you're trying to make decisions based on what will happen
over the following decades.

> Just because history says that "free markets" worked best, does not mean
> that this is true any more.

Holy non-sequitur, Batman. You sure wanted to shoe-horn that little gem in
there.

Furthermore, free-market isn't or will not be any more or any less true than
what is right now or was in the past. The free market is just a specific
theoretical definition of an economic system. It establishes conditions, draws
relationships between factors and their effects, and provides a tool to model
the evolution of economies.

Some assumptions followed in the definition of a free market don't hold in
some real-world economies, but it is already quite thoroughly established that
the evolution of real world economies does agree quite well with the evolution
of economic models based on free market principles if governments ensure that
these economies follow basic free market principles.

> It was historically a fact because you did not have big data

This is absolute nonsense.

~~~
x5n1
> Models are just means to predict the future based on observations made in
> the present and/or in the past.

Models are representations of reality. If you have the actual reality, as in
all transactions for every product made by every agent, you don't need a model
as you have the actual data. You can watch that in real time, and you can also
test hypothesis and theories in real time. That in opposition to a model, say
an economic model, which would be based on some theoretical assumptions
attempting to predict supply and demand while looking at certain variables. If
you have all the transactions that every single agent makes, as well as all
social-economic variables about that person in real time, then any theory you
have about their behavior can be tested in real time, rather than against a
model, and validated or thrown away.

> A model is a tool that tells you how systems evolve and lets you infer what
> you can expect out of them in order to make informed decisions.

Models are representations of reality, rather than simple inference it's much
more powerful to have actual data from reality available to test your
theories, not just a model. Models are simplified versions of reality, a
reality which is forever changing. Economic models are often wrong.

> Models are used to make decisions based on how things are expected to be
> years and decades into the future. It makes absolutely no sense to claim
> that you can tell how things will be in the immediate future if you're
> trying to make decisions based on what will happen over the following
> decades.

And this is why economics is often wrong. Knowing what is happening right now
and responding to it, is much more powerful than making theoretical
assumptions about how things are and then waiting and praying that they are
right... which often they are not.

> The free market is just a specific theoretical definition of an economic
> system. It establishes conditions, draws relationships between factors and
> their effects, and provides a tool to model the evolution of economies.

I don't know which tools you are talking about. I don't know what evolution
you are talking about.

One reason the free market is superior to central planners is exactly because
central planners did not have actual market data but instead had to rely on
models for supply and demand. When central planners have access to real time
actual market demand as well as all data about each agent, it makes it much
more likely that they will succeed at their job than the way the Soviet Union
did it.

Also your tone stinks, work on that.

~~~
bubuga
You clearly have no clue about what you're talking about. You obviously don't
understand what a model is, let alone how and why it's used, and you clearly
don't understand the role models play in decision-making processes.

Furthermore, you are completely oblivious to the reality and application of
models in general and economic models in particular.

If you are entirely oblivious to the issue you're trying to discuss, it's
pointless to continue discussing it with you.

~~~
x5n1
See you have this model:

[https://en.wikipedia.org/wiki/Computable_general_equilibrium](https://en.wikipedia.org/wiki/Computable_general_equilibrium)

See this model "estimates how an economy might react to changes in policy,
technology or other external factors."

This model uses real data. Why use this model at all? Why not change the
policy itself and see the effects of it in real time? If you can do that as
you can in terms of some decisions which are reversible. If on the other hand
that's not possible, why not validate this model continuously against the real
market with every single policy to point to its weaknesses and failures?
That's what big data allows you to do. That's all I was getting at.

~~~
donkalypse
Agile fiscal and monetary policy? Seems dangerous.

------
matthewbauer
At least in America, I think we are much happier with "neoliberalism" than
Brits are. Both Bill Clinton and Ronald Reagan, are considered two of our most
effective presidents. The 1980s and 1990s saw fairly significant economic
gains.

~~~
Gibbon1
Only significant if you ignore 1933 to 1978. Otherwise it's mediocre. If
you're a working class family it's dismal. You achieved no increase in wealth
between 1980 and 2000. And then lost ground in real terms since 2000.

~~~
bubuga
> Only significant if you ignore 1933 to 1978.

You do know that between 1933 and 1978 there were a couple of incidents that
ended up influencing the world's economy more than basic economic models,
don't you?

I mean, I'm sure we can agree that an event like WW2 alone, with the shift
from peace-time to war-time economy experienced by the leading economies of
the world, does influence things a bit more than the theoretical effect of
some economic systems.

~~~
wodenokoto
Nobody disagree that it didn't influence things, but how it did is up for
discussion.

People who back up Keynes, will say it was the wartime investment that drove
the economy.

Neoliberal will say the war pretty much destroyed every economy except the
American, leaving America relatively rich, which is why that period looked so
good for them. Had there been no war, everybody would have been better off.

~~~
dragonwriter
Ironically, most of the people I've seen claiming it was the war that saved
the economy were neoliberal in their feedback economic beliefs, while many
notable Keynesians have argued that domestic policies played a major role in
the wake and post-war expansion, with only a weak connection to the war (in
that the war weakened political resistance to them.)

~~~
Gibbon1
One of the things that happened in the war was the government effectively
erased private debt in the US. And took on a like amount onto it's books. And
it raised top rate income taxes sky high and kept them there for decades.
That's the period of high growth.

------
johnchristopher
> Mention it in conversation and you’ll be rewarded with a shrug. Even if your
> listeners have heard the term before, they will struggle to define it.
> Neoliberalism: do you know what it is?

> Its anonymity is both a symptom and cause of its power.

That might be a cultural thing or me hanging in the right circles (or the
wrong ones) but neoliberalism is quite well known in Europe. Many
intellectuals have discussed its particularities and most people know at least
what it broadly refers to.

And yet not everyone knows how pervasive and influential it is thanks to its
very discrete influence on vocabulary and political one-liners though. HN has
a neoliberal vibe and I have a feeling a lot of us around here are conflating
neoliberalism with capitalism.

------
donkalypse
What an incredibly frustrating read. The author quoting Andrew Sayer pretty
much sums up their understanding of economics: "Interest is ... unearned
income that accrues without any effort." Interest is an assessment of risk.
Our superior ability to assess risk is the primary reason we are the dominant
life form on this planet.

------
AdrianB1
People blame ideologies trying to hide some simple, basic facts: when 1
billion people in China and 1 billion in India earn $50 a month and the
minimum wage in US or Europe is $40-50 we don't like anymore the competition
and open market, so we run in circles blaming ideologies that don't even exist
in reality anywhere.

~~~
noobermin
>and the minimum wage in US or Europe is $40-50

What do you mean, in the hypothetical case in which tomorrow, the minimum wage
is the same everywhere? I certainly don't make $40 an hour.

~~~
AdrianB1
$40-50 per day, not hour. The comparison is that the average US or European
worker make in a day as much as the Chinese or Indian worker in a month. This
huge difference of potential creates tensions on the market and in the liberal
(no idea where the "neo" comes from, maybe Matrix?) economic doctrine the
tendency is the competition to drive the gap to minimize or close. Will that
be with European workers earning $50 per month or Chinese earning $50 per day?
None, because the European protectionism is distorting the market and
maintaining the tensions with the price of immigration, terrorism etc.

------
sbardle
Technological revolutions create economic growth, as understood by Schumpeter.
Governments do not create economic growth. Debt does not create economic
growth. We are at the early stages of probably the largest technological
revolution in human history...meaningful economic growth will follow, although
there could be another financial crisis in the meantime.

------
fthssht
An attack on liberalism. The Guardian really is a very poor quality
publication.

~~~
21echoes
to critique a political philosophy makes one a poor quality publication? what?

~~~
donkalypse
Politically, the article attacks conservatism and libertarianism which
discourage a strong government role in regulating the economy. Within the
context of economics, this is referred to "liberalism." Neoliberalism (the
subject of the article) refers to economic liberalism.

~~~
21echoes
I know that. I was responding to a poster who implied that critiquing
neoliberalism makes one a "very poor quality publication"

