posted on Apr, 24 2013 @ 11:30 AM
Neo-liberalism, the economic theory that government should get out of the way of business and let the markets regulate themselves has proven
disastrous for middle-class workers around the world. It has resulted in market bubbles causing massive economic upheavals on a regular basis around
the world, with each one getting worse and affecting more people every time.
People are losing faith in the so-called "trickle down economics" after having seen very little actually trickle down to employees while corporate
big-Wigs see their profits soar. Maybe its time to look at economics in another way before Neo-liberalism results in a permanent economic collapse
that no amount of bailouts can fix.
Four Signs Neoliberalism is (Almost) Dead
The basic premise of neoliberalism – that “free markets” lead to better growth, higher prosperity and even more equality – was always fiction.
As Cambridge economist Ha-Joon Chang has repeatedly pointed out, there is no such thing as a free market. Nor is there any example of a country that
has developed by following the neoliberal tenets of privatization, liberalization and budget cuts. Instead countries have traditionally used some mix
of subsidies, tariffs, and debt-financed investment to prop up industries and shift comparative advantage to higher-end goods.
Despite the history, neoliberals argue that markets alone should determine things like wages, and that corporations and their owners should be able to
operate however they like. Developed countries that adopted neoliberal tenets post-1980 saw wages stagnate almost as quickly as corporate profits
The four reasons are:
1) The IMF has admitted that budget cuts are not always the answer.
Recent studies have proven that the economic models they used were flawed and in one study was the result of Exel spreadsheet errors and that
government investment in the economy may actually spur more growth than cutting budgets.
2) The Doha development round is dead
In November, 2001 the World Trade Organization launched its “Doha development round”. Despite its name, the Doha round was about anything but
development. High on the agenda were things like removing social and environmental protections, eliminating subsidies for poor farmers, and ensuring
that big pharmaceutical companies could maintain patents on (and greatly increase the cost of) life-saving medicines.
That’s great news for those who want to see fair trade as opposed to “free trade” and trade deals that put development and human rights first.
The challenge now is to come up with a framework (and maybe even a mechanism) for multilateral regulation of global trade that prioritizes human
rights over corporate profits.
The old free trade mantra has ended up bankrupting the middle class faster than anything else out there. Its time to look into Fair Trade instead and
only trade with countries that treat their workers right.
3) Countries are increasingly trading in local currencies
4) 2007-08 proved beyond a doubt that markets don’t regulate themselves. And Iceland proved that there is another way.
Certain transactions must be done in U.S. dollars – buying petroleum for example – and the U.S. dollar is still seen as the safest global
currency. The result is that the dollar’s value remains artificially high, increasing the purchasing power of U.S. consumers and the desire of
everyone else to sell to the U.S.
This deal benefits almost no one (not even U.S. consumers) and some governments have begun to look for alternatives.
The country, Iceland, joins Argentina as one of the only countries to default on debts as a result of financial crisis. The disasters that
“everyone” was expecting (no access to currency markets, investors blacklisting Iceland, etc) never materialized, showing that even small
countries can stand up to the international creditor cartel and live to tell the tale.
Iceland demonstrates that there’s nothing natural about neoliberalism. The decision to protect elites from the effects of markets while using those
same markets to punish everyone else is a political injustice, not a natural law.
Iceland showed us the way the world SHOULD WORK; instead of protecting the people who have caused the problems time and again at the expense of the
little guy who's just barely scraping by, we need to jail the miscreants and give the power back to the people and tell the big banks to shove it.
Neo-liberalism has had its day and its proven to be an unmitigated disaster for the middle class. Its time to get back to more common sense economics
where bad decisions have consequences, especially for the big players who can do the most damage to the economy. Stop propping up failed institutions
at the expense of taxpayers and regulate the financial industry more (a lot more) and maybe a workable system of economics will come about.
edit on 4/24/13 by FortAnthem because: