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Beyond Neoliberalism Lies Opportunity for Grand Restructuring


#1

Beyond Neoliberalism Lies Opportunity for Grand Restructuring

David Kotz

The financial crisis of 2008 seemed at the time to herald a shift to the left in the U.S. political atmosphere. Forgetting the decades of free-market preaching, the government raced to bail out the giant banks at taxpayer expense while ordinary homeowners facing foreclosure were left to fend for themselves. The hypocrisy was astounding. By the spring of 2009 the survey company Rasmussen found that about one-third of respondents under age 30 preferred socialism to capitalism while another third was undecided.


#2

Capitalism always rides on socialism. For every system. There is social infrastructure (think Warren's "you didn't build it") and there are baubles in the extreme that only capitalism could provide. The question is what should be socialized and what should be capitalized. Even in communist Soviet society there existed a black market, a form of capitalism. Even in Mussolini's Italy the roads were part of the commons. It is time for a more mature conversation that acknowledges that either extreme is bad. In the discussion of where to draw lines should be included medicine, schools, prisons, and so much more, but that is the more nuanced discussion we should be having. Hell, even Nixon proposed wage and price controls.


#4

Granted, this is an article-essay, not a book yet much is missing from this very simplistic, linear assessment:

"In the 1970s regulated capitalism entered a structural crisis, with a decade of rising inflation, rising unemployment, shrinking corporate profits, and international monetary and financial instability. By the early 1980s a new "free-market," or neoliberal, form of capitalism had emerged, a development brought about by a unified business class. The main features of neoliberal capitalism have included marginalization of trade unions and collective bargaining, liberalization of domestic and global markets, deregulation of banks, cutbacks in the welfare state, and privatization of public services."

The 1970s represented a shift in the labor pool as women's rights and the Civil Rights movement opened up previously all-male sectors (and all-white sectors) to women and persons of color. The infusion of new labor shifted the calculus.

And while the explanation for the power of neo-liberal capitalism is sound, it doesn't speak to the fact that the aggregates of corporate wealth have now emerged as global powers sovereign unto themselves and about to demonstrate a lot more control over how citizens eat, think (through control of media), and work (through control of major job sectors). I'm referring to things like TPP and TIPP.

Also missing is any recognition that the sky is no longer the limit in that fossil fuel reserves--as Michael Klare explains at length--no longer offer up the cheap, cost-effective "low hanging fruit." In addition, reliance on coal, oil, and gas (not to mention nuclear power, thankfully being phased out in many areas) is burning up the planet to produce uneven agricultural outcomes, likely interruptions to trade, and plenty of areas that will require massive rebuilding.

The points the article raises are mostly sound, but too much is left out of the story and therefore, the overall direction of matters. I find this analysis rather shallow.


#5

Was "Voice of Reason" off duty and having dinner?


#9

Please! why does everyone refuse to see the wood in the trees?
There is one, and only one, cause of all our economic woes. Poverty
and deprivation caused because too many have too little or no money.
During the early 1900's our stupid/corrupt politicians signed away our Sovereign
"rights" , that allowed us to print and issue our own interest free,
debt free money; and since then we have all become "debt slaves". Our
rights to print and issue our own money out of thin air were ceded to
private banking Corporations, thus now, we borrow all our money from
them, and they simply print it out of thin air, and charge us interest
for the privilege. Given the nature of our economic cycles, the booms
and busts, it is virtually impossible for us ever to repay all such
debts, especially since, when they print our borrowings, they do not
also print the money to cover the interest repayments. This particular
economic consequence was recorded centuries ago in the well known fable
about the boy who possessed a goose that laid "golden" eggs; he sold the
goose for a paltry sum and forever thereafter he was destitute.

The remedy for our problems is simple; we abrogate any agreement
previously made, reclaim our Sovereign "rights" to print and issue our
own debt free interest free money.

This will enable us to stop income-taxing of individuals; we may pay
everyone that needs it a social wage, based on a break even computation,
this will eliminate poverty and deprivation; those in receipt of the
Social wage will be encouraged into employment, without loss of this
Social wage, and to work for any employer for additional income,
mutually agreed between them. this gives control of work and income to
the "workman". Employers will gain a workforce of people willing to
accept much lower wages than previously paid, thus making the employer
production cost significantly lower; plus, the employer no longer
collects taxes for the Government. The employer Corporation/business
will pay tax annually as usual. The collection of V.A.T. or G.S.T.,
consumer taxes will cease.

All Government expenditures will be provided by the planned issue of our
own debt free interest free money using legislation approved by
Parliament. Health, Education, University courses, Infrastructure of all
kinds, etc. etc.

Provided that all of these expenditures are actually "spent" into
circulation they will not create inflation; inflation will occur, for
instance, when too much money chases too few "goods". The Government
must own and run it's own Bank, just like the original Commonwealth
Bank. No Private Bank or Corporation will be permitted to create money,
under any guise; our financial system will revert to one of "sound "
money. Sound money is that which turns around sound borrowing and
lending, controlled by being liquid cash, backed by the ownership of
assets, and strict criteria keeping them in balance; borrowing and
lending outside of these criteria, characterised as "high risk", will be
permitted between parties willing to accept such risk, and then, only
when it involves their own wholly owned assets.

Interest rates in the private sector will be set by the private sector.
The floating exchange rate will be converted into "fixed" rates decided
by Government, and as decided between Sovereign Nations and embodied in
trade agreements. Our currency will not be traded on "Exchanges", our
Nation will be immunised against the manipulated predations of the "Market".

The foregoing explains the broad brush strokes involved, but in summary
we would have a Nation with little or no foreign debt, a Nation whose
domestic economy sits on a solid unshakeable base, a Nation better able
to compete in the wider World, a Nation without poverty whose peoples
are empowered to think and work for themselves, a Nation rescued from
the avarice of the "Money Lenders", and above all, a Government able to
be free and Independent, instead of being owned by Corporate money and
influence. This is named "The Universal Economy" because it will operate
anywhere.

For those who doubt the efficacy of this proposal, I suggest they study
the United States example. The clever banking Corporations engineered
the U.S. dollar to be the Worlds reserve currency. Ever since the U.S.
has been printing money out of thin air, the only Nation to do so, now
they have military bases in more than one hundred and seven Nations,
they have engineered regime change and wars in countless Nations, and
recently have printed trillions of dollars, called quantitative easing,
and poured it into foreign banks and financial Institutions trying to
prevent the next meltdown; but it is not working because their printed
money was not spent into circulation, instead it inflated the prices of
shares and real estate, the bust cometh.


#10

Capitalism has no plan and no intention to create the conditions that would allow everyone to work and earn enough to live on.Corporate finance of our so called democratic elections enables them to have deeper and deeper tax cuts, that must lead to deeper and deeper austerity for the majority. We must even up the playing field by giving all that need it a Social income for life, which in turn gives them the power to work or not work, to pick and choose between employers, to choose to work only for those employers offering money and conditions acceptable to them.

All this, and more, is possible. There is no need to threaten the wealthy with high taxes or wealth confiscation. Every human being is entitled to live, to survive, and to be cared for. All we need do is reclaim our Sovereign rights to print and issue our own interest free debt free money and to only give it to people who must spend it into circulation, thus eliminating the possibility of inflation. Yes, there is more needing to be done to curb the growth of those too massive private or Corporate fortunes; but first things first. By the way, go look up the State of North Dakota and it's State Bank, the only State in the U.S.A. not rotting away under the present crisis.


#11

We continue to perpetuate poverty by the way we define it. Treating economic poverty as a condition has never reduced it because this approach does not consider the affected individual as an actor and addresses only the symptoms affecting him. Too many otherwise intelligent people perpetuate economic poverty by confusing it with the deprivation that it causes. As in Lyndon Johnson’s misdirected “War On Poverty”, appeasement and electioneering result in shortcut feel good legislation that attempts to reduce only deprivation. A classic example is the FHA 235 program of the 1960’s where the only permanent results are the green spaces in the old ethnic neighborhoods. Confusing economic poverty with deprivation perpetuates economic poverty and constrains millions into embarrassing dependency on government charity.

“When you change the way you look at things, the things you look at change.” Dr. Wayne Dyer

The true definition of economic poverty is the inability of the individual to create value for himself and for others.

Value creation is the satisfying of needs or wants of individuals and organizations. In essence, most value creation is in some way service to others. Whether as an individual or as a nation, when more value is consumed than created, capital is surrendered. If capital is not available, then debt will be incurred. If debt cannot be incurred, deprivation will result. The inability to create value should be the only accepted definition of economic poverty in the public lexicon. We can only reduce economic poverty by enabling individuals to create legitimate value according to their own enlightened self-interest. We all have the inalienable right to have the opportunity to create legitimate value for ourselves and for others. In the long run, income inequality is the inequality of value creation. Society, through its governments, agencies, institutions, altruistic organizations, and enterprises has the obligation to promote and facilitate individual value creation by constantly improving the five essential resources:

  1. A sense of positive persistence.

  2. Knowledge of ways to create legitimate value.

  3. Enterprises that provide the tools with which to create value.

  4. Health and hygiene.

  5. Security of rewards and security of person.

Presented here are some actions that we can take to strengthen the five essential resources:

  1. A Sense Of Positive Persistence: We need to instill in our children that their long-term happiness is related to their future ability to create value and the most valuable resource enabling value creation is a sense of positive persistence. You can refer to Calvin Coolidge’s famous quotation. Our kids should be provided with a learning environment of more than one problem-solving project at a time that they can develop a passion for. And then let them alternate between these projects if solutions do not come immediately to encourage them to actually create problem-solving ideas and score higher on Torrance’s creativity testing. They should be conditioned to persistently strive to accomplish goals because their emotional reward will be the internalized feeling of adequacy and self worth. They will learn that all great things are accomplished in spite of difficulties. They will earn the ability to shrug off disrespect as they develop earned self-respect. They will learn that unearned cheap accolades will always prevent genuine self-respect. They should learn about Maslow’s need hierarchy and the power of delayed gratification and intermittent rewards. The Entrepreneurial Leadership Institute, E-City, Y.O.U., and Junior Achievement organizations help our youth to venture into value creating activities while most still have the security of family support. These organizations and others should be used as resources to the greatest extent in building character and demonstrating the essential importance of positive persistence in value creation. Our kids should also be taught negotiating skills so that they can fairly benefit from the value they create.

  2. Knowledge Of Ways To Create Legitimate Value: Knowledge is the sum of education, training, experience, and associations. Education is the starting point and yet we allow under education from over-consolidated school districts where graduation rates are less than 50% and where the primary beneficiaries are the administrators and the unions. Over the last sixty years, public school educational attainment levels have declined as school districts consolidated and teachers’ advocacy organizations morphed into teachers’ unions. Today’s controversial “common core” simply acknowledges this decline. There is absolutely no economy of scale in 50% graduation rates. We should deconsolidate all large urban school systems into smaller neighborhood systems with no more than 10,000 kids each. Smaller school systems have fewer levels of bureaucracy and are more responsive and approachable for parents. We should offer State wide public vouchers so that the districts can compete head to head for enrollment and drive the continuous improvement of educational attainment. This would reduce the need for charter schools. The State would have to subsidize differences in per-student funding between districts. Most failing school districts are already heavily state subsidized and spend more per student than more successful districts. Subsidizing vouchers would be less expensive than the long-term costs of welfare and incarceration. Rules for transfers between districts would include maximum annual enrollment changes, moving schools into adjacent districts, transportation costs, allowed residences, and student return policies. We would not be insanely prosecuting parents for trying to sneak their children into better school districts. We also need to reduce Federal regulations and mandates that can complicate the educational process and usurp State and home rule prerogatives that can stifle experimentation. In our school counseling, we should focus adequate importance on essential higher value creating careers in skilled trades that match market demands such as designers, machinists, tool and die makers, electricians, welders, carpenters, and other skills where many are presently in short supply. Every high school should again have its own industrial arts department to give all of our kids some ability to make things with their own hands. The most politically difficult policy would be to provide special and entirely separate resources for the kids who disrupt, threaten, and violate the rights of those who want to learn. We need to consider establishing academies for children at risk who live on the street in a feral environment. These academies would house, feed, educate, and mentor youth who are disadvantaged and at risk because of a lack of parental support and discipline.

  3. Enterprises To Provide The Tools With Which To Create Value: Either the individual creates value within someone else’s enterprise or he creates value within his own enterprise. The primary cause of the shortage of higher value creation enterprises is the trade deficit reducing the demand for about 70 million jobs by bleeding more than $700 billion in capital offshore every year. The absence of taxable wages for 70 million wage earners causes national “reverse tariffs” of more than $530 billion in reduced individual Federal income taxes, $350 billion in reduced Social Security taxes, and $50 billion in reduced Medicare taxes for a total impact of $930 billion in reduced Federal revenue. Including $219 billion in reduced corporate income taxes, this all adds up to a $1.1 trillion in a reversed tariff of reduced Federal revenue from a trade deficit of $700 billion. Added to this is the $226 billion reduction in
    State personal income taxes with additional losses of State corporate income taxes. This is why the States are hurting. It seems that every dollar of trade deficit reduces combined Federal and State revenue by about two dollars. The 2011 trade deficit was 46% energy and 41% China. It has been reported that we have more than 90 million working age adults no longer engaged in the economy and this has made our wage earning tax base too small to support the present level of Federal spending. We blindly subscribe to the efficiency and lower costs of "Free Trade" without understanding the real costs of trade deficits and the imbalance of international markets that are skewed against our domestic market. Over the last twenty years, the accumulated trade deficit and the accumulated Federal deficit have tracked parallel to each other as capital bleeds out of our nation. It seems that we are just beginning to wake up to the danger of the “new world economic order” as value consumption exceeds value creation in many national economies such as the U.S. and Greece. The hard lesson here is that free trade is only free when it is balanced. Whether as an individual or as a nation, when more value is consumed than created, capital is surrendered. If capital is not available, then debt will be incurred. If debt cannot be incurred, deprivation will result.

  4. Hygiene/Health: The individual must have a place to live, bathe, and eat. The individual must be healthy to be unencumbered to create value. The Affordable Health Care Act, although 52 times the length of our Constitution, deals directly with only the 15% of health care costs associated with insurance overhead. This bill was fixated on the issue of coverage and neglected to deal with the 85% of health care costs drivers associated with the providers. We can make healthcare more affordable only by changing the present business model where our bodies are held hostage and there is no possibility of making choices based upon up-front knowledge of a la carte prices and medical competency. We need legislation that requires all healthcare providers to list their services and fees for services on a single website and then track their history of outcomes versus prognosis. We need nurse-practitioners and doctors acting as ombudsmen to assist individuals in making healthcare decisions based upon diagnosis and published competitive costs and outcomes. Cost containment due to head to head competition through upfront transparency is the only way we will avoid rationing caused by a shortage of healthcare providers that are dis-incentivized by a socialistic single payer system as exists in Canada. We also need to reform the laws governing jury award decisions that drive up medical insurance rates that then drive practitioners out of private practice and into large institutions. Dementia is the single largest cost driver for Medicaid and is the single largest driver of increases in health care costs. Yet we never hear any legislator, governor, or president call for increased or better managed research to reduce the prevalence of geriatric dementia. We could spend 500 billion dollars on dementia research and if successful it would be the bargain of the century.

  5. Security Of Rewards And Security Of Self: The lack of security of rewards dooms socialism every time. Socialism looks upon poverty as a condition rather than as an inability and the lucky value creators must share with those who are unlucky and cannot or will not create value. Again, in the long run, income inequality results from the inequality of value creation. It is a fact that the top 10% of wage earners in this country already pay more than 70% of all income taxes and that is simply not fair and it is not productive. We could increase the top rate from 35% up to 50% and it would only cover about 21% of the Federal deficit and it will definitely kill the goose. We have the highest corporate income tax rate in the world and because of it we have the lowest corporate tax revenue as a percentage of GDP in the world. This has resulted from the off-shoring of jobs and headquarters to countries with lower tax rates. This fact alone should be a call to action. We need a simple and absolutely fair flat income tax for both individuals and corporations with no exceptions and no special economic incentives that tinker with markets. This would also eliminate about two-thirds of a massive, value consuming, and often abusive IRS bureaucracy.

The lack of security of self and the fear it creates and the precautions it mandates can trump all other priorities and limit or prevent value creation. The United States has a population of about 318 million and less than 680,000 non-federal peace officers. With these officers on four crews covering three shifts, with vacations and time off, there is about one first response officer on duty for every 2000 citizens. We have a very thin line of security that cannot be in all places and cannot protect everyone. The Supreme Court has already ruled that the primary duties of peace officers are to maintain order and enforce laws. They are under no legal obligation to protect individual life. Therefore the individual has been put in the position of having to assume responsibility for most of his or her own security against the psychopaths and miscreants of society that government seems powerless to identify and remove before the fact. Consequently we now have more than eleven million citizens with a sense of duty to help deter violent crime by qualifying to legally carry a concealed handgun. About one in every 21 adults is now able to protect themselves and those around them and all “un-policed gun free zones” that prevent concealed carry are becoming more asymmetrically dangerous. Because of emotional and irrational hoplophobia, gun free zones filter out and incapacitate those with good intentions and cannot possibly stop those with bad intentions. The decrease in violent crime since 1991 has occurred at the same time that the number of States enacting shall issue concealed carry laws has increased from eight to forty-four. The writer has personal experience in deterring a violent assault in downtown Cleveland. He can legally provide some deterrence to violent crime in 39 States but why not 50?

And it is way past time to decriminalize the addiction to dangerous hard drugs and provide mandated withdrawal treatment. Then concentrate on their elimination by legalizing and taxing marijuana and eliminating two thirds of the financial drivers for corruption, violence, and turf wars that have caused the business killings of thousands of people on both sides of our southern border. Unlike ending the prohibition of alcohol, we do not need a Constitutional amendment to accomplish this. About 500,000 people in the U.S. die every year from nicotine addiction. Yet due to the potential for a black market, as occurred durin alcohol prohibition, we do not see any support for tobacco prohibition. Yet this same logic eludes those who want to prohibit marijuana. So the real question……is the potential for some voluntary brain damage a lesser evil than the black market violence and massive incarceration rates caused by prohibition?

In conclusion, we desperately need a clearly focused holistic approach to poverty reduction that starts with its true redefinition in the public lexicon. Naturally there will be differing opinions regarding the content, approach, and priorities associated with each of the five necessary resources and books could be written about each. But all of this will stimulate constructive dialogue as we focus on a concerted effort to increase individual value creation and improve the quality of life for millions now relegated to embarrassing dependence.


#12

Re WiseOwl - and others, it seems to me that all too often the terms "socialism" and "communism", like capitalism, are used without anyone taking a moment to define what they mean.
For instance, it is commonly said that the Soviet system was "communism". But a moment's thought and a bit of historical knowledge tells us that this was not the case. Soviet Russia - even in the Stalin years - was trading with other - capitalist - countries,. What's more, the workers in Russia throughout the 1920s, 1930s, 1940s, 1950s etc went to work for wages - just as other workers do, in order to buy food and other necessities.
The existence of a wage-slave class in all modern countries worldwide is an indication that ,whatever the politicians and the mass media claim, world capitalism exists, worldwide.
The idea that state regulation or ownership gets rid of the key feature of capitalism, commodity production - competitive production for profit, based on the wages system - that idea is a fallacy.
Socialism / communism has not failed as some of these postings assert. It simply has not yet been tried.
But, I hear you say - what is it that I mean when I say this?
Well, there is an old 1904 definition of Socialism: "a society based on the common ownership and democratic control of the means of producing and distributing wealth by and in the interest of the whole community".
Clearly, that never has been established yet - and certainly not in 'Soviet' Russia, with its one-party "red Fascist", totalitarian dictatorship, the very opposite of democracy, and its state capitalist economy.
Today there are many parties which call themselves "Socialist". But in all cases that I know of, their 'Socialism' amounts only to a string of nice-sounding reforms, ways to alleviate the suffering of the poor, on the one hand, plus on the other hand, ways of state regulation and control of the economy. As such, their 'Socialism' is also something of a con-trick.
David Kotz cited a survey by Rasmussen in 2009 which

/quote]

.


#13

Sorry folks, I goofed up big time above.
Hope you realised what happened and could make some sense of that posting..


#14

What? You call this economic activity capitalism and it rides on law and order? Yes, the capitalists have bought off the lawmakers and rigged the system and the laws they have not rigged are not enforced at their will.

You missed the point. Pure capitalism or pure socialism does not work admittedly by this author and is evident in this unequal market which does not allow equal opportunity and has been for years conglomerating to wipe out competition.


#16

Oh dear oh dear oh dear! Dandyquill - like I guess many others out there - apparently cannot see the connection between competition and conflict.. Possibly he/she is one of those. probably rather rare, individuals who enjoy switching on the news and seeing villages and cities reduced to rubble, or thousands of refugees fleeing with their children from the intolerable horrors of the many war zones, the civil wars and other conflicts of this modern "end of history" era.
Most people don't like this: in fact even professional military men declare they prefer peace to war.
My point is that with economic competition you are bound to have a possibility of this economic competition hotting up till if boils over as a war. With very nasty consequences.
Capitalism cannot work any other way except by competition - fact. That's the nature of the beast, the rule of the game. But competition is inherently anarchic and wasteful. It is because of competition that periodically markets are glutted. and we get a crisis and possibly a recession, with millions of workers unemployed. This unstable lurching from crisis to crisis is not something the politicians and econmoists can control, any more than King Canute could control the tide.
Captialism is wasteful - of natural resources, and of human labour.
Socialism , in the sense I understand it ("and I'm not the only one!" Imagine,- John Lennon) has in fact not ever been tried. It If you've been brainwashed into supposing that every thing the mass media, the powers-that-be etc tell you is TRUE, you will go on believing in this myth of "Socialist" Russia, China, Cuba,etc...
But all these states are ones that trade and that exploit their workers,via the - capitalist - wages system.
If you like to distinguish that sort of econmy from the capitalism of the so-called "free market" ( actually a regulated system, with subsidies and tariffs and state regulations galore, even in the USA), if so you might try calling iit state capitalism. My point is that it is still a form of capitalism. As such it is wasteful,and warlike.. I'd like to think of leaving for future gerations a rather better sort of woorld. ...