Let's discuss 'neoliberalism'. What is it? Is it good or bad and who's doing it?

[Rumpole]

My view is that neoliberalism is the big cause of the rich/poor gap, which was accelerated under Reagan and that ship hasn't been fully reversed yet, despite Obama and Biden, who helped a little, but without a filibuster proof senate and control of the house, Dems can turn the neoliberal ship around. The main aspects of neoliberalism that are affecting the nation, more than any other policy, both of which have yet to be reversed, are the flatter tax policies (compared to the 50s), deregulation in the banking and finance sectors, and lax antitrust policies.

Neoliberalism did the following:

1. Flattened the progressive taxation of the 50s.
2. Lowered taxes on the super rich who don't need it, causing deficits which exacerbated inflation, which is a tax for those who cannot hedge (the poor)
3. Not controlling the ratio between pay of CEOs to lower employees. Was 50:1 in the 50s, is over 300:1 now.
4. Lax antitrust, more and more big companies gobbing up smaller ones. Wealth and Power flowing to fewer and fewer hands
5. Deregulated Airlines, resulting in similar to #4.
6. Upper 50% own 97% of the nation's wealth.
7. Pay for middle class flattened about the time reagan took office, hasn't improved much compared to pay for the rich.
8. Repeal of Glass Steagall and parts of Dodd-Frank. Allowing banks to act like hedge fund managers, with YOUR money without your consent
9. Deregulated derivatives, leading to exotic things like credit default swaps, which broke the camels back in 2008, causing a major financial disaster, forcing government to bail out 'too big to fail' banks and insurance companies.

What is neoliberalism? There are two contrasting opinions:

Neoliberalism is an economic and political ideology that emphasizes the importance of free market capitalism and individual liberty. It emerged in the late 20th century as a response to Keynesian economics and the welfare state, which had dominated economic thinking and policy-making in the post-war period.

View #1.
Neoliberalism is characterized by a strong belief in the power of market forces to allocate resources efficiently and create wealth, and a corresponding distrust of government intervention in the economy. Proponents of neoliberalism argue that reducing regulations and taxes, privatizing public services, and increasing competition will lead to economic growth and greater individual freedom.

Neoliberalism accelerated by Reagan,via the economic recommendations of Milton Friedman and the Chicago school of economics

View#2
Critics of neoliberalism argue that it leads to increased inequality, social fragmentation, and a focus on short-term profits at the expense of long-term social and environmental sustainability. They argue that the emphasis on individual liberty and market forces can lead to a lack of concern for the collective good, and that government intervention is necessary to protect the most vulnerable members of society and ensure a more equitable distribution of wealth and resources.

Prior to Reagan (and probably Carter) From Nixon prior back to FDR, Keynes was the dominant economic influencer. Ford was a neoliberal, I believe Carter, the Bushes, and Clinton were neoliberals, as well.
Now, the economy did well under Clinton, they (repubs helping) balanced the budget for the first time in history (or in modern history, or as long as I can remember and I'm 72), however, we saw the dot com crash, and Clinton signed the Commodity Futures Modernization act of 2000, which deregulated derivatives, which greatly contributed to the crash of 2008 (broke the camel's back. Banks might have weathered the storm but for the derivative investments to the tune of many billions, and the 'credit default swaps' (a type of derivative) gave them the false sense of confidence to purchase faulty mortgage backed securities where the mortgages were based on lax lending policies which were bundled as collateral for the securities. A ticking time bomb, but the derivatives/default swaps gave them a false sense of confidence, without which, no where near as much risky investments would have been made, not to mention it wouldn't have been possible but for the repeal of Glass Steagall by Clinton (a neoliberal). Liberals contributed to the lax lending problem, it must be said, of course.

After watching neoliberalism take root with Reagan, and pretty much remains to this day (in terms of the important areas; antitrust and taxation), and the damage it has done, overall, it is clear #2 is the more accurate point of view.

I asked a more educated person (on this subject, though not a Phd), a friend, to give a quick analysis, give the flaws and strengths, he gave this critique:

Flaws:

1. The essay presents a one-sided argument that neoliberalism is solely responsible for income inequality and other economic issues without acknowledging the complex factors that contribute to them.
2. The essay presents an oversimplified definition of neoliberalism, which does not fully capture the complexity of the ideology and its different interpretations by scholars and policymakers.
3. The essay presents some claims, such as the relationship between tax cuts and inflation, without providing evidence or supporting sources.
4. The essay uses sweeping generalizations, such as characterizing all presidents since Reagan as neoliberals, which oversimplifies their policies and ignores other factors that influence policymaking.
5. The essay does not offer a nuanced view of the role of both government and market forces in addressing economic issues, which limits its analysis.

Strengths:

1. The essay presents a clear argument and provides specific examples of policies and trends that reflect neoliberalism, which helps readers understand the ideology and its effects.
2. The essay challenges the dominant neoliberal perspective and offers an alternative view that emphasizes the negative consequences of the ideology.
3. The essay highlights the importance of regulation and government intervention in addressing economic issues and promoting social and environmental sustainability.
4. The essay uses accessible language and provides concrete examples that make the complex topic more understandable to a general audience.
5. The essay encourages readers to think critically about the economic policies and the assumptions underlying them, which is important for informed citizenship.

Rebuttal to flaws:
#1. It would take more of a book, to comply with this one.
#2 same as above
#3. I can provide evidence
#4 I could, but it would require a much longer essay
#5 Well, no one is perfect

I invite comments, discussion, disagreements, etc. Disingenuous replies will be ignored.

 

[shockedcanadian]

We need more classical.theories, not the perversions of such theories that always seem to evolve, at best, in a sideways fashion.

 

[Mexicano]

The result has been the accumulation of wealth in the upper echelons.
That, by itself, is not so bad. What is really disastrous is that such wealth accumulation has been coupled with financialization.
The money has flowed abundantly into financial instruments. By definition such a flow does not contribute to GDP , GDP considers as investment only capital expenditure ( capex) .
The result has been :
- More expensive services ( college , healthcare )
- A real estate bubble ( and higher rents whose apportion is not correctly reflected in the CPI)
- Financial asset bubbles: overprices stocks, derivatives and cryptocurrencies.
- Stagnation: the US industrial production has just the same level it had in 2007.