Is Neo-liberal economics (trickle down economics) on its way out?

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 skyrocketed.

Counterpunch

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

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.

4) 2007-08 proved beyond a doubt that markets don’t regulate themselves. And Iceland proved that there is another way.

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.

reply to post by FortAnthem


The Boom & Bust of Trickle Down economics is unsustainable.

Regulations are needed but also need to be enforced. It seems the Plant in West, Tx that exploded a few days ago was not regularly inspected by the likes of OSHA due to underfunding.

The study you mentioned with the Exel Spreadsheet error has more problems than just that. I started a thread on it. (Although it's been ignored. )
Austerity. Lies, Damned Lies and Statitstics.

Neo-liberal you say?

Today, "trickle-down economics" is most closely identified with the economic policies known as "Reaganomics" or laissez-faire. David Stockman, who as Reagan's budget director championed these cuts at first but then became skeptical of them, told journalist William Greider that the "supply-side economics" is the trickle-down idea: "It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."

en.wikipedia.org...

reply to post by FortAnthem


Certainly hope it's on it's way out. Never made sense to me. Even as a teenager when Reagan started all that BS, I didnt buy it.

"Neo-liberalism" is a set of economic policies that have become widespread during the last 25 years or so. Although the word is rarely heard in the United States, you can clearly see the effects of neo-liberalism here as the rich grow richer and the poor grow poorer. "Liberalism" can refer to political, economic, or even religious ideas. In the U.S. political liberalism has been a strategy to prevent social conflict. It is presented to poor and working people as progressive compared to conservative or Rightwing. Economic liberalism is different. Conservative politicians who say they hate "liberals" -- meaning the political type -- have no real problem with economic liberalism, including neoliberalism.

www.corpwatch.org...

In the UK all 3 parties I consider to be neo liberal. It's a confusing term, as it is more of an economic philosophy than political, embraced by both left and right over the past few decades.

reply to post by intrepid


Is that an example of re-branding for 2016 or has the political spectrum biased so far right that Reagan is actually considered liberal??

If we truly want to take anything out of this last economic dilemma, it should be that trying to base a huge and infinitely complex economy on one economic theory or a handful of them is not only idiotic, but dangerously so. Real life is not an economic theory--half the political and ideological debates that have gone one about government vs. free market have been narrow-minded, nonconstructive and completely at odds with reality. Real life isn't a theory, you just have to respond to economic problems as they are, not under the total monolithic veil of "Neoliberal", "Liberal", "Free Market", "Socialist", or whatever is in fashion this season.

Good god, I would literally give up my right to vote if I could trade these current Politico's with a handful of real and true critical thinkers.

This sounds like rebranding by republicans.
Now they are distancing themselves from trickle down?
They invented it touted it lived it and billionaires loved it.
That's your ugly baby not ours..

It seems a lot of folks are getting hung up on the term "Neo-Liberal" because "liberal" is a term most often associated with the left and Democrats in particular in today's political culture.

What the term is referring to is what Libertarians (notice the root of their name is "liberal") call CLASSICAL LIBERALISM.

Basically, classical liberalism is the belief in liberty. Even today, one of the clearest statements of this philosophy is found in Jefferson's Declaration of Independence. At that time, as is the case today, most people believed that rights came from government. People thought they only had such rights as government elected to give them. But following the British philosopher John Locke, Jefferson argued that it's the other way around. People have rights apart from government, as part of their nature. Further, people can form governments and dissolve them. The only legitimate purpose of government is to protect these rights.

People who call themselves classical liberals today tend to have the basic view of rights and role of government that Jefferson and his contemporaries had. Moreover, they do not tend to make any important distinction between economic liberties and civil liberties.

On the left of the political spectrum, things are more complicated. The major difference between 19th century liberals and 20th century liberals is that the former believed in economic liberties and the latter did not. Twentieth century liberals believed that it is not a violation of any fundamental right for government to regulate where people work, when they work, the wages they work for, what they can buy, what they can sell, the price they can sell it for, etc. In the economic sphere, then, almost anything goes.

At the same time, 20th century liberals continued to be influenced by the 19th century liberalism's belief in and respect for civil liberties. In fact, as the last century progressed, liberal support for civil liberties grew and groups like the American Civil Liberties Union (ACLU) began to proudly claim the label "civil libertarian." Since liberalism was the dominant 20th century ideology, public policy tended to reflect its beliefs. By the end of the century, people had far fewer economic rights than they had at the beginning. But they had more civil rights.

NCPA

Classical liberalism is closer to so-called conservatives in its economics while it tends to be closer to so-called lefties (or liberals) in its social policies.

Hope that clears this up for some folks.

The trickle down economics was mean to fail from the beginning and it did, because in a Capitalistic economy is only one goal and one winner.

The goal of profits at all cost and the winner is those that are at the top of the pyramid reaping the profits.

So nothing trickle down to the ones at the bottom.

VooDoo economics came from the conservatives. Even it's architects admit it is a failure.

Geez, didn't people watch Ferris Bueller's Day Off?

The only answer to the neo-capitalist trickle down economy is worker ownership.

1. Provide an exit strategy for owners. In almost every small business, the owner or owners will eventually want to leave. Selling the business to employees can be a way to provide continuity and preserve the culture of the business.
2. Attract and retain good employees. Many small businesses have trouble attracting and retaining good employees. Using employee ownership as an employee benefit can be an important way to address this problem.
3. Preserve jobs and local ownership. Employee ownership is a proven means of preserving local ownership of companies and the jobs they support, fairly sharing equity, boosting productivity, and improving the quality of work life. Rather than closing up shop or selling to a competitor, small business owners can sell to their employees. This keeps businesses and jobs in Vermont.
4. Improve performance. Several reliable studies indicate that, on average, employee-owned firms perform substantially better than non-employee-owned firms when ownership is combined with employee participation in decisions affecting their work. A survey published in the ESOP Report (August 2003) revealed that ESOP companies outperformed the three major stock indices in 2002: the Dow Jones Industrial Average, the NASDAQ composite, and the S&P 500. This means "once again that the decision to become employee-owned through an ESOP means better company performance and greater wealth creation for the employee owners." (ESOP Report 8/03).
5. Improve wages and benefits. Employee-owned businesses tend to pay higher wages and provide better benefits.
6. Provide tax benefits. Certain employee ownership structures qualify for tax benefits, which can be substantial.

www.veoc.org...

reply to post by BritofTexas


...and you said your thread was being ignored.


Glad I could give you the jump start that thread needed. Its really hoppin now.

We should just simply take back the money from those who exploited the system leaving much of society in poverty. Simple as that.

X

Originally posted by ANOK
The only answer to the neo-capitalist trickle down economy is worker ownership.

The large corporations are eating up small business and the government and big business are making it unprofitable to continue. As a small business owner myself, I worry about whether I'll be able to continue into the future. I really believe that soon small business will no longer exist and all workers will be required to serve a handful of very fat masters (and we'll probably all be forced to live on company compounds and be marched to and from work by armed guards while the fat cats take our homes and land - see, I can be as ignorantly paranoid as the next person).

Originally posted by Xeven
We should just simply take back the money from those who exploited the system leaving much of society in poverty. Simple as that.

X

Hey, do you have a time line for that, steps, 1, 2 and 3 all set out and ready to go? Let me know so I can join you If it involves breaking the law, though, I'd have to think about it...

Originally posted by FortAnthem
reply to post by BritofTexas

 

...and you said your thread was being ignored.

Glad I could give you the jump start that thread needed. Its really hoppin now.

It is Thank you

Something you might find interesting.

Frontline: The Retirement Gamble
(Not on youtube yet)

Apparently over the life of your 401k, about 60% of it's earnings go to management fees.

So if you should have retired with $1,000,000. You will only have $400,000.

Originally posted by Archie
I really believe that soon small business will no longer exist and all workers will be required to serve a handful of very fat masters (and we'll probably all be forced to live on company compounds and be marched to and from work by armed guards while the fat cats take our homes and land - see, I can be as ignorantly paranoid as the next person).

How is that ignorant and paranoid? Sounds like what is happening already to me.

There was a time when there was only small businesses, but inevitably with capitalism some of them turn into large businesses, leaving most of the small businesses behind as it becomes harder to compete.

That hurts all of us.

Worker owned, not for profit companies, don't have to compete and continually grow, they only have to provide what the community requires. Capitalism destroys communities because it's intention is to exploit, not provide what the community needs. This makes communities reliant on the capitalist private owners to provide jobs, or government to provide help if the capitalists remove their contribution to the community because they're not making enough profit.

We don't need wealth accumulation, we only need the means to produce. But the means to produce are monopolized by a minority class, who created a system that ensured that they would maintain power and control and privilege. A system not based on fair exchange, but exploitation. A system that makes it almost impossible to live outside of because of private land, capitalism.

Originally posted by ANOK
How is that ignorant and paranoid? Sounds like what is happening already to me.

There was a time when there was only small businesses, but inevitably with capitalism some of them turn into large businesses, leaving most of the small businesses behind as it becomes harder to compete.

That hurts all of us.

Worker owned, not for profit companies, don't have to compete and continually grow, they only have to provide what the community requires. Capitalism destroys communities because it's intention is to exploit, not provide what the community needs. This makes communities reliant on the capitalist private owners to provide jobs, or government to provide help if the capitalists remove their contribution to the community because they're not making enough profit.

We don't need wealth accumulation, we only need the means to produce. But the means to produce are monopolized by a minority class, who created a system that ensured that they would maintain power and control and privilege. A system not based on fair exchange, but exploitation. A system that makes it almost impossible to live outside of because of private land, capitalism.

I was having a go at me, nobody else. I probably should have made that clearer. I don't have proof that the future will head in this direction. I'm ignorantly paranoid because my fear is completely baseless to date as I've found no data to support such an extreme idea, not that I've looked. I just have had a feeling for years now that one day, I'm going to look out of the window to find the army on streets calling us all to pack our things and come out of our houses. I can't say where it comes from but it started around 9/11 and probably stems from feeling afraid in the outside world on some deeper level. So there ya go... *yawn*

I agree with you re: worker owned companies and current exploitation completely but but but... you know? Look what happened in Cambodia. The Khmer Rouge were Marxists and, essentially, were espousing these kinds of ideologies. It's a wonderful idea, this workers paradise, I just get stuck at the implementation stage, myself. Let me know if you get any grand ideas, though

reply to post by FortAnthem


Wrong, corruption lead to the crash. Two words Federal Reserve. U control the money supply, u can collapse the economy and consolidate it for pennies on the dollar.