...few would have guessed that the economic order built on Reagan’s and Thatcher’s common faith in unfettered global markets (and largely accepted by their more liberal successors Bill Clinton and Tony Blair) would be brought down by right-wing populists riding the anger of a working class that has been cast aside in the globalized economy that the two leaders trumpeted 40 years ago... Eduardo Porter, NY TimesAn interesting piece though I don't agree with the way this is presented. Reagan and Thatcher were just the instruments of neo-liberalism.
The article goes into history -- the FDR New Deal save capitalism but brought in big government - social security, welfare, and even talk of a national health plan. When people were out of work the government started conservation works to put people to work. The Keynesian view was dominant. Under neo-liberalism it is every man and woman for themselves.
Mr. Keynes’s views ultimately prevailed, though, providing the basis for a new post-World War II orthodoxy favoring active government intervention in the economy and a robust welfare state. But that era ended when skyrocketing oil prices and economic mismanagement in the 1970s brought about a combination of inflation and unemployment that fatally undermined people’s trust in the state.I think there was more of a driving force behind this - corporate profits and tax cuts for the wealthy as a way to stimulate a falling economy - opposite of Keynesian and obviously a disaster.
The so-called Brexit vote was driven by an inchoate sense among older white workers with modest education that they have been passed over, condemned by forces beyond their control to an uncertain job for little pay in a world where their livelihoods are challenged not just by cheap Asian workers halfway around the world, but closer to home by waves of immigrants of different faiths and skin tones.Simplistic. What about the left-wing populism of Sanders?
So where does capitalism go now? What can replace a consensus built by a charismatic American president and a bull-in-a-china-shop British prime minister in favor of small governments and unrestrained markets around the world?
So where does capitalism go now? What can replace a consensus built by a charismatic American president and a bull-in-a-china-shop British prime minister in favor of small governments and unrestrained markets around the world?Exactly what the Democratic Party has refused to address until Bernie brought it up. Note that Trump does not put forth a plan.
There are potentially constructive approaches to set the world economy on a more promising path. For starters, what about taking advantage of rock-bottom interest rates to tap the world’s excess funds to build and repair a fraying public infrastructure? That would employ legions of blue-collar workers and help increase economic growth, which has been only inching ahead across much of the industrialized world.
I laughed out loud when I read that Laurence Summers of all people has a plan. Where was he over the past 20 years?
When our Democratic Party candidate is a neo-liberal and the Republicans control Congress we can expect little. How come Obama never even floated a major plan to employ people after the initial stimulus even if it would go down to defeat? Remember how much of that money went to the wealthy instead of the working people. His job was to sell that to people. Instead we ended up with the Tea Party.After the Brexit vote, Lawrence Summers, former Treasury secretary under President Clinton and one of President Obama’s top economic advisers at the nadir of the Great Recession, laid out an argument for what he called “responsible nationalism,” which focused squarely on the interests of domestic workers.Instead of negotiating more agreements to ease business across borders, governments would focus on deals to improve labor and environmental standards internationally. They might cut deals to prevent cross-border tax evasion.There is, however, little evidence that the world’s leaders will go down that path. Despite the case for economic stimulus, austerity still rules across much of the West. In Europe, most governments have imposed stringent budget cuts — ensuring that all but the strongest economies would stall. In the United States, political polarization has brought fiscal policy — spending and taxes — to a standstill.
Agence France-Presse — Getty Images
In ‘Brexit’ and Trump, a Populist Farewell to Laissez-Faire Capitalism
June 28, 2016