Grim wrote:I disagree on a number of points. Most emphatically where you seem to think that "the alternative to neoliberalism is socialist planning." This is a crude dichotomy to say the least. Valid in point but in large part incorrect or at the least wildly imprecise. The alternative to neoliberalism is highly variable and seriously advocating a reduction in what would come under a reasonable definition of neoliberalism does not necessarily advocate any particular modification to democratic capitalism per se.
Defining the difference between 'democratic capitalism' and 'neoliberalism' is problematic. I am a fan of
Friedrich Hayek, notably of his view that "the efficient exchange and use of resources can be maintained only through the price mechanism in free markets.... In Hayek's view, the central role of the state should be to maintain the rule of law, with as little arbitrary intervention as possible." This seems to me the essence of neoliberalism. Departure from the price mechanism tends to provide political support to vested interests, undermining both broad based economic growth and sustainable poverty reduction. The US departed from the price mechanism in tax-deductibility of mortgage interest and in failure to price collateralised debt obligations. Nothing neoliberal about either policy.
When you begin to look at things like recent history as a general decrease in regulation, a weakening of the labor unions, lowering of taxes on corporation, and a general empowerment of the corporate business model through the severe reduction in Government involvement. The changes we have been seeing in the American business and social atmosphere seem to suggest a strong reversal of these values.
http://www.canberratimes.com.au/news/na ... 22838.aspx
Interesting that you should quote the Australian Prime Minister Kevin Rudd as an authority in the American economic debate. He also warned in this article, published today in The Monthly, not to throw the baby out with the bathwater, but then did precisely that by lumping all the sins of the boom under the catchall heading of neoliberalism.
"Distorting the allocation of resources," is exactly what we are beginning to see under Obama, saying that using American sources of resources such as iron and steel to revamp your infrastructure will become a contractual necessity. We have been talking about the need to, and the obvious failure of the current system (social, political, and economic) to move away from the highly impersonal and robotic fascination with optimizing value, perhaps we are seeing the beginning of a newer shared-cost mentality? Where goods and services don't need to be cheapest but best for all.
http://news.google.ca/news?q=obama+prot ... -8&rls=org.
This protectionist trend is highly unjust. By saying that people cannot buy from the most efficient supplier, President Obama is forcing customers to subsidise inefficient businesses. Obviously there is enormous political weight behind this new protectionism, but that doesn't make it rational or right.
"The real problem is how to regulate a free market." Isn't it though.
What do you mean by this?
"New Deal-type incentives for home ownership have gone spectacularly bust" Oh, just recently?
The underpinning of the subprime lending crisis is the idea, with roots in Roosevelt, that everyone can own a home even if they can't afford it.
... "you can't blame neoliberalism for these problems." I disagree, lots of people are looking to the reforms introduced Reagan and Thatcher style then carried diligently by Greenspan et al for blame.
But how much is it the neoliberalism of Reagan and Thatcher that is to blame for their dubious legacy? There was little that was neoliberal about the massive expansion of the American military orchestrated by Reagan. My impression is that their neoliberal ideas got caught up in a bigger political agenda of class war, and then tarnished by guilt with association
I guess the point you have to argue is why exactly a moderate amount of socialist style planning would do a great disservice to the American social-economic model (however rigidly you define it), especially now that neoliberalism has obviously failed to provide needed strength and integrity on so many fronts?
Socialism has also been tried and failed, even more spectacularly with the collapse of communism. The point is to consider policies on their merits, based on quantitative analysis of their effects. Using 'neoliberal' as a tar brush serves to discredit sound policies such as low inflation, high savings and incentive for investment, which are the basis of economic growth. The US is better off debating and defining sound policy than looking for catch-all ideological targets for blame.