Neoliberals are the Bickering Bickersons!

Congress is bickering again.  If you are wondering why Congress would parley away their best power-plays in legislative design so that they can argue endlessly and accomplish very little, you can find the explanation in American history.  This infighting has been a side effect of greater governmental influence in the economy which got started during the modern liberal period.

Our courts allowed Congress to expand its use of the Commerce Clause during the Age of Railroads.  Congress started performing economic interventionism with ghastly results such as the Dust Bowl which happened because of a WWI government farming subsidy to produce more wheat to win the war.  The Dust Bowl happened because too much prairie had been put under the plow during WWI.

Economic interventionism and deal making has worsened under neoliberalism.  When our government’s legislature has more power to affect the economy, more economic players seek the favoritism of someone in Congress.  And the nation as a whole can’t get legislation considered that would undertake a larger goal of helping more of us through sounder policies.  Since legislation is tailor-made to help a set of specific interests, legislators never seem to repeal bad legislation.  They don’t look at legislation in a broad context.

People in government argue more now because each elected official argues for their own self-interest or that of a small constituency instead of arguing for the best legislation that would help more Americans.  Each Congress member has special interests to please and big campaign contributors to please.  They can’t be bothered to think long-term about what would be best for our nation as a whole.  As they ignore past mistakes or bad legislation that should be repealed they carry on intervening just as they have for a while now.  They are trading influence.  Legislation that could be designed for a longer-term view has become eclipsed by deals where elected officials have a personal stake.  That’s why legislators can’t agree, or act for the benefit of the nation.  They have lost their common interests in undertaking better lawmaking and traded it for “Lets Make a Deal” opportunities and viewpoints that benefit themselves.

In order to change this habit of self-interest in lawmaking, we should recognize the folly of Congress’s power to influence the economy by picking winners and losers.  Congress’s power expansion has now gone too far.  Congress’s short-sightedness and self-interested policies have hurt our nation’s prosperity.  Congress keeps making the economy worse because they can’t run a marketplace and write reasonable legislation at the same time.   They now work within a system that is inherently conflicted.  And they have endless hubris about believing that they can steer the nation in the right direction through supporting monopolies and underwriting the stock market with the power to print more money.  It’s time to change the way Congress does business.

When I write “neoliberalism” and also write about Congress, it’s because both liberals and conservatives, both Democrats and Republicans operate under neoliberal principles, nowadays.  American’s old habit of contrasting the policies of Democrats and Republicans is old-fashioned because it comes from the time before neoliberalism made mincemeat of the legislative process.

In addition to the court’s expansion of the Commerce Clause during the modern liberal period, there’s another more recent historical perspective that shows why it isn’t surprising that our nation is full of neoliberal legislators that are fighting all the time and getting so little accomplished.  Philip Mirowski and Dieter Plehwe wrote a book, The Road from Mont Pelerin, that described how neoliberalism got started between WWI and WWII.  According to them, even from the beginning, neoliberals could never agree about what exactly the political goals of neoliberalism should be.  Groups vied for neoliberalism to be what their group wanted and neoliberals never agreed upon a single goal.  Even today, neoliberals in the legislature bicker instead of cooperate.

If you’d like to learn more about American political ideologies and about U.S. neoliberalism, read Political Catsup with Economy Fries available at Amazon.com.

reference:

Philip Mirowski. Dieter Plewe, The Road From Mont Pelerin: The Making of the Neoliberal Thought Collective, Harvard University Press, Cambridge Massachusetts, 2009.

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Neoliberals game the system.

Neoliberalism isn’t like the other two American (and to some extent, global) political ideologies that were active earlier in our history.  The first ideology, classical liberalism had outspoken activists and so did modern liberalism.  Neoliberals don’t proclaim their political or economic interests in public dialogue the way that Thomas Paine did during the classical liberal period or that Walter Lippmann did during the modern liberal period.  Instead of pursuing political activism through public rhetoric, they engage in the remodeling of our political system through lengthy drafts of new rules that benefit themselves and externalize problems to others.  They do this by buying influence in Washington D.C..

If you want to understand neoliberalism, you can’t ask a neoliberal.  Instead of doing that, you have to examine winners and losers as new legislation rolls out of the halls of Congress.  Ask yourself, when the legislation passes, will you be better off?  Who will pay for the consequences of the legislation?  Will it cause your taxes to increase?  Will it cause your opportunities to diminish?  What negative outcomes will come your way after the legislation passes?  How many persons will benefit who are like you?  How long is the legislation as it is written?  Modern laws can be hundreds of pages long and full of favors   for influential political donors.

In Washington, today, debate continues about HR 1, the Tax Cuts & Jobs Act.  When I first heard about this bill, I read that it would simplify the nation’s tax plan.  And that simplification would save people money.  Lately, I’ve been disappointed to hear that it probably won’t simplify the nation’s tax structure.

At first, I heard that it would even the playing field between small businesses and large corporations.  Small businesses have paid a high U.S. tax rate that large transnational corporations have mostly avoided. That rate varies from 15% to 35%.  Often we read that large transnational corporations don’t pay any taxes because of tax loopholes of which they can take advantage.  Yesterday, I read that the Tax Cuts and Jobs Act as it is drafted doesn’t give the same tax breaks to small businesses that it gives to large transnational corporations.  Too bad about that.

Keeping that tax differential in place would give transnational corporations a perpetual advantage over small businesses in America.  The tax differential between what small businesses pay and what transnational corporations pay has destroyed many small businesses in our country since 2007’s economic crash (during the sub-prime mortgage crisis and the bank bail-outs).  Small businesses couldn’t compete with large corporations in a recessionary environment because they had fewer tax advantages and less capital.  As I look at the development of this tax bill, I guess that the bigger fish want the biggest tax advantages just for themselves.  But I don’t think that’s been good for America, so far.

As the Tax Cuts and Jobs Act gets debated in Congress, I hope that more Americans are watching the debate and asking themselves what good government is about.  I think that it isn’t only about keeping the big fish happy.  What do you think?  And what do you want this bill to accomplish for you after the debate is finally over?  Will it get passed and will it help ordinary Americans without costing them a lot of money in order to help big transnational corporations?

If you’d like to learn about our nation’s ideological leanings across the arc of American history, get a copy of Political Catsup with Economy Fries at Amazon.com.  You can learn about classical liberalism, modern liberalism and neoliberalism.  You can find out how they differ and what motivated the political and economic changes that can be observed in the evolution of American policies.

additional sources that you may want to read:

Jacob S. Hacker, Paul Pierson, Winner Take All Politics: How Washington Made the Rich Richer–and Turned Its Back on the Middle Class, Simon and Schuster Paperbacks, New York, 2010.

Charles H. Ferguson, Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America, Crown Business, New York, 2012.

A chance for bank reform.

Janet Yellen’s term as head of the Federal Reserve Board will soon end and President Trump will select a new leader.  There are six other Federal Reserve Board positions that President Trump may have an opportunity to appoint, according to an article by John Mauldin writing for Forbes.  Mauldin seems to think that Trump would prefer a less dovish Fed.  I would wish for a bigger change than that.

Bank deregulation got going during the Carter Administration and continued until Glass Steagall was repealed during the Clinton Era.  Deregulation has led to innovations like derivatives and financialization that benefit large capital holders.  Meanwhile the rest of the economy continues to decline in prosperity.  Many small businesses have gone under.  Hopelessness abounds and is shown by the opioid crisis and mass shootings.

I would like President Trump to shrink the size of banks.  He should also increase their solvency by requiring them to hold more capital in reserve.  Since the Greenspan Put, the Federal Reserve has promised to shore up banks with tax payer monies in the case of a collapse like the Sub Prime Mortgage Crisis.   Greenspan’s promise became a subsidy for bank failure and it should end.  Glass Steagall was part of the FDIC era and separation of investment banking and commercial banking was another crucial part of it.  According to Dodd Frank, Americans savings can now be used to bail in failing banks (those Americans would lose their savings).  So much for FDIC insurance.  Glass Steagall should be reinstated with meaningful depositor insurance.

The amount of uncertainty that all Americans now are exposed to continues to harm everyday people.  Ninety five million people are out of work in the U.S..  Isn’t it time to realize that deregulation in most areas of our economy has created new harms?  Isn’t it time to stop white-collar fraud in banking and money laundering?  Isn’t it time to stop monopoly banking and Too Big to Fail Banks?  Isn’t it time to use new appointments on the Federal Reserve Board to institute widespread banking regulatory changes that would recapture economic opportunities for more Americans that hold small amounts of capital that they use to raise their families and prepare for retirement?

I heard someone on the radio blaming Americans for the state of the nation.  He thought that people who don’t care about political outcomes cause bad outcomes.  But most Americans aren’t charged with oversight of American Banking the way that the federal government is.  Because of that, I don’t blame everyday people for our economic woes.  I blame Congress’s penchant for deregulation.  I’m calling for a change of seas in federal banking regulation that would restore security to American banking.

If you’d like to learn about neoliberalism and how it affects American politics today including the state of our economy, buy a copy of Political Catsup with Economy Fries at Amazon.com.  It will explain our banking woes and the nature of derivatives and financialization.  Those are essential topics for all Americans.

sources:

John Mauldin, “Trump Could Get Seven Appointments to the Fed,” Forbes, Dec 22, 2016 http://www.forbes.com/sites/johnmauldin/2016/12/22/trump-could-get-seven-appointments-to-the-fed/#29cc79f339d7, accessed 8 Nov 2017.

Anat Admati and Martin Hellwig, The Bankers New Clothes: What’s Wrong with Banking and What to Do About It,” Princeton University Press, New Jersey, 2013.