Month: May 2017

Neoliberal rhetoric dies in May’s manifesto

In a previous post I argued that ‘neoliberalism’ was more rhetoric than reality. Now that the 2017 Tory manifesto has been published, even the rhetoric has been publically ditched. The ideology of the ‘libertarian right’ is overtly rejected (p7). The State now has a publically declared role. The ‘Government Spring’ has arrived!

In addition some of the insider cheerleaders now admit it has failed. Aditya Chakraborrty commenting on their turn around writes:

“…. it is the very technocrats in charge of the system who are slowly, reluctantly admitting that it is bust.

You hear it when the Bank of England’s Mark Carney sounds the alarm about “a low-growth, low-inflation, low-interest-rate equilibrium”. Or when the Bank of International Settlements, the central bank’s central bank, warns that “the global economy seems unable to return to sustainable and balanced growth”. And you saw it most clearly last Thursday from the IMF.

What makes the fund’s intervention so remarkable is not what is being said – but who is saying it and just how bluntly. In the IMF’s flagship publication, three of its top economists have written an essay titled “Neoliberalism: Oversold?”.

However, the reality of the current economic structure and social relations of production remains the same, but the rhetoric is replaced by the rediscovery of ‘one nation’ paternalist Toryism designed to appeal to older Labour (and UKIP) voters.

I suspect however, that the foundations remain, and will remain untouched. The 1% need not worry.

There are 5 challenges laid out in the Tory Manifesto:

 

  1. The need for a strong Economy.
  2. Brexit.
  3. Enduring Social divisions.
  4. Ageing Society.
  5. Fast changing technology.

 

There is no mention of climate change, tax havens, health and social inequalities, housing and education as one of 5 challenges.

 

The manifesto states:

 

We believe in the good that government can do (p8)

(my emphasis in bold)

Just look at that statement again, this time from a neoliberal perspective that  abhors state intervention except to provide a framework to allow markets to work. Thatcher and Reagan ‘government is the problem‘ would have choked. Ayn Rand would be apoplectic. Hayek would blush, Friedman would pace palm, Ted Heath would smile wryly. Although Thatcher was not a laissez faire capitalist in practice, she espoused and enacted privatisation, marketisation, deregulation and tax cuts.

‘To do that, we will need a state that is strong and strategic, nimble and responsive to the needs of people. While it is never true that government has all the answers, government can and should be a force for good – and its power should be put squarely at the service of this country’s working people’.

 A force for good!  But good for whom Mrs May?

‘If we are going to keep our economy strong as the world changes, we will need government to play an active role, leading a modern industrial strategy to make the most of Britain’s strengths and take advantage of new opportunities – bringing secure, well-paid jobs to the whole of the country’.

An active role! What happened to ‘government cannot pick winners’? or ‘Let the market decide’ or no ‘Lame ducks’?

‘If we want to overcome Britain’s enduring social divisions, we will need to give people real opportunity and make Britain the world’s Great Meritocracy. That will require government to take on long-ignored problems like Britain’s lack of training and technical education, as well as long-lasting injustices, such as the lack of care for people with mental health problems, and the inequality of opportunity that endures on the basis of race, gender and class’.

Oh, you’ve noticed?

This next is a hammer blow to neoliberal conservatives:

‘Because Conservatism is not and never has been the philosophy described by caricaturists. We do not believe in untrammelled free markets. We reject the cult of selfish individualism. We abhor social division, injustice, unfairness and inequality. We see rigid dogma and ideology not just as needless but dangerous’.

‘…do not believe in untrammelled free markets..’  Say, what?

‘True Conservatism means a commitment to country and community; a belief not just in society but in the good that government can do; a respect for the local and national institutions that bind us together’.

 ‘We know that our responsibility to one another is greater than the rights we hold as individuals. We know that we all have obligations to one another, because that is what community and nation demands. We understand that nobody, however powerful, has succeeded alone and that we all therefore have a debt to others. We respect the fact that society is a contract between the generations: a partnership between those who are living, those who have lived before us, and those who are yet to be born’.

 

Free market ideologues and libertarians should shudder at such sentiments, for they value a small state that should get out of the way to allow free markets to do their magical thing.

 

Instead here we have interventionist principles that a socialist may well nod in agreement to. Yes, it is not clause 4 ‘securing for the workers the full fruits of their labour’ but it clearly puts the state back into society. The ‘rugged individualism’ of Ayn Rand is denied in favour here of responsibility and obligations to each other backed by acceptance that we don’t achieve by our own efforts alone. Hayekian economics is publically trashed. Thatcher allegedly held up a copy of Hayek’s ‘The Constitution of Liberty’, May appears to have rediscovered aspects of Keynes.

 

Manifestos are of course written for electioneering and to provide a unifying vision for the party faithful. This one nails neoliberalism as a dead ideology no longer welcome in the Tory Party.

 

One wonders what the neoliberals think of it…but more importantly whether these principles will be put into practice.

Conservative Home welcomes the manifesto but say “You may be apprehensive about the effects of the Prime Minister’s Christian Democrat-flavoured politics on the unity of a previously (my emphasis) free market-committed party, as we are”. Germany’s CDU is a centre right party believing in social markets and government intervention rather than laissez faire capitalism. I also think this a reference to all of that ‘Government is good’ stuff as they seem to be saying that they were a free market party but no longer?  They don’t otherwise make a big thing of it…perhaps knowing that state power will still favour their class or that manifesto is more rhetoric.

The Adam Smith Institute had not commented by 23rd May. Neither had the The Centre for Policy Studies or the Institute for Economic Affairs. Five days have passed with no commentary on May’s inclusion of the rejection of ‘untrammelled free markets’ .

What is going on?  Perhaps free marketeers also don’t believe in free markets?

The Economist are clearer. For them, May has ‘interventionist’ instincts, for example on energy prices, council housing, minimum wages and EU rights for workers. May has ‘several digs at business’ on executive pay and worker representation. May’s stance on Immigration is of course another big example of intervention shifting the cost of policing it onto employers. The Economist feels this is tactical  – winning back UKIP voters and stealing Labour ‘moderates’. They suggest this is not only tactical but reveals a new ‘Tory Paternalism’. They are not entirely happy with this arguing for reducing intervention, cutting ‘red tape‘ (that’s environmental protection and worker’s rights in other words) and lowering taxes. All three are standard neoliberal approaches.

The Economist has come out for the Lib Dems and not the Tories!!

Other nuggets:

Universities are spoken of in purely economic terms, so that they ‘enjoy the commercial fruits of their research’ (p20). This is more ‘cognitive capitalism’, more ‘knowledge economy’ more ‘corporate university’. It is a rather narrow vision of the goals of Higher Education. Fracking will be supported. Investing in transport is highlighted but without any mention of actual funding. Cycling is promised expanded cycle networks.

None of this is costed, most of it is vague.

So what it comes down to is credibility. Has the nasty party really changed?

Neoliberalism as rhetoric is dead….leaving what? We will discover what May means by ‘believing in the good government can do‘ when her policies bite even further and post Brexit (unless of course Corbyn, against the odds, wins).

Thus spoke Narcissus.

Thus spoke Narcissus.

 

On Radio 4’s ‘Start the week’ recently, we heard from 3 key thinkers on environmentalism.

Wendell Berry: Farmer, Poet, Novelist, Essayist. Paul Bridgenorth: writer and environmentalist and Kate Raworth: ‘economist’.

Wendell Berry discussed his relationship to the land and the fundamental importance of life sustaining top soil. He spoke of love for the hill he gazes upon from his farmhouse. He prefers localised, non-intensive farming methods and argues that intensive industrial agriculture is damaging not only ecology but even our culture. His vision is about the land under our feet and our need to connect locally within community. Bridgnorth argues that what is required is similarly a return to the connection with nature while accepting that owning and running a small plot is not practical for all. He emphasised individual action against systemic degradation and destruction, as does Berry. Both however seem to accept that we are locked into current systems. Raworth outlined her ‘doughnut economics’ based on the planetary boundaries concept and a realisation that mainstream economics takes no account of nature except as an externality. She provides literally a new picture of the economy to shift consciousness towards this new paradigm of understanding our relationship to nature.

The relevance for health is of course based on our understanding of the wider determinants of health and the emerging domain of ‘Planetary Health’. The starting point is of course that we cannot survive without clean water, air and food that is sourced sustainably. Climate Stability, Biodiversity and Global Ecosystems are the foundations for wellbeing and health – not wealth, land ownership and fame.

Although each of them discussed a more positive vision for the future, there was nothing in the discussion that gave one pause for hope. The individual action advocated by Berry and Bridegnorth are of course vital. But neither provided any evidence or suggested that the big players  – agribusiness, the fossil fuel, or the extractive industries are listening. There was nothing in the discussion that positioned their philosophies as centre stage, indeed they still sound very marginal. Raworth’s doughnut economics is an acknowledgement of its marginality, hence the need for a new economic paradigm. Look in vain during the current 2017 electioneering for mainstream radical thinking about how the UK economy should be re- orientated. Instead we are treated to new versions of neoliberalism from the Tory party, like promising a cure to a cancer patient by the simple expedient of adopting mindfulness.

A critique of neoliberalism, the context in which these visions operate in the US and the UK, is that it has its blind spot that Raworth points out. On the natural environment it is silent rooted as it is in a vacuous theory oversimplifying human behaviour and need. It says nothing about the wider determinants of health or indeed that it values planetary boundaries. However, it has power and influence. But it is the power and influence of small minds who have large wallets. These moronic men of wealth buy idiot men of power. Their wealth provides an outward patina of competence and wisdom, as if an Armani suit bestowed vision.

As interesting and grounded in the Earth as the discussion was, the conclusion is that we are running headlong into a Nietzschian abyss. The ‘last men’ run the world, staring into an abyss but the abyss stares back. We look, but see ourselves reflected. We see into our own dark lifeless eyes leading down into vacuity. These eyes look good to us because we have seen no other.

We no longer look to the bright stars, instead we develop an endless stream of shiny bright things to dazzle us in our mediocrity. We mistake digitalisation for vision, financialisation for creativity and automation for transcendence. We travel faster, communicate faster, produce faster but we are in the slow lane leading into shit creek cul de sac. Art is a path to transcendence but our art is x factored commodified comfort. God is indeed dead but instead of striving for beauty and all that we could be, we fill the void with banality. We are content with ‘is’ and are blind to what ‘could be’. We consider that ‘what is’ should be the same as what ‘ought to be’. We are thus prey to demagogues and the mad because we have no thoughts of our own. Our thoughts have been bought, stripped of meaning and sold back to us wrapped in a superficial glittering package which is signifying nothing. They who sell, wander off into the abyss themselves, laughing as they go.

The world is black, because we have given up the light.

The richest 1,000 people have more wealth than the poorest 40% of households (UK)

The richest 1,000 people in the UK have more wealth than the poorest 40% of UK households. The 1,000 richest saw their wealth increase by a staggering £82.5 billion last year, the equivalent of £226 million a day, or £2,615 a second.

The Equality Trust has found that this increase in wealth of £82.5 billion could:

Pay the energy bills of all 25.6 million UK households for two and a half years. Cost = £79.15 billion OR

Provide 5,143,819 million Living Wage jobs , or 2,923,333 million jobs paid at an average salary for a year. Cost = £82.476 billion OR

Pay the grocery bill for all of the UK’s users of food banks for 56 years . Cost = £81.5 billion OR

Pay two years’ rent for 4.5 million households (4,528,000 households) . Cost = £72.1 billion OR

Pay for 68% of the budget for the NHS in England Cost = £81.6 billion
Pay for 4 years of adult social care in England . Cost = £78.8 billion.

This totally unearned bonanza needs justifying somehow. It arises merely from the structure of wealth ownership, tax laws, and property holdings. The beneficiaries had to do little beyond what they currently own or do to enjoy this largesse.

One justification for the support of the current social structure of wealth ownership and control is that these people pay in absolute terms a good deal of tax. If you are destitute at least you don’t pay tax. Consider however that if one paid tax on income on say, £1,000,000, under current tax rates you would still get £540,676 per year. You pay nearly 44% of your income.

The median in the U.K. in 2017 is £27,000. Thus you take home £21, 641. You pay 20% of your income. You take home 4% of what the high earner does.

The millionaire pays as much tax in one year (£458,000) as a the median earner would (£5,200 pa) in 88 years. This is of course ‘inequality’.

So for every 1 person receiving £1,000,000, you’d need 88 on the median. Impossible of course due to what median means. The top 1000 get, receive, not ‘earn’, considerably more than what to them what would be a miserable £1,000,000 pa.

Those who earn up to the £150,000 threshold of 40% take home £90,176. Each extra pound they then get is taxed at 45%. What if that tax rate was 90%? This would mean someone getting £200,000 would receive £90,176 up to the £150,000 threshold and then another £5,000 taking it to £95,176. Someone getting £1,000,000 would after tax get £90,176 + £98,500 = £188,676.

The price of a loaf of bread would be the same.

So even at 90% marginal tax rates over the threshold, a millionaire would not have to worry about paying utility bills. Yes they pay more tax, but what’s left for them is hardly destitution. I digress. Millionaires to the 0.01% are paupers. Billionaires can avoid paying any taxes at all.

A second justification is that they are the ‘wealth creators’ and so deserve it all. I will not unpick this here because the rebuff is as obvious as the claim is spurious.

A third justification is that changing this structure would lead to economic chaos and left wing totalitarianism. This sets up a false dichotomy of either keeping hold of wealth or descent into tyranny.

A fourth justification is that the wealthy need to get ‘rewarded’ as they operate in a competing market, and that pay rates merely reflects market forces at work? Well, indeed but should that really be a plea to hold on to vast amounts of wealth? Are you really saying that you are miffed because someone else gets £5,000,000 pa while you get a ‘paltry’ £2,000,000 ?

There is a fifth technical justification – the Laffer Curve:

“In economics, the Laffer curve is a representation of the relationship between rates of taxation and the resulting levels of government revenue. Proponents of the Laffer curve claim that it illustrates the concept of taxable income elasticity—i.e., taxable income will change in response to changes in the rate of taxation.

The Laffer curve postulates that no tax revenue will be raised at the extreme tax rates of 0% and 100% and that there must be at least one rate which maximizes government taxation revenue. The Laffer curve is typically represented as a graph which starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate. The shape of the curve is uncertain and disputed.

One implication of the Laffer curve is that increasing tax rates beyond a certain point will be counter-productive for raising further tax revenue. A hypothetical Laffer curve for any given economy can only be estimated and such estimates are controversial. The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%. Generally, economists have found little support for the claim that tax cuts from current rates increase tax revenues or that most taxes are on the side of the Laffer curve where additional cuts could increase government revenue.

Although economist Arthur Laffer does not claim to have invented the Laffer curve concept, it was popularized in the United States with policymakers following an afternoon meeting with Ford Administration officials Dick Cheney and Donald Rumsfeld in 1974 in which he reportedly sketched the curve on a napkin to illustrate his argument.”

See: Laffer Curve

If all else fails, fall back on classic economic models which are of course nothing more than mathematical representations of actual human behaviour in particular social and political contexts. They do not operate like the laws of physics. Hence they can easily change given different contexts.

With these vacuous and self serving justifications, the 1% keep the status quo going. Every society needs a unifying myth, and the powerful 1% need one even more so. Monarchy, Nation State, and ‘Free Market’ Capitalism (note: not financial/rentier/crony capitalism) are used as unifying myths to merely cover wealth and privilege. It is why right wing politics intuitively support monarchy, church and the flag because if those are dismissed by critics then that only leaves the theory of free market neoliberal capitalism as a defence against ‘the underclass’.

You decide if this level of wealth appropriation is good for social cohesion and health inequalities.

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