We Need to Move Away from Neoliberalism
Posted on December 4th, 2019

We have told ourselves a nice story about the economy. As we adopted the Manchester School and made it into the 20th-century model, the market became central. We renamed it into the neoliberal model. We forgot that the economy is far more than just the work sphere, or the business cycle.

I have written about this in the past because part of this is ideology.

We ignored the centrality of home life to economic life. Why we have stopped investing in those things that keep home life going.

We see it with education, which we continue to shortchange. It was not always this way. The launch of Sputnik led to a generalized panic. The United States lost its technological edge. We had to do something! Part of that something was a massive investment in public education. We needed to get our children and young adults ready for what these days is called science, technology, engineering, and mathematics; STEM for short.

The Russians launched Yury Gagarin soon after Sputnik; we knew we were falling behind. Not only was the National Aeronautics and Space Administration told, even ordered, to catch up. We started to do something else. Basic and secondary education was prioritized, and budgets grew.

But it was in the area of education that the impact of the Sputnik Crisis was to be most felt. In 1958, the U.S. Congress passed the National Defense Education Act in an effort to ensure that the highly trained individuals would be available to help America compete with the Soviet Union in scientific and technical fields.” In order to achieve this goal, the act made provisions for loans and grants to institutions of higher learning who wanted to improve their mathematics, science and foreign language programs. Of course this made perfect sense; there was no point setting up research and development bodies if there would be no trained personnel to run them.

Consequently, the National Science Foundation (NSF) was revamped and its budget drastically increased. In 1959, Congress appropriated 134 million dollars for the Foundation, almost a hundred million dollars more than the previous year. By 1968, the Foundation was receiving about half a billion dollars a year in federal funds; in fiscal 2012, the NSF had a budget of some 7 billion dollars and provides the funds for approximately 20 percent of all federally supported basic research conducted in colleges and universities throughout America. In some fields, such as mathematics and computer science, the NSF is the major provider of federal support. At all events, in the decade between 1955 and 1965, federal expenditure on research and development rose from 2.7 billion dollars to more than 15 billion dollars, as old bodies, such as the NSF, and new ones, such as NASA, competed to fund research of one kind or another.

But it was not just the government that was putting in new resources into education. The system itself was enthusiastic in its determination to take a giant leap forward, for practitioners of education in America were by no means sanguine at the thought of being left behind by their Soviet counterparts. James B Conant, a former President of Harvard University carried out a detailed two year study of American high schools with the support of the Carnegie Foundation in order to ensure that all gifted children were being properly motivated to pursue higher education; and in 1960 Harvard embarked on its biggest fund-raising up till then for the purpose of reforming its whole approach to education. The campaign raised 82.5 million dollars.

Less than a decade later subsidies went to public colleges and universities. This is the origin of well-funded systems like the University of California, and the California State system. These subsidies allowed students to attend colleges, and not go into massive debts. In fact, most students who graduated from college did so without debt or very little debt.

Compare this to the present. We are in the midst of a planetary emergency. We need people trained in the STEM fields. This is not because the Russians launched a satellite into space, or beat us into manned. No, the planet is in the midst of a crisis. And we may face extinction.

However, we are cutting educational budgets at all levels, from pre-K to graduate schools. States and the federal government have a problem finding the money. Teachers are facing pay cuts and benefit cuts across the board. The crisis is worse in some states than others, but it’s a crisis.

As a society, we decided that the market should take care of this. Why many charter schools (who can choose their student body) are financed with public funds but are run as private organizations. These schools also lack in the area of certified teachers.

It gets worst. The current administration is taking this effort to epic levels. Why? Science could impinge on the market and its instincts. The Environmental Protection Agency is preparing a new measure that will exclude science from its rulemaking. According to the New York Times:

The measure would make it more difficult to enact new clean air and water rules because many studies detailing the links between pollution and disease rely on personal health information gathered under confidentiality agreements. And, unlike a version of the proposal that surfaced in early 2018, this one could apply retroactively to public health regulations already in place.

In the final analysis, it is coming from our faith in the market, no matter what. It is also a retreat from the role of government, which is also part of the economy. Ultimately it is a product of corporate capture.

It is a rejection of the science that allowed us to clean this country’s waterways. It is part of a pattern, which also doubts the existence of the climate emergency. It is a complete surrender to the market.

So what happens when we ignore the core economy? For starters, we see increased insecurity and the costs of certain core services have gone up.

The transformation of the American economy into a market-centric system where education was commoditized happened in the last forty years. It creates not just distrust, but also insecurity. It is one of the reasons behind the precariat.

Then we have other issues that are part of this, the efforts to reduce the already paltry safety net is not just an attack on good government. It is also a direct affront to the core economy. If the elderly, for example, have no means to take care of themselves, it will have a direct effect on the rest of society. Just as we have some of the most expensive pre-K in the world, we have a safety net that is dissolving in the name of the market. This takes away from the efficiency of workers in the private sector.

The inequality in pre-k also keeps poor parents at home, or children are placed with relatives. While children of well to do parents go to schools that could cost as much as college. This deepens inequality and handicaps most. This is problematic because those children show up to school not ready to learn. They already are attending substandard schools. This is a cost we all pay. It is also an early indicator of the school to prison pipeline.

We also see this with health care. We have the most expensive, least efficient system in the world. People stay at a job to keep their insurance, as good or bad as it may be. People fear to go to the hospital, because there will be a bill to pay, and perhaps lose all they have worked for in their lives. This makes society sicker and less able to function. Some in the market charging as much as they can get away with, and lobbying politicians to prevent them from imposing measures that would slow down, or reverse trends. They include things like a maximum price for drugs, or being able to negotiate for lower costs on all services.

We have monetized and put in the hands of the market higher education, healthcare, basic research. We forgot that our success in the 1950s and 60s came from a heavy investment in these areas by the government. No, the private sector did not build the internet, which you are using right now to read this piece. That was the Department of Defense. Granted, ARPANET came from a need to survive a first, even second nuclear strike. But it is the origin of the internet and the information economy.

Nor did the GPS system we all use came from the private sector. In fact, it is still a military system that we civilians use. It was the government that invested in the basic science and technology needed to develop this. Many of the medicines we use today started with basic research at the National Institutes of Health. It was not the private sector that did that, so when we are told by the industry that it costs a lot of money to bring new medicines and procedures to market, they are correct, but a lot of it came from the taxpayer.

Over the last few decades, our investment in basic research has gone down. These are the trends:

For the first time in the post–World War II era, the federal government no longer funds a majority of the basic research carried out in the United States. Data from ongoing surveys by the National Science Foundation (NSF) show that federal agencies provided only 44% of the $86 billion spent on basic research in 2015. The federal share, which topped 70% throughout the 1960s and ’70s, stood at 61% as recently as 2004 before falling below 50% in 2013.

The sharp drop in recent years is the result of two contrasting trends — a flattening of federal spending on basic research over the past decade and a significant rise in corporate funding of fundamental science since 2012. The first is a familiar story to most academic scientists, who face stiffening competition for federal grants.

This rise is coming from the pharmaceutical industry. It is not just because they can get great profits from new drugs. But they can impose intellectual property rights on these, avoiding the need to share. This makes medicines that much more expensive for much longer.

When combined with a lack of price controls in the United States this makes it a very good business. And we are seeing it with old drugs, such as insulin. Small changes in the drug allow them to patent the drug anew. This is one reason insulin continues to rise in cost. Also, things like the Epipen, originally developed by DoD scientists to treat troops during a chemical attack, have gone into the stratosphere when it comes to price.

When Americans say that this is capitalism gone astray, they have a point. This is a system where the regulatory bodies were captured. It is also a system where profit is put ahead of human life affecting all spheres. In particular the core, or household economy.

Basic services are not there. Labor rights are under attack. Ultimately, because of this, the planet is under attack. However, some people are getting insanely rich. This will have negative effects on the overall economy, as well as political stability.

Yes, when Senator Elizabeth Warren or Bernie Sanders raised the issue of a wealth tax, this is partially what they are addressing. We need to rebalance our economy in ways that will redistribute wealth. But that will also strengthen the role of government and re-regulate industries towards the common good and away from pure profit-making. We also need deep investment in green economies, meaning that subsidies to mature industries (the fossil fuel industry) will need to go to the green industries we need to survive as a species.

This is precisely why those who benefited greatly from the centrality of the market above all else are not happy. If you made a few billion under the current system, higher taxation may cut your wealth growth curve. It will not stop under either model but will slow it down.

Think about this. How many cars, planes and homes can you own? How much material stuff can you acquire? Psychologists have found that people who are extremely wealthy have distorted views.

Several studies have shown that wealth may be at odds with empathy and compassion. Research published in the journal Psychological Science found that people of lower economic status were better at reading others’ facial expressions — an important marker of empathy — than wealthier people.

A lot of what we see is a baseline orientation for the lower class to be more empathetic and the upper class to be less [so],” study co-author Michael Kraus told Time. Lower-class environments are much different from upper-class environments. Lower-class individuals have to respond chronically to a number of vulnerabilities and social threats. You really need to depend on others so they will tell you if a social threat or opportunity is coming, and that makes you more perceptive of emotions.”

They may also develop an addiction to accumulating more money, which is a problem. One reason why they may feel threatened by a wealth tax. It will reduce the speed at which they get that money. Why they will fight against this. Maybe even, run for office themselves.

We need to recalibrate and re-regulate the economy to make it work better. And by regulation I mean change how it works. Not just who is regulated. But we also need to expand government investment in public services, including education and healthcare. Chiefly, we must move away from the market as the only way to run the economy.

One Response to “We Need to Move Away from Neoliberalism”

  1. Cerberus Says:

    The Father of Capitalism, Adam Smith who wrote the book “The Wealth of Nations” recommended not to have unbridled Capitalism. He suggested that all Essential Services be under govt control.  In the present day, unscrupulous corporations must be prevented by Law from running amok even at the expense of the society to make money for themselves even in the area of Essential Services.  We can see a good example of it in some powerful countries where they are removing important environmental controls, important safety nets for the disabled and weaker sections of the people, and allowing the capitalist market place take care of everything.  Of course, caring does not happen from the capitalist market place.  In one country, they passed a law that says that money is the same as speech and corporations have personhood. The other extreme where the State Controls everything is equally bad and leads to Fascism.

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