Neolibealism: tax cuts for the rich, cuts in services to the poor, deregulation of banks and corporations, selling of public revenue producing assets to private profit-seeking corporations. The rich get richer, the poor get poorer as public funds are transferred to private pockets. And, of course, since Reagan dismantled the private union movement, union strength has resided in unions of government workers. When airports and parks are sold to private parties, that is also a way to dismantle public unions and create an economy in which labor has no voice at all. Neoliberalism, then, is the class war of capital on labor, which is another way of creating inequality and robbing labor of its fruits. The rise and fall of the American middle class has been a study in how unions have lifted the working class and how the destruction of unions has hollowed the middle class out, leading to an uberclass of unprecendented wealth and a growing population of the working poor who do not even make enough to survive without government aid, which Trump's budget is cutting back. Less food, less healthcare for the poor and working class, less SNAP, less Medicaid.....to pay for tax cuts to the wealthiest Americans. Neoliberlism as a moral document, then, is about siphoning the fruits of labor to those who own the means of production and taking control of government in order to hand over what assets and revenue producing entities the government owns...to private corporations for the sake of concentrating wealth in fewer and fewer hands.
The argument that rationalizes this transfer of public wealth to private hands is that the private sector is more efficient, and yet private health insurance has an overhead of 12-15% while Medicare and Medicaid handle even more clients for less than 2% overhead.
The message is clear: making public services private and for profit introduces great inefficiencies, since the goal goes from providing service at the lowest cost to providing service at the highest cost to reward the managing class and investors. Even Adam Smith opposed privatizing roads and bridges because it would lead, given the monopoly position of most infrastructure, to cutting corners and maximizing profits by reducing maintenance.
"The tolls for the maintenance of a high road cannot with any safety be made the property of private persons. A high road, though entirely neglected, does not become altogether impassable, though a canal does. The proprietors of the tolls upon a high road, therefore, might neglect altogether the repair of the road, and yet continue to levy very nearly the same tolls. It is proper, therefore, that the tolls for the maintenance of such a work should be put under the management of commissioners or trustees[ Adam Smith
That is the current meaning of this term, but let us look at its odd history.
Ironically the term neoliberalism as first used referred to a regulated capitalist system, as opposed to laissez faire classical economics. It once had a leftish lean...but that all changed with Thatcher and Reagan, who promoted policies that increased inequality, cut spending on the poor, and enacted huge tax cuts for the rich. This was the twin ideology of privatization, whereby public assets were transferred to private entities and the huge tax cuts which provided the funds to buy these assets at bargain prices were financed by cuts to services to the poor.
This was the famous trickle down theory: cut funding for the needy and funnel to the rich and let it trickle back down. In fact, it did not trickle but gravitated to other faster growing economies in foreign nations, funded luxury lifestyles, was used to boost stock prices by buy backs, creating new wealth without creating new value.
We can summarize from the historical examples of free market reform and neoliberal ideology: neoliberalism is class warfare; it uses both legislation and tax reforms to siphon more money to the rich while funding it by cutting services to the poor. Foodstamps are cut to allow budgets to pay for tax cuts to the rich.
Neoliberalism, in its simplest form, is a way to create more inequality by transferring public funds intended for the needy to the rich. It is, from a moral perspective, robbing the poor to gift the rich. In recent, history, both parties have engaged in neoliberal policies, from Reagan, whose tax cuts caused such deficits that he was compelled to triple the debt, for which we will be paying forever. His claim, repeated when Bush II cut taxes, was that it would boost
economic activity and thus produce not less but more revenue. Had this been true , Reagan would not have had to raise the debt ceiling 11 time and triple the debt; in Bush II's case, where again he claimed that cutting taxes would increase revenue, ti led to a doubling of the debt (from 5.8 when his first budget went into effect to 12.6 trillion when his last budget ended in 2009) and the Great Recession, during which, in two years, 8 million jobs were lost government revenue sank as government overhead (for unemployment, Medicaid, and SNAP skyrocketed.
And now the Trump budget is based on the same template: huge tax cuts for the rich, cutting social services for the poor, increasing military spending, and claiming that all this will cause such economic growth that it will increase revenue and more than pay for itself.
A recent 65 year study showed that in the US, our most sustained economic growth has been during times of high tax rates on the rich (up to 90% during the Golden Age from 1950 to 1975) and that tax cuts to the rich (with a few bones for the middle class) have led to economic decline for most people. Since 1989 median wages for all jobs (full and parttime) has declined by 40% and the rich have tripled their incomes and wealth. Since 1999, household income has fallen, coinciding with lower tax rates. Why does Trump think this time that tax cuts to the rich (his plan will save middle income families about $400 a year and millionaires hundreds of thousands; it will save Trump millions) will result i different results? "Insanity is doing the same thing over and over and expecting different results," said Albert Einstein.
Trump's budget will balance the budget by 1) cutting government spending on programs for the poor and cutting back funding for the Department of State and the EPA and 2) cutting taxes, mostly for the rich. This, program, which is exactly what Reagan and Bush did (the two Presidents who most increased the size of government and national debt) is expected to produce the opposite results. This is, of course madness, and it will fail because it will create 1) a decline in government revenue 2) a consumption deficit leading to less economic activity as 3) corporation which will their top tax rates drop from 35% to 15% will use the savings to boost stock prices (and thereby enrich the managers whose pay is mostly stock options) through buybacks and mergers and acquisitions, all without boosting productivity.
This dynamic describes a Ponzi scheme in which wealth is created at the top not by increasing productive capacity but by draining it from the poor. In order to sustain this neoliberal project, more and more services must be cut to funnel more and ore wealth upward.
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