Allan Alach – What Happens When Neoliberalism’s Only Got Fear Left to Sell?

As the election campaign gathers speed it has become very obvious that the parties on the right don’t have any new ideas, instead just serving up rehashed versions of previous campaigns, and instead trying to point the finger of blame at Labour.

The National Party certainly has no new ideas, hasn’t had any for many decades, and so are reduced to the tried and true polices from the past, such as ‘tax cuts’, ‘lock up the criminals’, and ‘bash the beneficiaries’.

They have no vision for a better New Zealand, other than ‘getting back to surplus.’ Actually, that’s easy, just keep collecting taxes and don’t spend any money – the trouble is that means the country will fall apart due to lack of investment.  As many economists have pointed out (Professor Steve Keen for a start), a government in surplus means sucking money out of the economy one way or another.

Works in the short term, punting the problem into the future for the next generations to solve.

There are numerous example of that already such as the failing hospital system. Re-electing a National led government will just postpone the day of reckoning by three years.

What’s the point of crowing about a surplus when the country is falling apart?

Since National are so bereft of vision and policies, they have resorted to their usual fail back of scaremongering and outright lying about Labour and Green policies.

Another economist who is very active in challenging the current neoliberal economic ideology is Emeritus Professor Richard J Murphy. His YouTube videos, and accompanying articles are very informative.

His latest video, with accompanying article. is very appropriate to the current election campaign. While he is writing about the UK, you’ll find much that applies to the current National and ACT party campaigns. 

https://www.youtube.com/watch?v=C7gCT8rO7OA

The article:

What happens when neoliberalism’s only got fear left to sell?

‘Neoliberalism promised us prosperity, security and freedom through markets. Increasingly, it is delivering insecurity instead. So what does it have left to offer? Fear. And that is it.

We are told to fear government debt. We are told to fear the bond markets. We are told governments must maintain “fiscal credibility”, even when doing so means higher taxes, weaker public services, lower living standards and fewer jobs.’

 

Sound familiar?

What about this?

‘It is about an economic ideology that treats satisfying financial markets as more important than meeting human need.’

 

All Willis has to offer is that the budget will be in surplus in a few years. That will sure keep the financial rating agencies happy – too bad if people are dying in hospital ED toilets in the meantime. 

Surely people should come before money?

The role of any government should always be focussed on improving the quality of life for everyone e.g. free medical care, free education, affordable housing, fair incomes, fair taxation, good infrastructure and so on.

Murphy continues:

‘The argument rests in part on the household analogy: the claim that governments must finance themselves in much the same way as households do. But a currency-issuing government is not a household. That misunderstanding produces profoundly damaging economic policies.’

The biggest lie we are told is the household analogy, used to convince us that we must tighten our belts.

‘In this video, I argue that neoliberalism increasingly relies upon fear because its promise of prosperity is failing. When insecurity is already widespread, however, threatening people with more insecurity eventually stops working.

We need another objective for politics: freedom from fear.

That means economic security, decent housing, worthwhile work, healthcare, security in old age and protection from climate change.

Can we build an economics that puts those things before appeasing financial markets? That is the question.’

And:

‘We will be those who are sacrificed to the new god: the market.

We’re told that governments must obey this god.

We must obey this god.

And if we don’t, the failure to comply will bring fiscal retribution upon us.’

 

Reflect on this next section every time you hear Nicola Willis crowing about her imaginary surplus in a few years.

‘But the promised rewards of this system have in fact disappeared. Real incomes are falling. We are not seeing greater prosperity. Many people cannot afford what they are encouraged to desire, and housing is beyond the reach of an increasing number of people, especially those who are younger. Parents are worrying about the prospects facing their children. They tell me they’re now worried as well, because I know people of this age who are worried about the prospects for their grandchildren. Climate change just adds another profound source of insecurity.’

 

Neoliberalism was imposed on us, without any mandate, by the 4th Labour government, and no government since then has resiled from that. Sure, a couple of Labour led governments have diluted it, but the essential structure has been left in place. The current Labour election campaign policies continue to leave neoliberalism as the operating ideology, just watered down. Why for goodness sake, are they tying themselves to restricting expenditure to a percentage of GDP?  That is a neoliberal doctrine.

‘But let’s be clear, it is now neoliberalism that is creating the fear. It promised prosperity through markets and competition. It promised that consumption would deliver fulfilment. It promised that participation would produce economic security, and those promises are visibly failing on their own terms. We are not seeing the outcomes we were promised.’

Murphy expands further on the household analogy.

‘Households need to get income or borrow before they can spend. A currency-issuing government does not need revenue before it can spend. Government creates the money it needs as it spends it and puts it into circulation. Tax then withdraws some of that money after spending has taken place. The household analogy therefore produces the wrong policy conclusions because it’s based upon the wrong analysis of the role of the government inside the economy.’

Remember this every time any politician claims we are living beyond our means.  Governments can create as much money as they like, and can use taxation to pull it back out of circulation to control inflation. That’s the basics, as I understand it, of modern monetary theory (MMT). A government does not have to collect tax before it can spend, any politician who tells you this is either ignorant or deceitful. 

Murphy writes about MMT here, with accompanying video

‘And the government also has another duty. It has the duty to protect us from those with power who would use it to exploit us. A neat government balance sheet cannot substitute for these responsibilities, but that is what those in power, people like Martin Wolf, and people who the Financial Times represents, are saying.’

 

Further:

‘We know that the market has no solution to the problems of food supply or energy supply or anything else. How can we fear market punishment in that case? The market is already failing us.

And people can increasingly see that the neoliberal system is itself the problem they’ve got to stand up to. Turning up the fear now might then just reveal the weakness of those who propose this system rather than their strength. They think they’ve got the upper hand, but the question is really: does their promotion of fear now just reveal how weak they are and how strong we might become?’

Compare this next section against the scaremongering and outright lies being produced by National during this election campaign.

‘Economic policy should not be organised around fear of financial markets. It should instead be organised around the need to supply people with housing, with good work, with healthcare and freedom in old age. We need protection from climate change, and we need protection from economic insecurity.

Politics must decide whose needs and interests it exists to serve’

We know who National serves and it is not the general public of New Zealand.