I guess the manifestation of "gasping its last breath" is "about to become President"? As much as I would like for this article to be generally true, the results of this primary season have...
And neoliberalism is gasping its last breath.
I guess the manifestation of "gasping its last breath" is "about to become President"? As much as I would like for this article to be generally true, the results of this primary season have indicated that neoliberalism will be the prevailing paradigm of the democratic party for the next 1-2 decades at least.
Look at how radically the party's platform had to change over the last 4 years in order to make this happen? You might call Biden a "neoliberal", but his current platform bears little resemblance...
Look at how radically the party's platform had to change over the last 4 years in order to make this happen?
You might call Biden a "neoliberal", but his current platform bears little resemblance to that of the Democrats who birthed it decades ago. Pretending nothing has changed in 25 years does a grave disservice to all the liberals who have worked incredibly hard at pushing the party to where it is today.
Can you, our resident seemingly pro-Biden aficionado (not saying that sarcastically; mostly I encounter you when you're actively supporting Biden), explain the reasoning behind neolibs giving...
Can you, our resident seemingly pro-Biden aficionado (not saying that sarcastically; mostly I encounter you when you're actively supporting Biden), explain the reasoning behind neolibs giving Biden "progressive credit", so to speak, just for undoing the things Trump has done? Even if they just revert us back to the status quo we were at before? That doesn't seem progressive, that just seems like putting us back where we were.
I guess I just don't understand why we're using 2016's definition of progressive as the benchmark for Biden, if we live in 2020 and the definition is now different. But I also don't think, even if...
I guess I just don't understand why we're using 2016's definition of progressive as the benchmark for Biden, if we live in 2020 and the definition is now different.
But I also don't think, even if successfully explained to me, it'd be something I'd agree with. Which is fine.
Biden's wanting to spend trillions of dollars does not make him FDR-like. Embiggening government does not make him FDR-like. It actually matters what he wants to spend that money on. The FDR...
Biden's wanting to spend trillions of dollars does not make him FDR-like. Embiggening government does not make him FDR-like. It actually matters what he wants to spend that money on. The FDR article is pure fantasy written solely to make Biden seem more palatable.
I try to look up hard facts on old politics because I often weight past programs poorly. History is often about writing narratives so the economic figures drown. I tend to overestimate how large...
Exemplary
I try to look up hard facts on old politics because I often weight past programs poorly. History is often about writing narratives so the economic figures drown.
I tend to overestimate how large old economic stimulus was, and underestimate how large modern economic stimulus has been post 2000. That could just be me.
Here's at least some context to calibrate my own understanding of the backdrop for a historical comparison.
Some facts:
The Marshall plan, US aid to 18 European countries from 1948-51 under Truman, averaged around 3 percent of GDP for one year over the total plan. (Source, pdf)
The New Deal totaled at a little above 40 billion dollars at the time (source). Part programs lasted for different lengths, it seems the average length was around five years (wikipedia)
The New deal policies were financed largely though taxes. There were small federal deficits at the time (average around 3 percent GDP per year), not huge deficit spending like in the last couple of decades. Economic stimulus post-2008 has been deficit spending.
The American Recovery and Reinvestment Act of 2009 (ARRA) was estimated to cost $787 billion when passed. The Congressional budget Office (CBO) estimates it actually cost a little nofth of $830 billion in 2009-dollars. (source, pdf). For context, the New Deal policies translate to $653 billion in 2009 dollars (population has roughly doubled in that time)
ARRA was around 6 percent of US GDP in 2008 during the more than decade long duration. The New Deal was closer to 40 percent of 1929 US GDP. (source).
Government spending (local and federal combined) peaked at above 50 percent of GDP during WWII. It peaket at less than 25 percent of GDP during The New Deal. It's been consistently higher than 40 percent since 2009 (graph)
Federal spending has been above 20 percent of GDP since 2009, running huge deficits. Federal spending doubled from around 5 percent of GDP to 10 percent of GDP during the New Deal (graph)
This doesn't lead to a clear conclusion, it's just a summary of the facts behind a historical comparison.
You're very right that it matters a ton what Government spends money on. To take an extreme example, Norway's federal government spending is comparable to US, at around 24 percent of GDP. That gets you a strong safety net there, but much less security/military spending, for example.
(My main issue with US politics isn't the level of spending, but what our tax money is being spent on. And that we're running huge deficits to let future generations foot our bill for the programs we enjoy now. If we want the spending, we should pay the taxes for that spending, imo.)
I'd argue that the most successful parts of The New Deal weren't in terms of stimulus (but the spending there did prevent a much deeper recession and sped recovery up).
I'd argue FDR's actual New Deal with the Social Security Act, all the work related acts, the Glass-Stegall Act for banking regulations, minimum wage regulations and powerful union protections to make collective bargaining possible was what changed things the most in people's regular lives.
If Biden wants to walk in the steps of FDR, that's not about spending more money and accruing larger deficits. It's about re-regulating society and reestablishing a social security net.
And cutting peacetime military spending so that money can be spent on social programs that benefit regular people instead.
It's easy to forget that FDR fought tooth and nail to slash government salaries and WWI veteran payments to reduce deficit spending in true Keynesian fashion.
To be fair, you can grow deficits indefinitely as long as your rate of growth in incomes (and, consequently, tax receipts) grows faster. Debt to GDP ratio is a much more useful metric than just...
And that we're running huge deficits to let future generations foot our bill for the programs we enjoy now. If we want the spending, we should pay the taxes for that spending, imo.
To be fair, you can grow deficits indefinitely as long as your rate of growth in incomes (and, consequently, tax receipts) grows faster. Debt to GDP ratio is a much more useful metric than just the size of the debt. But Japan's debt to GDP ratio over the past 25 years suggests there's plenty of room for even a fairly moribund economy to float fairly high levels of deficit spending.
By this logic deficit spending used to finance projects with large multiplier effects, like education or useful infrastructure (in other words, no bridges to nowhere) is nothing to worry about.
Deficit spending dedicated towards blowing up useful infrastructure elsewhere, though, is obviously not a good place to put the money. To be fair to the military spending number though, something like 30% or 40% of that money falls under operations and maintenance, a significant portion of which is just running the office buildings and providing healthcare and stuff to the personnel.
And cutting peacetime military spending so that money can be spent on social programs that benefit regular people instead.
A significant aspect of the Obama Doctrine (which Biden almost surely had a major hand in), was a long-term plan to draw down NATO and UN reliance on American military resources by building a framework for sharing the responsibility for logistics and power projection among other members of the international community. Part of the reason our military is so big and EU countries spend so little is because they rely on American military reach to achieve their global strategic objectives. The shipping lanes that make global trade possible as secured by the American Navy. The logistical capacity to move men and materiel to places like Somalia to do a humanitarian intervention rests almost entirely on the US, even as the manpower for Peacekeeping missions is mostly South Asian.
to reduce deficit spending in true Keynesian fashion.
Is this supposed to be sarcastic? Because reducing deficit spending in a downturn is the opposite of Keynesianism.
FDR is widely known as the first president to truly embrace Keynesianism. His seemingly ruthless deficit hawkery is largely forgotten. That pretty much directly led to the Roosevelt recession of...
Is this supposed to be sarcastic? Because reducing deficit spending in a downturn is the opposite of Keynesianism.
FDR is widely known as the first president to truly embrace Keynesianism.
His seemingly ruthless deficit hawkery is largely forgotten. That pretty much directly led to the Roosevelt recession of 1937. To the extent that The New Deal is lauded as this large fiscal gamechanger, FDR wasn't a leader, but had his hand forced to do the right thing after the other options had been exhausted (I'd argue).
Others mostly remember him for getting rid of the gold standard, embracing substantial deficit spending rather than following the "balanced budget"-careerists in DC at the time. This leads to people envisioning him as much more of a social democrat than I'd argue he actually was.
The whole Economic Bill of Rights of 1944 with his famous quote:
We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. ‘Necessitous men are not free men.’ People who are hungry and out of a job are the stuff of which dictatorships are made.
wasn't visionary foresight, he'd tried the other paths and they didn't work.
That's one way to look at it. Another is to say that politics is the art of the possible and FDR's strength was in making the right enemies and picking the right battles. He was pretty...
FDR wasn't a leader, but had his hand forced to do the right thing after the other options had been exhausted (I'd argue).
That's one way to look at it. Another is to say that politics is the art of the possible and FDR's strength was in making the right enemies and picking the right battles.
This leads to people envisioning him as much more of a social democrat than I'd argue he actually was.
He was pretty non-ideological in general, and focused on hiring competent people to experiment with different approaches for getting things done.
wasn't visionary foresight, he'd tried the other paths and they didn't work.
1944 was the tail end of his career (and his life). Of course he was going to have tried numerous paths before he got anywhere, but it's also well after most of the big New Deal programs got passed.
This has always irked me about change. For a miracle to happen, it seems we need to be on the brink of irreversibly failling. I have to wonder how the current political environment will affect...
The ideology that was dominant these last 40 years is dying. What will replace it? Nobody knows for sure. It’s not hard to imagine this crisis might send us down an even darker path. That rulers will use it to seize more power, restrict their populations’ freedom, and stoke the flames of racism and hatred.
But things can be different. Thanks to the hard work of countless activists and academics, networkers and agitators, we can also imagine another way. This pandemic could send us down a path of new values.
This has always irked me about change. For a miracle to happen, it seems we need to be on the brink of irreversibly failling.
The members of the Mont Pèlerin Society knew they had a long way to go. The time it takes for new ideas to prevail “is usually a generation or even more,” Hayek noted, “and that is one reason why … our present thinking seems too powerless to influence events.”
Friedman was of the same mind: “The people now running the country reflect the intellectual atmosphere of some two decades ago when they were in college.” Most people, he believed, develop their basic ideas in their teens. Which explained why “the old theories still dominate what happens in the political world”.
Crises played a central role in Friedman’s thinking. In the preface to his book Capitalism and Freedom (1982), he wrote the famous words:
“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”
The ideas that are lying around. According to Friedman, what happens in a time of crisis all depends on the groundwork that’s been laid. Then, ideas once dismissed as unrealistic or impossible might just become inevitable.
And that’s exactly what happened. During the crises of the 1970s (economic contraction, inflation, and the Opec oil embargo), the neoliberals were ready and waiting in the wings. “Together, they helped precipitate a global policy transformation,” sums up historian Angus Burgin. Conservative leaders like US president Ronald Reagan and UK prime minister Margaret Thatcher adopted Hayek and Friedman’s once-radical ideas, and in time so did their political adversaries, like Bill Clinton and Tony Blair.
I have to wonder how the current political environment will affect such change? in the 1930s divisions seemed to be mostly economical, given treating blacks as people was still 30 years away in the US. In the 70s we had Gerald Ford and Jimmy Carter and divisions in the US were mostly dealing with bitter segregationists, foreign mishaps and primaries. Now we have the Trump-McConnell GOP to topple, which have gotten to the top not with ideas but with favorable media outlets and hard to get voter ID.
"Neoliberalism" is a vague umbrella term and used in different ways. I don't think it's worth using unless you define it. And probably better to say what you mean with different words. For...
"Neoliberalism" is a vague umbrella term and used in different ways. I don't think it's worth using unless you define it. And probably better to say what you mean with different words.
For example, if you want to talk about trade then we could discuss how trade policies are changing. If you want to talk about the stock market, we could discuss how that is changing. If you want to talk about taxes then we could talk about that. Or basic income. Whatever.
Neoliberalism, along with socialism, is now an "anything I don't like" term. Plus, economic thinking hasn't really changed a lot since pre-2008. Government intervention, bailouts, etc were all...
Neoliberalism, along with socialism, is now an "anything I don't like" term.
Plus, economic thinking hasn't really changed a lot since pre-2008. Government intervention, bailouts, etc were all somewhat orthodox. If anything, the least orthodox portion is how much the Gov't propped up certain businesses. Friedman's works in monetary policy informed our 2008 response after all.
I'm curious if we will view this as the "death of neoliberalism" in favor of more left wing economics as if anything US policy is of a mixture of mainstream and right nationalist economics.
Friedman also wrote about negative income tax, which is similar to basic income. Perhaps a bigger difference in macroeconomics between then and now is the decline of monetarism since the 1990's....
Friedman also wrote about negative income tax, which is similar to basic income.
Perhaps a bigger difference in macroeconomics between then and now is the decline of monetarism since the 1990's. At the time, it was thought that the Fed could guard against inflation by controlling the money supply. But since then, the Fed hasn't found tracking the money supply to be useful for making decisions.
I guess the manifestation of "gasping its last breath" is "about to become President"? As much as I would like for this article to be generally true, the results of this primary season have indicated that neoliberalism will be the prevailing paradigm of the democratic party for the next 1-2 decades at least.
Look at how radically the party's platform had to change over the last 4 years in order to make this happen?
You might call Biden a "neoliberal", but his current platform bears little resemblance to that of the Democrats who birthed it decades ago. Pretending nothing has changed in 25 years does a grave disservice to all the liberals who have worked incredibly hard at pushing the party to where it is today.
Can you, our resident seemingly pro-Biden aficionado (not saying that sarcastically; mostly I encounter you when you're actively supporting Biden), explain the reasoning behind neolibs giving Biden "progressive credit", so to speak, just for undoing the things Trump has done? Even if they just revert us back to the status quo we were at before? That doesn't seem progressive, that just seems like putting us back where we were.
Lack of a better option maybe?
I guess I just don't understand why we're using 2016's definition of progressive as the benchmark for Biden, if we live in 2020 and the definition is now different.
But I also don't think, even if successfully explained to me, it'd be something I'd agree with. Which is fine.
Thanks for your time and insight.
Biden's wanting to spend trillions of dollars does not make him FDR-like. Embiggening government does not make him FDR-like. It actually matters what he wants to spend that money on. The FDR article is pure fantasy written solely to make Biden seem more palatable.
I try to look up hard facts on old politics because I often weight past programs poorly. History is often about writing narratives so the economic figures drown.
I tend to overestimate how large old economic stimulus was, and underestimate how large modern economic stimulus has been post 2000. That could just be me.
Here's at least some context to calibrate my own understanding of the backdrop for a historical comparison.
Some facts:
The Marshall plan, US aid to 18 European countries from 1948-51 under Truman, averaged around 3 percent of GDP for one year over the total plan. (Source, pdf)
The New Deal totaled at a little above 40 billion dollars at the time (source). Part programs lasted for different lengths, it seems the average length was around five years (wikipedia)
The New deal policies were financed largely though taxes. There were small federal deficits at the time (average around 3 percent GDP per year), not huge deficit spending like in the last couple of decades. Economic stimulus post-2008 has been deficit spending.
The American Recovery and Reinvestment Act of 2009 (ARRA) was estimated to cost $787 billion when passed. The Congressional budget Office (CBO) estimates it actually cost a little nofth of $830 billion in 2009-dollars. (source, pdf). For context, the New Deal policies translate to $653 billion in 2009 dollars (population has roughly doubled in that time)
ARRA was around 6 percent of US GDP in 2008 during the more than decade long duration. The New Deal was closer to 40 percent of 1929 US GDP. (source).
Government spending (local and federal combined) peaked at above 50 percent of GDP during WWII. It peaket at less than 25 percent of GDP during The New Deal. It's been consistently higher than 40 percent since 2009 (graph)
Federal spending has been above 20 percent of GDP since 2009, running huge deficits. Federal spending doubled from around 5 percent of GDP to 10 percent of GDP during the New Deal (graph)
This doesn't lead to a clear conclusion, it's just a summary of the facts behind a historical comparison.
You're very right that it matters a ton what Government spends money on. To take an extreme example, Norway's federal government spending is comparable to US, at around 24 percent of GDP. That gets you a strong safety net there, but much less security/military spending, for example.
(My main issue with US politics isn't the level of spending, but what our tax money is being spent on. And that we're running huge deficits to let future generations foot our bill for the programs we enjoy now. If we want the spending, we should pay the taxes for that spending, imo.)
I'd argue that the most successful parts of The New Deal weren't in terms of stimulus (but the spending there did prevent a much deeper recession and sped recovery up).
I'd argue FDR's actual New Deal with the Social Security Act, all the work related acts, the Glass-Stegall Act for banking regulations, minimum wage regulations and powerful union protections to make collective bargaining possible was what changed things the most in people's regular lives.
If Biden wants to walk in the steps of FDR, that's not about spending more money and accruing larger deficits. It's about re-regulating society and reestablishing a social security net.
And cutting peacetime military spending so that money can be spent on social programs that benefit regular people instead.
It's easy to forget that FDR fought tooth and nail to slash government salaries and WWI veteran payments to reduce deficit spending in true Keynesian fashion.
To be fair, you can grow deficits indefinitely as long as your rate of growth in incomes (and, consequently, tax receipts) grows faster. Debt to GDP ratio is a much more useful metric than just the size of the debt. But Japan's debt to GDP ratio over the past 25 years suggests there's plenty of room for even a fairly moribund economy to float fairly high levels of deficit spending.
By this logic deficit spending used to finance projects with large multiplier effects, like education or useful infrastructure (in other words, no bridges to nowhere) is nothing to worry about.
Deficit spending dedicated towards blowing up useful infrastructure elsewhere, though, is obviously not a good place to put the money. To be fair to the military spending number though, something like 30% or 40% of that money falls under operations and maintenance, a significant portion of which is just running the office buildings and providing healthcare and stuff to the personnel.
A significant aspect of the Obama Doctrine (which Biden almost surely had a major hand in), was a long-term plan to draw down NATO and UN reliance on American military resources by building a framework for sharing the responsibility for logistics and power projection among other members of the international community. Part of the reason our military is so big and EU countries spend so little is because they rely on American military reach to achieve their global strategic objectives. The shipping lanes that make global trade possible as secured by the American Navy. The logistical capacity to move men and materiel to places like Somalia to do a humanitarian intervention rests almost entirely on the US, even as the manpower for Peacekeeping missions is mostly South Asian.
Is this supposed to be sarcastic? Because reducing deficit spending in a downturn is the opposite of Keynesianism.
FDR is widely known as the first president to truly embrace Keynesianism.
His seemingly ruthless deficit hawkery is largely forgotten. That pretty much directly led to the Roosevelt recession of 1937. To the extent that The New Deal is lauded as this large fiscal gamechanger, FDR wasn't a leader, but had his hand forced to do the right thing after the other options had been exhausted (I'd argue).
Others mostly remember him for getting rid of the gold standard, embracing substantial deficit spending rather than following the "balanced budget"-careerists in DC at the time. This leads to people envisioning him as much more of a social democrat than I'd argue he actually was.
The whole Economic Bill of Rights of 1944 with his famous quote:
wasn't visionary foresight, he'd tried the other paths and they didn't work.
That's one way to look at it. Another is to say that politics is the art of the possible and FDR's strength was in making the right enemies and picking the right battles.
He was pretty non-ideological in general, and focused on hiring competent people to experiment with different approaches for getting things done.
1944 was the tail end of his career (and his life). Of course he was going to have tried numerous paths before he got anywhere, but it's also well after most of the big New Deal programs got passed.
This has always irked me about change. For a miracle to happen, it seems we need to be on the brink of irreversibly failling.
I have to wonder how the current political environment will affect such change? in the 1930s divisions seemed to be mostly economical, given treating blacks as people was still 30 years away in the US. In the 70s we had Gerald Ford and Jimmy Carter and divisions in the US were mostly dealing with bitter segregationists, foreign mishaps and primaries. Now we have the Trump-McConnell GOP to topple, which have gotten to the top not with ideas but with favorable media outlets and hard to get voter ID.
"Neoliberalism" is a vague umbrella term and used in different ways. I don't think it's worth using unless you define it. And probably better to say what you mean with different words.
For example, if you want to talk about trade then we could discuss how trade policies are changing. If you want to talk about the stock market, we could discuss how that is changing. If you want to talk about taxes then we could talk about that. Or basic income. Whatever.
Neoliberalism, along with socialism, is now an "anything I don't like" term.
Plus, economic thinking hasn't really changed a lot since pre-2008. Government intervention, bailouts, etc were all somewhat orthodox. If anything, the least orthodox portion is how much the Gov't propped up certain businesses. Friedman's works in monetary policy informed our 2008 response after all.
I'm curious if we will view this as the "death of neoliberalism" in favor of more left wing economics as if anything US policy is of a mixture of mainstream and right nationalist economics.
Friedman also wrote about negative income tax, which is similar to basic income.
Perhaps a bigger difference in macroeconomics between then and now is the decline of monetarism since the 1990's. At the time, it was thought that the Fed could guard against inflation by controlling the money supply. But since then, the Fed hasn't found tracking the money supply to be useful for making decisions.