Death of Neo-Liberalism

[Jovial Monk]

The ETs will redistribute wealth. This is necessary as Howard did not offer anywhere near enough compensation for the GST. People without money cannot buy things.

Certain things went very wrong, esp with the regulators. Growth of protectionism must not be allowed!

[Jovial Monk]

More from Peter Martin:

(Lieberals better not look )


http://www.petermartin.blogspot.com/200 ... worse.html

[boxy]

Yes, yes, Frog... Lib vs. Lab... Dem vs. Rep.

Face it, they're one in the same, with minor leanings to the left or the right.

This may well force a shift in both towards the left.

[AiA in Atlanta]

It is a politically astute move by Rudd to lay the blame of a global financial crises on the opposing party and attempt to make one immune from criticism by saying any policy is reform of a failed system, but it is rather dishonest.

Rudd's own party set Australia on a more Neo Liberal economic path, remember Keating? Keathing the man who was in many respects far more of a true Neo Liberal than Howard. Howard was more of a pragmatist nationalist often bucking Neo Liberal economic orthodoxy, such as his insistence on keeping the PBS out of the FTA with the US or his middleclass welfare initiatives, all of which any Neo Liberal economist would balk at and some of which Keating criticized.

It is relatively the same in the US (though their economy was far more Neo Liberal in reality), Obama is attempting to portray himself and his party has the reforming force for economic change, but it was his party that largely put America on a no holes barred Neo Liberal path under Bill Clinton. Clinton removed the restrictions against merging banking with investment banking and allowed that industry to create all sorts of ties and new products between the housing market and financial products, even linking to derivatives.

Clinton pushed NAFTA and a very aggressive Neo Liberal economic agenda in Latin America as well, much of the populist backlash, the Chavez Morales effect is to some degree in response to Clinton’s policies of deregulation advocacy and privatization.

And now most of those Clinton economic advisors are Obama's advisors, Summers, Rubin for instance.

The fact of the matter is most parties of center left and right have been advocating some form of Neo Liberal economics since the 90s.

The real question is what will the economic reforms look like? Will they be new, innovatory, addressing not only the need for regulation and short term stimulus but also the fact both Australia and America have little manufacturing capacity and poor trade balances, that both countries are almost totally consumption economies, (with the exception of the Australian resource sector).Will the reforms invest in future economic capacity and innovation, or will they just pass huge and conventional spending programs that simply redistribute wealth rather than create wealth as is typical with old Left economic philosophy?

Clinton did what you said Frogen but I argue that Clinton was simply carrying out what Reagan had put into motion. It is THAT era that has ended.

[Jovial Monk]

"his insistence on keeping the PBS out of the FTA"

Wasn't that Latham?

[JW Frogen]

Clinton did what you said Frogen but I argue that Clinton was simply carrying out what Reagan had put into motion. It is THAT era that has ended.

The US it started with Nixon (who was indifferent to economics so ceded economic policy to his advisors), Keynsianism was God but the hyperinflation combined with rising interest rates saw Nixon’s economic team start to move to Neo Liberal, or the ideas of Friedman, such as floating the US currency and starting to deregulate stock markets.

Carter’s complete economic failure allowed Reagan to really move the process but he concentrated more on tax cuts and putting money back into private sector investment than he did financial deregulation, (indeed he re-regulated the Savings and Loan industry), no one did more to deregulate the economy than Clinton (NAFTA and an entire range of financial deregulation) who also aggressively pushed the process globally through influence on the IMF and World Bank, in particular in Russia and Latin America.

The question is what is replacing it, old, failed Keynesian ideas or something new and pragmatic.

Obama’s first stimulus package seems to be more of the former than the latter.

Strange, given that most of his economic team helped create the crises under Clinton.

[JW Frogen]

Yes, yes, Frog... Lib vs. Lab... Dem vs. Rep.

Face it, they're one in the same, with minor leanings to the left or the right.

This may well force a shift in both towards the left.

I am simply explaining who did what, it is Rudd and Obama trying to frame it as a problem created solely by Liberals and Republicans that will be cured by Labor and Democrats.

[AiA in Atlanta]

Clinton did what you said Frogen but I argue that Clinton was simply carrying out what Reagan had put into motion. It is THAT era that has ended.

The US it started with Nixon (who was indifferent to economics so ceded economic policy to his advisors), Keynsianism was God but the hyperinflation combined with rising interest rates saw Nixon’s economic team start to move to Neo Liberal, or the ideas of Friedman, such as floating the US currency and starting to deregulate stock markets.

Carter’s complete economic failure allowed Reagan to really move the process but he concentrated more on tax cuts and putting money back into private sector investment than he did financial deregulation, (indeed he re-regulated the Savings and Loan industry), no one did more to deregulate the economy than Clinton (NAFTA and an entire range of financial deregulation) who also aggressively pushed the process globally through influence on the IMF and World Bank, in particular in Russia and Latin America.

The question is what is replacing it, old, failed Keynesian ideas or something new and pragmatic.

Obama’s first stimulus package seems to be more of the former than the latter.

Strange, given that most of his economic team helped create the crises under Clinton.

A couple of things come to mind. American politicans a few decades ago interpreted Keynesianism to mean spend spend spend without regard to anything else which leads to another point. There are those that say Keynesianism has never been fully tried out, that FDR did all sorts of things that Keynes opposed and said wouldn't work. Then came WW2 and FDR started to spend even more money, forced actually, which is what Keynes wanted saying FDR never spent enough.

[JW Frogen]

Good point but the problem is if one spends too much they are sacrificing all future growth to service future debt and so the economic bump is short term. (Japan 90s).

With World War two much of the spending went toward simulating industrial demand, (it was actual investment in future private sector capacity), tax money sent to the private sector to produce military capacity, after WW2 Europe was devastated and the US had huge industrial capacity to rebuild it and create new products, so the US could fund the spending, but the US does not have such industrial capacity now, nor any economic sector large enough to create wealth (redistribution is not creating an economy or growth it is simply moving it( in ratio to fund the amount of spending Keynes would advocate.

[mantra.]

"his insistence on keeping the PBS out of the FTA"

Wasn't that Latham?

Yes it was - but only in part. Howard did a dud FTA deal with the US and even a couple of years ago we were approx. $15 billion in debt to them. Obama looks as though he is thinking of renigging - which in the long term may not be a bad thing as long as it works both ways.

The Rudd Government is not commenting directly on the protectionist threat until the Obama stimulus package is finalised, but a spokesman for Kevin Rudd said Australia expected the US to be mindful of its international trade obligations, including under our bilateral free trade agreement.

Business organisations said it ran counter to the commitments made by the US to the meeting of G20 nations held in Washington in November.

http://www.theaustralian.news.com.au/st ... 01,00.html

Rudd is quite right when he states we need a new world order. The IMF and World Bank are majority owned by nations with other agendas who have no interest in Australia. We have only a 1.5% share in the world bank, which helps us a little, but is usually detrimental to our interests. I still haven't found out which country has the majority interest - but it would have to be a toss up between Israel and the US.

Under the Rudd government Australia is managing the economy - yet we have the IMF making statements such as the following - and you have to wonder why they are making these global declarations? Is it Rudd's threat of an end to extreme capitalism and the neo-conservative ideology?

The unpublished IMF forecasts for Australia suggest that the recession will be drawn out, with economic growth predicted to recover by a weak 1.75 pc in 2010.

The Australian revealed last week that the IMF was due to revise down its 1.8 pc forecast for Australian gross domestic product growth in 2009 to close to zero.

Confirmation that the economy will go backwards this year suggests unemployment could rise steeply.

http://www.theaustralian.news.com.au/st ... 01,00.html