Fri, Jun

Tossing Neoliberalism into the Dumpster


GUEST COMMENTARY - It’s official, according to a speech by National Security Advisor Jake Sullivan, the United States is jumping off the neoliberal globalization bandwagon (a root cause of domestic extremism) and it couldn’t come soon enough as institutions of government are sucking up more and more angry exhaust fumes from constituents, as well as encountering a world trade map with China bullying its way across the world of commerce via its massive Belt and Road Initiative encircling the globe, kicking sand into Uncle Sam’s face. 

Neoliberalism is an economic philosophy of capitalism that promotes freedom of markets, very little government regulation, no price controls, low trade barriers, low-low taxes, and most importantly, reducing the role of government via austerity measures and privatization of state assets. Government social programs, like food stamps, are detested like the plague. Neoliberal-minded President Ronald Reagan famously said: “Government isn’t the solution to the problem; government is the problem.” 

Neoliberalism in harmony with globalization has dictated American policy for several decades, thanks to Reagan. However, that’s about to change as US National Security Advisor Jake Sullivan announced changes for America’s role in the world in a very significant recent speech: “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution, The White House, April 27, 2023.” 

As a backgrounder to that speech, over the past few decades America sent high-paying union jobs offshore to find the lowest common denominator wages (globalization) but it really started in earnest with Clint0n’s NAFTA deal. Back in the day Ross Perot nailed it: “You implement that NAFTA, the Mexican trade agreement, where they pay people a dollar an hour, have no health care, no retirement, no pollution controls,’ Perot said during the second presidential debate in October 1992, ‘and you’re going to hear a giant sucking sound of jobs being pulled out of this country.” (Source: Ross Perot was Ridiculed as Alarmist in 1992 but his warning turned out to be Prescient, Salon, July 21, 2019) 

America’s $15-20-35/hour union jobs that spun-off into the wilderness of NAFTA originated from today’s red states. NAFTA and expansive globalization (SE Asia & China) undercut union wages, crushing a vibrant middle class that was content to work 40-hours per week for wages that supported family, school, vacations, and a good retirement. Today, former union members are red-faced, angry, frustrated, searching for a voice to avenge decades of misery at the hands of elites that crushed middle class livelihoods. Trump’s early campaign promises beckoned interest: “The three most dangerous voices in America, academic elites, political elites, and media elites” captured the heart and soul of displaced Americans by voicing one word, “Elites.” 

The Biden administration knows this. His 2021 speech to a joint session of Congress countered Trump: “Trickle-down economics has never worked. It’s time to grow the economy from the bottom up and the middle out.” The table had been set for Biden’s trickle-down speech by four decades of neoliberal/globalization hanky-panky resulted in the biggest money gusher of all time but only for a select few (“the elites”). Meanwhile, the failure to adhere to the original promise of the American equality of opportunity dream is epitomized by billionaires taking joy rides into outer space. 

Now, after years of abuse of the blue-collar relationship, it’s finally dawned on America’s politicos that decades of neoliberalism and globalization hollowed-out the great American industrial machine whilst breaking the spirit of working people, decimating the all-important middle core of society. It’s difficult to keep a capitalistic democracy in balance when both ends of the economic spectrum are so heavily weighted, massive golden wealth on the right shooting up into outer space versus the skimping of 42 million SNAP cards barely-getting-by in survival mode on the left, with a weakened, deeply sagging middle. This clash of classes automatically breeds frustration, anger, and hatred: “Hang Pence” easily rolled off the lips of American extremist on January 6th

National security advisor Jake Sullivan was quick to itemize key categories of the old Washington Consensus that need to be addressed: (1) globalization and privatization have failed America; those are hallmarks of neoliberalism (2) challenges from China (3) challenges from climate change and inequality, as lowly job opportunities, the leftovers from neoliberalism-globalization’s search for the lowest common denominator, breeds contempt. 

More specifically: (1) the neoliberal trajectory has left a hollowed-out industrial base (2) public investment has declined because of too much emphasis on de-regulation, privatization, and trade liberalization, which defines the post-Reagan Republican mantra (3) widespread faith in “the magic of the markets” dogma to achieving success, growth, and prosperity totally backfired with too much emphasis on the “financial sector” at the expense of a “real economy” that has solid job-producing industries such as semi-conductor manufacturing and infrastructure development, two big Biden proposals. 

According to an astutely worded interpretation of Sullivan’s remarks: “The US national security establishment now argues that ‘trickle down economics’ has been a disaster that has led to ‘corporate concentration’ and ‘active measures to undermine the labor movement that initially built the American middle class.” (Source: Anuradha Chenoy, US Merges its Economics and Foreign Policy, Defend Democracy Press, May 14, 2023) 

Washington Consensus-2 has not yet been thoroughly vetted or analyzed or countered by either side of the aisle, which will be difficult because it’s equivalent to rolling back time to the good ole Fifties and Sixties when unions shone, and the middle class flexed its muscles and unions impacted politics. That’s gone. Replaced by dark money billionaires pulling the strings of today’s politicians, and judges, in favor of disassembling America’s social welfare state and weakening unions as much as possible. It's fascinating that the Federal Reserve fights inflation, in large part, based upon employment weakness or strength and rate of pay, too rapid of increases (good for labor) causes the Fed to wince and tighten credit conditions to slow down or abort high wages (bad for labor). 

The White House is a strong proponent of changing America’s character to better represent its glorious past of the Fifties/Sixties strong middle-class values. After all, the country already knows via first-hand experience that farming-out good, solid American jobs to cheaper manufacturing in SE Asia and China handed over, on a golden platter, a cat’s bird seat for China in world markets whilst building its own middle class worker bees at the expense of decimation of workers in America, far removed from a distant American past of the Fifties and Sixties when real wages doubled, and blue-collar families were proud. Biden wants that once again. 

Implicit within this new directive for revival of America, it’s likely that Biden and Sullivan have their fingers tightly crossed, hoping it’ll stem the outrageous infectious anger pitting Americans against Americans in an ugly throwback reminiscent of the dark shadows of Jim Crowism. It’s difficult to ignore the noose that swayed in the breeze on the capitol grounds on January 6th with its stern message and serving as an imprimatur for radical public violence. Ever since, all hell broke loose.


(Robert Hunziker, MA, economic history DePaul University, awarded membership in Pi Gamma Mu International Academic Honor Society in Social Sciences is a freelance writer and environmental journalist who has over 200 published articles appearing in over 50 journals, magazines, and sites worldwide.)