An unlearned lesson about neoliberalism

From the Daily Kos:

In this country, the neoliberal cult of an unregulated self-correcting free market began to creep into Democratic policy-making during the Carter presidency, and it accelerated with the Clinton presidency, which Obama's has come to emulate. The problem with neoliberalism was concisely summarized by Joseph Stiglitz, in 2008:

The world has not been kind to neo-liberalism, that grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics, and the so-called “Washington Consensus” in favor of privatization, liberalization, and independent central banks focusing single-mindedly on inflation.

For a quarter-century, there has been a contest among developing countries, and the losers are clear: countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top.

A phenomenon from which the United States has not been immune, with an income gap steadily growing and now greater than ever before recorded. And as Stiglitz continued:

Neo-liberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud now hanging over the global economy.

But there was no lesson learned. The Obama economic team seriously underestimated the severity of the crisis they inherited, and were ideologically incapable of perceiving it as the transformative moment it should have been. A depression may have been averted, but a real recovery did not begin.

More here.

An even more important lesson to learn about neoliberalism, I mean, apart from the fact that it doesn't work, is that when human beings are concerned, herd mentality usually trumps logic and reasoning. Seriously. Logic isn't something that comes naturally to us. We are, after all, biological creatures who often forget that we are animals, complexly thinking animals, to be sure, but animals nonetheless. That means emotion and instinct are as strong in us as in dogs or cats or salmon or ducks. We can, with effort, overcome such biological drives in order to embrace reason on certain issues and at certain times, but we have to remain constantly vigilant such that our hopes and fears don't overpower carefully constructed and logical trains of thought.

Really, we're just like chimpanzees. And chimps have this thing called the "alpha male," the guy who's in charge, who gets the most bananas, who gets the most sex. He's the loudest, the strongest, the most aggressive. Other chimps follow his lead. It's more complicated for humans, of course, but the dynamic is essentially the same. Despite our aspiration for rationality, we usually defer to authority, whether it is reasonable or not to do so. We're also like cows and horses: if everybody else is doing something, then we should probably be doing it, too, even if it means peacefully walking into the slaughter house to meet our grisly fate.

This is the only way to understand the establishment's embrace of neoliberalism.

I mean okay, a lot of Washington fully, and cynically, understands that neoliberalim is bullshit propaganda designed to give public legitimacy to stealing from the poor and giving to the rich; I'm talking about people who honestly believe in stuff like "the free market" or that tax cuts for the rich translate into greater economic prosperity for all. That is, there is no other way to explain the doctrine's lingering hold on the establishment's imagination in the face of:

1. The recent near collapse of capitalism as a result of the wild casino-like atmosphere embraced on Wall Street after years of deregulation, which should have had the opposite effect.

2. The continuing slow collapse of the American middle class, made glaringly obvious by the necessity of two bread winners to maintain the standard of living, relative to the single earner household that typified the middle class of the 50s 60s and 70s.

3. The economic success found by South American nations that kicked out the WTO and IMF: these global banking agencies tied massive loans and bailouts to harsh neoliberal reforms that impoverished any and all nations that took the money. It was only when people like Venezuela's Hugo Chavez and others told the IMF to fuck off that the continent started to see any real sense of economic growth.

And the list just goes on and on. We've been doing the neoliberal thing for over three decades now, and it just hasn't turned out at all the way its champions insist it should have. Indeed, neoliberalsim is a scam, doing well what it is really designed to do, rob a million Peters in order to pay off one Paul. Rational people should throw neoliberalism out the window and remove from public discourse all its defenders. But they don't because human beings aren't rational.

What we need, really, is about a million chimpanzees, I mean American citizens, throwing their poop at the alpha male ruling class. If we start shoving bananas up their butts instead of docilely serving them Bananas Foster the way we do, the biological drives might do for us what logic and reason can't: force our leaders to change their herd consensus.

In other words, short of a massive popular freak out in the streets, things aren't likely to change, and no amount of argumentation, persuasion, or reason will make any difference.

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