Economic Shock Therapy for Neoliberals: Joseph Stiglitz

[appalachiablue]

- A pedestrian walks past a gas station advertising gas prices on March 25, 2022 in Los Angeles, California.
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- 'Economic Shock Therapy for Neoliberals.' Joseph Stiglitz, April 11, 2022 by Project Syndicate.

- Neoliberalism has failed yet another test and must finally be replaced by a new economic vision based on new values. -

The fallout from Russia's invasion of Ukraine has reminded us of the unforeseeable disruptions constantly confronting the global economy. We have been taught this lesson many times. No one could have predicted the September 11, 2001, terrorist attacks, and few anticipated the 2008 financial crisis, the COVID-19 pandemic, or Donald Trump's election, which resulted in the United States turning toward protectionism and nationalism. Even those who did anticipate these crises could not have said with any precision when they would occur. Each of these events has had enormous macroeconomic consequences.

The pandemic called our attention to our seemingly robust economies' lack of resilience. America, the superpower, could not even produce simple products like masks and other protective gear, let alone more sophisticated items like tests and ventilators. The crisis reinforced our understanding of economic fragility, reprising one of the lessons of the global financial crisis, when the bankruptcy of just one firm, Lehman Brothers, triggered the near-collapse of the entire global financial system. Similarly, Russian President Vladimir Putin's war in Ukraine is aggravating an already-worrisome increase in food and energy prices, with potentially severe ramifications for many developing countries and emerging markets, especially those whose debts have soared during the pandemic.

Europe, too, is acutely vulnerable, owing to its reliance on Russian gas—a resource from which major economies like Germany cannot quickly or inexpensively wean themselves. Many are rightly worried that such dependence is tempering the response to Russia's egregious actions. This particular development was foreseeable. More than 15 years ago, in Making Globalization Work, I asked, "Does each country simply accept [security] risks as part of the price we face for a more efficient global economy? Does Europe simply say that if Russia is the cheapest provider of gas, then we should buy from Russia regardless of the implications for its security…?" Unfortunately, Europe's answer was to ignore obvious dangers in the pursuit of short-run profits.

Underlying the current lack of resilience is the fundamental failure of neoliberalism and the policy framework it underpins. Markets on their own are short-sighted, and the financialization of the economy has made them even more so. They do not fully account for key risks- especially those that seem distant- even when the consequences can be enormous. Moreover, market participants know that when risks are systemic—as was the case in all the crises listed above- policymakers cannot idly stand by and watch. Precisely because markets do not account fully for such risks, there will be too little investment in resilience, and the costs to society end up being even higher. The commonly proposed solution is to "price" risk, by forcing firms to bear more of the consequences of their actions. The same logic also dictates that we price negative externalities like greenhouse-gas emissions...

- Read More, https://www.commondreams.org/views/2022/04/11/economic-shock-therapy-neoliberals
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- Joseph Eugene Stiglitz (b. Feb. 9, 1943) is an American economist, a public policy analyst, & a full professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) & the John Bates Clark Medal (1979). He is a former senior vice president & chief economist of the World Bank & is a former member & chairman of the (US president's) Council of Economic Advisers. He is known for his support of Georgist public finance theory & for his critical view of the management of globalization, of laissez-faire economists (whom he calls 'free-market fundamentalists'), & of international institutions such as the International Monetary Fund & the World Bank... https://en.wikipedia.org/wiki/Joseph_Stiglitz
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- Why Neoliberalism Needs Neofascists, Boston Review, July 19, 2021. - The neofascist assault on democracy is a last-ditch effort on the part of neoliberal capitalism to rescue itself from crisis. The only solution is a decisive retreat from globalized finance. - It has been 4 decades since neoliberal globalization began to reshape the world order. During this time, its agenda has decimated labor rights, imposed rigid limits on fiscal deficits, given massive tax breaks and bailouts to big capital, sacrificed local production for multinational supply chains, and privatized public sector assets at throwaway prices. The result today is a perverse regime defined by the free movement of capital, which moves relatively effortlessly across international borders, even as free movement of the people is ruthlessly controlled by a sharp increase in income inequality and a steady winnowing of democracy.

No matter who comes to power, no matter what promises are made before elections, the same economic policies are followed. Since capital, especially finance, can leave a country en masse at extremely short notice—precipitating an acute financial crisis if its “confidence” in a country is undermined—governments are loath to upset the status quo; they pursue policies favorable to finance capital and indeed demanded by it. The sovereignty of the people, in short, is replaced by the sovereignty of global finance and the domestic corporations integrated with it. This abridgment of democracy is usually justified by political and economic elites on the grounds that neoliberal economic policies usher in higher GDP growth...https://bostonreview.net/articles/why-neoliberalism-needs-neofascists/

[OAITW r.2.0]

1. High gas prices go up, faster EV adoption.

[Budi]

2. Commondreams won't ever write an honest piece crediting Democrats

If it says Democrats/Neoliberals/Establishment/Hillary, it will be negative focused.

[appalachiablue]

3. Supreme Court Justice Louis Brandeis:

- Louis Dembitz Brandeis (Nov. 13, 1856 – Oct. 5, 1941) was an American lawyer & associate justice on the Supreme Court of the United States from 1916 to 1939. Starting in 1890, he helped develop the "right to privacy" concept by writing a Harvard Law Review article of that title,[3] and was thereby credited by legal scholar Roscoe Pound as having accomplished "nothing less than adding a chapter to our law". He later published a book entitled Other People's Money and How the Bankers Use It, suggesting ways of curbing the power of large banks and money trusts. He fought against powerful corporations, monopolies, public corruption, and mass consumerism, all of which he felt were detrimental to American values and culture.

In 1916, President Woodrow Wilson nominated Brandeis to a seat on the Supreme Court of the United States. His nomination was bitterly contested, partly because, as Justice William O. Douglas later wrote, "Brandeis was a militant crusader for social justice whoever his opponent might be. He was dangerous not only because of his brilliance, his arithmetic, his courage. He was dangerous because he was incorruptible ... [and] the fears of the Establishment were greater because Brandeis was the first Jew to be named to the Court." On June 1, 1916, he was confirmed by the Senate by a vote of 47 to 22, to become one of the most famous and influential figures ever to serve on the high court. His opinions were, according to legal scholars, some of the "greatest defenses" of freedom of speech and the right to privacy ever written by a member of the Supreme Court... https://en.wikipedia.org/wiki/Louis_Brandeis

[BComplex]

4. That nails exactly what the has been force-fed to people of the world for the last 40 years.

And it's all wrong, and it's all lies.

[appalachiablue]

5. That's all of it and the end has to come. Let the struggle

to rebuild begin.

[modrepub]

7. Fat Tails and Black Swans

Are what this article is describing. See Nassim Nicholas Taleb for a more thorough explanation.

You can't address big government without addressing big business. Taleb is a champion of the anti-fragile; resilient systems that thrive in adversity. Generally he favors small-scale solutions. Big institutions, in his mind, are fragile and tend to disrupt the whole system.

[Beastly Boy]

8. This is beating a dead horse.

Neoliberalism as an economic policy has become increasingly irrelevant since the 1980s. It has been losing its impact and meaning throughout the Obama administration, the Trump administration and the Biden administration. The term itself has been assigned so many competing definitions, that it has become useless to describe anything with any clarity:

The term has multiple, competing definitions, and a pejorative valence.[20] English speakers have used the term since the start of the 20th century with different meanings,[21] but it became more prevalent in its current meaning in the 1960s, 1970s and 1980s, used by scholars in a wide variety of social sciences[22][23][24] as well as by critics.[25][26][27] The term is rarely used by proponents of free-market policies.[28] Some scholars reject the idea that neoliberalism is a monolithic ideology and have described the term as meaning different things to different people as neoliberalism has "mutated" into multiple, geopolitically distinct hybrids as it travelled around the world.[29][30][31] Neoliberalism shares many attributes with other concepts that have contested meanings, including representative democracy.[32]

https://en.wikipedia.org/wiki/Neoliberalism

As a derogatory label, however, it lives on. Most notably, the "neoliberal" label has been applied, and misapplied by the far left towards the center-left Democrats in the 2016 elections, contributing to the facturing of the Democratic Party and the consequent disastrous Trump presidency.

It appears that some demagogues haven't learned their lessons.

[appalachiablue]

9. Milton Friedman's vision of Libertarianism, the Chicago

School of Economics and the focus on neoclassical economics have been the main criticism yet a broad community of economists remain with use of the term neoliberal. Some however, esp. from Australia and Britain still use the term neoclassical.

- Milton Friedman was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy. With George Stigler and others, Friedman was among the intellectual leaders of the Chicago school of economics, a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago that rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics heavily based on the concept of rational expectations... https://en.wikipedia.org/wiki/Milton_Friedman

https://en.wikipedia.org/wiki/The_Shock_Doctrine

https://en.wikipedia.org/wiki/Neoclassical_economics

[Beastly Boy]

10. This illustrates one of my points.

Even within the realm of economic theories, there is no definitive consensus of what neoliberalism means. Some conflate it with neoclassical capitalism, which is significantly different from neoliberalism. Others apply the term as a driving force behind political decisions, not economic ones, that have to conduct US foreign policy. Yet others still use the term as a marker to brand their ideological opponents with.

"Neoloberal" is a label that has outlived its usefulness a long time ago to mean anything that doesn't raise questions of its accuracy.