Why have Democrats embraced neoliberalism, anyway?

[JHB]

53. Consider when it began, in the 1970s...

Inflation was high, foreign competition was on the rise, computerization was beginning to have real impact on traditional trades (e.g., typesetting), etc. The New Deal framework had become creaky in places and clearly needed updating. The framework needed some modernizing, and to portions of the Democratic establishment, some degree of deregulation and privatization seemed like a more flexible structure.

Add to that the fact that relations with unions had become strained, over the Vietnam War and other things, and they were a major source of resistance about changing things.

There was also a geopolitical aspect: the economy of most ex-colony nations was resource extraction, in which most of he population was poor peasants ripe for revolutions the Soviets were happy to encourage. If they had some form of industry and a middle class dependent on it, there would be more internal stability and less volatility. Or at least, so the thinking went.

Then also consider the Democratic Party's internal structure and how it was evolving at the time. Coming off the blow-out of McGovern by Nixon, dealing with the New Left who attacked the Democratic establishment for its role in supporting the war in Vietnam, demographic shifts away from traditional centers of Democratic power, changes to the primary system to get away from the "men in a smoke-filled room" method of selecting candidates (or perception thereof), the rise of television advertising, etc.

Heap on top of that changes to what was allowed in terms of campaign financing, both from new laws and court decisions.

Those began a shift toward a more open method of choosing candidates than had been the case, with TV advertising and exposure rising in importance. Politics has always been a money game, but TV ads added rocket boosters to it, and that means more backing from wealthier donors, most of whom are ok with neoliberal changes that improve returns on their portfolio.

Enter 1980, when fifteen years of conservative efforts to pry apart the Democratic coalition come into full flower with the "Reagan Democrats" who give Reagan a blow-out win.

To avoid droning on even further, suffice to say that the intellectual climate, political math, incentives, and disincentives for charting a more "pro-business" neoliberal path outweighed the comparable factors arguing not to do so.