Economists have lied to you!
Lets define what Neoliberalism is.
Neoliberalism and its policies seek to give the private sector ever more and the public sector ever less control of free market capitalism. It is an economic philosophy that tends toward privatization, deregulation, globalization, free trade, austerity, and reductions in government spending
This definition of capitalism has been massively popular with the top 1% ever since President Reagan propagated it in the 80s. It has been the driving force of the major western economies for the last four decades. This ideology has also been a major contributor to the US housing crash of 2008, the systemic destruction of the environment, the intensification of wealth inequality, the offshoring of wealth as displayed by Panama Papers (which no one talks about anymore), and even the exaggerated effects of the COVID-19 epidemic on mortality and the economy.
Why does this message resonate with the remaining population? This is because their message is to denigrate unions (to keep labor cheap), stigmatize government spending as wasteful (except for the military and construction which they make money from), lower taxes on the wealthy (because they are the source of all jobs and the government would just waste the money anyway), and deregulate business and finance (because it is just more efficient that way — in taking your money). They repeat these mantras over and over until people believe them, even economists. And that is the real problem. NO ONE knows what is neoliberalism!
To come to the point, a neoliberal economist believes that: 1) raising wages kills jobs, 2) raising taxes kills economic growth, and 3) government regulations reduce business efficiency. And all these are lies. Lets have a go at them one by one.
Lie Number One: Raising Wages Kills Jobs
Neoliberal economists postulate that the free market is in equilibrium. If you increase one element another must, necessarily, go down. If you increase wages, there must be a loss in jobs and vice versa. An common argument is made that the employer must pay more for labor. At the extreme end of the spectrum, some employers may not stay in business because they cannot afford the increased cost. Ergo, a loss of jobs. Or they will have to let go one or more employees and have the remaining take up the slack. Same result, a loss of jobs.
However, numerous industry-financed studies find that jobs tend to go down after wages go up. Independently conducted studies, curiously, find that increased wages have little to no affect on jobs though.
Why? Well, the reason is obvious. The working class people whose wages were increased, now have the money to spend on themselves and their family as they so desire. This is actually a concept pioneered by Henry Ford in 1914. when Mr. Ford doubled his employees salaries to $5 a day, twice what other car manufacturers were paying, this enabled them to go out and buy the very vehicles they were working to build. In our modern society this principle has been all but forgotten.
Lie Number Two: Raising taxes kills economic growth
Neoliberal economists don’t finish the above sentence. “Raising taxes kills economic growth of the wealthy’s accounts.” They always forget to mention that last part. And the wealthy don’t possess some superpower of job creation. There are a few geniuses like Elon Musk, Ritesh Agarwal and Vijay Shekhar Sharma who make their ideas reality on a regular basis, creating whole industries and the jobs that go with them. However, most of the 1% are one trick ponies that would rather increase their wealth by methods like buying monopolies and tax breaks or forcing the competition out of business.
We need the tax rates of the 50s and 60s. The wealthy need to start pulling their own weight again. They won’t spend enough in a market economy to help out. They can’t buy that many more shoes, cars, houses, happy meals, and lattes than the next guy. I mean they could, but they won’t. Their tax money, however, can pay for much needed infrastructure, healthcare, and education so we can really get the economy humming and let innovation hit new strides.
Lie Number Three: Government Regulations Reduce Business Efficiency
If you’ll notice, we have relaxed regulations on businesses so much over the years, but have they been nearly as efficient? This is capitalism on steroids getting wasted.
We need to bring back industry regulation on an industrial scale. No more making money off the ability to foist industrial waste onto shared public treasures like the atmosphere and natural waterways and the oceans at no expense or risk or without long term mediation plans.
Originally published at https://www.linkedin.com.