Saturday, October 17, 2015

Economists exposing the disasters of market fundamentalism (neoliberalism)

All around us is evidence that market fundamentalist (neoliberal) policies and practices  are a disastrous failure for the bulk of the population, whilst enriching the corporate, business and political elite and the top 20% of the population.

We everyday, ordinary people know this and see it everyday.

So we should value the work of contrarian economists and economic commentators in this country, like Bill Mitchell, John Quiggin, Richard Dennis, John Passant, Ben Spies- Butcher and Frank Stilwell, to name just a few, who provide the intellectual and policy evidence to expose the myths and fallacies of the neoliberal world view, propagated by most economists, that dominates economic policy making, the business world, politics, public policy and media commentary.
What they provide are analytical frameworks and ways to critique and speak out against market fundamentalism in all its forms.

This week John Quiggin wrote of the disastrous failure of the belief that private for-profit corporations and business can do a better job of providing a variety of services previously provided by the public and not-for-profit sector.

Quiggin notes the failure of market based neoliberal processes such as privatisation, competitive tendering, contracting, public-private partnerships and greater for-profit provision in sectors such as health, education, water, electricity, telecommunications and social services.

Quiggin challenges the claim that these processes are good for the public and calls for a fundamental reassessment of the market based reform being imposed by Federal and State Governments.
Quiggin cites the case of for-profit and corporate delivery of education and training, which has been a disastrous failure wherever it has been tried. He cites three examples:
  • US reports that for-profit universities continue to receive millions of dollars in public funds despite a sustained track record of fraud and failure.
  • the growing body of evidence here in Australia of rampant abuse, gouging of fees, unlawful behaviour, accelerating costs and doubling of debt as a result of the market based reforms of Australia's vocational education and training sector, in which corporations and private firms have become major providers of publicly funded vocational education with access to the publicly funded FEE-HELP scheme.
  • Growing evidence from Sweden (the poster child of for-profit education) that the sector is now in a state of crises with declining performance and growing inequality.
Bill Mitchell writes a daily blog, Billy Blog, in which he demolishes the fallacies, idiocy and deceit of the global and Australian neoliberal order.
This week he described the disastrous state of the teenage employment market under neoliberal policy, in which the actual level of teenage unemployment is likely to be close to 30% (or higher), than the 18% figure cited by Governments. 
In a recent piece The neoliberal wages scandal, Mitchell writes about the scandal of low wages growth. He notes that one of the defining characteristics of the neoliberal era has been the real divergence between real wages growth and productivity growth, as shown in Mitchell's graph showing movements in real wages and GDP per hour worked since 1971 in Australia
Mitchell contends this has been deliberately engineered by pro-business governments and policy makers who impose policy initiatives that allow corporations, business, investors and capital to gain a greater share of national income to build a 'booty' that is then pumped into deregulated financial markets and siphoned off to allow executives and managers to take their obscenely high salaries and pay packages. Mitchell says the dynamics unleashed by these distributional shifts helped cause the Global Financial Crisis.
John Passant's blog En Passant provides a radical leftist analysis of  economic and public policy matters, particularly taxation policy, tax evasion and tax avoidance by the rich and corporate Australia. John Passant is a former Assistant Commissioner of the Australian Taxation Office.
This week he has published a letter to the Age, this piece in the Canberra Times and a blog piece about Prime Minister' Turnbull's investments in the Cayman Islands tax haven.
Richard Denniss's work appears in the mainstream press and on the website of The Australian Institute where he is currently the Chief Economist (after previously being the Executive Director).

Ben Spies Butcher's work focuses on the impact of neoliberalism in social policy, social welfare and civil society. He argues that Australia is  in the vanguard of introducing neoliberal social and welfare policy that has produced a dual or hidden welfare state which includes an increasingly marketised public welfare state (public funding and provision of welfare through income support, Medicare, pensions, unemployment benefits and support), as well as growing private welfare state involving the private provision of welfare funded by public money (the hidden welfare state).
This private welfare state benefits the affluent, the well off and the wealthy and includes tax related expenditure, and public subsidies and benefits such as superannuation concessions, private health insurance concessions, childcare funding, housing benefits (such as exemption on capital gains and negative gearing).
This private or hidden welfare state encourages private purchasing in the private market and subsidises private and corporate welfare providers.
The private welfare state creates new constituents of powerful corporate providers and affluent customers. It is also expensive, regressive and growing and entrenches inequality. It is also protected by Governments from the sort of cuts, austerity and reform imposed on the public welfare state.

Frank Stilwell is Emeritus Professor at the Department of Political Economy at the University of Sydney and has been responsible for the development of radical political economics in Australia, as well as the excellent Journal of Australian Political Economy.

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