How Milton Friedman's Neo-Liberalism Destroyed the Economy of the US and the UK
The Beginnings of Neo-Liberalism...
Somewhere around 1966/7, my late father came back from his business one day and explained to me that laws involving business practice had changed, and that it would have a disastrous effect on his business. He explained to me business need no longer sell goods according to the price set by wholesalers, but that they could now sell at whatever price they preferred.
This would mean that businesses with more capital could bankrupt their competition through the practice of selling goods at less than cost. It would result in small business with little capital to sustain themselves eventually going out of business if they could not compete. As a consequence, within a few short decades, there was little competition in most product lines. Wal-Mart bankrupted tens of thousands of small businesses as a result of this policy.
Thus came my introduction to Chicago economist, Milton Friedman’s Neo-Liberalism, initially proposed by American/Austrian ecoonomist, Ludwig von Mises. The 'free market' would rule all.
A Brief History of Democratic Socialism and Progressivism
The incredible prosperity of the 50s and 60s had its roots in the early progressivism of the late 19th century and the 20th century. Those movements came about as a result of the rise of the robber barons. The robber barons became incredibly rich as a result of wage slavery and the long, inhumane hours that they enforced on their workers. By the 50s and 60s, strong unions prevented the abuse and underpayment of labour. A strong middle class was born.
In addition, the progressivism politics (democratic socialism) ensured that government provided excellent services and a strong safety net for those who needed social welfare during times of difficulty.
High taxes prevented the rise of more robber barons, and this money was used for the betterment of we-the-people.
Business was seen as a social good.
Milton Friedman was a Chicago economist who said that business was more efficient than government in running services for the people and that by taxing business as high as government did, it prevented business from expanding. He maintained that lower taxes with less regulation, plus the removal of power from the unions, would result in more business, and more business would result in greater prosperity and better jobs for everybody.
Ronald Reagan, the president of the USA, and Margaret Thatcher, the Prime Minister of the United Kingdom believed Milton Friedman’s doctrine, and they both set about lowering taxes for the rich. This, in turn, meant less funds for the State, so consequently, government needed to cut down on various services. Free, or relatively cheap education, was a thing of the past. From energy, through communications and postal services, to public transport – all took a hit. Over a period of 30 years, this trend continued until the middle class started disappearing as a result of services becoming more and more expensive through privatization. More people sunk into debt as a result of less and less pay and pricier goods everywhere. Student debt reached oppressive heights and became a life-long burden. The Unions were thrashed and much of their power was removed.
So Why Didn’t Neo Liberalism Work?
- The aim of business is not automatically benevolent. Benevolence was forced on business by progressive and democratic socialist governments. In the 50s and 60s socialism was not a dirty word. Ask anyone who is older than 70.
- The aim of business is profit for the owners. Owners do not automatically expand business and ‘create jobs’ because they feel it is their duty. They only do that if they see the opportunity to make even more money. If they do not see the opportunity to make more money, or if they are perfectly happy with the amount of money they are already generating, they do not invest in setting up more business and generating jobs. It can also be argued that, currently, with the advent of intelligent robots, it is cheaper to buy a robot than hire a human being.
- Business is not better than government at managing services. Certainly, they may cut costs, but they do so at the expense of safety for workers and the public who are using the services. Nor do the services become less expensive to those using them. The opposite occurs. Because the motive of business is profit, services become more expensive.
- Removing regulations from business may well result in higher profits for business. However, as we have already established, higher profits for business do not necessarily mean better paid (or more) jobs for the workers. It does, however, result in toxic rivers, wage slavery, over-production of needless goods resulting in massive advertising (brainwashing) of the general public, and overflowing landfills. It results in plastic filled seas and climate changing consumerism.
- Limiting taxes on the very wealthy and big business has resulted in extreme differences between .01% of the population and everybody else. Throughout history, this scenario has led to revolution and class war (populism). Both the French Revolution and the Russian Revolution were the result of extreme differences between the rich and the poor. Billionaire Nick Hanauer has warned his fellow billionaires that the reckoning is coming in his article “The Pitchforks are Coming.” Olivia Huffington, founder of Huffington Post has spoken about this outcome on radio.
Margaret Thatcher, once loved for her Falkland Island Victories, is now loathed for her destruction of the welfare state.
The Historical Writer's Association named Margaret Thatcher the worst prime minister in a century with David Cameron coming in second.
For the past thirty years, there has been a concerted effort in both the United Kingdom and the United States of America to discredit Progressivism and Democratic Socialism. In reality, the world was a much happier and more prosperous place for most people when it existed. While there has been an increase in civil liberties in terms of gay marriage, abortion being accepted, etc. none of these factors intrinsically affect the wealth of those who are now rolling in it.
Advertising, which is nothing more than soft brainwashing and indoctrination, has assured people that they will be happier if they buy this and that. Public relations and spin has consistently discredited the victims of this inhumane economic system. They have been called lazy, no-goods, a drain on the government, and losers.
Do you agree with Nick Hanauer that the pitchforks are coming?
Margaret Thatcher and Ronald Reagan were the first political leaders to implement the tenets of this inhumane economic system. Subsequent governments have carried on implementing what they started. However, without sufficient resources to live, the average human lives a stressful, horrendous life, and that has been the outcome of Milton Friedman’s neo-liberalism.
Business has now amassed such power that in both the United Kingdom and the United States, business influences the outcome of government policy. This has seen an even higher increase in prosperity and profits for these big businesses. They have become international power houses at the expense of small countries and have ruined the lives of large numbers of people in their own countries.
This is increasingly leading to the power of a few over the many. Whether you wish to call this fascism, a plutocracy, or an oligarchy is up to you. The end result is that we-the-people are now without representation, and we are - again - at a point in history where revolution once more appears to be the only answer.
© 2017 Tessa Schlesinger