What is Neoliberalism, Anyway?
It increasingly looks like the cause of high construction costs in the English-speaking world is the trend of the privatization of the state since the 1980s. Instead of public planning departments, there is growing use of consultants. This trend is intensifying, for example with increasing use of design-build contracts, introduced into Canada just before costs exploded.
Q. Does this mean neoliberalism is to blame?
A. Not really.
Nearly every political and economic trend in the last 40 years in a developed country can be connected with neoliberalism. The transition in South Korea from military government to something like social democracy has been reasonably compatible with the Washington Consensus principles.
In fact, two opposite trends have both been criticized as neoliberal: the move from income support to workfare in the Clinton administration in the 1990s, but also calls from some liberals, greens, and social democrats today for basic income.
Even things that are mostly about things that are what people on the left criticize as neoliberalism are not necessarily about the privatization of the state. Any of the following agenda items can be plausibly called neoliberal:
- Privatization of state-owned enterprises like the mail, the national airline, the national railway, road maintenance, and health care.
- Reduction in top income tax rates from historic levels that were sometimes higher than 90% to something closer to today’s 50% in various rich Western countries.
- Liberalization of foreign exchange and foreign investment.
- Voucher systems for public services like schools.
- Fiscal and monetary austerity.
The key here is that none of these items is exactly privatization of planning. Germany had welfare reform in the Schröder era, Hartz IV, that SPD and the Greens don’t even like anymore. It’s had austerity budgets under Angela Merkel, and inflation has been below the 2% target. The Netherlands privatized health care. Sweden has contracted out operations of rail and many other infrastructure services.
However, the privatization of the state itself is mostly a British and American program, which has spread to other English-speaking countries through their cultural cringe. Under Macron, the most neoliberal of French leaders, Grand Paris Express staffed up as a public planning agency, rather than contracting everything out to consultants.
Even when France engages in design-build, it’s not the same as in the Anglosphere. Design-build in France means that the three teams that are typically kept separate – public planning, private design, private construction – talk to one another more regularly, still with public oversight. There is still strong civil service, and no impetus so far to privatize it or discount its advice on the American and increasingly British model.
There is neoliberalism in Japan, and in Germany, and in France, and in Scandinavia. And in none of these do we see Anglo construction costs. This matters.
Pedestrian Observations 
This doesn’t mean that neoliberalism is *good* though, just that the Anglos managed to fuck it up even worse than everyone else
? I think your comments actually prove the point about neoliberalism which is the fetishisation of market fundamentalism to the exclusion of everything else, which includes (as in the Anglosphere extreme version) the shrinking of the state. Which in turn means outsourcing everything including oversight itself which is mostly contracted out to the usual suspects of KPMG, Deloitte etc. (Extreme example is the UK’s appointment of covid test-and-trace to Deloitte & Serco and the resulting disaster and opacity.) As you have explained, the French, least of all for GPX, don’t do that and would never give such oversight or control to a private party. You are getting a bit carried away when you want to claim Macron as the most neolib French politician because that allows you to make this leap in logic that this kind of extreme outsourcing/shrinking of government therefore can’t be neoliberal. But it is.
And BTW, I don’t know anything about the privatisation of Dutch healthcare but I somehow doubt it is anything like US private healthcare with almost no government control (over costs or quality etc). Probably more like the French or Swiss systems in which a near majority or 100% (respectively) of the health systems are private but overseen by strong state regulation (effectively equivalent to single-payer system).
Also, I’m not convinced it is valid to label Macron a neoliberal. For sure he wants to see a more efficient state but no way is he a Thatcherite-Reaganite. If the media were labelling his changes to the railways and pensions etc as neoliberal then that is just wrong. Has he got any policy of privatisation? He may believe in markets and competition, eg. in the EU’s open-access rail policy but that’s a long way from privatisation. And his whole life he has had plenty of examples, from just across the ditch (or ditches, big one or small one) of how disastrous they turn out. In some ways the French set a better model when they harnessed private industry and capital to build the autoroute network (repaid with tolls) but used state resources to build the rail network and city transit etc.
Finally, everywhere has reduced the highest marginal tax rates to close to 50% (except a few Nordics and others that have it about 55% IIRC). By itself that is not neoliberalism. But crippling progressive taxation so that fewer and fewer of the wealthy have less and less of their income touched by those high marginal rates is pure neoliberalism. As is very low corporate tax rates while loading up regressive taxes like TVA, VAT, GST that hit the poor much more than the wealthy (though this is not really neoliberal and more a matter of practical collection of taxes).
France is neoliberal though and Marcon is too but it didn’t start with Macron either. Maybe not Anglo-style neolib, but definitely neoliberal.
If you look at where the biggest impact neoliberalism has had on people across the world, the labour market, before neoliberalism it wasn’t uncommon to see unemployment rates between below 2% or even below 1%. In Menzies Australia, the unemployment rate was below 2% for most of his post-war tenure, occasionally below 1%. France also had very low unemployment rates during the post-war period. Today, France has an unemployment rate of around 9% before coronavirus. So, France is definitely neoliberal in labour market management (even if there is still strict regulations for people still employed, but that’s not helpful if you don’t have a job).
Notice the unemployment rate of France before and after neoliberalism (note the first beginnings for neoliberalism across the world started during the oil shock, the 80-90s just sealed the deal): https://fred.stlouisfed.org/graph/fredgraph.png?width=880&height=440&id=LRUN74TTFRA156N
And the unemployment rates for Australia, notice the post-war period, then the neoliberal period and even today it’s not as low as it was during Menzies: https://www.rba.gov.au/publications/confs/1998/images/borland-kennedy-figure-1.gif
I personally focus on the labour market when talking about neoliberalism, the rest is just not really too relevant compared to where the main damage has been done for people and the non-labour impacts (including contracting and market deregulation) has been minor compared to labour. Austerity has an impact on labour sure, but even when there is no austerity today, the unemployment rate is still very high compared to before. When it comes to neoliberalism’s impact on what matters most to people, their jobs, all western countries are guilty including France, which is why France is not immune to populism, because it is neoliberal. Despite France not going for the Anglo-extras of neoliberalism.
@Untangled
Once again, an absurdly simplistic concept of neoliberalism. Re France most economists would claim the exact opposite. Too simplistic to discuss further.
Not to mention that the entire world had that trente glorieuse post-war growth.
OK, rereading the post and it just seems deranged, and so probably a troll.
Yeah nah, the story of the labour market is definitely part of the story of neoliberalism. Too simplistic not include it. Keep denying that labour isn’t part of the problem, you won’t fix the problem. Why did Japan, which has also fully recovered from the war and squeezed the fruits of its post-war growth like the west, have a 2.2% unemployment rate in 2019 and no widespread populism compared with the west? What’s happening in the labour market is a central part of neoliberalism.
That makes zero sense. Nobody would contest that America is among the world’s most neoliberal countries and yet it had extremely low unemployment before the pandemic. Meanwhile, the highest unemployment in the Western world tends to be in countries with unliberalized labor markets and massive public sectors–France being the most obvious example.
It would still make sense. There was still high rates of labor underutilization in America before coronavirus beyond the headline UE rate, America has also had much higher rates in the last 40 years as well compared to say Japan. And of course, Trump himself is also not really a neoliberal either, he does whatever he wants.
I linked a journal article last night but here’s another one from the same volume and issue. https://journals.sagepub.com/doi/full/10.1177/1035304618810973
The abstract has some pretty interesting comment like:
“The part played by unemployment in the rise to power of Hitler weighed on the minds of leaders in Western democracies.”
Hello Trump. I see Trump, despite all his other problems, as the first president to at least somewhat try to begin a transition away from neoliberalism even if he’s doing it incompetently. He’s not committed to the neoliberalism of Reagan. The problem, of course, is that he’s also kinda similar to Hitler in the other stuff he’s doing it.
(BTW, when talking about Hitler’s economics, it’s not strange to find praise for him among today’s economists, Ben Bernanke did it. I initially thought WTF when I first heard it and didn’t really want to hear any more crazy talk at first but I eventually decided into look anyway and Ben Bernanke’s comment on Hitler was really what drove me into looking into unemployment and neoliberalism. Yes, like you, I thought it was nonsense at first.)
“There was a determination to create a world in which large-scale unemployment was abnormal and at worst only a temporary phenomenon.”
Large-scale unemployment is now a permanent feature of today’s economy, less so under Trump compared to past presidents but still very much there compared to before especially once you add in underutilization.
“Its success depended on governments responding to any sustained increase in unemployment”
“The biggest obstacle to achieving this today is the growth of neoliberalism”
There’s nothing stopping us for going even further than what Trump has done so far once he’s out of office, but at least he’s shattered some neoliberal norms.
What do you mean? His economic policies consist of deficit-financed tax cuts for high income earners and corporations, light-touch regulation (but no attempt at formal deregulation – that only happened under Carter), political appointments of officials who will look the other way when business violates labor and environmental law, and total indifference to public health in a pandemic. Even the trade brinkmanship differs from the policies of Bush and Obama only by degree and not by kind.
“deficit-financed”. There’s the key difference. The plan under neoliberalism, including Reagan, was eventually for budget surpluses and fiscal responsibility down the line. Even if Reagan had expanded deficits, but he was still a fiscal conservative.
Trump is not pretending to be a fiscal conservative. This is a big, big, big change from Reagan, even if the other things you’ve listed haven’t changed yet. A big enough change that it more or less effectively defangs any future attacks the Republicans may make against Democrats if they decided to go for a big spending plan. Notice the big fight in the Republican party over fiscal conservatism, that’s the first sign of neoliberalism starting to die within the Republican party.
Also note that Japan’s unemployment rate, at its peak, would be considered good in the west including France. Yet, it is the worst in Japan.
If you have access to journal articles, I would also recommend just going over this one about how the abandoning of sub-2% UE rates actually happened in Australia. Spoiler, it wasn’t because the recovery was over all the sudden, but it was the start of neoliberalism. It was a similar story elsewhere. Japan managed to save itself from the worst of it though.
https://journals.sagepub.com/doi/abs/10.1177/1035304618817413
My definition of neoliberalism is activities that are consistent with the principle that governments in general and politicians in particular are poor managers (particularly in economic affairs) and that as much as is practical decision-making should be outsourced or isolated away from them. Various types of markets are usually advocated as replacements.
Personally I think there was some case for a bit of neoliberalism in the 70s and 80s but that it has been taken entirely too far in many places now, particularly in the Anglosphere. In any case neoliberalism is not a rigid program of things, it is more ephemeral than that.
The problem with this is that “markets are better than governments” as a principle can be used to argue for two opposite policies. For example, in the Clinton administration, there was a trend toward replacing welfare with workfare, on the grounds that people shouldn’t depend on the government but instead have to work. And now today you see people argue for basic income on the grounds that the government is bad at allocating social programs efficiently and instead people should get money and use it however they’d like.
And the problem with that Alon, is that that ‘bad’ scenario is of government after 4 decades of neoliberalism, ie. as desired by its adherents it is greatly depleted government. In fact the evidence over the last century is that while governments are far from perfect (and of course some are worse than others etc), they are far preferable for a nation’s welfare than giving free reign mostly to the so-called free market (no such thing of course; it becomes a market fixed to favour certain players and certain sectors). The East Asians are sometimes claimed as great success of free markets but it is the exact opposite. They (esp. Japan, S. Korea & Singapore, perhaps less so Taiwan) are strong examples of huge economic and social success by strong government. And then there is the ne plus ultra of China which again the neolibs like to claim as “their” success but at the macro level it too is strongly guided by central government and central planning, even if they let markets rip once top decisions are made. They (CPC) just made one yesterday: to become more independent of imported supplies, esp. US, in electronics, IT etc. In fact these countries are big international success stories despite the actions of global neocons because they have resisted their ministrations. OTOH if you look at those nations who have acceded, often under extreme duress, to the global neolib pressures (from IMF, World Bank) and many are basket cases. It is no accident that the former (East Asia) have managed very good responses to Covid-19 while the latter haven’t. And that the two principal proponents of neoliberalism, UK & USA, happen to be amongst the worst covid responses. Some of these poor responses are not solely attributable to government but to the social impact of decades of being told that big government is bad, no such thing as society, focus on individual interest rather than societal success etc.
“East Asia” reacted well to covid19 but not in a single way. Taiwan reacted well by closing the borders very early. Vietnam reacted well by being extremely strict about quarantining whole buildings and neighborhoods when necessary. Japan reacted well by having a population which chooses to wear masks and not talk in public, even as the government did little relative to even Western countries. What they have in common is being prepared due to their experience with SARS. Their choice of responses, though, is widely divergent.
@Eric2: “What they have in common is being prepared due to their experience with SARS. ”
I agree.
In fact I have said that many times on Alon’s blog more than 6 months ago*. Alon has never quite accepted that previous experience with SARS was a critical factor; the argument being that Japan didn’t actually get SARS but my counterargument was that they still got spooked by it and prepared. Plus the other scares of H5N1 (bird flu), H1N1 (swine flu pandemic) and most recently MERS. The last two, plus the Ebola outbreak in West Africa, happened during Obama’s term of office which is why he set up the Global Health Security and Biodefense directorate within the National Security Council, but which was closed down by John Bolton the day after Trump appointed him NSA.
BTW, I do think we complacent rich westerners have got off lightly from Covid-19. It so easily could have been much worse. So not only did it get rid of Trump (most likely, and this alone will have saved the world untold future chaos) but we now will make serious preparation for future pandemics.
…………………
*Here it is (8 months ago!):
The scepticism on the left towards UBI is not the principle of guaranteed income itself, but if it’s used to further privatise essential services and move to a user-pays free market model for them, which is what the Silicon Valley types advocate. The principle of free (i.e. tax-payer funded) provision of health, childcare, aged care, education at all levels and even basic utilities (including transit) is more favoured by the traditional left than just cutting people cheques, because it removes these areas of life out of for-profit logic, which if it is appropriate for anything is certainly not adequate for things like health and education (as the US experience empirically shows). This is also the problem people have with Piketty’s proposal to distribute capital on an “egalitarian” basis: it still keeps everyone locked into a capitalist mode of functioning. Bad choices or misfortune could still see you fall through the cracks of society in a way that a strong welfare state prevents.
Apart from that I agree with Barbarian2000 that just pointing out the differences between countries doesn’t actually exonerate neoliberalism: it is an uneven process that has manifested itself in different ways since the 1980s, and the Anglosphere has obviously embraced it a lot more fully than continental Europe (and their respective construction costs are surely not coincidental).
Macron is undoubtedly a died-in-the-wool neoliberal at heart (as his rhetoric about the “start-up economy” shows), but he is hamstrung by what he can get away with politically in France, which is not all that much even with a large parliamentary majority.
There have also been at least partial reversals of neoliberalism, most notably in South America since the early 2000s. And of course the post-2008 order has basically seen a “socialism for the rich, neoliberalism for the poor” modus operandi dominate. There won’t be any sink-or-swim free-market logic when it comes to future Lehmann Brothers situations.
There are two kinds of universal basic income. The first, favored by the American left, is enough to cover basic expenses (or at least partially in high-housing-cost areas) but keeps the existing social programs intact. The second, favored by libertarians, replaces all social programs with a flat cash allowance. The problem with that is, some people need more assistance than others, and this would wipe out that “more assistance” that disabled people need. They’re also hoping it will lower total government costs, but it can only do that if it’s less money than the existing programs, and the existing programs are already inadequate.
I didn’t explain that well. The first kind would be a net increase in assistance and extend it to everybody. Existing programs may be restrutured but the total result would be more generous than the existing system. The second kind of UBI simply liquidates the existing programs and distributes the money to everybody. That would be a loss to higher-needs people, and a further loss as it’s spread out over more people, and an additional further loss if it’s not adequately indexed to inflation (and the cost of necessities and housing are rising faster than inflation).
Bear in mind that a lot of the reason people have higher needs is, American welfare has so much red tape that anyone who needs even a little assistance has to turn being on the phone with obstructive bureaucrats into a full-time job and go on permanent disability. This isn’t about needing more money for health care or anything like that.
That is one of the strongest arguments there is for universal provision: the labour involved in administering means-tested services (both from the state’s side and from the beneficiary’s side in terms of phone calls, appointments, form-filling, etc.) is a significant drain of social resources.
Macron’s … rhetoric about the “start-up economy” shows (he is undoubtedly a died-in-the-wool neoliberal).
What? That’s kinda ridiculous, and is a odd blot on an otherwise good post. There is no objection to start-up companies even by social-democrats, and equally, support of them is not a unique or defining feature of neoliberalism. In fact that silly concept is just typical of what neoliberalism likes to claim for itself but is bunkum.
And so I remain unconvinced Macron is a neoliberal in the way I understand the term and as defined by almost everything that attempts to define the term/ideology from Wiki to David Harvey, Monbiot, Stiglitz, Rodrik et al. I’ve always thought it a glib throwaway line, even as I remain alert for the signs eg. massive privatisation of the extensive French state shares of many companies, or dismantling of the welfare system. Reform of the overgenerous pension schemes of some workers is pretty much bipartisan and long overdue and thus unrelated to neoliberalism–remember that it was policy of Hollande’s PS but he wimped out and that is what triggered Macron (briefly a member of his government) to run as independent against Republicains and Socialists both wanted but failed to bring that change over a period of two decades.
most ”social democratic” parties/policies as of today are neoliberal though, they’re completely unrecognizable from, say, Olof Palme or Red Vienna
I would agree with this that there is a strong neoliberal flair with European social democracy. Which is why I look beyond the things they kept (welfare states and not as much privatisation) and looked at the Keynesian things they abandoned that has had a massive impact on society, like abandoning managing a sub-2% unemployment rate. Keynes and old school social democrats would not approve of the unemployment rates that Europe has had for the past few decades, despite whatever Michael thinks of why present-day labour market is the way it is.
To barbarian2000: yes and this is a big part of the reason why the PS is presently polling around 4-5%, and even the SPD in Germany can barely crack 15%. These were both parties that once had a lock on about 40% of the electorate. Labour under Corbyn was an exception, both in its return to classical socialist politics and retaining a sizable electorate. But that’s been smashed and the parliamentary party is returning to the doomed approach of neoliberal technocracy (which most of its MPs never wanted to abandon in the first place).
Starmer is ahead of Boris in the polls.
And SPD is losing votes mainly to the Greens; Die Linke mostly exists as an Ostalgie party, too concerned with its historic hate of SPD to do what it needed to do to support a Steinbrück-led coalition in 2013. Nowadays you’ll find Die Linke organs defending Lukashenko.
The problem is that a lot of former socdem voters or whose demographic characteristics would make them socdem base forty years ago don’t vote anymore at all.
The greens are among the better liberal parties, but they have zero concept of class and are genetically incapable of recognizing the needs of the sub minimum wage sub sub sub contractor enslaved by Amazon…
For now Starmer leads, because he has a new car smell, and he might even be able to win an election due to fatigue with the conservatives. But it’s hard to see Labour avoiding the fate of other social-democratic parties hollowed out by centrist politics if it continues that course, even with FPTP voting (this was already the trajectory they were on before Corbyn, and is what precisely led to his election as leader).
I’m not sure what you thought Die Linke “needed to do” after the 2013 election. They were pretty happy to support an RRG coalition as they are now doing in Berlin, it was the SPD that ruled this out point blank. To their own immense detriment, since they have basically been the handmaidens to Merkel for a decade and a half now.
“doomed approach of neoliberal technocracy”
You do realize the last Labour leader to–you know–actually win was Blair, don’t you. It’s pretty clear that approach works better than whatever absurd ideas Corbyn was pushing.
the last election blair won was fifteen years ago, and the 2010 and 2015 elections both saw blairite labour party leaders lose more and more seats
Milliband in 2015 was soft left (and made a major error accepting blame for overspending) and Brown didn’t do terribly in 2010 for a party who’d been in power for 13 years.
@Matthew Hutton:
“Milliband in 2015 was soft left”
… and an Oxford PPE graduate. Talking about the topic/title of this thread!
No accident that in its desperation, part of Labour grassroots turned to an extreme opposite in Corbyn though it was totally clear that it didn’t represent any viable future (for the party or the nation should he have gained power). Interestingly, and partly by sheer accident (or exhaustion of the alternatives like the neo-Blairite, neo-libs like Milliband freres), Starmer is closer to a true third way than Blairism and is a breakout from the usual professional politician, as one of the few who have had a working life history outside politics–as a civil rights lawyer then DPP. In this regard Corbyn was one of the worst being in parliament for 30+ years and with close to zero accomplishments and unworkable throwback to the worst of Labor’s history. Starmer is actual ‘soft left’, and checkout his christian name, a nod to Labour’s deep legacy, and he does seem to represent some of that early legacy. He may be the only Labor leader in my lifetime I could actually consider voting for (in my time in the UK I usually voted for the SDP who later became the Lib-Dems but I would have abandoned them when Nick Clegg took them into coalition with Cameron, the most dumbfk thing imaginable).
Anyway, there is no getting away from the hyper-toxic effect of class in the UK. Just like in the US where Trump draws support from white non-college grads (though finally even the women in that group are turning away), ie. people voting against their own best interests essentially because they are so uninformed and/or poisoned by religion (which makes them functionally stupid), it needs a clown like Boris as leader to attract enough of the same class to vote Conservative! And of all things, to support Brexit “because” the EU is neoliberal, despite Thatcherism being the modern incarnation of it and Boris’s agenda being an unimaginable extreme version. However, commenters here should be wary because they are doing the same dumb thing: being incredibly promiscuous in their labelling of everything everywhere as ‘neoliberal’. One can find these kind of voters everywhere of course but I do think there is a difference between the Anglosphere and others–one of those big differences is Murdoch (note, no Murdoch in NZ or Canada other than bleed-thru from their bigger neighbours). Alon won’t agree but even the dumbest voters in France have something I see quite missing in the Anglosphere beyond self-interest and short-termist consumerism: values.
Just this past weekend, with another terrorist event on top of Nice and Samuel Paty killing, in Australia we see a set of conceited responses trying to tell Macron and France that they have it wrong and should adopt our brilliant version of multiculturalism. As successful as it may be, we do happen to have an idiot evangelical as PM (and before him a rabidly Catholic Jesuit nutter in Tony Abbott) so we should really tone it down. Worse, they are recommending exactly what we know you must not do to terrorism: placate them. I believe Macron is totally correct in reinforcing the laïcité which is at the core of French governance (remember, a product of centuries of vicious religious wars and its instability). Islam has the explicit goal of a theocracy replacing democracy, and not just in ‘their’ territory but everywhere especially France which is one of the few nations that practices what it preaches on keeping religion of any flavour out of governance. BTW, Alon won’t agree but there’s a reason why France has the highest Jewish population in Europe and IMO it’s exactly that its constitutional and strongly enforced laïcité brings more stability for them (yes, despite everything).
No one on this discussion has made any convincing case for Macron being neoliberal, mostly because of silly definitions but also being susceptible to silly media–especially Anglosphere media. So far it’s all been shouting Benghazi. I’m expecting Pizzagate next.
One essential thing that often gets overlooked about the neoliberal turn, but that Untangled tangentially brings up, is job market “flexibility” and the concomitant crushing of trade unions. So jobs for life are gone for most people, or even the prospect of steady full-time employment without the prospect of periodic bouts of precarious unemployment.
The pre-Covid USA sometimes had impressive looking unemployment statistics, but dig deeper and you’ll find a lot of that is people working poorly paid casual jobs with inadequate hours, because without a decent welfare state their only alternative is penury, and if they get sick they won’t even have health care to deal with it.
This is why Macron’s “start-up economy” rhetoric is not a quirk, it is essential to his entire political program, which is to dismantle France’s relatively strong labour protection laws and instead follow the Silicon Valley model of high-turnover, easy-to-hire, easy-to-fire workplace relations. Which may be tolerable if you’re a 25-year-old with a degree from Stanford, but much less so if you’re a working-class person with a family to feed.
Or they worked 80 hours a week at two or three jobs to reach the purchasing power that one minimum wage job had in the 1970s.
In 1968 the subway fare in NY was $0.20 and the minimum wage was $1.60 an hour, or eight times the amount. The subway is now $3.00. Minimum wage is somewhat less than $24 an hour.
The late sixties was the peak of the minimum wage. If I remember correctly, 80 hours a week lifted a family of four out of poverty. Just barely.
I think the end of job stability and the rise of job flexibility was somewhat inevitable based on changes to the economy. Having a job for life worked well when you had an economy dominated by government jobs and big corporations that did everything in house from janitorial/catering services to manufacturing to white collar labor. You weren’t a janitor that might work here one day and there another day. You were a Kodak or Ford janitor back then. The people who inhabited Silicon Valley seemed to have always favored more flexible work arrangements and they imposed this on the rest of us.
Job flexibility helps that everybody likes it when they have job stability but doesn’t like job stability or unions that make things seemingly harder for them. Rideshare apps were able to become big despite being flagrant law violators on their face because nobody liked the taxi companies. I’m short white man, the least threatening passenger possible and I got into fights with cab drivers when wanting to go home to a wealthy neighborhood in Brooklyn late at night because they wouldn’t get a return fare back into the city. If you were a person of color it was worse.
That is a ridiculously simplistic take. Like as if anyone, least of all a European or French leader of any stripe, expects a ‘start-up economy’ to dominate their economy. I’d say the motivation is worry about balance of trade on all that IT and electronics etc. The French political class have known for at least half a century (ie. before Macron was born!) that their predominance of big companies means a slowness in responding to changes in industry, especially those naturally fast-moving fields like electronics and IT*, and worse, that they are not ideal for fostering innovation and thinking out of the box. Macron’s attempt to shift this is nothing new.
This stuff about Macron’s “entire political program” to destroy job security etc is total bullshit and I challenge you to provide links to his official policy anywhere, and not just all the noise in media and political opponents. You’re just shouting Benghazi.
Is Macron a neoliberal? Well let’s go through the list:
Does he believe in privatising and “rationalising” government assets? – Yes (see the Spinetta proposals for the SNCF)
Does he believe in lowering taxes for business and the wealthy? – Yes (see the budgets under his presidency, which the FT described as “France’s richest gain most from Macron’s tax reforms”)
Does he believe in lowering job security for workers? – Yes (see his labour law reforms under Hollande and as president)
Does he believe in lowering barriers to international trade? – Yes
Does he believe in a low regulation environment for finance capital? – Yes
Does he entertain fantasies about the powers of unshackled free markets to deliver wealth and prosperity for all? – Yes (see virtually every speech he’s ever given about the economy)
He probably won’t do much to health care, education or even welfare, because of the resistance this would arouse, and he’s pretty scarred from the Gilets jaunes experience. But his belief system fits 100% with contemporary neoliberalism, moreso than any previous French president, including Sarkozy.
The Spinetta proposal, which was enacted, was to convert SNCF to the formal structure of a state-owned enterprise. The sort of conspiracists who also think corona is a Jewish plot may think it’s about privatizing SNCF, but the Spinetta report did not discuss privatization anywhere, nor did it propose any of what DB has been doing in the last 25 years to make it privatization-ready, like maintenance deferral. France spends way more on track maintenance per km than Germany – I think it’s inefficiency and less mechanization, not better standards – and beyond a half-page factsheet comparing SNCF and DB’s network size the report at no point points out this discrepancy as a way SNCF could save money. And this isn’t even exactly French solipsism, which exists in droves – French people are aware of Germany and think it’s a successful country, this isn’t an Asian country French people can’t find on a map.
Once again a list of what you believe but which is not referenced, or which isn’t necessarily convincingly anything to do with neoliberalism, except for exactly the context I am complaining about: calling anything vaguely market or efficiency oriented as neoliberal. It’s just twisting meaning to anything you want and has become devoid of meaning. I think the problem is that, as someone else here (Eric2?) wrote, a lot of people don’t accept what is now the standard definition of neoliberalism, and it changed considerably in the 70s and 80s to be what it is today: not just usual belief in markets (who doesn’t, except perhaps Corbyn?) is not it, but free market fundamentalism–ie. that everything must be subject to the unfettered ‘free’ market, and enabled by deregulation, and a government ‘small enough to drown in a bathtub’. The other key policies are privatisation of state entities, downgrading the welfare state and austerity in reduced government spending. A ‘pure’ form of globalisation especially in no impediments or regulation of free movement of capital (to avoid taxes) and so it is multinationals who set the rules (as in Investor State Dispute Settlement carried out in secret by industry-appointed lawyers). You’re fantasising if you think Macron believes in any of that.
A big issue is how neoliberalism fights environmentalism as in deregulation so companies can pollute, because, you know it will be self-regulating (as in companies who pollute are destined to lose market share or some such fiction) and of course against action against climate change. None of this crap is Macron or the EU. Who is leading the EU, and fighting the UK, on getting to grips with big finance and big multinationals tax avoidance strategies? France. Ditto for moderating the power of the FB-Google-Apple-Amazon cabal? Does Macron believe in human-induced climate change and have policies to combat it? The discredited Gilets Jaunes was a reaction by a tiny disgruntled minority over new environmental taxes on diesel introduced by Macron!
Again, I think you are confusing the belief in well-functioning and well-regulated markets, including international markets, with neoliberalism and economic rationalism. As someone who has lived in France for a longish time, like any country it is true that there are things that need change. The pension system is</i? overgenerous to a privileged group. The public service is too big and too pampered. The labour laws are too inflexible. France benefits a lot from international trade so of course it wants to support a well-regulated international system (just not the one American multinationals want). I believe in those changes but I absolutely am not a neoliberal. The frustration that Macron shares with quite a lot of people is that France is just a few percent of GDP away from running a much better sustainable economy (though look at the two big neolib nations of UK and USA and tell me they are remotely sustainable!).
Most of your points are vague hand-waving but your very first point is a case: Spinetta does not recommend privatisation. I don’t happen to agree with its points (closing ‘unprofitable’ lines; I’ve had long arguments with Alon about that) while at the same time no organisation can remain in aspic. And remember that it is a report to the government and we’ll have to see what they accept or reject. In fact just months ago Macron put out a policy to have rail replace all domestic flying within France. (Rail already has four times as many passenger-km than air.) Is Macron squeezing SNCF with nasty neolib austerity measures? Hardly:
Don’t forget that closing unprofitable lines was what Britain did in the 1960s, so unless we’re defining neoliberalism to cover Macmillan and Wilson, I don’t think these kinds of cuts can be called neoliberal.
@Alon.
That’s right, as misguided as some of the extreme cuts of the Beeching Report were. The neoliberal approach took another two decades under Thatcher and successors (including Blair who inherited it and didn’t stop it) who made the huge experiment of privatisation of BR.
Now the EU wants to try the experiment of open access, and I don’t agree with that either. Mostly because I think the notion of competition in rail using a common public resource is not really feasible. It is notable that the Thatcherite privatisation did not introduce competition but simply transferred a public monopoly to a private monopoly.
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I meant to comment, on df1982’s point about corporate taxes, I have come to accept that too high corporate taxes are counterproductive and part of the problem of multinationals putting in so much effort to avoid it. In fact until recently the US had the highest rate (40%) in the OECD. France also had one of the highest in the EU and its first reduction was done under Hollande but it still is >30%. However the paradox is that the only companies who pay that rate will be domestic ones not the multinationals who do the double-Dutch sandwich etc. Australia too is in the process of reducing our high rates for similar reasons, ie. no one pays those headline rates. But the critical thing is to ensure that the reduced rates (EU av. is about 22%) are actually paid by corporates. Especially in the EU (the largest free trading bloc in the world) it is important to have some kind of harmonisation on these issues to counter the multinational’s tricks aided and abetted by Dutch, Ireland, Luxembourg (luckily the UK has dealt itself out). Just like a Tobin tax needs to be EU wide (currently, IIRC, it is restricted to a core that includes France btw) and eventually may, especially as one of the biggest obstacles, the UK, is no longer able to veto such stuff.
This kind of thing does not comprise neoliberalism, which actually supports the tax evasion and is dead against any financial transaction taxes (esp. the US & UK).
Alon, there’s a reason it’s called “neo”-liberalism: because a large part of the project has been return to the laissez-faire mode of capitalism dominant in much of the capitalist world in the 19th century and early 20th century, before the rise of the welfare state and Keynesian economics. Beeching was in a way anomalous for the UK in the 1960s, primarily due to the cultural shift towards suburban car usage. You could argue it presaged Thatcherism, but equally that it was simply a continuation of the earlier mindset around railways, which were all built in the Victorian era as for-profit enterprises, and not originally intended as social services provided by the state. Pointing to Beeching in no way refutes the notion that “rationalisation” of public services is an integral part of the neoliberal playbook.*
One of the tenets of neoliberal policy is that a service should not be provided if it can’t be profitable, and if it can be profitable it is best off provided by the private sector. This was the logic of Spinetta, which as you know proposed closing large numbers of branch lines for accounting reasons, regardless of the social impact. I think it’s very credible that this was to prepare the ground for privatisation. The same kind of thing happened in Germany with plans for privatising DB, which ended up going nowhere but not for want of trying. And of course EU policy mandates open access rails which also precludes a state monopoly using cross-subsidies to maintain more lightly travelled lines (since private competitors will cherry pick the most lucrative lines).
* Although even on its own terms I think Beeching was a failure, because most of the lines that were closed were losing very little money in the grand scheme of things, and Beeching totally ignored the network effect, which also works in reverse in that if you take away a connection you also take away all the journeys that could have been made with that connection.
I think the problem is that people would have got cars anyway, especially the richer citizens who travel more. And while rail, especially high speed rail, can be competitive with driving often it isn’t.
Really branch lines need to offer service every 30 minutes, or maybe at worst hourly and need to go fast enough to be competitive with driving that typically evens out at 60km/h for short journeys and 100km/h for longer ones.
Hi Alon,
Have you considered the rise of localism to be the main factor in the rise of American transit construction costs?
Basically for property rights there’s typically either individual property rights or property rights being owned by the state (or eminent domain at least). If you’re building a railway/highway with individual property rights you’ll have to buy out the property. However, with localism you not only need to pay for the property but also pay all of the surround properties impact fees — if they neighboring areas even let you build it. This also incentives American transit agencies to overly build tunnels where unnecessary or build extra large deep bore tunnels (san jose bart extension) to avoid local concerns.
I don’t think other countries really have such strong localism or if they do, their regional government (or major city) usually has enough power to overrule the smaller cities.
I was born at the tail end of 1980, so I’m too young to know anything personally about the classic welfare state era/full employment era, roughly the period between 1945 and the late 1970s. My impression was that by the late 1970s there were some serious problems emerging in the post-WWII economy for various reasons and the Keynesian responses weren’t working that well. So that combined with a reaction against the fast social changes of the 1960s and 1970s, gave market fundamentalist/neoliberals a way in.
@Lee Ratner:
“My impression was that by the late 1970s there were some serious problems emerging in the post-WWII economy for various reasons and the Keynesian responses weren’t working that well. ”
The “problem” was simply that technical advances were reducing the need for labor. It is true that this has been made worse by globalisation, ie. jobs exported to the developing world, but it was always bound to happen. No system has been devised to cope with this ‘problem’ except theoretical considerations of a steady-state economy. UBI is a band-aid to counter the trend. Certainly neo-liberalism offers no solutions but merely the false one of laissez-faire feasibly giving a near-term increase in economic activity–but it is quite unsustainable (not least socially as we are seeing in Trump’s US and Brexit’s UK). Indeed as almost any economist will describe, by driving down pay and conditions of as many workers as possible it eventually suppresses economic activity, something even Henry Ford realised a century ago.
The impact of these inevitable advances were so much more of a shock following on from the trente glorieuse that represented post-war growth and recuperation combined with more widespread prosperity (consumerism) but it too was doomed. Its causes had nothing to do with any particular economic philosophy (Keynsianism).
The other issue, especially for the United States, is that our post-War boom was helped by a lot of other countries either being reduced to near zero because of WWII and/or embracing basket case economics. A lot of the boom was just as much about rebuilding everything that got destroyed in World War II. When the 1970s came around, the rebuilding was done and we had competition again and the basket case economies started running into real trouble.
@Lee Ratner
Yes. And the Marshall Plan and Lend Lease weren’t gifts but fed straight back into the only undamaged large industrial economy left standing in the world. One has the sense that that era is, or has, come to an end. Even having avoided another 4 years.
The other, biggest problem in the 1970s was that cheap oil had run out, OPEC controlled the oil supply, and nobody had prepared for that.
Jimmy Carter had a solution but it wasn’t adopted, and the crooks who followed Reagan seized their opportunity to start looting.
Yes, governments get blamed or rewarded for the economics of their era regardless of whether they had any role (almost never because nationwide economic effects lag policy change by years). Trump still gets credited with economic boomtimes but it is a amazing straightline from the second Obama term (so only fair Trump cops the covid recession). Governments all around the world suffered from that 70s tripling of oil price and the world recession it induced. In US, Ford then Carter who copped the worse. In UK it was Callaghan’s Labour and Heath’s Conservatives (setting up for a Thatcher takeover). In Australia it was the Whitlam Labor government (despite it getting worse under Fraser’s conservatives who followed, and who had mortgage interest rates at an all-time crippling 18%–so much for conservative economic management).
In France it was Valéry Giscard d’Estaing who is generally regarded as hauling France into the modern era (and that odd thing, a progressive conservative) but was a one-term president when he lost in 1981 to Mitterrand. Giscard died a few days ago (at almost 95 years, curiously like Carter, the longest lived president of his nation) and has a better reputation today than at the time, much of which was due to the turmoil of the mid- to late-70s. Though he gets credited with the TGV program he was rather unhappy about it (on financial grounds IIRC) and had been somewhat snookered by administrators into reluctantly accepting it.
Trump still gets credited with economic boomtimes
The recovery was slowing and may have been slipping into recession in early 2020. It’s only boottimes according to true believers. Who also spent most of 2016 screeching that the official numbers were wrong, lies, fabrications and lies.
@adirondacker
I don’t disagree but I think we should, and certainly voters do, judge on actual economic performance data. Meaning that covid has rendered moot your point. My point was that everything was an amazing straight line from about 2010 onward, including GDP, total unemployment, black unemployment, DowJones index etc. So, while it’s true that many of these indices achieved all-time records, it would have happened with the drover’s dog in the WH. But then equally, the Obama boom was largely an expected bounce-back from the 2008 crash.
Likewise, Biden will be taking the reins as covid will be far worse than today and still worsening, probably for several more months. I wonder if Tweets emanating from Mar-a-Lago will be claiming Biden is handling the crisis so much worse than the former Prez.
They don’t. Dear Leader said it was fake, lies and fabrications in 2016. The same numbers in 2020 are fantabulous. Even though they aren’t. It’s not a straight line. It’s been flattening out. And statistics they don’t want to talk about like labor participation rates are lousy.
I’m a little confused about your neoliberal beliefs– as an American, I am used to thinking of neoliberals as people who primarily want to remove government regulations from businesses, who think that government should be as small as possible and actively try to reduce state capacity, which you tend to advocate to increase. You tend to argue for centralized government planning, whereas I believe US neoliberals think that the government should not do much planning at all, and just let the market decide how things end up. Could you provide examples of what being a neoliberal means to you, of particular neoliberal policies that you would support?
It strikes me that “neoliberal” is one of those words like “conservative” “liberal” or “socialist” which means very different things to different people. All the meanings of each word can be roughly placed on a spectrum, but one can be in vastly different places on the spectrum which means vastly different meanings. Which means that asking “is the issue neoliberalism or not” is not a very enlightening question, because the answer depends so much on how “neoliberalism” is defined.
+1. It’s a great way of starting arguments, though.
A couple comments here have mentioned the US healthcare system as a “free market” system that has failed. I feel both components of that statement are understandable but not meaningfully accurate.
I’m not advocating for a free market in healthcare nor playing No True Scotsman; quite simply everything I’ve experienced or learned indicates that government involvement is pretty dramatic (there’s also monopoly and guild behavior for which the “free market” label is a matter of debate). Clearly there’s a minority of the country excluded from the system, especially so if Obamacare is killed, but [a market system would have this problem] doesn’t mean [we have a market system].
The performance of the US system also varies dramatically when you start trying to adjust for national income and unhealthy diet/lifestyle/violence/despair. Not hand-waving those problems but they’re external to the healthcare question. Readers of a transit blog should know.
I don’t particularly favor our current system and would vote in favor of a dramatic overhaul, I just think it’s important to be specific about its failures and what we can expect solely from changing healthcare.
This is a variation on Eric2’s comment on the confusion around the term “neoliberal”. That and “free market” obscure a lot. However, I do think our host got pretty specific, and I respect that.
FYI:
(FWIW, I didn’t find the article very informative. It is what I call “descriptive” but not identifying causes or any meaningful prevention, except perhaps the simplistic implication of not to build mega-projects a la Flyvbjerg).
Neoliberalism isn’t even a well defined concept. It’s just a polemical term applied by the left to any policy they disapprove of.