Neo-Liberalism Defined


 

From around the web.

From the web site, Political Snapshots.

http://politicalsnapshots.wordpress.com/2010/05/23/neo-liberalism-and-the-role-of-government/

Neo-Liberalism and the role of Government.

 

When a government abdicates its responsibility in regulating the economy (as did the U.S. government), capitalist greed accompanied by all sorts of illegal amassing of wealth by the few, at the expense of the majority in society takes place. In other words, policies of neo-liberalism compel governments to abandon regulation of the economy, so that only profit- making becomes the law of the land. Society be damned. The citizen is only a consumer. The government is only a facilitator of business exploitation.

 

A government as a body that has the power to enforce environmental, labor and consumer laws was required by neo-liberal philosophy to abandon its most critical responsibility of social policy to “market forces”. While it is true that Democracy gives ordinary people a significant voice in government, at the end of the day, who makes the policies that the U.S. government pursues, is what matters. When that question is properly answered, then, we will find out who has power in America.

Greeks Enraged as the Parliament is set to approve Austerity plan (via )


I believe Greece should default. I would rather live on a planet where investors have to make intelligent investment decisions than one where their investment decisions are protected by United States, the EU, the World Bank and the IMF.

I would love to hear more in the media about Goldman Sachs involvement in this debacle.

For instance, here, here, here, and here.

James Pilant

Greeks Enraged as the Parliament is set to approve Austerity plan Thousands of Greeks arrive at the Parliament’s building to press their representatives to reject the new austerity package. Reuters June 28, 2011 Anti-austerity protests turned violent in Athens on Tuesday as the European Union warned Greek lawmakers the country faces immediate default unless they back an unpopular economic plan this week. Hooded youths throwing stones and wielding sticks set fire to garbage bins and a telecoms truck outside parl … Read More

via

Did The International Monetary Fund Push Tunisia Into Revolution? Yes.


The IMF played  an important role in the Tunisian Revolution

This is from the International Monetary Funds Survey Magazine, an article entitled –

Tunisia Weathers Crisis Well, But Unemployment Persists.

(September 10th, 2010)

Maintaining a stable macroeconomic environment that promotes employment and growth also requires determined expenditure control, the IMF assessment said. Key for success in this area is the reform of the social security system. To this end, the authorities are in discussion with social partners on pension reforms to buttress the pension system’s financial sustainability. The government should also explore ways to contain subsidies of food and fuel products, the report noted.

The authorities are also undertaking reforms to make the tax regime more business friendly. International comparisons with other emerging market economies show that the tax burden on businesses is relatively high in Tunisia and that there is scope to increase the yield from consumption taxes. To promote private investment and employment, the authorities intend to reduce tax rates on businesses and to offset those reductions by increasing the standard VAT rate and expanding the tax base through the elimination of exemptions, the report noted.

Tunisia’s growth-enhancing strategy also includes a package of measures to strengthen the financial sector through consolidating the financial strength of banks, enhancing the role of banks in the economy, restructuring the public banking system, and bolstering the presence of Tunisian banks abroad. The aim, ultimately, is to transform Tunisia into a banking services hub and a regional financial market.

To strengthen the country’s ability to adapt to changes in the global economic environment, the authorities also intend to modernize the monetary policy framework by introducing inflation targeting and to implement convertibility of the dinar and capital account liberalization by 2014. The IMF assessment said that this strategy would require significant preparatory work, particularly further strengthening of the banking system and deepening of the foreign exchange, money, and capital markets. The report also noted that the authorities would need to take additional steps to ensure increased reliance on interest rates as the operational target of monetary policy.

The IMF had been recommending an austerity regime for Tunisia for many years. Being an exceptionally corrupt and kleptocratically ruled nation, the pain of these kinds of “austerity” measures fell on the poor. In Tunisia, the poor is virtually everybody.

The IMF was pushing for a decline in government spending particularly in the areas of food and fuel in a poor population that could rarely afford either. Per capita income is a little over $6,000 but the population is divided into a very small oligarchy of immense wealth and a very large population of the poor. So, I would suspect that income among the average Tunisian was probably far less than half. So, they were recommending cuts in food and fuel in a population just hanging on to the edge, hardly able to make it from day to day.

It could be said that the IMF at all times stands for cuts in social welfare spending, business tax cuts, consumption tax increases (a form of sales tax),  bank consolidation, and declines in government spending. But there is no issue upon which the IMF is more devoted than inflation control. It crops up again and again in report after report. Inflation damages capital because it makes debts less valuable to creditors. Since while inflation can exist by itself, it is also a characteristic of growing and prosperous economies, that kind of economic growth must be avoided. What is wanted instead is stable economic growth with little or no wage pressure. This removes inflationary pressure and assures those loaning money of a full return on their investment.

There is another thread you pick up when you read IMF reports, a fascination with data. They always want more data. Better reporting they call it.

The numbers are everything. People are not.

James Pilant

Popular Revolt in the Arab World (via Grand Strategy: The View from Oregon)


These events are hardcore business ethics matters. It is the economic theories of the Chicago School of Economics that propels the austerity measures all over the world. It is the intense privatization movements again pushed by American philosophies and business interests that is a factor in these conflicts. I will cover the IMF and its part in these uprisings in more detail in my next posting.

There are few commentators I trust as much as J. N. Nielsen. Certainly very few are as well read.

I strongly recommend his writings.

James Pilant

Popular Revolt in the Arab World Thursday Tunisia’s authoritarian government of several decades duration has fallen to a popular uprising. This was not a perfectly bloodless revolution, but bloodshed was definitely kept to a minimum, largely because security forces took the side of protest … Read More

via Grand Strategy: The View from Oregon

The Writing is on the Wall for the Irish Government (via homophilosophicus)


I recommended this on Facebook. I quoted a paragraph with pleasure in another entry on this blog.

It’s not enough. I’ve waited a long time to see this kind of writing and here it is – Christianity with teeth, not some Bible thumping loon talking about the innocuous undefinable “family values” while safely giving a pass to the rapacious businessmen in his congregation. I say to you that he has his reward.

I am honored to, once again, pass on these words.

James Pilant

The Writing is on the Wall for the Irish Government Reading the prophet Amos in Ireland in the midst of this time of fear and uncertainty most certainly does not make comforting reading, but this is not to say that it is not beneficial reading. Yesterday morning it was announced on the national radio news that an Taoiseach (the Prime Minister), Brian Cowen, and Brian Lenihan TD, the Minister for Finance, finally admitted to the people of Ireland that they had decided to seek a rescue package amoun … Read More

via homophilosophicus

Power, The Strong And The Weak, The Rich And The Poor – Ireland’s Debt Crisis


Homophilosophicus writing in his blog quoting the Prophet Amos. (Jeremiah is my favorite.) The first decades of the 21st century are truly the years of the Old Testament Prophets. All around us, uncertainty, stupidity and greed flourish.

“They do not know how to do right, says the Lord, those who store up violence and robbery in their strongholds (Amos 3:10).”

Those of whom the writer of Amos speaks are not merely petty criminals, for they live in strongholds. Amos is referring to those who rule from their unassailable citadels, who fill up their treasuries with the wealth they have taken from the powerless by violence and theft. It is evident that this relationship between the powerful and the powerless has not changed; in fact it has become enshrined within modern economic systems. There are those who, by virtue of their monopoly on power alone, assert the right to grow fat from the labour of the powerless. In Ireland we have seen that the government have stolen from the people. They have taken tax from the people and they have failed to provide for the welfare of the people from that revenue; this is nothing other than theft. Without proper consultation with the people the government has gambled and lost billions of euros from the community purse, and have successfully lined their own pockets. This also is theft. By maintaining systems of injustice they have demonstrated their violence against the vulnerable and the weak. Ignorance is not an excuse for what they have done, but it would seem to be the case that “they do not know how to do right.” Each and every member of the present government of Ireland comes from a privileged background, a background that has taken wealth for granted and considered the accumulation of money the highest virtue. It stands to reason then that these people have suffered from a severe form of political myopia in their regard of the poor. They have consistently failed to take the needs of the poor into account when they have made decisions ‘for the good of the nation.’ What ‘good’ in this context actually means is that which is ‘economically good for the wealthy.’

Doesn’t this sound like a Minister of God with brains? All we got around here is an editorial writer explaining that the Medal of Honor has become feminized!

James Pilant

Risky Lending and Lobbying – Connection?


 

Risky Lending and Lobbying – Connection?

An International Monetary Fund report entitled: A Fistful of Dollars, Lobbying and the Financial Crisis, reports that those lenders pursuing high risk lending practices did the most lobbying.

The actual report is found here: http://www.dnb.nl/binaries/Deniz%20Igan_tcm46-223260.pdf

Perhaps we should think of the risky lenders on Wall Street less like ivy league educated scum individuals and more like bold Western heroes. Here let me provide some music.

However, some of you may not feel that the mantle of Western hero does not fit them well. How about this one?

Well, now that I’ve got that off my chest. Let’s discuss the issue. First a quote from the actual study:

We find that, after controlling for unobserved lender and area characteristics as well as changes over time in the macroeconomic and local conditions, lenders that lobby more intensively (i) originate mortgages with higher loan-to-income ratios, especially after 2004; (ii) securitize a faster growing proportion of loans originated; and (iii) have faster growing mortgage loan portfolios.

This is research language, an arcane format similar in many ways to spell casting in Lord of the Rings. Let me translate: We worked hard to do a fair study and we discovered that lenders who did a lot of lobbying made stupid decisions.

So, here we come to the meat of the matter. The more lobbyists you hire, the more money you spend on influencing the government; the more likely you are to take risks.

Of course, you could turn it around. The more money and lobbyists financial institutions send to Washington, the more Washington protects them from laws and regulations while simultaneously shielding them from the effects of their ridiculous decisions.

We all learned in civics class that bankers and financiers are careful to protect their investors from loss while our Senators, Representatives and President would never fail to protect us from financial sector decisions that could destroy millions of jobs and damage the economic fabric of the planet.

We all know that a new Democratic President wouldn’t appoint all of his economic advisors from the very firms receiving bailout money. We all know that no Congress would give hundreds of billions of dollars of loans to private companies without setting up a mechanism to get the money back. We all know that should by some mischance all our protections fail and our financial system comes within a matter of minutes of total collapse that new rules and regulations would be put in place to stop that from happening again.

I guess I’m just cranky. I am getting older. Of course, I do teach Business Ethics and watching these event unfold hits me in the gut. It’s like teaching medicince in a place where they just kill the patients to save money.

But I’m probably just cranky.

James Pilant