Three Choices of Political-Economic Philosophy in the US Presidential Election

There are a lot of confusing issues swirling around in the current presidential election: gay marriage, abortion, gun rights, immigration, police brutality, racism, women's rights, financial regulation, healthcare costs, foreign wars, social security, money in politics, climate change, etc. etc. All these issues (and new ones that will certainly be introduced to stir the debate) resolve into a choice of three political-economic philosophies. Understanding the philosophies can help you evaluate the political rhetoric and inform your voting.

The three political-economic philosophies that are being offered to US voters are:

• Neoliberalism: The current political-economic philosophy which has been in play since the 1980s but which started to unravel during the Bush II years.
• Neoconservativism: The philosophy of the Republican Party, dominant during the Bush II years.
• Social Democracy: The current version of Embedded Liberalism, the philosophy that dominated US politics from the end of WWII until the 1970s.

If you understand these philosophies, make a decision about which one you support and place the candidates in the philosophy they support, your decisions will be a lot easier. First, follow the links above to understand the philosophies (if this is new territory) then use the following cheat sheet to classify candidates:

The Embedded Liberalism of the post-WWII era failed during the 1970's in the US after a period of stagflation. Neoliberalism ran from the 1980s until the Financial Crisis of 2008. Follow the graphs below to see why Neoliberalism began failing after 2008. The choices are to continue with a political-economic philosophy with this track record (a don't-kill-the-golden-goose strategy for some), re-ignite the Neoconservativism of the Bush II years that ended in Financial Crisis or return to Embedded Liberalism, possibly with some Social Democratic updates. 

These are the political-economic philosophies that seem to be in play in the current US presidential election. Inform yourself, understand the choices, locate confusing issues within the philosophies and it will be easier to motivate support of a candidate and voting. Think of the different philosophies as strategies that might, if pursued, either benefit or not benefit you, the US and the World (not necessarily all the same thing). Vote and support your political-economic interests. To me this is the essence of Democracy since we do not all have the same political-economic interests.

THE TRACK RECORD OF NEOLIBERALISM

Neoliberalism emerged in the 1980's and started failing after the Financial Crisis of 2008 as a result of internal contradictions (Harvey, 2005). Neoliberalism was originally sold on the basis of widely accepted economic theory, a theory used to advise governments on policy. In practice, Neoliberalism did not perform as predicted by it's theory.

The most important consequence of Neoliberalism in the US has been an increase in Income Inequality as measured by the GINI index, plotted in the graph below. Notice that income inequality in the US is approaching levels not seen since then end of the 1920s. During the 1980's, Neoliberalism was sold on the basis of trickle-down theory: policies that benefited the wealthy would benefit everyone. 

If you are a wealthy person or come from a wealthy family, then Neoliberalism has been a great success for you and you should be interested in seeing it continue. If not, your political-economic interests may be elsewhere.

Another chart that displays a similar historical pattern is the share of Gross Domestic Product (GDP) in the Financial Industry, a measure of Financialization (the dominance of US Finance Capital or the power of Wall Street). There are the familiar "twin peaks" in both the inequality and the financialization graphs: one just before the Great Depression and another right before the Financial Crisis of 2008. The important enabling legislation: regulation that separated investing from banking, passed after the Great Depression (the Glass-Stegall Act passed in 1933), was eventually repealed during the Clinton Administration in 1999, nine years before the Financial Crisis of 2008.

If you work in or derive your income from the Financial Sector or live off the earnings of a Trust Fund, it will probably be in your interest to see Neoliberalism continue. If your only contact with the US Financial sector is through high-interest credit card debt and poor returns on savings accounts, your political-economic philosophy might not align with Wall Street.

Just to make clear the importance of the last two graphs graphs and one to follow, in an economic system where growth is "balanced" (a balanced-growth equilibrium or balanced-growth path in Neoclassical Economics), all variables should grow at a constant rate. Unbalanced growth is considered a failure of the economic system typical in "undeveloped" economies. Any policy derived from Neoclassical Economics should not produce unbalanced growth.

A final example of unbalanced growth is the comparison of worker productivity to hourly compensation. The graph below shows that the two started to diverge in the 1970s, again the start of Neoliberalism in the US. Neoclassical Economics, the theoretical foundation of Neoliberalism taught in all major US universities, requires that wages keep pace with productivity, that is, workers should receive their marginal product. 

Other economic theories can be used to explain constant wages or hourly compensation (see the Dual-Sector model of Arthur Lewis or Paul Samuelson's Dissection of Marxian Economics) but Marxian economics is not widely embraced in either Academia or the US Government. Breaking Labor Unions and exporting jobs to low-wage peripheral countries was supposed to benefit workers through trickle-down theory. In practice, the theory was flawed.

Another key part of the Neoliberal philosophy was the placement of all social services in the free-market private sector where competition can supposedly control prices. The result of free-market forces in health care has, for example, been opposite what was predicted. The US saw a large increase in the price of medical care commodities after the Health Maintenance Organization Act of 1973 which was inspired by Neoliberal thinking. If you work in the health care industry and have benefited from these increases in prices charged to consumers, then you will want to see Neoliberalism continue. If you are a consumer of health care services and either have increasingly large co-payments or must pay out-of-pocket medical expenditures, you might favor a political-economic strategy other than Neoliberalism.

The result of market forces in higher education has been a steep increase in college tuition, again starting in the 1970s. If you work in higher education and have benefited from the increases in expenditures, then you would like to see Neoliberalism continue. If you are a college student, a family who wants to send their children to college or a lower ranking employee in Higher Education (non-star faculty and academic staff), you have not benefited from market forces in education and would probably prefer some political-economic philosophy other than Neoliberalism.

Finally, there has been an increase in gun ownership within the US. The trend started after 9/11 (the September 11 Terrorist Attacks on the World Trade Center) and was not a direct result of Neoliberalism. However, the personal freedom and responsibility emphasized by Neoliberalism looks at the trend positively. If you are a gun owner or are concerned about arming yourself defensively, you will probably find Neoconservativism attractive. If you are intimidated by armed citizens carrying loaded weapons in US streets and are inclined to favor gun control, then you will probably find Social Democracy more attractive.

The topic of gun ownership fits well with consideration of US military expenditures. The graph below shows that the US, by far, outspends the rest of the world on the military. It is a cost of being the hegemonic leader of the world system. If you think this level of expenditure is correct or should even be higher, you will be comfortable with Neoconservativism or Neoliberalism. If you think the expenditures are too high then you will probably favor Social Democracy. However, it is important to note that even during the period of Embedded Liberalism after WWII, a high level of military expenditure has always been part of US political culture. The question is whether that should change at this point in history.

EXERCISES

Where candidates fall on the three philosophies is somewhat difficult to determine. Especially if candidates are good politicians, they and their supporters will attempt to obscure their positions to gain votes. I have refrained from putting candidates in boxes for you. You will need to inform yourself on the political philosophies and do your best to make judgment calls. Here are some exercises that might help.

1. Using web sites that compare candidates on various issues (here, here, here and here), try to identify the political-economic philosophies of each presidential candidate (use the table at the beginning of this post).
2. Using candidate's own web sites (Bernie Sanders, Hillary Clinton, Donald Trump, Ted Cruz, Marco Rubio, Jeb Bush, etc.) and the party platforms (Republican Party, Democratic Party or a site that compares all party platforms here) test your understanding of their political-economic philosophies. Compare candidates to their parties.
3. Evaluate past presidents and their administrations (Reagan, Carter, Bush I, Clinton, Bush II, and Obama administrations). How clear was their political-economic philosophy when they entered office? How did their political-economic philosophy change over time, if at all? How easy was it to predict their major decisions based on a political-economic philosophy?

Good luck!

Privatization and the Student Loan Crisis

Tonight, the PBS News Hour featured a piece on Why American Students are Struggling with -- and Defaulting on -- Small Debts. New research (from the New York Federal Reserve, I think--it wasn't clear in the piece) found that borrowers with the smallest balances ($5,000 or less) were the most likely to default. This is a counterintuitive result that is interesting, but I think this piece skirts the issue of why we have so much student debt in the first place. If you are studying right-wing politics, you know the answer to this question but let's just make the causal model a little more explicit.

The path diagram above (click to enlarge) shows my theory of what's going on. The model is pretty clearly on display at the University of Wisconsin (here) but also applies to Kansas (here), Arizona (here) and many other US States with Right-Wing governments. The primary driver for the model is the Neoliberal policy emphasis on privatization, that is, encouraging public universities to become private entities. Once privatized, State funding for universities can be reduced, sometimes substantially. With the reduction in State support, the funding shortfall has to be made up by increasing tuition, sometimes substantially approaching and eventually equaling the fees charged by elite private colleges. To pay the increase in tuition, students and their parents need to take out loans. When the students graduate (if they graduate) paying off the loans provides profits for the banking industry which feeds back to encourage more Privatization.

The effect of this positive feedback loop on economic performance is unclear. Students with heavy debt cannot purchases homes, purchase automobiles or otherwise invest in their future. They have no discretionary income to spend in the market place and struggle to pay food and rent. The effect on National Consumption and Gross Domestic Product has to be negative. The Neoliberal hope is that the reduction in State support for Education will reduce taxes and stimulate economic growth. In Wisconsin, Kansas and Arizona, at least, this is not happening.

Quite simply, it is very important for government to stay in public education, keep tuition costs low, keep admissions open and keep standards high. At the University of Wisconsin, prior administrations have asked for more flexibility in the application of State regulations, particularly regulations covering building construction and employee hiring. What they received from Right-Wing State government was an offer to allow privatization in exchange for reduced regulation. This is an odd offer coming from the Right-Wing and it suggests that the Right-Wing has actually made little progress in reducing State regulation. In any event, the message for the University of Wisconsin should be clear:

What you get is something that will ultimately not be in the best interests of your students (or customers, I guess, if you are privatized). If you would like to see the entire News Hour piece, the video is below:

 

Conditionality, Corporate Welfare, and Compensation

Spectrum Brands (stock symbol SPB) recently received a $4M forgivable loan from the Wisconsin Economic Development Corporation. WEDC is a public-private partnership that promotes governor Scott Walker's "Wisconsin is Open For Business Message." The question for this post is whether the $4M was a good investment of taxpayer money?

SPB is a highly leveraged holding company that picks up orphaned consumer brands and tries to bring them back to life. SPB hasn't had a great track record and recently emerged from bankruptcy in 2009. An old video above tells the story. None of the CNBC anchors are with the network anymore and neither is Chairman and CEO Kent Hussey. To emerge from bankruptcy, Hussey noted that the restructuring took out 42% of the population of the company (does this mean jobs?). They still had $800 M in debt out of an initial $1.8 B. Mr. Hussey retired from the company in June 2010. My analysis of their common stock price history (here) doesn't suggest a very bright future.

One interesting aspect of the deal is that the $4M forgivable loan is actually less than the yearly salary of the current CEO, Dave Lumley, who took home total compensation in 2010 of $7.3M (here). Now here's my suggestion for the WEDC: follow the IMF's lead (here) and, instead of offering forgivable loans, provide contingent credit lines, the contingency being that loan amounts are matched by commitments of executive compensation. So, if SPB wants a $4M loan, Mr. Lumley would match that $4M out of his compensation leaving him $3.3M as his yearly compensation.

Now maybe this is an impractical suggestions and maybe $3.3M is not enough salary for a top executive of a highly leveraged holding company. I'm not sure exactly what the senior executives of SPB do to deserve multi-million dollar compensation but this statement from Anthony L. Genito's, SPB's CFO, in the Nov 16 Q4 2011 Earnings Call (here) provides some idea:

As I've said previously, based on the level of NOLs [Net Operating Losses] we expect to be able to utilize, we do not anticipate being a U.S. federal taxpayer for at least the next 5 years. We will, however, continue to incur foreign and a very small amount of state taxes. Cash taxes are expected to approximate $45 million to $50 million for fiscal 2012.

Evidently, evading state and federal corporate taxation in addition to pilling up NOLs is one of the ways senior executives earn their compensation. Another contingency might be that the company pay substantial State taxes during the period they obtain the loan.

Christine Lagarde "Speaks the Truth"!

In case you missed the interview on 60 Minutes tonight (here), Christine Lagarde, managing director of the IMF, made a number of interesting statements: (1) Compensation in the banking sector is "obscene," (2) the banking sector needs more regulation since it is capable of doing so much damage, (3) my brand is "truth telling."

Lagarde was a noted antitrust and labor lawyer (read her biography here). Her economic philosophy is described as "liberal," but from her comments I would say she was a pragmatist. One can only hope that having someone who was not trained as a neoliberal economist at the head of the IMF might make a difference in how the institution conducts itself. Time will tell.

Paul Ryan and the Theory of Income Inequality

Paul Ryan, R-WI, is a conservative philosopher and theoretician of the first rank and it's a real challenge to get the best of him intellectually. He makes a very strong defense of US income inequality using the following theoretical framework.

Neoliberalism and free-market fundamentalism lead to income inequality. Rewarding people in the upper income distribution increases economic growth. Growth generates jobs. Jobs then reduce income inequality. In the economics profession, the role of income inequality in creating economic development is called a Kuznets process (or Kuznets curve) named for the economist Simon Kuznets who studied the empirical foundations of economic growth.

The Pew Economic Mobility Project makes a little different analysis, exploring the link between economic mobility and income inequality (you can read the executive summary of their report here). 
The theory underlying the PEW mobility research can be summarized with the following directed graph.

Economic growth creates absolute mobility (in terms of the video, everyone is moving up the income escalator). However, economic growth under certain conditions (neoliberalism) blocks individuals from moving up the escalator as they enter on the bottom (relative mobility). In the view of the PEW researchers, the lack of relative mobility is "destroying the American Dream." The result is the type of class conflict that Paul Ryan accuses Democrats of inflaming.

Clearly, Rep. Ryan sees neoliberalism creating absolute mobility and endorses the rise in income inequality (declining relative mobility) because he thinks it feeds back to create growth. In a globalized world system, however, growth may not feedback to the benefit of the working and middle classes.

What seems evident from the late 2000 Financial Crisis is that income inequality leads to the concentration of cash looking for a high-rate of return. Financialization leads to the risky investments necessary to provide high rates of return. Risky investments eventually create a financial crisis which, to some extent, reduces income inequality. The extent of the reduction, however, still leaves the majority of high and low income individuals at the same place in the income distribution.

Rep. Ryan does not mention the financial crisis (and neither does the Pew Center video). However, both the Great Depression and the 2000 Financial Crisis both occurred at secular peaks in US income inequality. The conjuncture of high inequality and financial crisis must be more than a coincidence.

Economist Greg Mankiw's gives his explanation of the growth in US income inequality. He does bring the late 2000 Financial Crisis into his discussion.

Right Wing Fixation on Fertilization

The NY Times ran a comprehensive article today (here) that explores the important role of the world's forests in controlling CO2 emissions and global temperature. The causal diagram below summarizes the article (click to enlarge).

CO2 emissions from fossil fuel burning enter the atmosphere where the greenhouse effect increases global temperature. At the same time, atmospheric CO2 concentrations are absorbed (Co2 sequestration) by the oceans and by the forests. Co2 fertilization increases the growth rate of the forests, but wild fires, insect infestations and water deficits created by global warming decrease forest biomass as does outright deforestation and poor forest management techniques.

The article details how the right wing has latched on to C02 fertilization to argue that global warming (if it really exists) will benefit the planet. Unfortunately, the forces reducing forest growth are overwhelming the CO2 fertilization effect.

In addition to being sinks for carbon emissions, the forests and the oceans provide biodiversity (fish, animals and plants) that are threatened by ocean acidification and forest die-off. The article concludes that we cannot count on natural feedback effects to control climate e.g., there are limits to how many trees we can plant on the available land as a way to absorb Co2 emissions. The only option is to reduce CO2 emissions.

Right Wing Social Security Scare

In the video above, Uncle Milty (Milton Friedman) lays the groundwork for scaring people above Social Security.

Let's be honest: the right wing has been trying to eliminate Social Security since it was first enacted during the Great Depression. Henry J. Aaron makes a few great points: (1) the argument that Social Security must be reformed because people are living longer only applies to the wealthy who are living longer and who do not need Social Security--working people's life expectancy still remains relatively short, (2) Social Security payments are very modest, really not enough to live on in retirement, (3) the system is currently not insolvent (there is no crisis and David John of the conservative Heritage Foundation was caught out with his own version of the facts here) and (4) the future of the system could easily be made sustainable by eliminating the income cap on Social Security taxes.

I would make the further point that wage earners paid their Social Security payroll deduction on the assumption that they were buying social insurance for retirement. The right wing is willing to break that social contract on the simple grounds that they and their wealthy contributors don't want to pay up.

What We Need Now: More Capitalism! Huh?

After the greatest financial crisis since the Great Depression, Joe Kernen (an anchor for CNBC) teams up with his daughter (Blake) in their book Your Teacher Said What?! Defending Our Kids from the Liberal Assault on Capitalism to claim that what we need is more Capitalism, specifically, more Capitalism taught to young children.

BASIC CAPITALISM 101

• How to make campaign contributions without appearing to bribe politicians.
• How to beg for tax breaks, special favors and reduced regulation.
• How to break unions and prevent workers from organizing.
• How to reduce wages, reduce benefits and eliminate retirement plans while at the same time boosting executive compensation and overall income inequality.
• How to externalize costs of production (air pollution, hazardous waste dumping and carbon dioxide emissions).
• How to globalize your business, exploit sweat shop working conditions in peripheral countries and evade US environmental regulations.

FINANCE CAPITALISM 201

• How to make millions while skimming pennies off large volume transactions.
• How to document a liar loan.
• How to get a bailout from the Federal Government.
• How to chose a sympathetic or incompetent regulator.
• How to trade on insider information and avoid SEC scrutiny.
• How to exploit uncertainty in commodity, currency and foreign stock markets.

Now Joe and his daughter do live in New Jersey which, I assume, must be on some other planet, somewhere! A couple of courses in American Capitalism might help.

The Dangers of Environmentalism

In the aftermath of the Subprime Mortgage Crisis, concern for the environment has been pretty much swept off the table. When was the last time you saw a headline about climate change? The problem hasn't gone away, it's only our attention that has shifted.

A subtle subtext of Prof. William Cronon's run-in with the Wisconsin Republican Party (here) is that (1) Professor Cronon teaches environmental history and (2) the radical right wing sees environmentalism as something inspired by the Devil (see the video above). Professor Cronon's interest in conservative, right-wing groups is certainly motivated by his environmental concerns.

In his blog (here), Professor Cronon suggests that we all need to be more concerned about what's happening in the conservative movement. For example, if you are a public employee or an environmentalist or both, as is Professor Cronon, the activities of conservative think tanks may actually have an effect your job, your income and the world you live in. He suggests studying the following groups:

• The American Legislative Exchange Council http://www.alec.org/
• The State Policy Network (SPN) http://ww.spn.org/
• The MacIver Institute http://maciverinstitute.com/
• The Wisconsin Policy Research Institute (WPRI) http://www.wpri.com/

To this I would also add some of the old-line conservative organizations:

• The American Enterprise Institute http://www.aei.org/
• The Cato Institute http://www.cato.org/
• The Club For Growth http://www.clubforgrowth.org/
• The Heritage Foundation http://www.heritage.org/
• The Hoover Institution http://www.hoover.org/
• The Hudson Institute http://www.hudson.org/

For a more complete list see Right Wing Watch (here) and Source Watch (here). To be completely fair, balanced and even handed (or if you can only take so much from the right wing in one day), here's a list of dangerous environmental organizations to monitor:

• The Global Footprint Network (GFN) http://www.footprintnetwork.org/ investigates how much "nature" we have, how much we use (the ecological footprint) and who uses the most.
• The World Wildlife Fund (WWF) http://www.worldwildlife.org/ They publish the Living Planet Report, the Living Planet Index and GFN's Ecological Footprint index (here).
• The Earth Policy Institute (EPI) http://www.earth-policy.org/ founded by the notorious environmentalist Lester Brown, publishes alarmist works such as World on the Edge: How to Prevent Environmental and Economic Collapse as well as megabytes of depressing data (here)

The Scholar As Citizen

William Cronon is a historian at the University of Wisconsin. His speciality is environmental history and he, in fact, can be credited with inventing the discipline (watch a brief video from PBS where he discusses the National Parks above).

A few semesters ago I took a class from Bill Cronon. It was a real "lecture" course, the kind that is generally considered too boring for today's plugged in, tech distracted students. The class was given in a large lecture hall, was always packed with students sitting in the aisles and not a single student in the class had a cell phone or computer out during the lecture. It's not that Bill prohibited technology but rather that the students hung on every word of a gifted lecturer (my students, on the other hand, warned me never to speak for more than 15 minutes!).

Now, evidently, Bill Cronon has had enough of Wisconsin politics (one sympathizes). He recently started a blog, the Scholar as Citizen (here), wrote an Op Ed for the New York Times discussing the ongoing radical break with Wisconsin political tradition (here) and immediately was attacked by the Republican party who slapped him with a FOIA request for all his emails dealing with Governor Scott Walker, etc.

What prompted the attack? Prof. Cronon is looking into (here) conservative groups such as the American Legislative Exchange Council (ALEC), the State Policy Network (SPN), the MacIver Institute, the Wisconsin Policy Research Institute (WPRI) and their funding sources (the Koch brothers, etc.). Prof. Cronon is studying these groups because they are having an important impact on US politics and because the groups seem not to have been investigated extensively by the popular press.

Bill Cronon is being the historian and the Republican Party is, I guess, being the Republican Party, the party of Nixon, Watergate and Dirty Tricks.

Paul Ryan, R-WI: Conservative Philosopher

Representative Paul Ryan, R-WI, gave the Republican response to the State of the Union message. As some responders have found (e.g., Bobby Jindal, here), this can be a tough assignment. Representative Ryan chose to give us a primer on Conservative philosophy while at the same time coming off as a reasonable person. Quite an achievement!

I love counterfactuals, for example, "What if Paul Ryan would have made some specific proposals?" Had Rep. Ryan chosen to do so, he probably would have drawn on his ROADMAP FOR AMERICA'S FUTURE (here): (1) Health Care: repeal the current bill (which is a mess) and allow people to buy health insurance across State lines. People in Wisconsin can then enjoy trying to make claims on insurance companies in Nevada or use their refundable tax credit to play on-line poker. (2) Medicare and Medicaid: Fully fund Medical Savings accounts so that poor people with no money can put some of it aside for medical expenses. (3) Social Security: Allow people under 55 to take part of their Social Security taxes (it's my money and I need it now) and invest it in the stock market or add it to their refundable health care tax credit to play on-line poker. And, (4) Simplify the Tax code so that the wealthy and the large corporations don't have to pay taxes and don't have to hire expensive Democratic tax lawyers to find loopholes that they should just be getting anyway.

For any of my international readers who think Wisconsin is in Canada, Rep. Ryan's political philosophy and ROADMAP FOR AMERICA'S FUTURE should help correct your geography.

Sarah Palin's Cleavage

David Easton in A Systems Analysis of Political Life writes "As a concept, cleavage therefore refers to these two different dimensions: Diversity of opinions, attitudes, or culture and conflict among potential support groups" (p. 235). What dimensions of cleavage, then, is Sarah Palin channeling?

The list is lengthy: (1) big government, (2) the environment, (3) militarism, (4) the media, (5) abortion, (6) taxation, (7) fundamentalist religion, (8) universal health care, (9) same-sex marriage, (10) creationism, (11) gun rights, (12) off-shore oil drilling, (13) global warming skepticism and more.

David Easton thinks that cleavages can either strengthen a country through open discussion and debate or weaken the political system through unresolvable conflict. What do you think?

Recently, Barney Frank (D-NY, liberal) and Ron Paul (R-TX, Libertarian) wrote a Huffington Post article calling for reductions in military spending. Last year, I played golf with a Libertarian tradesman and Ron Paul supporter. It was amazing how much we agreed on and how interesting the discussion was to me. The essence of a strong democracy is to be able to reason, discuss, debate and move forward. I question whether that is possible with the current makeup of the Republican party. Also, see the interesting discussion between Nassim Taleb (Libertarian) and Nouriel Roubini on PBS. From this perspective, Libertariansim is making a strong contribution to American democracy. The Tea Party movement and the Republican party, on the other hand, seem intent on weakening the political system through "unresolvable conflict".

P.S. If you thought this post was about another dimension of cleavage, you can find plenty of that elsewhere on the Internet!

How Canada Avoided the Financial Bubble

Canada avoided the Financial Crisis of 2007-2010 using simple, no-nonsense financial regulation involving (1) capital requirements (targets for tier-one capital holdings), (2) quality of capital regulations (75% of tier-one capital in common rather than preferred stock) and (3) a leverage ratio of 20 to 1.

Similar lesson about no-nonsense control and regulation of the health care system are also available from Canada: (1) control of physicians salaries, (2) control of capital investment and technology and (3) control of drug prices.

Even though Canada has flirted with Neoliberalism, it seems to have avoided the nonsensical parts.

A Cold North Wind for Neoliberalism

Iceland is in the midst of of a financial crisis after its economic bubble burst. The bubble was driven by neoliberal, free-market philosophy and now the party is over. Johannes Por Skulason is heading a group opposed to the terms of repayment (austerity) being imposed on Iceland. Here is the basis of his opposition:

"I can be very frank about it: What we want to do is abolish this neo-liberal greed philosophy that was driving things in the bubble years," he says. "What we want to re-establish in Iceland is a strong Nordic welfare society with equal justice and equality."

Good luck to you, Mr. Skulason!

Freaked Out Neoliberals

There is an interesting comment on Paul Krugman's blog in response to the about-to-be-published book "Superfreakanomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance". The point of the comment was that economists should "...stick to your third-quarter profit forecasts and leave climate predictions to real scientists!" I would slightly qualify this comment to read "neoliberal economists" since the ecological economist are doing research that is complimentary to the earth scientists.

Neoliberalsim and The Power of the Poor

Last night, our local Public TV channel ran "The Power of the Poor," documenting Hernando de Soto Polar's efforts to expand property rights for the poor. The program was evidently developed by the FreeToChooseNetwork which supports neoliberal ideas ("...the interdependency of personal, political and economic freedom sustained by the rule of law.")

The documentary touched on a number of issues: the tragedy of the commons (the poor without property or employment must earn their living off the commons), the ownership society (a Bush II era idea that led to the Subprime Mortgage Crisis), and the provision of public goods (ownership of private property does not absolve the government from providing public goods as is argued by market fundamentalists).

It would be very useful in the United States (and in the IMF), to have some agreement on the proper role of government: support for private property rights but where markets fail or where private property rights damage the public interest, the responsibility falls on government to intervene and regulate. Progress here would involve giving up the Reagan-era idea that government is the problem and must be dismantled.