Thats what I asked earlier. Haven’t gotten an answer yet.
Rather than dismantle the assumptions in your thesis, I’ll just point out that neither Greece nor Venezuela is an example of whatever you think you’re proving.
Greece is an example of huge deficits, endemic tax avoidance, lying about these things to Europe, and then getting swamped in the crash created* by the USA and Iceland.*
Venezuela is a Western Hemisphere petro-state, with chronic under-investment; but it was wrecked by political conflict between a populist presidency, the USA’s general imperialism in “our backyard,” and everybody else. (In this case, anyone who knew what they were doing and cared enough to do it right was probably included in “everybody else.”) It’s partly a cautionary tale about political systems; but mostly a common tragedy of being in the Yanqui sphere of influence and having a resource that Yanqui capitalists want for themselves. There was no way Venezuela was going to be stable and autonomous in the USA’s shadow, and no way the Venezuelans would shut up and become a Yanqui possession. No economic program, no constitution could save them so long as they had that much oil and no political counterweight to the USA and the Roosevelt Corollary.
How do you define neoliberalism? Singapore has a very authoritarian government, just like China that is involved in their economic system. They still grew rapidly.
The countries you list as neoliberal success stories are well known for their strong labor laws, environmental laws, welfare state, mandatory benefits, etc. Germany, Sweden, Australia, Canada, etc. How are these neoliberal success stories? These are welfare states with high levels of wealth redistribution and strong government regulations of the market.
As I mentioned earlier upthread, under Pinochet and his neoliberal economic rule, the GDP didn’t grow much. After he stepped down and was replaced by a string of left of center presidents, Chile’s GDP strated to grow rapidly. You could more accurately make the argument that democratic leadership by socialists are what propelled Chile’s economic growth, since their economy didn’t start growing rapidly until the 1990s with a succession of left wing presidents.
The argument is nowhere near settled the way you imply it is. I’m not even an economist and I can see that.
There is no pure free market, purely “neoliberal” country so the term has little practical meaning. Consider that free market purists like Rothbard reject central bank regulation and every single country in the world still has one.
Even the old libertarian utopia punching bag of Somalia has a central bank.
http://www.centralbank.gov.so/
Any country that does not wish to regulate its own currency is clearly insane. Therefore free market fundamentalism like Rothbard wanted is insane.
There is a cost to regulation however. Free market people such as myself have that correct. And certain regulations (like mandatory FDIC insurance) is worth its small cost.
Rothbard is not a neoliberal, he’s an anarcho-capitalist.
Even were we to grant that the comparison between countries can be boiled down to something so simple as “who is more neoliberal” (understood how?), you’re simply wrong about at least part of your claims. Germany grew by 8% in the 1950s, by 4.3% in the 1960s to 1973, and by just 2% from then to reunification (see here).
And that’s assuming that GDP growth is a meaningful measure of an economic system’s usefulness, without being measured against various other, usually more complicated issues, such as the precariousness of employment, loss of social security, rise in inequality, and so on.
I’m reasonably sure that this is not the usual “Name a better system if you can! As long as you can’t, we’ll keep the shitty system we have!”, right? Because the “answer” to this isn’t really going to name that. The thing is that economic systems obviously can’t simply be made like that, we cannot just simply go and remake a complex global economic system in a more equitably fashion. Neoliberalism itself is a variant of capitalism which developed in the wake of the collapse of the one system we’ve had that did what you require: social-democratic, post-war Keynesian capitalism. That system, certainly for the West, did exactly what you’re asking. But it collapse precisely because it was no longer sustainable within the logic of capitalist economic thought, not because somebody “decided,” or anything, that it should be replaced.
So it’s not like you can just simply go and say: hey, the policies of the 1950s, let’s go back to them, because, well, things have changed. If you like, I can name a few books that spell out the argument for this point of view, and the logic which got us from the more equitable system of the 1950s to the contemporary one, necessarily so within the logic of capitalist development.
More fundamentally, I think we need to rethink the premises of your question: what is economic growth good for, and what should it reasonably measure? Why think in terms of a larger middle class, rather outside of class terms? And so on. I’m not sure any of these questions yields immediate answers, but we shouldn’t artificially limit ourselves to thinking within the terms of a system that might itself be faulty.
How do YOU define neoliberalism?
Can you cite even a single person who identifies as “neoliberal” who would complain about Singapore’s economic system (as opposed to their political system) compared to practically any other country on this planet? I’d be fascinated if you could find even a single person.
What are we actually interested in?
The political labels that politicians attach to themselves? Or the actual policies that they implement?
How “left of center” are the POLICIES of Chile compared to other countries in South America, or even globally? How do their POLICIES compare on a spectrum of “neoliberalism”? If we were to ask a bunch of neoliberals about Chile’s relative standing, and the quality of their economic policies even under their “left of center” leaders since Pinochet, what would the answer be? Would you guess that “socialist” leadership, as you describe it, would continue policies that rank Chile as one of the “freest” economies on the planet at least according to some metrics?
Which country in South America is the “freest” economy? Which has the largest GDP per capita?
What about globally? If we draw a naive linear regression line, how much are we going to explain with it? Obviously not everything. There are plenty of other factors involved, and even potentially reverse causation as richer countries can potentially afford better government, which helps them get even richer. Nevertheless, where does Chile stack up based on these policy questions?
When we plant a tree, do we expect it to grow to several stories overnight? Or even given ideal conditions, do we expect it to take time to grow?
One of the biggest absurdities of the Kansas-Brownback-style Republicans in the US is the notion that they can change the patterns of ink in their legislative law books and suddenly create a new economic miracle in an already developed country. It doesn’t seem to occur to them that if you don’t start as miserably poor as a country like China, growth tends to be a hard, grinding, and long-term process.
Political parties come and go. The consistent application of pro-growth policies under many successive governments of nominally different ideology is much harder. But it’s the creation of long-term conditions that are conducive to growth that will actually create long-term growth, not any short-lived tax policy that works as good marketing for a single election style and then blows up in people’s faces because the effects of the policy weren’t actually thought through.
Greece is listed as the second least free economy in all of Europe by the Heritage Association. It has high spending, state controlled industries, and a large regulatory burden.
Your version of what happened to Venezuela is delusional. America has very little influence there and what is going on is a result of government looting of the oil industry to buy votes and manipulating the currency.
Neoliberalism is not a state but a direction to move the country’s economy. Germany enacted neoliberal labor reforms called the Hartz concept in 2003, as a result they have some of the lowest unemployment in Europe. Canada cut spending after a debt scare and balanced their budget every year from 1998 to 2008. As a result their federal spending as a share of GDP went from 22% in 1995 to 15% in 2005. As a result their economy went into a 15 year boom that only ended in the great recession. Sweden underwent neoliberal reforms in the 90s when the government cut spending by 15 million euros.The Budget deficit went from 13% of GDP to 2.6%. As a result the economy grew by around 4% which was one of the highest rates in Europe. Australia underwent neoliberal reforms in the 80s and 90s and has been one of the best economies in the world ever since.
I don’t know who the Heritage Association are. Do you have such numbers from somebody like the IMF or the UN?
I don’t actually disagree with your second sentence. I just understand that to be in the Western Hemisphere is to be in Eagleland’s shadow. Once oil was discovered there, Venezuela was going to be screwed over by economic imperialism, or they would elect someone who promised patriotically to fight that imperialism. Of course they went for the latter, and of course the USA power structure started calling for the man’s head.
Pat Robertson, America’s preacher, called for Chavez to be assassinated. Was that because of mismanagement of the nation’s finances? Of course not. It was because a spic got uppity, and thought he could keep Venezuela’s wealth for Venezuela. Just because Chavez didn’t know what he was doing doesn’t mean the USA weren’t constantly trying to destroy Venezuela’s autonomy. Chavez was far better from a USA imperialist perspective than an effective nationalist, who would represent successful defiance of the USA; his inept successor is even more a gift to Washington and to Wall Street; the hope is that soon those poor mutts will be begging us to put in a Pinochet. I maintain that Venezuela’s woes happened if not entirely because of oil and imperialism, within a framework of oil and imperialism.
“A direction”? So, if a country’s spending is already low, should they cut even more? This is a silly claim.
From what I’ve seen, neoliberalism is synonymous with laissez faire capitalism. The government gets involved as little as possibly not only in economic activity, but also in the welfare state and arguably even in infrastructure in some situations. Basically libertarianism and laissez faire capitalism.
No I cannot. I even looked up Milton Freeman’s opinions on Singapore, and he had good things to say about it.
Chile. but my point is that Chile has had a succession of left wing governments since 1990, with only a handful of right of center governments. Are we discussing the same thing? To me when people discuss neoliberalism, they want as little government intervention as possible. Chile has been pushing for a bigger and bigger welfare state as well as government regulations while they experienced rapid economic growth.
I agree, which is why I and many on the left support government intervention for things like promoting health care, clean water, infrastructure, universal education, etc. to increase the productivity of the workforce. These things require taxes and government intervention.
Yes.
But how rapid would their growth have been if they ranked even “freer” on those economic indices?
I don’t think anyone is denying that Chile has done well even with its left-of-center leaders. But policies aren’t binary. They are a SPECTRUM. On that spectrum, Chile can and does still rank as relatively “neoliberal” compared to its neighbors, at least depending on the definition of that word, and it also does better economically than its neighbors. The question is: what if it were even more “neoliberal” than it already is?
There is a hypothetical country in South America that ranks even higher than Chile does, and just as important, has ranked higher for long enough to make a substantial difference in its citizens’ lives. How would that country be doing if it existed? Might it be doing even better than Chile is? Outside of South America: despite the strange nature of its government, Singapore consistently ranks as one of the “freest” economies in the world, and that ranking would literally go back decades if the indices went back that long. It also ranks as one of the very richest economies in the world per person. A landlocked country like Bolivia is never going to achieve success like Singapore’s – there is no possibility of a port in an ideal location when there is literally no access to the ocean. But is it really a coincidence that Bolivia ranks as poorest in South America, while also having the absolute worst rankings according to economic “freedom”? Bolivian leaders claim they’re trying to help their poorest with their policies, but their policies are on the opposite side of the spectrum from Singapore’s. Is that really helping their poor, when they remain the country most mired in poverty?
There is no libertarian fantasy-land, and I don’t believe that there could be.
But if we arrange countries by their per capita income and also their relative economic “freedom” on a graph, and draw a line through that graph using a naive linear regression, what we’re going to see is that the countries that rank relatively better on economic “freedom” also tend to be relatively richer. It’s not a perfect relationship. Of course not. But it’s still quite striking.
So that raises quite an important question: what happens to world prosperity if every country tries to emulate Singapore – economically, if not politically? How much more prosperous do they become? And then there’s a question even more compelling than that. What happens to world prosperity if every country in the world tries to emulate a hypothetical country that is even more economically “free” than Singapore is? What if we try to push out that line on the graph as far as we can? Would the poor in Chile – or the poor anywhere else for that matter – be doing better on average in a more “neoliberal” countries with stronger economic growth and better job opportunities, or do the very policies that are ostensibly intended to help the poor actually on net impoverish the very people that they’re intended to help?
I’m not saying the answers to these questions are set in stone. A big part of economic “freedom” rankings seems to be plain quality of government, so of course governments that tend to be more efficient, less corrupt, and more fair tend to have stronger growth. Quality government is quite naturally an important recipe for strong economic growth. But economic policies also come into play here, and given what that line on that graph looks like, it’s a valid question to wonder how well the poor would be doing if the world pushed even further out on that graph toward more economic “freedom”.
These are important questions that do not, I believe, get enough attention.
The idea of creating a line chart correlating prosperity with libertarianism and projecting that chart further than the data allows is based on the assumption that libertarianism is the extreme of a continuum of possibilities and that increases in it are consistently beneficial. I don’t believe this is true. To me it seems clear that a regulated market would be optimal - a point on the ‘freedom scale’ between the two extremes of the government enslaving everyone and the businesses enslaving everyone. This would result in something perhaps like a bell curve of awesomeness - something naive linear regressions are ill-suited to remark upon.
That is very possible.
But it’s worth noting that the best performing countries aren’t on the middle of the current data set. They are at the edge. So given the very real possibility that there is some ideal optimum, after which things curve back to hell, it is quite possible that the optimum is beyond the current data. At very least, the optimum would seem to be at the edge of the current data. (Keeping in mind the stark limitations of these indices, some of which I’ve already listed. These indices are interesting, but still full of problems.)
I would also suggest that behavior beyond the current data might behave in ways that do not necessarily fit our ideological pre-conceptions. Things might curve back exactly in the way we tend to expect. But then again, that might not happen.
But that was my point when I brought up Chile in the first place. They were more neoliberal under PInochet, and growth stalled. It wasn’t until the military junta stepped down and was replaced by left wing democratic governance that growth started.
I don’t know. Its an unpopular opinion, but I subscribe to the ideas of Lynn and Vanhanen that there are differences in the innate human capital of various geographic regions. As a result, Singapore probably would’ve succeeded under any system other than communism. The fact that east asian nations are working their way out of poverty so well to me is more about the higher baseline of human capital there than any economic system. Singapore has authoritarian intervention in the market (while still ranking economically free) while Hong Kong does not. China is labeled ‘mostly unfree’ on economic indices but it is rapidly growing and will soon be the worlds biggest economy in USD. In fact, isn’t the rise of China despite being labeled ‘unfree’ or ‘mostly unfree’ by economic indices a sign that these are not necessarily accurate tools to describe how well the economy will do?
My view is that pretty much any system other than communism seems to work for economic growth as long as it is well run and there is human capital in the economy. You need a market economy (China didn’t start to grow until their reforms, eastern europe didn’t start to grow until after the USSR fell, Vietnam and Laos didn’t grow until they abandoned economic communism, North Korea’s black market is thriving because the planned central economy is a failure, etc.), but the degree of public sector involvement, welfare state and regulation seems like it isn’t that important overall as long as the system is well run and there is human capital.
Yes, but how many of the economic “reforms” did the more democratic government roll back?
Some, sure. But not enough to drop Chile from the “freest” country in South America. This is point I was making earlier: seeds don’t sprout into towering trees overnight. It takes time especially to build up trust in new institutions. Growth is not a short-run process.
I realize I’m telling a story here. I’m building a narrative. This narrative is going to be wrong at the edges for every single particular country in the world. It’s not going to cover every particular case. But what makes this particular narrative compelling is how it is broadly congruent with the available evidence. I wasn’t always of my current views, and it was this evidence – coarse as it is – that ultimately changed my mind.
If you’re interested in this sort of topic, I’d recommend Hive Mind.
Okay, but even their performances haven’t been equal.
Even if you break it down to East Asian groups, there remains a spectrum of policies. Not binary. Not just communism vs no-communism like North vs South Korea. Some East Asian countries have been more economically successful than others, and it remains broadly the case that those countries that tend more toward the Singapore end of the spectrum with respect to policies have been the strongest economically. South Korea is an especially interesting case because it remained more strongly economic interventionist until much later, and their own strong economic growth was subsequently delayed until their economic liberalizations.
This is a smaller data set, and small samples exhibit extreme behavior. But it’s compelling how consistent these findings tend to be even as we narrow the scope of our inquiry to South America or to East Asia or to practically anywhere else.
China was a country that starved 50 million of its citizens to death within living memory of some of its citizens. Such are the wages of communism.
When you’re hitting yourself in the head with a hammer, you can achieve very quick relief by the simple expedient of no longer hitting yourself in the head with a hammer. It’s much easier to grow when you’re pulling yourself up from nothing, because the first steps are the easiest to take. So yes, China is growing rapidly and will continue to do so, just as the US grew rapidly in previous decades. That’s the low hanging fruit. For the same reason, we can’t fairly compare US growth in the 1950s to US growth today.
According to PPP measures, China is already the biggest economy in the world. But the more relevant measure is economic output per person, and by that measure, China is still very poor.
Their growth will stall if they don’t reform their economy further. The low-hanging fruit will no longer be available. And in fact, I do anticipate further economic reforms.
No, it’s just a sign that we ultimately need more sophisticated statistical tools.
Multiple regression is a better tool than the naive 2d line I was referring to earlier. And there are other tools beyond that. I’m referring to a simple naive line because it’s the easiest to visualize, and because Great Debates isn’t exactly the best place to discuss advanced econometrics. But the general results are going to hold even as we control for more relevant variables.
I also want to emphasize that I’m not trying to be dogmatic about this. The Scandinavian countries score extremely well on these indices on every measure except size of government – exclude size of government and they tend to crowd out almost all of the top spots. This is why I tend to scoff at the word “neoliberal” when it’s used as a tribal signifier. Sweden can be considered one of the most neoliberal countries in the world. Yes, it’s got major government spending, most likely too much for optimal growth. But they institute very pro-growth policies in other areas in order to create beneficial economic conditions in order to pay for that extensive government spending. That is a legitimate choice. It wouldn’t be a bad world at all if every country had institutions that worked as well as Sweden.
They are the same thing except to pedants.
In what sense are they “the same thing”? The term neoliberalism is usually associated with the Anglo-Saxon West after Jimmy Carter: the “Reagan Revolution,” and so forth. The policies of Margaret Thatcher, Ronald Reagan, Bill Clinton, and Tony Blair may have had some similar objectives to Rothbard’s anarcho-capitalism, but we don’t generally treat the terms as synonymous.