[p2p-research] must read: The era of extreme neoliberalism and the end of the European social state

Tue Jun 29 05:59:53 CEST 2010

you may be right about the U.S.  being an example, I'm not an expert,

though I'm convinced that there is a cultural tendency for Anglo-Saxons and
Americans in particular to think they invented everything and are an example
of everything good ... it's certainly not what I learned in my courses on
welfare during my uni years ... but I have mostly forgotten the details ...

the wikipedia article also doesn't stress any U.S.-centric development:
http://en.wikipedia.org/wiki/Welfare_state

On Tue, Jun 29, 2010 at 10:21 AM, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> Nice history of the British welfare state:
>
> http://www.bbc.co.uk/history/british/modern/field_01.shtml
>
> Bismarck actually introduced national healthcare as a military supporting
> scheme in Germany.  The US tried in 1919 and failed by a few votes after
> ferocious lobbying by doctors against a national system.
>
> The US Social Security System of the 1930s was the model for most modern
> systems that came into being after WW2.
>
> It was the effective bankruptcy of the UK in the 1970s that really launched
> Thatcherism.   Many of the discussions current now in the US, Spain, Italy,
> Greece, etc. were commonplace in 1965 and again in the 1980s.  Demographic
> models have been predicting the current outcome for a generation.
>
> France seems to be the place still to retire early with good benefits:
>
> http://www.cnbc.com/id/37725169
>
> Here's some OECD numbers...
>
> http://focus.ie.edu/entry.php?id=1264
>
>
>
>
>   On Mon, Jun 28, 2010 at 9:27 PM, Michel Bauwens <michelsub2004 at gmail.com
> > wrote:
>
>>
>> The era of extreme neoliberalism and the end of the European social state<http://blog.p2pfoundation.net/the-era-of-extreme-neoliberalism-and-the-end-of-the-european-social-state/2010/07/04>
>>
>> see
>> http://neweconomicperspectives.blogspot.com/2010/06/europes-fiscal-dystopia-new-austerity.html for
>> the full article
>>
>>
>> [image: photo of Michel Bauwens]
>> Michel Bauwens
>> 4th July 2010
>>
>>  *Europe is dying. If its trajectory is not changed, the EU must succumb
>> to a financial coup d’êtat rolling back the past three centuries of
>> Enlightenment social philosophy*. The question is whether a break-up is
>> now the only way to recover its social democratic ideals from the banks that
>> have taken over its central planning organs.
>>
>> *Michael Hudson* has a brilliant analysis<http://neweconomicperspectives.blogspot.com/2010/06/europes-fiscal-dystopia-new-austerity.html>of the tragedy that is unfolding in Europe, where the politicians beholden
>> to the financial predatory class are ’suiciding’ the European social state
>> and three centuries of a particular logic of civilization.
>>
>> *Excerpt*:
>>
>> *“The idea is to create an artificial financial crisis, to come in and
>> “save” it by imposing on Europe and North America “Greek-style” cutbacks in
>> social security and pensions. For the United States, state and local
>> pensions in particular are to be cut back by “emergency” measures to “free”
>> government budgets.*
>>
>> *All this is quite an inversion of the social philosophy that most voters
>> hold. This is the political problem inherent in the neoliberal worldview. It
>> is diametrically opposed to the original liberalism of Adam Smith and his
>> successors. The idea of a free market in the 19th century was one free from
>> predatory rentier financial and property claims. Today, a “free market”
>> (Alan Greenspan and Ayn Rand style) is a market free for predators. The
>> world is being treated to a travesty of liberalism and free markets.*
>>
>> *This shows the usual ignorance of how interest really are set – a blind
>> spot which is a precondition for being approved for the post of central
>> banker these days. Ignored is the fact that central banks determine interest
>> rates. Under the ECB rules, national central banks can no longer do this.
>> Yet that is precisely what central banks were created to do. As a result,
>> European governments are obliged to borrow at rates determined by financial
>> markets.*
>>
>> *This financial stranglehold threatens either to break up Europe or to
>> plunge it into the same kind of poverty that the EU is imposing on the
>> Baltics. Latvia is the prime example. Despite a plunge of over 20% in its
>> GDP, its government is running a budget surplus, in the hope of lowering
>> wage rates. Public-sector wages have been driven down by over 30%, and the
>> government expresses the hope for yet further cuts – spreading to the
>> private sector. Spending on hospitals, ambulance care and schooling has been
>> drastically cut back.*
>>
>> *What is missing from this argument? The cost of labor can be lowered by
>> a classical restoration of progressive taxes and a tax shift back onto
>> property – land and rentier income. Instead, the cost of living is to be
>> raised, by shifting the tax burden further onto labor and off real estate
>> and finance. The idea is for the economic surplus to be pledged for debt
>> service.*
>>
>> *In England, Ambrose Evans-Pritchard has described a “euro mutiny”
>> against regressive fiscal policy. But it is more than that. Beyond merely
>> shrinking the economy, the neoliberal aim is to change the shape of the
>> trajectory along which Western civilization has been moving for the past two
>> centuries. It is nothing less than to roll back Social Security and pensions
>> for labor, health care, education and other public spending, to dismantle
>> the social welfare state, the Progressive Era and even classical liberalism.
>> *
>>
>> *So we are witnessing a policy long in the planning, now being unleashed
>> in a full-court press. The rentier interests, the vested interests that a
>> century of Progressive Era, New Deal and kindred reforms sought to
>> subordinate to the economy at large, are fighting back. And they are in
>> control, with their own representatives in power – ironically, as Social
>> Democrats and Labour party leaders, from President Obama here to President
>> Papandreou in Greece and President Jose Luis Rodriguez Zapatero in Spain.
>> *
>>
>> *Having bided their time for the past few years the global predatory
>> class is now making its move to “free” economies from the social philosophy
>> long thought to have been built into the economic system irreversibly:
>> Social Security and old-age pensions so that labor didn’t have to be paid
>> higher wages to save for its own retirement; public education and health
>> care to raise labor productivity; basic infrastructure spending to lower the
>> costs of doing business; anti-monopoly price regulation to prevent prices
>> from rising above the necessary costs of production; and central banking to
>> stabilize economies by monetizing government deficits rather than forcing
>> the economy to rely on commercial bank credit under conditions where
>> property and income are collateralized to pay the interest-bearing debts
>> culminating in forfeitures as the logical culmination of the Miracle of
>> Compound Interest. *
>>
>> *This is the Junk Economics that financial lobbyists are trying to sell
>> to voters: “Prosperity requires austerity.” “An independent central bank is
>> the hallmark of democracy.” “Governments are just like families: they have
>> to balance the budget.” “It is all the result of aging populations, not debt
>> overload.” These are the oxymorons to which the world will be treated during
>> the coming week in Toronto. *
>>
>> *It is the rhetoric of fiscal and financial class war. The problem is
>> that there is not enough economic surpluses available to pay the financial
>> sector on its bad loans while also paying pensions and social security.
>> Something has to give. The commission is to provide a cover story for a
>> revived Rubinomics, this time aimed not at the former Soviet Union but here
>> at home. Its aim is to scale back Social Security while reviving George
>> Bush’s aborted privatization plan to send FICA paycheck withholding into the
>> stock market – that is, into the hands of money managers to stick into an
>> array of junk financial packages designed to skim off labor’s savings. *
>>
>> *So Mr. Obama is hypocritical in warning Europe not to go too far too
>> fast to shrink its economy and squeeze out a rising army of the unemployed.
>> His idea at home is to do the same thing. The strategy is to panic voters
>> about the federal debt – panic them enough to oppose spending on the social
>> programs designed to help them. The fiscal crisis is being blamed on
>> demographic mathematics of an aging population – not on the exponentially
>> soaring private debt overhead, junk loans and massive financial fraud that
>> the government is bailing out.*
>>
>> *What really is causing the financial and fiscal squeeze, of course, is
>> the fact that that government funding is now needed to compensate the
>> financial sector for what promises to be year after year of losses as loans
>> go bad in economies that are all loaned up and sinking into negative equity.
>> *
>>
>> *When politicians let the financial sector run the show, their natural
>> preference is to turn the economy into a grab bag. And they usually come out
>> ahead. That’s what the words “foreclosure,” “forfeiture” and “liquidate”
>> mean – along with “sound money,” “business confidence” and the usual
>> consequences, “debt deflation” and “debt peonage.”*
>>
>> *Somebody must take a loss on the economy’s bad loans – and bankers want
>> the economy to take the loss, to “save the financial system.” From the
>> financial sector’s vantage point, the economy is to be managed to preserve
>> bank liquidity, rather than the financial system run to serve the economy.
>> Government social spending (on everything apart from bank bailouts and
>> financial subsidies) and disposable personal income are to be cut back to
>> keep the debt overhead from being written down. Corporate cash flow is to be
>> used to pay creditors, not employ more labor and make long-term capital
>> investment. *
>>
>> *The economy is to be sacrificed to subsidize the fantasy that debts can
>> be paid, if only banks can be “made whole” to begin lending again – that is,
>> to resume loading the economy down with even more debt, causing yet more
>> intrusive debt deflation.*
>>
>> *This is not the familiar old 19th-century class war of industrial
>> employers against labor, although that is part of what is happening. It is
>> above all a war of the financial sector against the “real” economy: industry
>> as well as labor.*
>>
>> *The underlying reality is indeed that pensions cannot be paid – at
>> least, not paid out of financial gains. For the past fifty years the Western
>> economies have indulged the fantasy of paying retirees out of purely
>> financial gains (M-M’ as Marxists would put it), not out of an expanding
>> economy (M-C-M’, employing labor to produce more output). The myth was that
>> finance would take the form of productive loans to increase capital
>> formation and hiring. The reality is that finance takes the form of debt –
>> and gambling. Its gains therefore were made from the economy at large. They
>> were extractive, not productive. Wealth at the rentier top of the economic
>> pyramid shrank the base below. So something has to give. The question is,
>> what form will the “give” take? And who will do the giving – and be the
>> recipients?”*
>>
>> --
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>>
>> Think tank: http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>>
>>
>>
>>
>>
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>
>
> --
> Ryan Lanham
> rlanham1963 at gmail.com
> Facebook: Ryan_Lanham
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