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

Tue Jun 29 16:01:53 CEST 2010

I think lots of naitons were copying each other.  The US tended to be more
insular and self-aware then as now.

Ryan

On Mon, Jun 28, 2010 at 10:59 PM, Michel Bauwens <michelsub2004 at gmail.com>wrote:

> 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?”*
>>>
>>> --
>>> P2P Foundation: http://p2pfoundation.net  -
>>> http://blog.p2pfoundation.net
>>>
>>> Connect: http://p2pfoundation.ning.com; Discuss:
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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
>> P.O. Box 633
>> Grand Cayman, KY1-1303
>> Cayman Islands
>> (345) 916-1712
>>
>>
>>
>>
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>
>
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>
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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
P.O. Box 633
Grand Cayman, KY1-1303
Cayman Islands
(345) 916-1712
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