ZenHalfTimeCrock
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The things that puzzle me are these:
1. Why is Kwarteng reviving supply-side economics when - unless I have missed one - it is already well-known that there are no examples of it ever having worked? Is there something unique to our current predicament that justifies this experiment in what has been dubbed ‘zombie economics’?
2. It is also well-known that - in MEDCs (More Economically Developed Countries) the neoliberal economics favoured by Kwarteng exacerbates inequality. In their recent books, The Spirit Level and The Inner Level, epidemiologists Richard Wilkinson and Kate Pickett have found that along with this gap, the more unequal a society is, the more people suffer from a variety of physical and mental health problems, such as obesity and depression. Additionally, drug abuse tends to be rife, rates of imprisonment and teenage pregnancies are higher, social mobility is less possible (making it harder for people to better their lot in life), trust between citizens is lower, and violence more endemic. In other words, outcomes are significantly worse in more unequal countries like the US and UK.
Deregulated markets also tend to put a strain on family life, as both parents typically have to work long hours. It is therefore unsurprising that already by 1991 Britain had the highest divorce rate of any EU country, one that was only comparable to that of the United States. Given that America and Britain both serve as exemplars of the this variant of free market philosophy, in the light of Wilkinson and Pickett’s research, it seems reasonable to draw the conclusion that it is hardly conducive to the well-being of society. So why does Kwarteng seem to think it is?
3. In his book False Dawn: The Delusions of Global Capitalism, John Gray looks in detail at four countries that have experimented with neoliberal policies: the USA, UK, New Zealand and Mexico. In each instance, the imposition of these policies demonstrably increased economic inequality (thus confirming Wilkinson and Pickett’s research), and reduced social mobility and cohesion. For example, according to the Rowntree Report on Income and Wealth, inequality in the UK increased dramatically and quickly between 1977 and 1990, a period during which the poorest income groups ceased to benefit from economic growth, and there was a threefold increase in the proportion of the population earning less than half of the national income. However, by 1984-85, the richest 20% of earners enjoyed a 43% after tax share of that income, the highest since the end of the World War 2. Meanwhile, in New Zealand a previously non-existent underclass was created following the introduction of neoliberal policies, while in Mexico the size of the middle classes was substantially reduced, and the very poorest were driven into a state of even more abject poverty.
But what of the USA, a country that has both fully embraced and preached the free market philosophy? Gray takes the view that ‘it has gone far towards establishing itself as the unofficial American civil religion’ but that the results have been to ‘bring about levels of economic inequality unknown since the 1930’s and far in excess of those found in any other advanced industrial society today, [and] has encompassed an experiment in mass incarceration, accompanied by an elite retreat into walled proprietary communities that has left the country deeply divided socioeconomically. He then goes on to add that, ‘in late twentieth-century America, the free market has become the engine of a perverse modernity. The prophet of today’s America is not Jefferson or Madison. Still less is it Burke. It is Jeremy Bentham, the nineteenth-century British enlightenment thinker who dreamed of a hyper-modern society that had been reconstructed on the model of an ideal prison.‘
Again, set against this backdrop, why does Kwarteng think that there will be a different outcome, especially when - in not imposing a windfall tax - the Chancellor is saddling us with even more debt? And why try to emulate the USA, given how fissiparous that society has become by following policies that this government favours?
And what guarantees are there that the economic development zones favoured by Truss and Kwarteng, ones where the only socially binding glue would seem to be provided by presumably outsourced and private agencies of law and order, will not end up looking like variations of Mega City-One or Bentham’s famous Panopticon?
Just to be clear, I am not asking these questions because I am hostile to capitalism per se. One reason for this is because of what I have recently read in Peter Singer’s book One World Now, which is about the ethics of globalisation. By his own admission, Singer is no ‘starry-eyed enthusiast for the global capitalist system we have today’ and yet, when considering the period of economic globalisation that took place between 1988 to 2008, he writes as follows:
‘*The incomes of the bottom 5 percent of the world’s people (around 360 million people) have remained the same.
*The incomes of the bottom third of the world’s people (about 2.4 billion people) have risen by 40 – 70 percent.
*The incomes of people at or slightly below the median income (about 380 million people) have risen by 70-80 percent.
*The incomes of the top 1 percent (about 72 million people) have risen by 60 percent.
If our overriding priority is the welfare of everyone affected by economic globalization we should think of this as good news.’
If the above is attributable in some way to some version of free trade, this suggests that capitalism may have something going for it, though with LEDCs there is a suggestion that neoliberal policies have failed them because the deregulation this demands means that infant industries cannot be protected with import tariffs.
But anyway, I look forward to hopefully reading some answers to the questions I have posed authored by contributors who are more favourably disposed to Kwarteng’s brand of economics.
1. Why is Kwarteng reviving supply-side economics when - unless I have missed one - it is already well-known that there are no examples of it ever having worked? Is there something unique to our current predicament that justifies this experiment in what has been dubbed ‘zombie economics’?
2. It is also well-known that - in MEDCs (More Economically Developed Countries) the neoliberal economics favoured by Kwarteng exacerbates inequality. In their recent books, The Spirit Level and The Inner Level, epidemiologists Richard Wilkinson and Kate Pickett have found that along with this gap, the more unequal a society is, the more people suffer from a variety of physical and mental health problems, such as obesity and depression. Additionally, drug abuse tends to be rife, rates of imprisonment and teenage pregnancies are higher, social mobility is less possible (making it harder for people to better their lot in life), trust between citizens is lower, and violence more endemic. In other words, outcomes are significantly worse in more unequal countries like the US and UK.
Deregulated markets also tend to put a strain on family life, as both parents typically have to work long hours. It is therefore unsurprising that already by 1991 Britain had the highest divorce rate of any EU country, one that was only comparable to that of the United States. Given that America and Britain both serve as exemplars of the this variant of free market philosophy, in the light of Wilkinson and Pickett’s research, it seems reasonable to draw the conclusion that it is hardly conducive to the well-being of society. So why does Kwarteng seem to think it is?
3. In his book False Dawn: The Delusions of Global Capitalism, John Gray looks in detail at four countries that have experimented with neoliberal policies: the USA, UK, New Zealand and Mexico. In each instance, the imposition of these policies demonstrably increased economic inequality (thus confirming Wilkinson and Pickett’s research), and reduced social mobility and cohesion. For example, according to the Rowntree Report on Income and Wealth, inequality in the UK increased dramatically and quickly between 1977 and 1990, a period during which the poorest income groups ceased to benefit from economic growth, and there was a threefold increase in the proportion of the population earning less than half of the national income. However, by 1984-85, the richest 20% of earners enjoyed a 43% after tax share of that income, the highest since the end of the World War 2. Meanwhile, in New Zealand a previously non-existent underclass was created following the introduction of neoliberal policies, while in Mexico the size of the middle classes was substantially reduced, and the very poorest were driven into a state of even more abject poverty.
But what of the USA, a country that has both fully embraced and preached the free market philosophy? Gray takes the view that ‘it has gone far towards establishing itself as the unofficial American civil religion’ but that the results have been to ‘bring about levels of economic inequality unknown since the 1930’s and far in excess of those found in any other advanced industrial society today, [and] has encompassed an experiment in mass incarceration, accompanied by an elite retreat into walled proprietary communities that has left the country deeply divided socioeconomically. He then goes on to add that, ‘in late twentieth-century America, the free market has become the engine of a perverse modernity. The prophet of today’s America is not Jefferson or Madison. Still less is it Burke. It is Jeremy Bentham, the nineteenth-century British enlightenment thinker who dreamed of a hyper-modern society that had been reconstructed on the model of an ideal prison.‘
Again, set against this backdrop, why does Kwarteng think that there will be a different outcome, especially when - in not imposing a windfall tax - the Chancellor is saddling us with even more debt? And why try to emulate the USA, given how fissiparous that society has become by following policies that this government favours?
And what guarantees are there that the economic development zones favoured by Truss and Kwarteng, ones where the only socially binding glue would seem to be provided by presumably outsourced and private agencies of law and order, will not end up looking like variations of Mega City-One or Bentham’s famous Panopticon?
Just to be clear, I am not asking these questions because I am hostile to capitalism per se. One reason for this is because of what I have recently read in Peter Singer’s book One World Now, which is about the ethics of globalisation. By his own admission, Singer is no ‘starry-eyed enthusiast for the global capitalist system we have today’ and yet, when considering the period of economic globalisation that took place between 1988 to 2008, he writes as follows:
‘*The incomes of the bottom 5 percent of the world’s people (around 360 million people) have remained the same.
*The incomes of the bottom third of the world’s people (about 2.4 billion people) have risen by 40 – 70 percent.
*The incomes of people at or slightly below the median income (about 380 million people) have risen by 70-80 percent.
*The incomes of the top 1 percent (about 72 million people) have risen by 60 percent.
If our overriding priority is the welfare of everyone affected by economic globalization we should think of this as good news.’
If the above is attributable in some way to some version of free trade, this suggests that capitalism may have something going for it, though with LEDCs there is a suggestion that neoliberal policies have failed them because the deregulation this demands means that infant industries cannot be protected with import tariffs.
But anyway, I look forward to hopefully reading some answers to the questions I have posed authored by contributors who are more favourably disposed to Kwarteng’s brand of economics.
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