Democracy

The New Right: Fictitious Yesterdays and Fabricated Tomorrows

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By Ovais Malik

In contemporary political discourse, doctrine and reality tend to be radically divorced from each other. We often hear from the New Right about the alleged glories of private enterprise; the wonders of the “free market”; and the incompetence of government intervention. When it comes to reality, however, sinister hypocrisies pervade this rhetoric.

 

Ronald Reagan – infamous for announcing that “Government is the problem, not the solution” – was ironically the most protectionist US president since the Great Depression. While chastising single black mothers for being “Welfare Queens” at home, he boasted internationally about ‘record import relief’ for American industry. Assessment of his British counterpart Lady Thatcher reveals similar problems. At the time of her departure from office, government spending as a percentage of GDP remained 42.25; it was the same when she became Prime Minister in 1979. Why is the case? Perhaps this is due to the existence of heavy state support for financial institutions, corporations and privatized natural monopolies such as railways. Estimates suggest government insurance policy for the “too big to fail” banks to be $40 billion a year. The source of profits from such institutions appear rather dubious.  Looking at an IMF study, editors at Bloomberg observed, ‘the billions they allegedly earn for their shareholders were almost entirely a gift from from US taxpayers’. Ordinary people on the other hand are to be subjected to austerity, market discipline and bootstrap-pulling. This is often called “tough love”. The question “How are you going to pay for it?” only ever arises in conjunction with that of adequately funding schools and hospitals.

 

Corporate welfare recipients who are often labelled “wealth creators” by the New Right should really be called “wealth extractors”. Apple is a classic example: Virtually every technological component inside the iPhone was developed by a government grant before being handed off to private capital for commercialization and profit. Touch screens, the internet, GPS, computers, biotechnology, nanotechnology etc. are also prominent examples. All were funded by taxpayer dollars at public expense. A large bulk of what passes off as “defense expenditure” is essentially a subsidy to hi-tech industry (So much for rugged individualism). Apple now pays 0.005 % tax on profits in an offshore tax haven. Costs and risks are socialised, while wealth is privatised.

 

Pointing out hypocrisies concerning class conflict and structural inequalities is supposedly “playing the politics of envy”. Apparently, it is envious not to scapegoat immigrants, single mother “scroungers”, unions and the imaginary “bloated pensions” of public sector workers for all societal ills. Is it a coincidence that CEOs in the 1950s made 30 times as much as the average worker, whereas now they make 300 times as much? In some abstract universe, one may point to meritocracy and productivity to explain this. In the real world, this can be better explained by wage repression; weakened unions reducing bargaining power and outsourcing. The former Chairman of the Federal Reserve, Alan Greenspan noted the importance of “job insecurity” in controlling inflation. In other words, fear of unemployment meant workers did not ask for pay rises, hence skyrocketing profits complemented by declining real wages and longer working hours. This has meant an enormous increase in people accumulating large amounts of debt to survive. The emphasis on controlling inflation is crucial here and reveals a conflict of interest between two sections of the populace, creditors and debtors. Inflation erodes the value of debt, hence why those who profit from others’ debts prefer deflation.

 

Both Thatcher and Reagan claimed to be classical liberals. However, their policies often contradict the teachings of renowned classical liberals such as Adam Smith. Take the lack of enforcement of antitrust laws, or union busting. The former led to increasing monopoly power since the 1980s while the latter led to a fundamental assault on workers’ rights and security. Adam Smith, in contrast, was staunchly against monopoly power and thought regulation protecting the worker was always ‘just and equitable’. You won’t hear this quoted by any neoliberal think-tanks.

 

The policies of the New Right, along with the Third Wave ‘left’ (Clintonians and Blairites), were largely based on neoclassical economic theory. Neoclassical economics has been critiqued for having a ‘normative’ bias. In other words, its abstract theorems and models are based on assumptions of what ought to be, rather than what is- thus divorced from reality.

 

With this in mind, it is apparent that what is practiced is completely at odds with what is preached. One should be extremely sceptical of hegemonic narratives espoused by politicians as well those who insist there is no alternative to the status quo.

 

Sources:

https://www.theguardian.com/commentisfree/2017/jul/12/phone-state-private-sector-products-investment-innovation

https://www.realclearpolitics.com/2013/02/23/why_should_taxpayers_give_big_banks_83_billion_a_year_302581.html

https://www.forbes.com/sites/francescoppola/2016/08/31/no-apple-you-cant-hide-your-profits-in-europe-any-more/#5cd3f0967b07

http://michael-hudson.com/2014/01/n-is-for-neo-serfdom-o-is-for-offshore-banking/

https://mobile.nytimes.com/1997/02/27/business/job-insecurity-of-workers-is-a-big-factor-in-fed-policy.html

http://www.businessinsider.com/ceos-are-making-300-times-the-average-worker-2015-6?IR=T

https://chomsky.info/199705__/

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