The Anger Wave That May Just Wipe Out Laissez-Faire Economics - The New York Times - 1 views
www.nytimes.com/...t-laissez-faire-economics.html
market fundamentalism populism theory economics crisis
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few would have guessed that the economic order built upon Mr. Reagan’s and Mrs. Thatcher’s common faith in unfettered global markets (and largely accepted by their more liberal successors Bill Clinton and Tony Blair) would be brought down by right-wing populists riding the anger of a working class that has been cast aside in the globalized economy that the two leaders trumpeted 40 years ago.
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The so-called Brexit vote was driven by an inchoate sense among older white workers with modest education that they have been passed over, condemned by forces beyond their control to an uncertain job for little pay in a world where their livelihoods are challenged not just by cheap Asian workers halfway around the world, but closer to home by waves of immigrants of different faiths and skin tones.
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It is the same frustration that has buoyed proto-fascist political parties across Europe. It is the same anger fueling the candidacy of Mr. Trump in the United States.
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Mr. Trump, the bombastic businessman who’s never held office, and Mr. Johnson, the former journalist turned mayor of London, might not put it this way, since they continue to cling to a conservative mantle. But they are riding a revolt of the working class against a 40-year-long project of the political right and its corporate backers that has dominated policy making in the English-speaking world for a generation.
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The British political scientist Andrew Gamble at the University of Cambridge has argued that Western capitalism has experienced two transformational crises since the end of the 19th century. The first, brought about by the Depression of the 1930s, ended an era in which governments bowed to the gospel of the gold standard and were expected to butt out of the battles between labor and capital, letting markets function on their own, whatever the consequences
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Mr. Keynes’s views ultimately prevailed, though, providing the basis for a new post-World War II orthodoxy favoring active government intervention in the economy and a robust welfare state. But that era ended when skyrocketing oil prices and economic mismanagement in the 1970s brought about a combination of inflation and unemployment that fatally undermined people’s trust in the state.
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The Keynesian era ended when Margaret Thatcher and Ronald Reagan rode onto the scene with a version of capitalism based on tax cuts, privatization and deregulation that helped revive their engines of growth but led the workers of the world to the deeply frustrating, increasingly unequal economy of today.
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After the Brexit vote, Lawrence Summers, former Treasury secretary under President Clinton and one of President Obama’s top economic advisers at the nadir of the Great Recession, laid out an argument for what he called “responsible nationalism,” which focused squarely on the interests of domestic workers.
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Instead of negotiating more agreements to ease business across borders, governments would focus on deals to improve labor and environmental standards internationally. They might cut deals to prevent cross-border tax evasion.
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There is, however, little evidence that the world’s leaders will go down that path. Despite the case for economic stimulus, austerity still rules across much of the West. In Europe, most governments have imposed stringent budget cuts — ensuring that all but the strongest economies would stall. In the United States, political polarization has brought fiscal policy — spending and taxes — to a standstill.