The Neoconservative Destruction of the Public Sector

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Wed, 15 Feb 2006 11:25:34 -0800 (PST)

The Neoconservative Destruction of the Public Sector

 

 

 

http://www.comer.org/

 

 

The Neoconservative Destruction of the Public Sector

 

by Dix Sandbeck

 

The Clinton Scare

 

Since the Reagan years the neoconservative (NC) wing of the Republican

Party has dominated American politics. Even when Clinton was in office,

the NCs proved to have swung the point of gravity in American politics

so much towards their side that the Democrats felt forced

to follow policies well to the right of their traditional positions.

 

Nevertheless, to the NCs' great worry, Clinton's centrist policies were

economically sounder, primarily because they restored some of the

middle class' real incomes, which boosted aggregate spending power.

So while the rich were still getting richer, they were no longer raking

in the entire growth dividend from the booming economy.

 

Clinton's international policies, including support for the Kyoto Treaty

and a willingness to listen more to America's international partners,

further riled the NCs. Their foreign policy was to unilaterally project

American power with little regards for how it would be perceived,

even by America's long-term strategic allies in continental " Old Europe. "

 

With the economy rebounding, the charismatic Clinton easily won

reelection in 1996. Worse yet, the NCs were faced with the grim prospect

of being shut out once again in 2000 by Clinton's vice-president, Al Gore.

 

To prevent that, became the goal of NCs backrooms.

Vastly improving their chances were the godsend

of Clinton's silly indiscretion with Monica Lewinsky. Blowing this out

of all proportions the NCs managed to put the Democrats

on the defensive and, with a little help from the High Court,

sneak their candidate, George Bush, past the post

and into the White House.

 

The Season of the Falderal

 

With their man in the White house, Bush's election masquerade

as a " compassionate conservative " – put on for the benefit

of the independent voters in the political center

– was quickly tossed aside.

Instead, the focus proved to be the old Reagan medicine

– of top-heavy tax cuts,– deregulation,–

– and reduction of public spending – except on the military.–

Privatizing public activities, and dismantling public bodies charged

with planning and oversight functions in the economy has given

the corporate sector an almost free hand in the pursuit of their

interests.

 

Furthermore, in Bush' Washington the respect for public service

is at an all-time low, causing lobbying, political favoritism,

and the policies of pork barreling to reach unprecedented levels.

In line with this, many top positions in the underfunded federal agencies

have been handed over to appointees, whose main – and sometimes

– only qualification has been campaign work in the NC political machine.

 

What remains of discretionary spending is mostly cut into pet projects

and handed back to lobbying corporations that has given campaign

contributions to the senators and congressmen writing the bills.

With the main aim of the Bush administration's policies

- squarely focused on protecting the interests of the wealthy,

- economic inequalities are once again widening.

 

But according to Cheney, receiving a growing share of the national

output is their due, fuelling the expansion of conspicuous consumption,

and, as a bonus, handing over to them the mortgage

that the ballooning deficits are acquiring on America's future.

It would not bode well, of course, for the NC dream of establishing

a permanent lock on government power if too many of the voters

were to recognize the real consequences of their policies.

 

Therefore, an integral part of the NC political strategy has been

to constantly have a well-oiled spin machine in full operation.

At the center of this is a president, who – despite the fact that

he comes from a super-rich family at the center of American power

– is portrayed as someone close to average Joe, and, like him,

not too familiar with all the big words used

by his more intellectually endowed, but political suspect, opponents.

 

What has been critically important for the success

of the NC spin machine is the way economics traditionally

is being taught in schools across the country.

 

This has formed deep-rooted attitudes in the populace,

seeing the economy as competitive laissez-faire markets driven

by self-interested, but rational and fully informed agents.

That much of the political debate in America is based on this conception

has made it a lot easier for the NC spin machine to get citizens

in ordinary incomes brackets to accept policies

that factually are detrimental to their interests.

 

Friedman and Maximization of Returns

 

While teaching of economics today most-ly adheres to the market-based

neoclassical foundation, this was not the case during a long spell

after the

Great Depression threw a monkey wrench into the Western economies.

When this caused massive unemployment and empty factories,

Keynes, the leading economist of the day, argued that activist governments

should gear discretionary spending up and down to ensure that

aggregate demand proceeded along stable levels.

 

As long as the Depression was still in fresh memory, the Keynesian

doctrine remained standard guidelines for economic policies in the West,

even for conservative parties.

 

This troubled the true believers in the markets' superiority

and spurred Milton Friedman, then a relatively unknown professor

at the University of Chicago's Department of Economics

– a bastion that had not been swallowed up by the Keynesian wave

– to publish a short paper in 1953 in which he put forward the

" maximization-of-returns " hypothesis.

 

Conservative economists quickly rallied around this banner, though

it would take them well into the 1970s before their efforts

were picked up in the political arena with the rise of NCism.

On the theoretical level, though, the debate quickly heated up.

Friedman's postulate was that the basic neoclassical tenets

were corroborated simply by the fact that only businesses

that maximize returns will survive.

 

Their owners don't need to understand the underlying economic theories,

just like a good pool player doesn't need to calculate the " right " angles

in order to shoot the ball into the hole. However, when he does so

he implicitly acts " as if " he masters the calculation. Likewise,

a business owner, by the very act of surviving in face of intense

competition

he acts " as if " he masters the intricacies of neoclassical theory.

 

One criticism of the hypothesis was that many observations showed

that businesses do not necessarily attempt to maximize returns,

but often have other goals. Obviously, firms at some level must produce

returns to survive, but if they sub-optimize returns and still can

survive,

others firms probably do just that.

 

Thus, Friedman's hypothesis is a meaningless truism when restated

as a relative statement by replacing " maximization " with

" best at maximizing. " There is, though, another fundamental problem

with the hypothesis. Its inference that firms best at maximizing returns

survive because they adhere to underlying neoclassical economic

principles.

That is still unproven.

 

The ability to maximize returns can just as well be caused by other

factors, which, in fact, observation of current business conditions

often points to. Instead of free and truly competitive markets following

to the neoclassical ideal, modern markets are dominated by monopolistic

competition that diminish choices. Similarly, the ability to project

economic power and flex political connections is of growing importance

for the outcomes of many market events. Sure, Halliburton is good

at maximizing returns, nobody doubts that. But does that prove

that it business practice are " as if " they

adhere to the neoclassical principle of free and open competition?

 

The Degradation of Public Services

 

Meanwhile, when the NCs exaggerate the superiority of free markets,

they use it as excuses for trimming government agencies

and eliminating oversight. (labeled as " red tape " ). The real outcome

of all this has been an ongoing degradation of the fabric of society.

 

The neoclassical conception of free markets operating as independent

natural forces has always been ill-conceived. Markets can only be

interpreted as social institutions that transmit whatever social forces

are in play in the societies in which they exist. And as such,

they develop in step with other aspects of their social structures.

Ever since markets emerged in human history, they have evolved

in a symbiosis with the existing political institutions Market efficiency

is mainly dependent of how well this symbiosis operates.

 

During earlier historical periods, it is evident that

commercial expansion tended to coincide with strong states.

Only these were able to protect trade, and, importantly,

impose unified usages of measures and money over wider areas.

The recent hurricanes tragically showed the extent to which

the America's social fabric has been allowed to erode.

 

Of course, previous administrations – Republican as well as Democratic

– must share some blame, but beyond all question the

Bush administration has pushed matters to a new level

with the massive diversion of funds to the War in Iraq and tax cuts.

 

One consequence is that the country has is more exposed

to natural disasters than need be.

After Katrina hit New Orleans and during the Rita approach to Texas,

many public responses were woefully inadequate. Evacuation plans

called for the middle and upper class to drive out of town,

but gave little thought to the poor without cars.

Resultantly, in New Orleans they largely ended up being left behind

to fight for themselves amidst a disintegrating public order.

 

Haphazard plans and the lack of unclear chains of authority

created chaotic situations and left obvious problems unattended

for considerable times. One instance was the gigantic traffic jams

on the highways out of Houston that caused both cars

and gas stations to run out of gas, almost farcically so,

in the city that is the very center of the world's oil industry.

 

The disasters thus proved that much of the homeland security talk

has been hype, as the expected measures simply were not in place.

The main culprits were funding cuts to the bone

and political appointees at the top lacking the required skills.

In the face of that, Bush and the NCs clamour for more tax cuts

and government downgrading is a dangerous prescription.

 

America increasingly looks like a firm trying to operate without funding

for product development or for a delivery department

that can bring the products out to its customers.

 

No sane business owner would think of solving such problems

by just cutting wages in the shop.

===============

COMER Publications

 

Babel's Tower, William Krehm

The Bank of Canada: A Power Onto Itself, William Krehm

Democracies and Tyrannies of the Carribean, William Krehm

It's Your Money, W. F. Hixson

Meltdown: Money, Debt and the Wealth of Nations, William Krehm

Price in a Mixed Economy- Our Record of Disaster, William Krehm

Towards a Non-Autistic Economy-A Place at the Table for Society,

William Krehm

Recommended:

Goodbye Canada, Paul Hellyer

Funny Money, Paul Hellyer

 

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