October 3, 2013
Free-market fundamentalists are back and it looks as if they will dominate the political scene more thoroughly than ever, despite of the Global Financial Crisis and the subsequent recession in Europe and the US. We should let the market’s work, even when they fail because they will fail when government is involved distorting something. They hold this even though the banks and Wall Street were bailed out on such a massive scale by governments.
Their neo-liberal talk, which dominated public policy for more than three decade, revolves around the following ideas: that government borrowing would send interest rates sky-high; that all government debt is bad; that inflation is just around the corner; that austerity creates growth; that tax-cuts to the rich boost the economy through the trickle down effect; that financial markets are efficient because the prices generated by financial markets represent the best possible estimate of the value of any investment, and so there is no need for regulation of the financial system; that the boom bust business cycle has been overcome with stability now the norm; and that privatization is good because any a function now undertaken by government could be done better by private firms.
The result of neo-liberalism in public policy has been a form of economic growth has been a growing inequality because most of the benefits of Australia's economic growth went to those in the top percentile of the income distribution. One good reason why neo-liberal ideas continue to guide the thinking of many, if not most, policymakers and commentators is because these ideas are useful to rich and powerful interest groups.
What we now see returning under an Abbott Government is calls for industrial relations reform to be far more flexible; and the idea that growth in productivity needs to increase and the best way to do this is for employees to work harder, for longer hours and lower wages. For many neo-liberals productivity growth is simply code for working harder not for educating the workforce to take account of improvements in technology.