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Thursday, January 7, 2016

Neoliberalism versus Economic Policy that Really works

We are seeing that some really horrible ideas are having predictable effects on economies around the world. They are horrible, they are counter-productive and they hurt people. Yet they are Zombie economic ideas that won't die. Why?

The reason that this happens is that people who have an agenda invent narratives to support that agenda. If it is convenient enough and it's not challenged those narratives become myths, and myths can be very, very bad and very persistent. Especially when those myths justify hierarchy and bullying. See []

In Bill Moyer's Article The Libertarian Delusion he talks about these horrible consequences of neoliberalism. But first let's define what "neo-liberalism" is. A Website called "Corporate Watch" lists some 6 main points about Neoliberalism and what their core tenets are:

  1. The Rule of the Market
  2. Attacking Public Expenditure for Social Services
  3. Deregulation allowing all sorts of rent seeking and abuses
  4. Privatization shifting public capital (wealth) to private hands (privateering)
  5. And at the core of all this:

  6. Eliminating the very concept of "the public good" or "community" and replacing it with "individual responsibility." Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy."

Or as I've observed, these pirates eliminate the notion of "public good" or "commonwealth" and replace it with a buccaneering spirit; Pirates

For more on this read:

Neoliberalism's long war against the People's of the World

It all Sounded Good! Operating under the banner of "Free Enterprise", Free Trade and "economic liberalization". The hucksters tell people they'll be middle class: own TVs, microwaves, internet! They find countries in decent shape, but not wealthy. Like they did with Honduras:

Honduras used to be known as the "breadbasket" of Central America. It grew enough of the basic staple crops of beans, rice, and corn to feed its own people and then have enough left over to export to the region." [Moyers Article]

Then using these Zombie Economic ideas they take countries that were once power houses capable of feeding themselves and turn them into basket cases. But it sounded good. These modern privateers operate under the banner of "free" trade (Freebooting really) and "economic liberalization."

But back in the early-1990s, as part of economic liberalization efforts by the World Bank and International Monetary Fund (IMF) to push for free trade and open up markets around the world -- the so-called policy of "neoliberalism" -- these institutions persuaded Honduras, governed then by President Rafael Leonardo Callejas, to lower or eliminate import duties on basic grains, thereby opening the way for cheaper imported beans, rice, and corn. In return, Honduras received loans that it needed to pay off older loans accumulated by previous governments. And consumers benefited from lower food prices (temporarily). [Moyers Article]

Neoliberalism isn't an accident. The Banking interests who swoop in on entire countries do so because local government's aren't autonomous in their money supply, and banks are rarely run in the public interest. It's easy to induce officers to borrow money from abroad. And when that happens the bankers dictate repayment terms. The one thing that neoliberalism guarantees is rents for investors. But it often comes in talking about "economic reform", "personal responsibility" and balanced budgets. The bait is money. The switch is that countries are induced to sell their wealth and then find themselves renting back their own property. So therefore, after the initial loan starts to come due:

"the price for Honduras' small farmers and rural communities was huge. Because small farmers were not able to compete on price with the much cheaper imports, many of them went out of business, had to sell their lands, and eventually had to move with their families to the cities to find work. (This migration of campesinos to urban areas and abroad -- mainly the US -- created a whole new series of social, political, and economic problems for Honduras. But that's another story.) Suddenly, it became much harder for campesinos to feed their families, their communities, and the rest of the country's population." [Moyers Article]

A lot of Honduran's lost their land, and moved from Honduran Cities to the United States too. Many of them without Visas or other documentation. Some of them turned to crime. Others participated in military adventures, which in the case of Honduras mostly involved killing Hondurans.

"All this was done in the name of "free trade." Of course, the idea of free trade has largely been a myth, because a large portion of the cheap grain imported by underdeveloped countries like Honduras under neo-liberalism has been subsidized by foreign governments. The United States government, under the massive Farm Bill for its Department of Agriculture, is bloated with subsidies designed to protect US farmers. Just from 1995 through 2012, for example, US rice subsidies totaled $13.3 billion. For that same period, US subsidies for corn totaled $84.4 billion." [Moyers Article]

Even if it hadn't been a myth, the "free trade" was arbitraged by giant monopolies whose real goal is to burden people with loans, extract rents (Piketty's "return on Capital (r)") and to substitute real personal enterprise and free enterprise with corporate ownership. [see Capital Versus Unearned Wealth]

"Free trade? No such thing."

So the inevitable (not natural) result of these neo-liberal (also neo-colonial) policies was predictable:

"Naturally, small farmers in Honduras could never hope to compete. Despite all the talk of free trade on the part by advocates of neoliberalism, the fact is that free trade has never existed because of the widespread and huge government subsidies. If the subsidies were removed, many farmers in the US would face the same fate as have many Honduran farmers: They'd go out of business." [Moyers Article]

And the article continues:

"Thanks to the deals made with the World Bank and the IMF two decades ago, Honduras has lost its ability to feed its own people. Nearly two-thirds of the rice Hondurans eat has to be imported. Half of the corn consumed has to be imported. The country has also become vulnerable to fluctuations in the international prices for its staple foods, making it increasingly difficult for Hondurans to afford a basic diet, particularly in light of the prevailing low wages and high unemployment. Is it any wonder that there is so much crime and violence in the country? People who are hungry and are desperate to feed their families tend to do things they would not normally do." [Moyers Article]

The other consequence is country after country loses power over it's money supply and domestic law:

"But it's not bad enough that Honduras has lost its domestic ability to feed itself and is subject to up-and-down world prices for the grains that its people require to survive, now -- because of this external dependency and vulnerability -- the country is even more vulnerable to whimsical threats such as currency devaluations." [Moyers Article]

Joseph Stiglitz calls the feedback of such policies "a vicious cycle." And it is vicious. And the worst thing is that it always looks like the victim countries are the ones at fault for their own degredation. Whether we are talking about Puerto Rico, Greece, Honduras or Detroit; the pattern is the same and the victims are made the scapegoats so that they can be cooked for dinner. The method for implementing neo-liberal policies is always the accusation that the people of the target country are at fault for their own degradation.

"An IMF team, led by Lisandro Abrego, arrived in Tegucigalpa yesterday. It will spend about 10 days in Honduras negotiating with a team from the Honduran government... starting off with a nice cocktail reception last night. The talks could result in some $220 million in credit for Honduras under favorable rates of interest. One of the central points of discussion will likely be Honduras' high budget deficits and to what extent they should be reduced. In other words, how much pain should the Hernández administration inflict on the Honduran people in terms of spending reductions." [Moyers Article]

The IMF is operating in the interests of International financiers:

"Another point of contention may be the value of the lempira. It's no secret that the IMF would like the Honduran government to significantly devalue the lempira, which currently trades at about 21 to the US dollar. Any devaluation -- forget a major one -- would greatly hurt the poor in Honduras where it hurts the most: their stomachs. A devaluation would immediately make imported grains more expensive, and thus more unattainable for the poor, who are already hungry and malnourished." [Moyers Article]

And it's just business Mafia Style. Think of Michael Corleone and the horses head in his enemies bed.

"Thus, this is a really bad idea. The people from the IMF know it, but that's not their primary responsibility or concern. Their job is to find ways for Honduras to increase its exports and attract foreign investment in order to generate more hard currency for the government so that it can improve its capacity to pay off its international loans and receive new ones. So you can't blame them too much for insisting on an "accelerated" devaluation." [Moyers Article]

Personally, I can't blame Hernández alone. This is a three fingered thing.

The blame should fall squarely on the shoulders of the Hernández administration if it allows itself to succumb to this pressure... against the better core interest of the vast majority of Hondurans: the poor." [Moyers Article]

This is international policy that winds up benefiting a tiny sliver of folks who can hang onto slivers of hierarchy, while burying masses in misery. Neoliberalism is international piracy. It violates basic tenents of decency,

"Feed, educate, and protect your people. It's pretty basic. If a government can't do it, then it doesn't deserve to be in power.[Moyers Article]

But who cares? It's a system that makes some people incredibly rich. Yo Ho Ho!!! and a cellar full of rum!

What Goes Around Comes Around

Except what goes around Comes around. Our latest treaties, including TPP, TAP, TISA and others threaten to impose Neo-liberal Catch 22 rules on ourselves. They need to stop. We need an international trade regime that is fair to ordinary people. Not Oligarchs, Multinationals and the world's richest families - only.

Further Reading Started in March 2015, finished in January 2016.

Post Script

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