Wednesday, June 20, 2012

411: The Utopia of theFree Market - Neoliberalism

"TNT acquisition by UPS cost thousands of jobs"
That was a headline in my newspaper of last Saturday.
Formerly I wouldn't have read the article, but nowI see the utopia at work.

The situation is thus: UPS delivers parcels in the Netherlands and Belgium. TNT does the same. UPS wants to acquire TNT, not to increase its capacity, but to take over the customers of TNT. Delivery of parcels will be done by the existing UPS organization.

This means that a few thousand jobs become redundant. It means that people loose their jobs, while one of the things that give meaning to life in our society is participation, having a job.

Here you see the market at work. Profit maximization and stockholders are the main goals of an enterprise. That it creates employment and in this sense has a social function is just an accidental value.

Like Adam Smith said. That the baker bakes a bread, that can feed you  is just an added value. The main interest of the baker is his own profit and income, his self-interest.

Here we may ask the question, whether it is justified that a company just for the sake of increasing profit is allowed to create a social disaster for thousands of families. What ethics applies here?

This is the result of privatization  of the postal services in the Netherlands and something unique is happening now. 

The Dutch Senate has started in investigation into the effects of privatization of a number of previously state enterprises, like postal services and the national railways, energy and telecommunications.

Privatization of state enterprises and public services  was from the late eighties seen by politics as THE answer to all problems.

State enterprises were heavy and slow, the public service was inefficient and not transparent. All  misery would end, if the market would get a say. 

The prices would decrease, increase of quality, and previous public services would become innovative and customer-friendly.

Non of this has become really true. Therefore an investigation by a committee of the Senate is more than justified.

All this could happen due to the 10 commandments of neoliberalism as formulated in the Washington Consensus.

The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C.

The consensus as originally stated by Williamson included ten broad sets of relatively specific policy recommendations:
1.Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP; 

2. Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;

3. Tax reform, broadening the tax base and adopting moderate marginal tax rates;
4. Interest rates that are market determined and positive (but moderate) in real terms;
5. Competitive exchange rates;

6. Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
7. Liberalization of inward foreign direct investment;

8. Privatization of state enterprises;
9. Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;
10. Legal security for property rights.

These have been the guidelines of many governments of many countries in the past 30 years. I guess you recognize some of the themes favored by your political parties (e.g. 3, 8 and 9).

Since 2008 we know that these commandments and neoliberalism have failed, like the opposite, communism, failed. Maybe in the next lecture I can formulate some ideas for a post neo liberalist society.

The Discussion

[13:20] herman Bergson: There is no self regulating market
[13:21] herman Bergson: and there is no rationally choosing customer
[13:21] herman Bergson: That is a utopia....
[13:21] herman Bergson: Thank you....
[13:22] herman Bergson: Next thursday it will be the last lecture of the season and conclusion of this project
[13:22] Lizzy Pleides: Thank you Professor
[13:22] Femtasia Rexen: thank you
[13:22] Bejiita Imako: oki
[13:22] Bejiita Imako:
[13:22] Annie Brightstar (anniebrightstar): Thank you Herman
[13:22] Mistyowl Warrhol: ty
[13:23] CONNIE Eichel whispers: welcome thorberg...
[13:23] herman Bergson: My observation is that we have great trouble finding our way out of the present crisis....
[13:23] Bejiita Imako: seems so it just continues
[13:23] Merlin (merlin.saxondale): Does anyone know a revolutionary economist in Aus callled Steve something?
[13:23] herman Bergson: because nobody has realized that the basic ideas were utopian
[13:24] Bejiita Imako: the company owners want more and more without caring for their employees at all
[13:24] Bejiita Imako: like they're machines
[13:24] Bejiita Imako: really sad development
[13:24] CONNIE Eichel: yep
[13:24] Mistyowl Warrhol: I read an article comparing Big Business to the Mafia.. it is scary how much they are alike.
[13:24] herman Bergson: That is no longer true Bejiita…
[13:24] Merlin (merlin.saxondale): economist in Aus called Steve something? Anyone?????
[13:24] herman Bergson: No Merlin.....
[13:25] Merlin (merlin.saxondale): Oh ok
[13:25] Merlin (merlin.saxondale): He was very critical of the banks anyway
[13:25] herman Bergson: Steve Keen...
[13:25] Merlin (merlin.saxondale): could be
[13:25] Annie Brightstar (anniebrightstar): Herman we are celebrating 60 years of Queen Elizabeth in UK. As such television programs are showing how things were when she ascended to the throne in 1952. When you compare living conditions in 1952 and 2012 talk of Failure seems to be stretching it a bit.
[13:25] .: Beertje :. (beertje.beaumont):
[13:25] Merlin (merlin.saxondale): Good point Annie
[13:26] Merlin (merlin.saxondale): I was there (just)
[13:26] Lizzy Pleides: Nobody knows a solution for the problems. On long term it will be the question if civilization can survive. the nature limits the growth and we have to prove if we are able to react fairly
[13:26] herman Bergson: In a material sense you are right Annie....
[13:26] herman Bergson: We have created material prosperity...
[13:26] Merlin (merlin.saxondale): Thanks Beertje
[13:26] .: Beertje :. (beertje.beaumont): yw:)
[13:27] Mistyowl Warrhol: I disagree, in 50s, ppl could farm for food, etc. Today, ppl dont know how to do that nor is there land on which to do it.
[13:27] herman Bergson: In the first thirty years after WWII by building the social Wlefare state...
[13:27] Merlin (merlin.saxondale): If its him, he was interviewed or radio this week
[13:27] Merlin (merlin.saxondale): Today or yesterday
[13:27] Linda Bartavelle: neoliberalism was not the dominant doctrine in the 50s
[13:27] herman Bergson: No....neoliberalism took over when prosperity was at its height....
[13:27] Annie Brightstar (anniebrightstar): The average livespan for a man in 1952 in England was 66 now it is 79 not bad for failure
[13:28] Annie Brightstar (anniebrightstar): sorry about spelling
[13:28] herman Bergson: When money could make money...
[13:28] herman Bergson: in the 70s and 80s
[13:28] Lizzy Pleides: we have to reduce our consumption, that is most important
[13:28] Merlin (merlin.saxondale): What Annie is saying is relevant
[13:28] CONNIE Eichel: i wish being older... hehe
[13:28] herman Bergson: Then we went for selfishness in the Randian way...
[13:28] herman Bergson: we didn't need the social solidarity anymore
[13:29] Bejiita Imako: today we have a what we call in sweden, wear and throw away society
[13:29] Lizzy Pleides: yes Bejiita
[13:29] Bejiita Imako: things break deliberately so we have to buy new and new all time
[13:29] Merlin (merlin.saxondale): We call it 'disposable'
[13:29] Bejiita Imako: stuff don't last long so the manufacturers can make miney
[13:29] Bejiita Imako: while the scrap heals grow
[13:29] Merlin (merlin.saxondale): is this a digression?
[13:29] Mistyowl Warrhol: true, in 50's, your watch breaks, you took it in to be repaired.. now, just toss is.
[13:29] .: Beertje :. (beertje.beaumont): they do that on purpose Bejiita
[13:29] herman Bergson: That is changing Bejiita.....
[13:30] Bejiita Imako: yes they do
[13:30] herman Bergson: This Earth is a globe with limited resources....
[13:30] Merlin (merlin.saxondale): I don't believe in that 'planned obsolescence' idea
[13:30] Lizzy Pleides: the industry created an artificial demand for their products
[13:30] herman Bergson: Unlimited growth of the economy as goal is an absurdity
[13:30] Bejiita Imako: before machines held virtually forever now no more then maybee some years
[13:30] Bejiita Imako: at least my tv works great'
[13:30] .: Beertje :. (beertje.beaumont): my monitor screen was build for 3 years..they told me..then it broke..I fixed it for 5 euro:)..
[13:30] Mistyowl Warrhol: in 50's ppl want enough to eat, today, they want more than their neighbor
[13:31] Bejiita Imako: but if things last then they instead market new stuff in a way that make people throw away fully working stuff to get a newer model
[13:31] Bejiita Imako: a total waste
[13:32] Annie Brightstar (anniebrightstar): But if everything lasted forever Bejiita what would the workforce do
[13:32] herman Bergson: I would advise….read your newspaper.....check for the signs that question what Bejiita says, that question the absolute  belief in the self regulating free market....
[13:32] Bejiita Imako: well maybe but the thing is that it goes out of control
[13:32] Bejiita Imako: we must have a balance
[13:32] Lauren Nostram is online.
[13:33] herman Bergson: Yes Bejiita....a balance....
[13:33] herman Bergson: a balance between what....good issue to think about
[13:33] Mistyowl Warrhol: The question is.. is it too late to find balance, even if we could get ppl to do it?
[13:33] Bejiita Imako: today its just buy new buy new buy new all time
[13:33] herman Bergson: It is never too late Misty.....
[13:34] Annie Brightstar (anniebrightstar): Bejiita have you ever seen the film (the man in the white coat" 1951?
[13:34] herman Bergson: Most economists thought that the Free Market really had it all....
[13:34] Mistyowl Warrhol: I hope what you say is true. but I see so much damage that can not be undone.
[13:34] Bejiita Imako: no but i recognize the title i think
[13:34] Bejiita Imako: sound familiar
[13:34] herman Bergson: so if history had stopped and reached its endpoint....long live the free everybody will get happy
[13:34] Annie Brightstar (anniebrightstar): A man makes a coat which he thinks will be a boon fo society doesn't need cleaning will last forever
[13:35] Mariella Diesel (mariella.deezul) is online.
[13:35] herman Bergson: Well that is not the case....
[13:35] Annie Brightstar (anniebrightstar): The unions and the business owners see it as a disaster
[13:35] herman Bergson: The financial crisis has awaken a lot of people....
[13:35] CONNIE Eichel: mayas were right, professor? hehe
[13:36] Linda Bartavelle: what you say sounds like what stalin said about communism in ussr in the 30s.. now we have communism, so happiness for all for ever
[13:36] herman Bergson: Greenspan was shocked by the observation that his idea of the free market was a real mistake,
[13:36] herman Bergson: That is different Linda....
[13:36] Bejiita Imako: good that he realized that
[13:36] Bejiita Imako: 'at least
[13:37] herman Bergson: Every utopian ideology is inclined to totalitairism...
[13:37] herman Bergson: there is always a group of people who dont believe th in the utopia....
[13:37] CONNIE Eichel: yes, believe in the utopia, or die...
[13:37] herman Bergson: so they have to be re-educated....
[13:37] Bejiita Imako: an utopia is always impossible
[13:37] Mistyowl Warrhol: maybe we all need to go back and live in caves for a while and readjust our ways of living LOL
[13:37] herman Bergson: Exactly CONNIE
[13:37] Bejiita Imako: its like building a perfect machine with no energy loss
[13:37] Bejiita Imako: impossible
[13:38] Linda Bartavelle: capitalism for the whole planet is not a utopia, it is reality.. but it doesn't bring happiness for all
[13:38] herman Bergson: The challenge for the future will be finding that balance
[13:38] herman Bergson: to get what Aristotle already called the good life...
[13:38] CONNIE Eichel: it is an utopia for owners, linda, at least
[13:39] herman Bergson: Capitalism in the sense of the belief in the free market indeed Linda
[13:39] herman Bergson: But we have to rethink our situation.....
[13:40] herman Bergson: our resources, redistribution of wealth...
[13:40] Bejiita Imako: yes
[13:40] herman Bergson: But that will be work for centuries...
[13:40] Bejiita Imako: it has spun out of control a bit now
[13:40] Lizzy Pleides: centuries are too long Herman, we don't have so much time
[13:40] herman Bergson: reality has taught us a lesson Bejiita....
[13:41] Mistyowl Warrhol: Maybe if ppl would use their own brains and look at a whole picture and not just the bits, one side of the news had feeds them.. but now I am being an optimist :-)
[13:41] herman Bergson: Part of the people go as usual....hoping for th the next bonus
[13:41] herman Bergson: other are in doubt....
[13:41] herman Bergson: read your newsshows....and you see it everywhere
[13:42] Bejiita Imako: yes, seen some examples now recently
[13:42] herman Bergson: Where it will lead to I don't know....
[13:42] herman Bergson: I'll think about it for next lecture ^_^
[13:42] Bejiita Imako: oki
[13:43] herman Bergson: So thank you all for your participation again....
[13:43] Bejiita Imako:
[13:43] herman Bergson: Class dismissed
[13:43] .: Beertje :. (beertje.beaumont): thank you Herman
[13:43] Bejiita Imako: interesting as usual :9
[13:43] Bejiita Imako: tnx Herman
[13:43] Femtasia Rexen: thank you Professor
[13:43] Gemma Allen (gemma.cleanslate) is offline.
[13:43] CONNIE Eichel: great class, i missed it :)
[13:43] Mistyowl Warrhol: TY.. much to think about :-)
[13:43] Bejiita Imako: yes
[13:44] herman Bergson: Thank you CONNIE
[13:44] Bejiita Imako: ok cu soon again bye
[13:44] Bejiita Imako:
[13:44] CONNIE Eichel: a pleasure :)

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