neo-liberal assumptions in the news Sean Phelan

1. neo-liberal assumptions in the news Sean Phelan

2. “The state of opinion which governs a decision on political issues is always the result of a slow evolution, extending over long periods and proceeding at many different levels. New ideas start among a few and gradually spread until they become the possession of a majority who know little of their origin” F. A. Hayek, The Constitution of Liberty (1960)

3. what is neo-liberalism? • Term used to describe the broad social, cultural and political changes that have taken place in the structures of western style capitalism since the late 1970s. • An ideological shift that revolves around the relationship between states and markets • Hayek and Friedman two of its key political theorists • Anglo/American pedigree: Thatcher and Reagan its most trenchent political proponents • Term mainly used by those who oppose/critique it • Liberal in the economic sense

4. Key neo-liberal assumptions • Reduce the role of the state as a direct economic actor • Greater power to the “ free market” • Competition good/monoplies bad • Deregulation of markets, including labour markets, desirable • Privatisation of state companies necessary • State as market facilitator • Sometimes referred to, interchangably, as “Globalisation” or the “Washington Consensus”

5. The Guardian’ s editorial voice - a microcosm of the neo-liberal turn? “But where, pray, are [the] advantages? [in floating British Gas] It will certainly provide anything up to 10 billion pounds to reduce the Government's borrowing requirement, and maybe finance pre-election tax cuts. But do we really want tax cuts financed by selling the [state] silver? Mrs. Thatcher claims that this is all part of introducing peoples' capitalism into Britain. Would that it were so. In fact, selling off shares in monopolies like gas and telecommunications at cut-price rates in order to produce a quick (and in the case of British Telecom,astronomical) capital gain, gives a completely distorted view to new punters of what investing in industry - with its high risks and long pay-off periods - is all about. If governments really want to get off the backs of State monopolies (and it is difficult to see why they should) then there are other ways than privatization”.- May 8, 1985

6. Guardian and the “end of history”? ‘Last week, Lionel Jospin's government decided to block European Union moves to liberalise the continent's energy market, which would have exposed its national champion EdF to competition. France's insouciance annoyed the 14 other member states of the EU, who all voted for, and in some cases have already implemented, a considerable degree of deregulation. They have watched France's power giant swallow rivals whole, such as London Electricity. French politicians are courting votes. Upcoming elections for the presidency and the national assembly mean they do not want to anger powerful trade unions which would oppose the painful job losses that privatisation would entail’. Guardian Editorial, March 9th, 2002

7. Neo-liberal ideology Neo-liberalism is a composite of different strands of economic thought: neo-classical, Austrian, supply side, libertarian and monetarist. Crystallise around a loose, yet common ideological attitude Neo-liberalism Negative freedom/freedom from Economic freedom Individual Micro-morality Market Power decentered Means Equal opportunity Common man/market populism Dynamic Socialist “Other” Positive freedom/freedom to Political freedom Collective Macro-morality State Centralisation of power Ends Equality Intellectual hubris/elitism Rigid

8. The rhetoric of Milton Friedman “The essence of human freedom is of a free private market, is freedom of people to make their own decisions so long as they do not prevent anybody else from doing the same thing. That makes clear, I think, why free private markets are so closely related to human freedom. It is the only mechanism that permits a complex interrelated society to be organized from the bottom up rather than the top down. However, it also makes clear why free societies are so rare. Free societies restrain power. They make it very hard for bad people to do harm, but they also make it very hard for good people to do good. Implicitly or explicitly, most opponents of freedom believe that they know what is good for other people better than other people know for themselves, and they want the power to make people do what is really good for them”. 1991 Lecture

9. The rhetoric of Kevin Myers ‘...how those who argued that poverty was a moral matter, to be solved by the state, detested the PDs. [Country wideboy] Charlie McCreevy, of course, did not. Instinctively, he understood their message. Let people keep their earnings. Look after the hopeless, the old, the ill, but make everyone else work. So the pious State-interventionists turned their loathing on him, as he took a shears and through Budget after Budget hacked at the levels of taxation. We know what happened. Tax-take rose, and the Government coffers were awash with money, even as the economy boomed. It is the simplest of economic lessons, one which was derided by the obsolete left who preferred inert, incompetent and heavily unionised State-run companies to dynamic and privately-owned ones. In a bizarre rebuttal of their own self-interest, they preferred a State monopoly and high airfares to low air-fares and competition’ The Irish Times, Sept 15th 2000

10. But isn’t the “free market” a bad thing? ‘This is the triumph, not just of celebrity, but of market values: prostitution is, after all, the ultimate expression of the free market’ Finton O’Toole, Dec 1999 on a Metropolitan exhibit of Versace frocks ‘Have we failed to realise that meanness, covetousness and the rapacious pursuit of self-interest are not unfortunate by-products of a free-market economy, they are absolute essentials without which it cannot function?... The free market does not produce meanness and selfishness, it requires them’. Reader’s letter, The Irish Times, 16.02.2001

11. Boston V Berlin • Debate revolves around concerns about identity and sovereignty • But also has a strong neo-liberal ingredient • Boston: code for the neo-liberal forms of governance typically associated with the US • Berlin: code for the social democratic “other” typically associated with continental Europe

12. Boston V Berlin “In a controversial speech delivered last night in Boston, Ms de Valera said directives and regulationsagreed in Brussels often "seriously impinge on our identity, culture and traditions". Senior Government sources expressed surprise at Ms De Valera's hard-hitting comments. They will also cause serious embarrassment for Ireland at European level.” “In July the Tánaiste and PD leader, Ms Harney, also expressed concerns about European integration, saying it would be against the interests of Ireland, which she claimed was "spiritually a lot closer to Boston than Berlin. Ms Harney had told a meeting of the American Bar Association that she was against a more centralised Europe with key political [and] economic decisions being taken in Brussels”. The Irish Times, September 19th, 2000

13. Derek McDowell on Boston V Berlin "Boston stands for prosperity and inequality, low taxes and poor public services. A society where you buy healthcare, schooling for your kids, security guards for your neighbourhood, a society where you can buy a good quality of life, if you have the money, and a society where those who don't have the money do without. Berlin, however, according to the Labour Party stands for "public investment and public services, a society which provides healthcare, education and security to all who need it and not just those who can afford to pay". ...Mr. McDowell remarked that if Fianna Fáil and the PDs line up behind the Boston model, Fine Gael is at risk of sinking in mid-Atlantic The Irish Times, March 25th, 2002 .

14. Read my lips - no tax rises! McDowell promises no rise in rates of income tax Labour's finance spokesman, Mr Derek McDowell, has insisted the party will not raise income-tax rates and will honour its corporation tax deal with business. He told the 300 delegates: "There is no such thing as something for nothing, and the public knows that well". They could not build roads, have a better health service, repair schools or provide creches without more resources. But Labour would hold to the 12.5 per cent corporation tax rate for multinational companies, agreed with the EU until 2007, and there would be no income-tax increases. Criticising both Fianna Fáil and Fine Gael, he said they had bought into the "something-for-nothing philosophy".

15. Deposit £4 and get £1 free! • Rhetorical pitch to the individual • Your money to do with it as you please! • Collective purpose? • Its common senseness unchallenged • Only really challenged on technical grounds • Political failure as much as a media failure • No follow up critique by any of the opposition parties • ‘The Tanaiste, Ms Harney, said the savings scheme [introduced as part of the Finance Bill] represented a powerful and innovative initiative. "The savings plan will give a great boost to people's ability to save, by returning taxpayers' money to them and by giving equal benefit to those on modest and fixed incomes," she added’. • Irish Times, Mar 16th, 2001

16. And what did the others say? “Fine Gael's new spokesman on finance, Mr. Jim Mitchell, said ... "The provisions proposed seem to be riddled with difficulties and have the potential to be a bureaucratic nightmare and provide plenty of opportunity for creative accounting and money switching. It is likely the banks will be the biggest winners.” Labour's spokesperson on finance, Mr Derek McDowell, described as "unfair" the provision to introduce favourable tax treatment of share options. "The proposals in the Finance Bill fall short of what is required," he said. "Effectively, the provisions in the Bill allow big companies to pay large salaries at a reduced rate to a small number of well-paid workers.” The Finance Bill has also been criticised by the Green Party, which accused Mr McCreevy of abandoning the poor. "Charlie McCreevy's savings scheme, without measures to ensure social equity, do little more than 'rub salt in the wound' to those who are marginalised by the Celtic Tiger," said its finance spokesman, Mr Trevor Sargent.

17. Neo-liberal redistribution? ‘This [scheme] is such an appalling statement of our collective priorities that comment is almost redundant. I don't need an extra 50 pounds a month. Anyone who can afford to save or invest 200 pounds a month, by definition does not need an extra 50 pounds a month. I was planning to save anyway - I didn't need this encouragement. What truly baffles me is how members of this Government can preside over these kind of redistributive policies and simultaneously claim to be defenders of social justice."The left-wing focus on social justice as redistribution of resources by the State misses a wider concept of justice," the Tanaiste, Mary Harney, wrote in The Irish Times last week. The Progressive Democrats, she continued, "stand for equality of opportunity and merit".By increasing employment "our economic policies are working for justice". Anne Marie Wren, Irish Times, Mar 6 2001

18. Barcelona Summit - Irish Times “EU leaders claimed to have made an important breakthrough in their ambition to make Europe the world's most competitive economy by 2010. The leaders agreed at a meeting in Barcelona to a partial liberalisation of the European energymarket by 2004 butFrance succeeded inpreserving its state monopoly for providing electricity to households. Tony Blair said "There is no doubt this is a change of gear for Europe and a very welcome change. There is no one really arguing about the direction. There may be some argument about the pace of movement," he said. The French Prime Minister, Mr Lionel Jospin, welcomed the summit deal on energybut said he was glad to preserve the monopoly on supplying domestic users for the moment, adding that there was no proof that competition improved service”.

19. Barcelona - The Los Angeles Times “European Union leaders agreed here Saturday to reforms designed to make their economies more competitive, though resistance from France produced a proposal to open the alliance's energy markets by 2004 only in the commercial sector. The agreements in Barcelona amounted to an economic "change of gear," an enthusiastic British Prime Minister Tony Blair said Saturday. Even center-left governments accept that markets will have to be opened and competition stimulated to achieve the lofty official goal of making Europe's economy "the most competitive in the world," he said. "There's been an idea that the European social model is about more and more regulation, is about state control, is about an old-fashioned attitude toward science and technology," Blair said. "The discussion of economic policy at this summit might be a world away from the type of discussion" five years ago”

20. Barcelona - The Financial Times It was easy to forget that Barcelona's main outcome - agreement on the liberalisation of the commercial energy market "as of 2004" - fell short of the original hopes of the Commission and the Spanish EU presidency. They wanted the full liberalisation, including household users, of the electricity market in 2003 and of gas in 2004. This goal was blocked by the two French presidential contenders, President Jacques Chirac and prime minister Lionel Jospin, who feared a trade union backlash during the current election campaign.

21. Barcelona - the untold story? Why was there French resistance? Is it merely a case of electioneering & self-interested unions? What is the economic argument for resisting deregulation and where is it being discussed in the media? Is there popular support for the Government stance in France, and, if so, why? How do French energy prices compare to those in other countries? Is there popular support across Europe for the Barcelona agenda? And as for “Boston V Berlin” ??? The meeting was symptomatic of a curious contradiction: Even as Europe drifts further from the United States because of tensions over foreign policy, leaders are undertaking economic changes that will make the region more closely resemble the U.S.Los Angeles Times

22. Barcelona - in ‘our’ name? “TONY BLAIR appeals to his fellow European leaders today to use this week's Barcelona summit to kickstart the economic regeneration process to which they committed themselves in Lisbon two years ago. "We cannot deliver . . . [the changes] the Europe citizens want unless we are prepared to reform. We are failing to realise our potential," Mr Blair declares in a joint article in The Times with Goran Persson, the Swedish Prime Minister. "Reform and modernisation require hard choices, and are not always easy.” The London Times

23. Barcelona - in ‘our’ name? If the EU leaders wanted evidence of their disconnection with European citizens, they need only have stepped out of their conference centre onto the streets of Barcelona. Inside the summit venue, the leaders proclaimed the importance of their "Lisbon agenda" - a 10-year plan to liberalise the European economy. But the very measures the leaders are championing - more privatisation, labour market flexibility and a bigger role for private firms in providing public services - are precisely what make many Europeans fearful. The European Commission's dream of a more business-friendly Europe with a smaller economic role for the state sounds like a nightmare for citizens who crave security for themselves and their children. Denis Staunton, The Irish Times, March 19th, 2002

24. Free market cant “America has a window of opportunity to extend and secure our present peace by promoting a distinctly American internationalism. We will work with our allies and friends to be a force for good and a champion of freedom. We will work for free markets, free trade and freedom from oppression. Nations making progress toward freedom will find America is their friend” President Bush's Message to Congress on His Budget Proposal, Feb 28th, 2001 Only a few hours after the U.S. slapped a 19 per cent tariff on Canadian softwood lumber, Bushcalled for open markets and free trade [at the Monterrey summit]. "When nations close their markets and opportunity is hoarded by a privileged few, no amount of development aid is ever enough," he said. Toronto Star March 23, 2002

25. Economic nationalism? “Mr Bush said he had not abandoned his free-trade beliefs, saying the tariffs would "help steel workers, communities that depend upon steel and the steel industry adjust without harming our economy". "We're a free-trading nation, and in order to remain a free-trading nation, we must enforce law. And that's exactly what I did," he said”. Australian Financial Review March 7, 2002 Thursday Mr. Bush defended his move .... "We're a free-trading nation, and in order to remain a free-trading nation, we must enforce law," he said. "And that's exactly what I did. I decided that imports were severely affecting our industry, an important industry, in a negative impact, and, therefore, provide temporary reliefso that the industry could restructure itself." New York Times, March 6th, 2002

26. Who’s doing the ‘dumping’? Bush's pragmatism on the decision to impose the steel tariffscame after he weighed up the costs and benefits. On the one hand, 160,000 steelworkers in America, 30,000 of whom marched on the White House earlier this month, are convinced that they are the target for dumped steel products from across the globe. On the other hand, the damage to America's global reputation, and its commitment to free trade, weighed heavily. Sunday Times, March 10th 2002

27. Trade war? “TONY Blair was reeling yesterday from a kick in the teeth by George Bush over steel tariffs.The U.S. President ignored the Premier's pleas and imposed a 30 per cent charge on imported steel to protect clapped-out American plants. The move could cost thousands of British jobs and threatens to ignite a global trade war. In the Commons, Mr Blair denounced the President's action as 'arbitrary, unjustified, unacceptable and wrong”. Daily Mail, March 7th 2002

28. War losers? THE European Union is to match American steel tariffs with its own protectionist barriers, harming other countries and delivering a further blow to the world's trading system. Anticipating a flood of cheap steel diverted from the American market, the European Commission has drawn up plans for tariffs of up to 26pc on 15 categories of imported steel. Anthony Gooch, the commission's trade spokesman, said the measures had been targeted carefully to minimise damage to "innocent bystanders",but said Europe's steel industry could not be expected to bear the brunt of anti-trade measures taken by the Bush administration. "In doing what it did, the US knew it would have a domino effect," he said. "We have not taken the opportunity to indulge in protectionism ourselves. Our measures are strictly confined to products where the US action will result in trade diversion." The Daily Telegraph, March 26, 2002

29. Development Aid - but with neo-liberal provisos? In a speech to the [Monterrey] conference Friday morning, Bush plans to flesh out an initiative announced in Washington last week to increase U.S. development aid by $ 5 billion over the next three years. The new money is to go into what the administration has called a "Millennium Challenge Account," with grants targeted toward countries that have established democratic governments, free markets and health and education programs. Bush'sannouncement appeared to defuse much of the antagonism that was expected to greet him at the Monterreyconference, which has called for wealthy countries to double their foreign aid. The Washington Post March 22, 2002

30. Red Oscar and the UK press When pro-euro business leaders gathered at the City offices of accountants KPMG on Friday to plan the launch of their Britain in Europe campaign, Colin Sharman, the firm's chairman, fretted about the damage being done by Bonn's finance minister, "Red Oscar". "What do we do about the German question?" he asked. A pager sounded on the hip of Colin Byrne, the campaign manager: Oskar Lafontaine had resigned. "Colin," said Byrne, "I think the German question has just been solved.” Sunday Times, Mar 14th, 1999

31. The fate of Red Oscar ALARM was growing in Downing Street last night that Germany's new finance minister is another 'Old Labour' style socialist. Jubilation broke out in Number 10 after 'Red' Oskar Lafontaine resigned and was replaced by the supposedly 'business friendly' economist, 'Pink' Hans Eichel. But the celebrations cooled after it emerged that Mr Eichel, 57, is not the moderate he seems. German bosses protested that in reality he is a strong supporter of a European superstate with a single government. Daily Mail, Mar 13th, 199

32. Goodbye To Red Oskar, Dead Losskar TO listen to some people you might think this country faced as big a threat from Germany today as it did in 1939. They have even identified the man who is as dangerous now as Hitler was then - Oskar Lafontaine. While he is undoubtedly a political buffoon, Germany's finance minister was never going to be a threat to Britain. Yesterday Red Oskar resigned so he could spend more time with his absurd out -of-touch ideas. He had a grand scheme for raising taxes across Europe but it had as much chance of success as Luxembourg does in the World Cup. Lafontaine's boss, Gerhard Schroeder, is totally against his manic old- fashioned notions. He is very much New Labour and models his policies on Tony Blair's. Anyone with a gram of sense could see that Red Oskar was conducting the sort of battle that the Labour Party lost 20 years ago. The Mirror

33. The fate of Red Oscar There will certainly be hefty sighs of relief in Downing Street at the resignation of the man Tony Blair and his entourage saw as the embodiment of "old Labour" thinking in Europe Daily Telegraph Mr Lafontaine represented old-fashioned socialist values, whereas Mr Schroder is flattered by comparisons to Tony Blair. For "New Labour", read "New Centre" - the ill-defined slogan which propelled him to victory in last September's elections. Mr Lafontaine's heavy taxation policies have shaken confidence in the euro and were in part responsible for yesterday's failure to radically reform the Common Agriculture Policy. The Independent

34. The fate of Red Oscar . Herr Lafontaine - a strong supporter of greater European integration - had become a serious problem for Tony Blair's pro-European Government. He was an uncomfortable reminder to the Prime Minister of the spectre of Old Labour which he had to banish to win his landslide election victory. And the troublesome Finance Minister was a serious obstacle to Gerhard Schroder, the German Chancellor, following the path of economic reform that Mr Blair has been urging on him and the rest of Europe. Herr Schroder's instincts are in the right place, according to British ministers, but the Third Way was not for "Red Oskar" and had failed to develop in Germany as a result. The Times

35. Euro zone rejoices as Red Oskar bows out The resignation of Mr Lafontaine was widely welcomed in Ireland. Economists said his resignation and the subsequent recovery of the euro was positive, although ABN Amro economist Dan McLaughlin cautioned against too much euphoria until it is seen how Mr Lafontaine's successor performs. Red Oskar, as he was known to friend and foe alike, was vociferous in calling for Euro tax harmonisation and his resignation will now remove much of the pressure on the Ireland's low tax regime for business. It also means that the euro is more likely to stage a prolonged recovery. The Irish Independent

36. Irish Times on Red Oscar Mr Oskar Lafontaine's resignationas German finance minister is hugely significant for that country's domestic politics and for international economic policy. In his short term of office he had become the bete noire of business opinion at home and abroad because of his commitment to higher corporate taxation, Keynesian demand stimulation, lower interest rates and currency target zones for the euro. He fell victim to a deep-seated power struggle with the German Chancellor, Mr Gerhard Schroder, who became convinced that such policies are politically unsustainable as he faces into a series of local, state and European elections. Mar 12, 1999

37. Neo-liberal critique - the rhetoric of Noreena Hertz As far back as 1968, Margaret Thatcher said in a famous speech: 'There are dangers in consensus: it could be an attempt to satisfy people holding no particular views about anything. No great party can survive except on the basis of firm beliefs about what it wants to do.' The irony is that by buying so wholeheartedly into the form of capitalism initiated by Thatcher and Reagan, British politics has fallen into this very trap, leaving us the electorate increasingly alienated from and distrustful of politics, and providing us with little alternative but to protest rather than vote. Until the Government regains the trust of the electorate, the people will continue to scorn democracy. Until the state reclaims the people, the people will not reclaim the state. What might a neo-liberal perspective make of her claim to speak on behalf of ‘the people’? Contrary to Thatcher, is there such a thing as “society”?

38. Key attributes of neo-liberal rhetoric • Are right wingers funnier- McCreevy’s “pinko lefties”? • Deploying the caricature of the liberal/do gooder clown • Fusion with the rhetoric of economic realism • Populist appeals - Frank’s market populism • Is neo-liberalism sexier?

39. Implications for journalists Don’t be afraid to question the authority of sometimes priestly economists Be attune to ‘taken for granted’ economic assumptions Watch for easy, lazy shorthands - a la Boston V Berlin State V Market itself a simplistic ideological proposition Is political consensus always desirable? How does the image of ‘social partnership’ buy into neo-liberal thinking?