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The wrong diagnoses, the wrong treatment

If your doctor misdiagnoses your disease, you’re probably not going to get any better. The same problem will arise for people in the UK who voted to leave the EU because of assurances from Brexit campaigners that they could ‘solve’ globalisation. Similarly for Australian voters who chose the Hanson or Xenophon treatment, attracted to the anti-free-trade-deal rhetoric, which promises to reverse the ill effects of globalisation. And of course, Trump’s supporters could find they have opted for the wrong prescription if he wins the US election.

The patients in this metaphor share similar symptoms of wealth inequality: they’ve seen their stable employment disappear in the industries their families relied on for generations – like automotive, whitegoods, steel production and fabrication, coal mining, clothing and footwear manufacture. They feel resentful that the ‘establishment’ political process has left them to fend for themselves. They never wanted to be reliant on government help, which makes them even more resentful of needing it. They’re not educated in the professions which would allow them to take advantage of a changing global work landscape. They feel priced out of their local job market and often blame unions for pricing them out. They’ve seen full time, ongoing positions degrade into casual, unstable working environments, leaving them constantly anxious about the future. Their fear of change is sometimes scapegoated to a fear of people who don’t look like them, the immigrants who they see as living-next-door representatives of the new world order that has caused all their problems. They are told by right-wing politicians it is their fault they are poor, and they are ‘leaning’ on society, when all they really want is to be contributing like they used to. It’s no wonder they’re visiting the doctor.

But the problem is, they’ve all accepted the misdiagnosis of globalisation. The Brexit campaign, the Hansons, Xenophons and Trumps have made a villain of globalisation, and have promised a treatment to fix this disease which won’t do anything to cure it because it’s not the disease they are suffering from. What’s really making them sick are the ill-effects of neoliberalism. They’re suffering from neoliberalism playing out on a globalised scale. So what they really need is treatment to fix the down-side of neoliberalism, not a fix for globalisation.

Once people come to terms with what they are really suffering from, it becomes much easier to talk to them about positive steps to solve the problem. The first thing we need to do is to stop voting for political leaders who think neoliberalism is the right answer. Malcolm Turnbull, for instance. Taking out the ‘lisation’ and ‘lism’ words from this complex situation, you could describe globalisation as a world market, and neoliberalism as a way of removing government mediation from regulating this market. Therefore, the only way to treat the disease is to change the rules by which the market operates, in order to share its spoils more evenly amongst all citizens.

I can already feel people flinching as they read the words ‘government regulation’, but that’s what we’re really talking about here. The treatment for the disease is government policy that aims to reduce wealth inequality which is caused by neoliberal agendas massively advantaging those who already have a foothold in the market over those who don’t. That means a legislated minimum wage and working conditions. That means supporting industries which are really important to the country, which employ lots of people, which in turn stimulates the economy and is therefore worth the investment – such as steel manufacturing, car manufacturing (it’s working for America!) and defence industries. It means investing government funds in high quality school, vocational and tertiary education so it is available to people who can’t afford to pay for it, in order to give them the resources they need to compete in a new market for jobs. It means healthcare available to everyone, no matter their income. It means guaranteeing those who are unemployed have enough government assistance to live in dignity, and be in a position to better their circumstances. It is providing infrastructure and government services which level out the playing field to make the opportunities of globalisation more evenly distributed amongst the whole society.

There are many advantages to globalisation which are hard to embrace when you’re suffering from neoliberalism. For instance, the availability of world markets for those engaged in high-paid, interesting and challenging work, such as in technology, engineering, professional services, design, science, academic, arts and entertainment fields. If you don’t have an education that makes you eligible for such positions (because you haven’t had your government-funded treatment for neoliberalism), it makes it hard to see these benefits. But once you feel better, globalisation doesn’t seem so bad.

The paradox is, the people offering the treatment to solve globalisation refuse to acknowledge that neoliberalism is the real villain here. Like Voldermort in Harry Potter, neoliberalism has become he who shall not be named and therefore it who shall not be blamed. It might sound like a story too good to be true: that you can have your globalisation cake and eat your more equally distributed economic growth too. But, all it takes is for voters to trust a government who is prepared to mediate the world market to make sure economic benefits of globalisation flow more evenly, not just to the privileged few.

Neoliberal governments, instead of offering the treatment people need, have been cutting back, stripping, undermining and hollowing out government’s role in every policy area imaginable. In doing so, they’re hurting economic growth, hurting the wealth of their country, and hurting the wealth of the individuals in these countries. We can all be better off by making all of us better off. We just need to identify the right treatment for the right disease.

10 comments

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  1. Matters Not

    What’s really making them sick are the ill-effects of neoliberalism. They’re suffering from neoliberalism playing out on a globalised scale.

    Indeed! Hawke, Keating et al have a lot to answer for. Did you know that:

    By the time Labor left office in 1996 the government had virtually abolished tariffs and had ceded its control over interest rates to an “independent” Reserve Bank and the dollar and wages to markets. This was the biggest transformation of the Australian economy since the end of the Second World War, a neo-liberal market revolution.

    The Hawke-Keating government reduced corporate taxes by 16 per cent from 49 to 33 per cent. They cut the top personal tax rate from 60 cents to 47 cents in the dollar. Union membership fell from over 48 per cent to below 31 per cent. These changes saw the wages share of GDP fall from around 61.5 per cent of GDP to less than 55 per cent, amounting to a transfer of $50 billion from workers to the rich.

    Labor did more than the Liberal governments of either John Howard or Malcolm Fraser to increase inequality, decimate union strength and erode Labor’s own support-base in the working class.

    It’s a bit late for voter remorse. And now we will compound that error by agreeing to the TPP.

    BTW, don’t think that because you are in one of the ‘professions’ you will be spared. Already ‘lawyers’ are in plague proportions – as are optometrists, patent attorneys, dentists, accountants and the list goes on.

  2. paulwalter

    ” ..Lawyers are already in plague proportions..”. Loved that.

    Are you a John Grisham fan?

    One problem with globalisation is that it seems to be Americanisation or Europeanisation to a lesser extent in wolf’s clothing and that the real directives come from Washington, Wall St and the City of London with its hoards of bankers, bean counters and ambulances chasers, all setting about to undermine the very basis of multicultural type globalisation for a relapse to a sort of feudalism as big capital tries to eliminate “risk”, including in human form.

    I’m not quite sure if Victoria Rollinson has it quite perfect re first and second paras- terminology probably.

    But it’s a good thread thread starter on the underlying problem… we shall see what we shall see.

  3. PK

    Problem is there is no real alternative both the ALP & LNP and the Greens (who are the kinder of the 3) are following the neo-liberal agenda and austerity measures that are exasperating the problem and issues… economists such as Dr Stephanie Kelton, Dr Bill Mitchell, Dr Randall L Wray, Dr Steven Hail, Dr Phil Lawn just to name a few have stated what needs to be done and the way foward but are not being listened to and are ignored by MSM. The only ones who have emerged with an understanding of what needs to be done economically is the Employment Party and the push for a Job Guarentee… the issue and constraint to making a change is of course that wider public are under the false belief that a federal budget is like a business or household budget (which is encouraged by our Government and the MSM) which couldn’t be any further from the truth!!

  4. nexusxyz

    First of all ‘globalisation’ destroys both ‘Blue’ and ‘White’ collar jobs via in-sourcing, out-sourcing and off-shoring. The threat to White collar jobs can be seen if the Trade in Services Agreement (TiSA) is ratified. It is potentially more damaging than the ‘TPP’ abomination.

    There is a big difference between ‘free trade’ and ‘globalisation’ that people totally fail to acknowledge, or more importantly understand. A distinction between neoliberal economics and globalisation is not possible when this is grasped. Free trade is where independent nations are freely trading with other nations. Globalisation is the imposition of an ‘economic system’ of exploitation by one nation or group (corporations) on other nations. Propaganda promotes this as some kind of sick ‘grand bargain’ but there is not as it guts the wealth of industrialised countries while imposing sweat shop working conditions, pollution, etc. on poorer countries for the benefit of a small percentage in society. Most importantly it does not enable them to create their own independent national economic model.

    Next, there is nothing to indicate an understanding of what generates ‘economic well-being’ in terms of an increase in the standard of living and funding public services. Economists and business academics are utterly clueless with their conventional and failed theories. Remedies like monetary and fiscal reform are utterly pointless as are programs to increase productivity. Throwing money at ‘innovation’ is another complete waste of time. It is a myth that it results in increased economic well-being for a nation. This does not stop them trying these failed ideas over and over in the hope they might work. The only way to increase economic well-being of a nation is to make your national economy more ‘competitive’ via the acquisition, manipulation and management of technologies. This is a fundamental prerequisite to the evolution of existing industries, generation of new industries, new jobs and balancing trade. Anything else is a complete and utter waste of time if your economy is not ‘competitive’. The Chinese and other Asian countries understand this.

    Globalisation and neoliberal economics promote a dismal dog eat dog cost driven race to the bottom that actually destroys value – bubbles, destroyed businesses and communities, etc. We have two alternatives. One is to seek to make our national economy more ‘competitive’, or two, kick the can down the road by either increasing debt in an effort to maintain living standards, introducing austerity and cut back programs or a combination of the two which appears to be the LNP approach in terms of trashing the lives of the poor and defenceless in society while pissing treasury away on useless weapons. Unlike the ‘competitive’ option these are all dead ends in terms of ending with significant economic dislocation and potential societal collapse.

    If anyone thinks Australia is somehow blessed and operates in some kind of magic economic bubble with unique rules you only have to look at the decline in ‘competitiveness’ of the US as millions of jobs and whole industries have been lost and are still being lost. China and other Asian countries will asset strip our economy of its value and also our jobs as we have leaders that are incompetent and do not understand that the race to acquire technology and the impact that will have. Articles like this merely contribute to a delusion by making a false distinction between two things that are not mutually exclusive – neoliberal economics and globalisation.

  5. Matters Not

    all it takes is for voters to trust a government who is prepared to mediate the world market to make sure economic benefits of globalisation flow more evenly, not just to the privileged few.

    Sounds simple. But how does it work. No doubt people read that the European Commission ordered Apple to pay a very large amount of ‘back taxes’ to the Irish Government in the order of €13bn (£11bn). And to most observers the real shock was the Government’s reaction, arguing that it was a sovereign nation and didn’t want the extra tax. Sure they will collect the money (as ordered) but it will be held in escrow pending an appeal and hopefully returning the monies collected.

    According to the EU Commission, this head office existed “only on paper” and therefore its profits were not taxed. Only a small percentage of profits were allocated to the Irish branch of Apple Sales International.

    As a result, the final 10 million euros tax paid by Apple was equivalent to a rate of 0.05% – this fell to 0.005% by 2014 as profits rose – far less than the 12.5% Ireland charges other companies.

    Got that a tax rate of 0.005% . This is how many governments across the world ‘compete’, now and more so in the future. Singapore, for example, engages in the same practices when it comes to BHP and ‘our’ iron ore. The practice is widespread. And yet we talk about ‘sovereign borders’. More like ‘free loader’ boarders. And our government want to crack down on ‘welfare cheats’.

    Multinational sham: how Australia was hoodwinked

  6. mars08

    To a large extent, those with influence… our ruling class… are clinging tightly to the misdiagnosis because they WANT TO. The status quo is what makes them powerful. For the time being, they cannot offer (or control) an alternative system.

    To paraphrase Upton Sinclair… “It is difficult for a man to understand something, when his POWER depends on him not understanding it”

  7. jim

    More than 200, that is 200 legal and economic scholars—including President Barack Obama’s Harvard Law School mentor Laurence Tribe—have penned a letter to Congress warning that the pro-corporate Investor-State Dispute Settlement (ISDS) regime enshrined in the Trans Pacific Partnership (TPP) “threatens the rule of law and undermines our nation’s democratic institutions.”

    As ISDS “threatens to dilute constitutional protections, weaken the judicial branch, and outsource our domestic legal system to a system of private arbitration that is isolated from essential checks and balances,” the academics urge (pdf) lawmakers to reject the TPP, despite the Obama administration’s full-court press to pass the trade agreement during the upcoming lame-duck session of Congress.

    “If the TPP text were approved by Congress, we would not only be entrenching this inherently flawed mechanism, but significantly expanding it.”
    —200 legal and economic scholars
    The signatories—who also include Nobel laureate Joseph Stiglitz, former California Supreme Court Justice Cruz Reynoso, and Columbia University Professor and UN Senior Adviser Jeffrey Sachs—note that concerns they outlined in a March 2015 letter opposing the inclusion of ISDS provisions in the TPP and other multinational trade deals were ignored.

    CLEVELAND, Ohio — Ohio, and every state in the nation, has lost thousands of manufacturing jobs since 2001 the “free trade agreement”. China is to blame, according to a policy study released Thursday afternoon.

    Ohio lost 106,400 jobs alone, ranking the state eighth in the nation.

    The Economic Policy Institute, an economic think tank in Washington, D.C., estimates that America lost 3.2 million jobs as a result of the U.S.-China trade deficit between 2001 and 2013. Three-fourths of those jobs were in manufacturing……..Wages of American workers have also suffered due to the competition with cheap Chinese labor, EPI says.

    Diddlysquat matters not a fn big war coming soon.

  8. Jexpat

    Jim:

    These are just the sorts of “trial balloons” we’d expect to see if Labor were buttering us up for a betrayal on the TPP.

    With any luck, this will die on the vine in the US, before they have the opportunity to shore up their corporate racketeering credentials again.

  9. sam

    jim, the TPP with the feudal ISDS clause should have been opposed by Labor, the Greens and Unions.
    An intelligent and representative mainstream media would have gone into bat for us also.

    Singapore and Vietnam got some concessions in the trade agreement, why couldn’t we?
    Is it possible to return to the scene of the crime and renegotiate the ISDS clauses out of existence?
    Now that Andrew Robb has retired to consultancy heaven, it must be possible?

    My suggestion is to send in Pauline Hanson as a proxy negotiator on behalf of Team Sell-out (LNP).
    Better still, why not call on the skills of both Pauline and Derryn Hinch?
    Good cop-bad cop – that’ll fix it.

  10. paulwalter

    It is simple. The underlying aim of this economics is to smash the unions and workers by flooding the labour market.

    It has the added advantage of having different ethnic groups then quarreling amongst themselves for the spoils of defeat.

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