neoliberal assumptions

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 M
arket Power decentered Means Equal
opportunity Common man/market populism Dynamic
Socialist Other Positive freedom/freedom
to Political freedom Collective Macro-morality St
ate Centralisation of power Ends Equality Intell
ectual 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 isnt 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
OToole, 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. Readers 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
regulations agreed 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-nothi
ng 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 energy market by
2004 but France succeeded in preserving 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 energy but 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, Bush
called 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 relief
so that the industry could restructure itself."
New York Times, March 6th, 2002

26
Whos doing the dumping?
Bush's pragmatism on the decision to impose the
steel tariffs came 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's announcement appeared to defuse much of
the antagonism that was expected to greet him at
the Monterrey conference, 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 resignation as 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- McCreevys pinko
  lefties?
• Deploying the caricature of the liberal/do
  gooder clown
• Fusion with the rhetoric of economic realism
• Populist appeals - Franks market populism
• Is neo-liberalism sexier?

39
Implications for journalists
Dont 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?