The Costs of Equal Opportunity in a Neoliberal Economy

Eric Loomis has a nice discussion of an article in the WaPo titled “White Americans long for the 1950s, when they didn’t face so much discriination.” The article reports these findings:

• 43% of all respondents said discrimination against whites is as much of a problem as discrimination against blacks and other minority groups.

• 60% of the white working class respondents said discrimination against whites is as big a problem today as discrimination against blacks and other minorities.

• White Americans feel put-upon and mistreated — and large shares of non-white Americans do not seem to have any knowledge of the challenges that white Americans say they face.

Loomis concludes that these feelings are the basis of the appeal of Donald Trump:

I will however say that the numbers of the white working class are particularly important because the economic insecurity of an outsourced and automated economy, the effects of which are swept under the rug by the many proponents of unrestricted globalization, are very real. I have said for a long time that if you want a stable society you have to have good paying jobs. Without those jobs, racial and religious prejudice becomes even more powerful than it usually is. That is part of what we are seeing in this recent rise of proto-fascism. It’s scary and should make us rethink a lot about the society we want to build before it’s too late. Emphasis added.

I absolutely agree with Loomis, but there’s more to be said. So here’s a story. I was accepted at Indiana University Law School in the Summer Session of 1971. My college grades were mediocre, but I got a very good score on the LSAT and had two years in the Army to encourage me to study harder. My law class had 200 people of whom 20 were women, as I recall. I graduated 20th in my class, and 10 of the people ahead of me were women. I assume that all the white guys with better credentials than mine got in, so it’s fair to guess that I would have graduated at least 10th if not for those really smart women. As it happened, it didn’t affect my ability to get a great job with a brilliant mentor, Stanley Schwartz, who taught me how to be a real lawyer. But that was a good time for lawyers and for hiring in general. And if I had wanted a job in New York City with a big firm, that move down the graduation rank would have made that unlikely.

The same thing happened to athletes when African-American players were allowed to compete. Lots of really good white players lost their scholarships to better players. The same things happened when police forces opened the doors to everyone on more or less equal terms. The number of jobs didn’t increase much, so the competition meant that some white men who would have been cops or office administrators or anything else didn’t get those jobs. It wasn’t a great problem until the decent jobs were disappeared by the rich. With the vast number of good jobs that had cushioned the entry of women and people of color gone, the previously privileged people, mostly white men, didn’t automatically win. Instead, they had to deal with the fact that there many previously disqualified people who were smarter and better prepared than they were, and many more were at least as smart and well-prepared as they. Just like me, they lost their previous rank.

That is an actual loss for white men. It isn’t just an appearance, or an excuse, it’s a genuine loss.

That was bad enough, but it got worse. When the rich started their drive to collect all the money from work in the Reagan years, they explained to the working people that they needed to be better and smarter, and they needed more education, which the workers were expected to pay for. Then college tuition shot through the roof, and states cut support, first for higher education, and then, in the wake of the Great Crash, for all education. But at the same time, Republicans tell workers it’s their fault, they need to work harder and longer and better and smarter. It’s a horrible double bind. I think the result is that some people respond by blaming themselves, and others respond by blaming the people who beat them out, or the liberals who made equal opportunity more of a real thing.

No one, especially politicians and economists, blames the people who shipped all the good jobs out of the country. Not a single politician or economist points out that if Intel and Apple and IBM don’t ship physical, financial and intellectual capital to Taiwan, there won’t be any semi-conductor manufacturing low-wage jobs there. No one says out loud that if the heavy equipment used to manufacture washing machines isn’t shipped to Mexico, there won’t be washing machine plants in Mexico. Economists of all stripes applauded the hollowing out of US industry on the absurd theory that the benefits to some outweighed the costs to society, assuming, of course, that there are economists who think about the interests of society beyond money. Neoliberal policies, specifically the massive support for unrestrained movement of physical, intellectual and money capital, produced the current state of the US economy.

Certainly, restraints on free movement of capital might not have permanently insured that these jobs remained in the US. But the central lesson we learn from Karl Polanyi’s The Great Transformation is that the pace of change is of crucial importance. See p. 39. The sudden and massive changes in the US economy have produced unnecessary misery, just as the Industrial Revolution did in the early 1800s in England. Whatever benefits there are in cheap foreign labor haven’t gone to the working class in the US, or even to most of the middle class. A government that cared about human beings would have acted to slow down change so society could protect itself. But we had Reagan and a crowd of crappy Democrats.

All this not only explains why people are so angry at both parties, it answers a basic question: why don’t the poorest among us vote? These are the people who benefit from the scraps of safety net left after years of efforts by neoliberals of both parties to destroy it. This is from the NYT:

While Mr. Bevin did not win Louisville, a Democratic stronghold, Mr. Conway did not win by nearly as big a margin here as Democrats usually do. William Benton, a Family Health Centers patient who voted for Mr. Conway, said he was not an inspiring candidate even for committed Democrats.

“A lot of people felt really justified not voting,” said Mr. Benton, a musician and part-time bakery worker who signed up for Medicaid this month to get help for his depression.

Not inspiring? That barely begins to describe a Democratic Party supporting neoliberalism at the expense of poor and the middle class.

Notre Dame undergrad (math); JD, Indiana University at Bloomington; 1st Lieutenant, US Army.; private practice in corporate and securities law; Assistant AG in Tennessee for consumer protection and securities; Blue Sky Securities Commissioner, Tennessee; private practice, bankruptcy and corporate law.

I have had a lifelong interest in economics. For most of my career, that interest was practical, focused on the problems in front of me. Lately I have been more interested in economics as a theory, especially its impact on the lives of people like those I met in my bankruptcy practice, and on the politics of money in the US. I also enjoy reading philosophers, starting in college and steadily expanding my reading ever since. I wrote at FireDogLake for a number of years.

Generally, I think the problem facing the US is the dominance of neoliberal discourse. I think it clouds the vision, and limits the kinds of problems that can be identified and solved. For example, the existence and danger of climate change can easily be identified in a scientific discussion. However, the problem does not fit the neoliberal discourse because science insists that the pursuit of individual and corporate self-interest will lead to devastation. In neoliberal discourse, the pursuit of self-interest always leads to Eden.

The neoliberal project has two prongs. One is the police function of crushing dissent and alternative views. The police function is provided by government agencies and private and institutional actors. The counterpart is the economic system , which is operated by government and by private and institutional actors. Some of these actors operate in both spheres. I focus on the second prong.

25 replies
  1. orionATL says:

    “… to describe a Democratic Party supporting neoliberalism at the expense of poor and the middle class…”

    and, equally importantly, a democratic party playing who-wants-to-be-my-sugar-daddy-now with the future of the nation.

  2. allan says:

    “But we had Reagan and a crowd of crappy Democrats. ”

    Which is about to get crappier. In Illinois,

    “Mr. Rauner’s closest supporters hope to elect more Republicans. But some wealthy families, mindful that Democrats are likely to control the legislature for the foreseeable future, have financed an even more ambitious goal: to carve out a new faction of Democrats more willing to reach a compromise with the governor.”

    http://www.nytimes.com/2015/11/30/us/politics/illinois-campaign-money-bruce-rauner.html

    They will no doubt find lots of willing takers.

  3. orionATL says:

    part of the issue of the rotting democratic party has to do with the social (sub-) classes that run for office as democrats. the way wealthy dems approach “social problems” legislation is, i suspect, different than middle class, middle income dems. an alan greyson is an anomaly.

    is this true? that would be helpful to know.

    has the proportion of dems running who are wealthy changed in 20, 30, 50 years?

    • orionATL says:

      also the wealth/family income measures probably do not accurately describe the crucial factor of social bias (used here as a positive term) which a congressman might inherit from childhood thru young adulthood.

  4. haarmeyer says:

    Some thoughts:
    1) It wasn’t the Reaganites who pushed the idea that jobs being eliminated could be overcome by education, it was the liberals, and their adherence to the notion that globalization would be a net gain because we would move “up the food chain” to better, more educationally sophisticated jobs, which never happened.
    2) No politician blames Apple for anything at all, not just job movement. In fact, it took most politicians 25 years or more to realize that Apple wasn’t really an American company anymore and did all its manufacturing overseas.
    3) Sharp rises in tuition were also quite after the Reagan administration.
    4) Yes, the pace of change matters. But in addition to quick change producing displacement, it is also exacerbated by reduction onto a small number of political axes, and the change had quite a few other components to it. The globalizers are to blame for the quick shipment of jobs out of the country, but the unions are to blame for not staying up to date and fighting old battles, the anti-tech “intellectuals” are to blame for encouraging anti-intellectualism instead of keeping abreast of technology and criticizing and changing its directions. The internet structure is to blame for promoting siloes, endless “opposition research” on ordinary people, overpromoting the PR and advertising industries, and generally structuring itself on winner-take-all monopoly and vertically integrated economic structures, and on and on.

    I don’t think things ever boil down to single classifiers anymore, and in particular the label “neoliberal” is one of the most overused and multiply- or under-defined terms in all of internet vocabulary. Reductionism is for physical laws, not for describing social structures and ecologies.

    • orionATL says:

      “neoliberal” as used here has a meaning based in economic theory and described extensively in previous sets of essays by ed walker.

      read up.

        • Ed Walker says:

          I assume you have read the basic texts on neoliberalism, Foucault’s The Birth of Biopolitics, Mirowski’s Never Let a Serious Crisis Go to Waste, and Harvey’s A Brief History of Neoliberalism. Perhaps you can offer a criticism of the current status without mentioning these books, the ideas and history they lay out, and the current state of society. What would that look like?

          • haarmeyer says:

            My criticism is of the term and its current use. It has at least 3 documentable definitions in economics and in the various social sciences — neoliberal does not mean the same thing when used by an economist and by a sociologist — and has pretty much two definitions within economics. Then it also has its current colloquial use on the internet as a general catchall for beliefs in corporate globalism as a “root cause”.

            I don’t believe in rood causes, and I don’t believe that the term has any legitimate meaning. It did once, in the 1940s-1950s.

    • orionATL says:

      re #6 & 9

      well then,

      “…  Reductionism is for physical laws, not for describing social structures and ecologies…”

      yours maybe a critique suitable for book of theory,

      but in the context of a discussion aborning on a weblog, it is just a pompous, quasi-intellectual putdown.

      of course “neoliberal” can be used as an explanatory idelogical factor in a discussion such as this – and without your permission, if you can believe that :))

    • bevin says:

      Surely “neo-liberal” means no more than it says: it is the current version of the liberal ideology which is largely composed of Bentham’s utilitarianism and Malthus’s economics as systematised by Ricardo’s literary mentor James Mill. Braid that together with the imperialist authoritarianism licensed by James’s boy John Stuart and evangelical protestantism’s otherwordliness and you have the basic components of a liberalism that has been re-furbished for these times

    • P J Evans says:

      I needed loans to go to college in the early 80s. I was lucky enough that they were low-interest and thus possible to pay off. It was much more expensive than in the very late 60s.
      That was before the GOP decided to privatize student loans (along with everything else they could get control of).

      • haarmeyer says:

        Okay. But I was in college twice. Once almost at the same time as Mr. Walker, and once at the same time as you. The tuitions weren’t high either time. The loans were low interest, the state universities were free or close to it at both times, the price of books was very reasonable both times.

        The costs went up starting with the elite universities in the late 80s after congress rejected their recommendations (the David Report). The costs for the other universities rose definitely in the 1990s, and the price of a student loan went up dramatically in the 2000s.

        I had loans too. They weren’t that hard to pay off because they weren’t like many students who are graduating now, when the size of the loans rivals a small mortgage, and the books are hundreds of dollars a piece.

    • Ed Walker says:

      We disagree. The only reason you can blame liberal economists is that the conservatives, especially movement conservatives, never gave a rat’s ass about workers. Ever. Their ideology justified their indifference to the lives of others and to the horrific damage to society they supported. That ideology is neoliberalism.
      .
      The plain fact is that blame is proper, even if I’m limited to blame in retrospect. You can try to justify this damage with whatever arguments you like, but in the end, I’m right. It was predictable, people said so at the time, and they were ignored, because Turbo-Capitalism was on the march, and there was absolutely no competition to the dreams of neoliberalism, and no one to defend the interests of society.

      • earlofhuntingdon says:

        You and PJ Evans are correct about the steep rise in tuition beginning in the mid-1970’s, post-oil shock era. By the early 1980’s, tuition, fees, room and board combined had more than doubled. They would double again in less than a decade. And again, consistently much higher than consumer inflation. Instead of a single year costing as much as a bachelor’s degree had a few years before, it cost as much as a bachelors’ and graduate degree combined. The value of student loans as a percentage of total annual costs quickly declined, as did state support for higher education generally. (Unruly students should have more skin in the game so that they are more politically and socially pliant. And then there’s the virtual privatization of top state schools.) Student loan interest rates lagged the market in the late 1970’s and 1980’s, but they were about to skyrocket.

        The consequences for poor, working and middle class families were devastating. They still are. The rise of for-profit schools, once considered a reprehensible contradiction in terms, grew from private school tuition price gauging, using the familiar law partner’s refrain, “If the client doesn’t scream about the bill, it wasn’t high enough.” For-profit schools are loan factories, not educational establishments. There’s also the frightful added cost that unlike most other personal debts (before the credit card company protection legislation known as the 2005 bankruptcy “reform” act), student loans follow you for life. Businesses, of course, can still write off their loans, their union and labor contracts, their externalized business costs such as environmental poisoning. GM alone, for example, rid itself of more than half a million contracts in its bankruptcy. Nice work if you can get it.

        • earlofhuntingdon says:

          Let’s not forget textbook price increases. They have gone up 1,000 percent since the early 1970’s. A science text can easily cost more than $200-300. There’s an additional 50% charge for the often mandatory access to the online version (with fantastic, new, original, exxxtra goodies), access which lasts only for the duration of the course. One would think that would bear a little antitrust investigation. Nevermind.

  5. bevin says:

    The problem you identify with the Democrats is mirrored in the problems European workers have with their “socialists” whose parties are also committed to neo-liberalism/imperialism and elsewhere (up here in Canada for example where the NDP runs to the right of the Liberals who share Attila the Hun’s ideas about society.

    What Polanyi was talking about was the natural reaction in society against cruel and destructive (of community and environment) policies. The problem is that it is moot whether there is such a reaction or whether it cannot be short circuited by ruling class terror, which in these enlightened days can be targeted, thanks to mass surveillance, in a way quite different from the fascist terror of the 30s, which was laid on with a broad brush.

    Polanyi was assuming that Trade Unions and political parties would serve as vehicles for society’s instinct of self protection, survival. In recent years we have seen that the Unions inherited from the old days are paper tigers while the Parties have fallen like ninepins before the sickly and thin ideology of warmed over liberalism.

    While Ed was at the Indiana Law School I was taking seminars with one Bill Letwin a pioneer of neo-liberal revivalism at LSE, his arguments were very seductive, largely because the left had forgotten what the critics of capitalism had seen and, like Polanyi, had assumed that historical changes are inevitable, that when you beat up a mass of people they will bite back. Sometimes they simply look sad, feel guilty and murmur ‘thanks’. The neo-liberals, in whose eyes working people are animals (look at the conditions they impose in those foreign factories they set up) feel that they understand humanity better than the left or the traditional Tories, with their quaint ideas of human dignity and the sanctity of life, do. They see people as easily trained to accept mass incarceration, perpetual war, Big Brother and the Panopticon and a Hobbesian struggle for bare subsistence.
    Are they right? Look around you.

    What we have seen in recent years is that change can be made but only by hard work and self respect: hence Corbyn’s victory in the Labour party in England. We’ve seen Sanders getting out big crowds for his soft populism too. There is no reason why he could not do to the Democrats what WJ Bryan did in 1896- he just has to weld together the justifiable grievances of 99% of the population and burst through the primaries (which were invented so that the Bryans of future generations would not have to deal with crooked conventions and could blow those ex-officio delegates away.)

    • orionATL says:

      thanks for the history. there’s so much we’ve forgotten in this area of what is essentially fair distribution of the income ftom combined capital and labor (money, machines, and men :) ).

  6. IAN TURNER says:

    I would add only one or two minor “corrections” to the above lively discussion;
    .
    1.Regardless of when exactly,and why exactly, did tuition fees & students’s loans & student debt levels increase have you thought of “doing something about it”?.
    Have you, for example, encouraged your States Governor & your state’s polity to at least —try–to implement a command into your own State University system to offer $10,000 TOTAL TUITION FEES for a 4-year Bachelor’s degree by urging them/commanding them to “change the delivery model”?
    If not,why have you not done so?

    2.The rising cost of textbooks [which the USA’s Librarians have been complaining about for decades] is a scandal—but so also is the collapse of any credible anti-trust function in the Federal government level AND SO ALSO IS THE SCANDAL OF THE NATIONAL ASSOCIATION OF ATTORNEYS GENERAL REFUSAL TO TAKE ACTION AT THE TIME OF THE COLLAPSE/WITHDRAWAL OF THE ANTITRUST ACTION AGAINST MICROSOFT BY THE FEDERAL GOVERNMENT BY CREATING WITHIN THE STATES ATTORNEYS GENERAL AN ALTERNATIVE LITIGATING CENTER FOR ANTI-TRUST ACTIONS
    Have you urged your own State’s Attorney-General to defend his/her own State’s citizens from the depredations of interloper monopolists—–or are you going to wait until the Directorate-General for Competition [of the EU Commission in Brussels] does it for you instead?
    .
    Have you supported the extension of the campaign to command any State taxpayer authorized/tolerated research publication to use ONLY OPEN[non-commercially created publications].
    If not,why not?
    .
    Have you expanded the State University’s Press—to rival the Oxford University Press [the world’s largest by publication numbers & by $]—or have the OUP manage your State University publishing house?
    .
    You live in a Federal country—why should Texans be the only ones that can think for themselves & act independently of Washington?

    3.As for Mr Walker’s complaints about [US Headquartered] Corporations “shipping out jobs” to foreign lands–YES it is true that the stereotypical US Corporation –when it becomes a multi-national tends to leave its own [US based] blue-collar employees “back home” & never changes them to become blue collar employees of an EXPORTER OF PRODUCT—certainly not by comparison with their European or [I used to say Japanese,now I must say Asian] counterparts–for US headquartered multi-nationals only send their MANAGERS abroad——- [and if I understand [the retailer] Target’s recent disaster of a “launch in Canada”NEVER sending ANY of their managers OR blue collar workers EITHER to deal with Anglophone Canadians–so they never knew why inviting Canadian customers to take part in a Thanksgiving Sale IN LATE NOVEMBER failed to attract any interest.
    .
    So have you thought about asking a European, or Asian headquartered, company to come to this country & employee Americans.?
    .
    I submit, it shouldn’t be left to Marcy Wheeler to insist on describing car manufacturing plants based in the “Rust Belt States” but with non-US invented labels or names as “transplants” instead of the derogatory—& intended to be derogatory–name of “imports”—-every US citizen who worries how American residents are going to earn a living in the near future should be doing so.
    .
    No? .

    One of the reason’s, of course for this made-in-America-by-Americans problem of tremendous insularity is that,when the post WWII settlements of the New World Order was created 1945-1952,President Truman & many in Washington made sure that the USA [the last major power involved in WWII & the least harmed for the shortest amount of time] “won the peace” & with the Soviet Union locked out the New World Order, much of the US Govt actions were
    directed against other European-heritaged /”Western” countries.
    In living in a country that had “won the peace” white American males had a very easy life—for the next 30 years..
    .
    Meanwhile,back in the Western countries that didn’t put much effort into “winning the peace”they have already left behind much of this countries’ efforts in i) finance industry [see http://www.thecityuk.com ii)telecommunications industry [the original Anglo-French invented GSM global cellphone technical standard has become: well by Q1 2001 when Greater Manchester Police & the Lancashire Constabulary had switched over to all -digital cell-phone based network as the world’s 1st Emergency Services All-Digital network iii) and by 2012 with both British & German railroading companies showing how to abandon “lineside signalling”[electric light signalling] in very busy railroad corridors,increase capacity & speed while reducing costs –nobody buys American these days.iv) When GE[General Electric] wanted to get back into the large scale electrical equipment business [which they had abandoned 20 years earlier] they had to buy out the French multi-national electrical giant Alstom & accept the French government as a silent partner.
    .
    And of course no one,but no one, is going to suggest that a dysfunctional country like the USA,living on memories of past glories,should bring the cost of its medical/hospital industries down to North European standards & thus extend many millions of US citizens lives by many years by granting them a North European ” we never won the peace” effective lifespan—-
    .
    Need I say more?

    • earlofhuntingdon says:

      The metastasis of university “administrative staff” – and its relation to costs, including the devouring of unrestricted endowment earnings – suggest your skepticism is well-founded.

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