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GLOBAL ELECTIONS IN THE SHADOW OF NEOLIBERALISM  
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Joseph E. Stiglitz
May 1, 2024
Project Syndicate
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_ Scandals, culture wars, and threats to democracy dominate the
headlines in this super election year. But anti-democratic populist
authoritarianism is itself the legacy of a misbegotten economic
ideology. _

Zeng Peiyan, Klaus Schwab - World Economic Forum Annual Meeting Davos
2008, by World Economic Forum (CC BY-NC-SA 2.0)

 

NEW YORK – Around the world, populist nationalism is on the rise,
often shepherding to power authoritarian leaders. And yet the
neoliberal orthodoxy – government downsizing, tax cuts, deregulation
– that took hold some 40 years ago in the West was supposed to
strengthen democracy, not weaken it. What went wrong?

Part of the answer is economic: neoliberalism simply did not deliver
what it promised. In the United States and other advanced economies
that embraced it, per capita real (inflation-adjusted) income growth
between 1980 and the COVID-19 pandemic was 40% lower than in the
preceding 30 years. Worse, incomes at the bottom and in the middle
largely stagnated while those at the very top increased, and the
deliberate weakening of social protections has produced greater
financial and economic insecurity.

Rightly worried that climate change jeopardizes their future, young
people can see that countries under the sway of neoliberalism have
consistently failed to enact strong regulations against pollution (or,
in the US, to address the opioid crisis and the epidemic of child
diabetes). Sadly, these failures come as no surprise. Neoliberalism
was predicated on the belief that unfettered markets are the most
efficient means of achieving optimal outcomes. Yet even in the early
days of neoliberalism’s ascendancy, economists had already
established that unregulated markets are neither efficient nor stable,
let alone conducive to generating a socially acceptable distribution
of income.

Neoliberalism’s proponents never seemed to recognize that expanding
the freedom of corporations curtails freedom across the rest of
society. The freedom to pollute means worsening health (or even death
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for those with asthma), more extreme weather, and uninhabitable land.
There are always tradeoffs, of course; but any reasonable society
would conclude that the right to live is more important than the
spurious right to pollute.

Taxation is equally anathema to neoliberalism, which frames it as an
affront to individual liberty: one has the right to keep whatever one
earns, regardless of how one earns it. But even when they come by
their income honestly, advocates of this view fail to recognize that
what they earn was made possible by government investment in
infrastructure, technology, education, and public health. Rarely do
they pause to consider what they would have if they had been born in
one of the many countries without the rule of law (or what their lives
would look like if the US government had not made the investments that
led to the COVID-19 vaccine).

Ironically, those most indebted to government are often the first to
forget what government did for them. Where would Elon Musk and Tesla
be if not for the near-half-billion-dollar lifeline
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Barack Obama’s Department of Energy in 2010? “Taxes are what we
pay for civilized society,” the Supreme Court Justice Oliver Wendell
Holmes famously observed
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changed: taxes are what it takes to establish the rule of law or
provide any of the other public goods that a twenty-first-century
society needs to function.

Here, we go beyond mere tradeoffs, because _everyone_ – including
the rich – is made better off by an adequate supply of such goods.
Coercion, in this sense, can be emancipatory. There is a broad
consensus on the principle that if we are going to have essential
goods, we have to pay for them, and that requires taxes.

Of course, advocates of smaller government would say that many
expenditures should be cut, including government-managed pensions and
publicly provided health care. But, again, if most people are forced
to endure the insecurity of not having reliable health care or
adequate incomes in old age, society has become less free: at a
minimum, they lack freedom from the fear of how traumatic their future
might be. Even if multibillionaires’ well-being would be crimped
somewhat if each were asked to pay a little more in taxes to fund a
child tax credit, consider what a difference it would make in the life
of a child who doesn’t have enough to eat, or whose parents cannot
afford a doctor’s visit. Consider what it would mean for the whole
country’s future if fewer of its young people grew up malnourished
or sick.

All these issues should take center stage in this year’s many
elections. In the US, the upcoming presidential election offers a
stark choice not only between chaos and orderly government, but also
between economic philosophies and policies. The incumbent, Joe Biden
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committed to using the power of government to enhance the well-being
of all citizens, especially those in the bottom 99%, whereas Donald
Trump is more interested in maximizing the welfare of the top 1%.
Trump, who holds court from a luxury golf resort (when he is not in
court himself), has become the champion of crony capitalists and
authoritarian leaders around the world.

Trump and Biden have vastly different visions of the kind of society
we should be working to create. In one scenario, dishonesty, socially
destructive profiteering, and rent-seeking will prevail, public trust
will continue to crumble, and materialism and greed will triumph; in
the other, elected officials and public servants will work in good
faith toward a more creative, healthy, knowledge-based society built
on trust and honesty.

Of course, politics is never as pure as this description suggests. But
no one can deny that the two candidates hold fundamentally different
views on freedom and the makings of a good society. Our economic
system reflects and shapes who we are and what we can become. If we
publicly endorse a selfish, misogynistic grifter – or dismiss these
attributes as minor blemishes – our young people will absorb that
message, and we will end up with even more scoundrels and opportunists
in office. We will become a society without trust, and thus without a
well-functioning economy.

Recent polls show that barely three years after Trump left the White
House, the public has blissfully forgotten
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administration’s chaos, incompetence, and attacks on the rule of
law. But one need only look at the candidates’ concrete positions on
the issues to recognize that if we want to live in a society that
values all citizens and strives to create ways for them to live full
and satisfying lives, the choice is clear.

_Joseph E. Stiglitz, a Nobel laureate in economics and University
Professor at Columbia University, is a former chief economist of the
World Bank (1997-2000), chair of the US President’s Council of
Economic Advisers, and co-chair of the High-Level Commission on Carbon
Prices. He is Co-Chair of the Independent Commission for the Reform of
International Corporate Taxation and was lead author of the 1995 IPCC
Climate Assessment. He is the author, most recently, of The Road to
Freedom: Economics and the Good Society (W. W. Norton & Company
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Lane
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2024)._

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* economic inequality
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* Neoliberalism
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* Authoritarianism
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