Poverty and inequality by Chris Jones ; Tony Novak

Author:Chris Jones ; Tony Novak
Language: eng
Format: epub
ISBN: 978-1-44731-590-2
Publisher: Policy Press.
Published: 2013-10-19T00:00:00+00:00

The neoliberal strategy

By the mid-1970s, the liberatory potential of the welfare state began to threaten its regulatory functions thereby fuelling the elite’s effort to rein in ‘big government’. The modern welfare state emerged in the 1930s as part of the New Deal established to mediate the impact of the first economic crisis of the 20th century by redistributing income downwards and expanding the role of the state. Fuelled by post-war peace, prosperity and pressure from popular movements, the welfare state expanded until the mid-1970s, when the second economic crisis of the 20th century undercut business profits. The current attack, a response to this ongoing crisis, is best understood as part of the broader neoliberal strategy designed to restore profitability by undoing the New Deal. Designed to redistribute income upwards and downsize the state, the now familiar tactics include: (1) tax cuts and a less progressive tax code, (2) programme retrenchment; (3) privatisation (shifting government services to the private sector); (4) devolution (shifting federal responsibility to the states); and (5) weakening social movements best positioned to fight this austerity plan. At the same time, the Right has called for the restoration of family values and a colour-blind social order (Abramovitz, 2004).

To win public support for measures that undermined personal economic security and the common good, the anti-government forces sealed the deal with the race, ‘welfare-queen’, gay marriage, and/or immigration cards. The resulting politics of fear and hate have kept people divided, blinded to their shared interests, and – until recently – demobilised. The elite also made calculated use of what Naomi Klein (2007) calls the ‘shock doctrine’ or the creation and manipulation of crisis to impose policies that people would not otherwise stand for. In the US elected officials created budget crises by refusing to raise taxes while continuing to spend. By 2011 federal revenues had dropped to their lowest level since 1950, while federal spending rose to 25.3% of the GDP in 2011 – the highest level since World War II (due mostly to the costs of Middle East wars and health care) (Merrick and Thorney, 2012). After creating a $1.3 trillion deficit, legislators played to fears of a ballooning debt to press for more cuts to spending but not any tax cuts. They dismissed analyses showing that tax cuts accounted for 50% of the revenue gap from 2001 to 2007, compared to 10% for entitlement and 7% for discretionary spending (Greenstein, 2012); ignored later data showing that the cost of means-tested programmes will not add to long-term fiscal problems (Greenstein, 2012); and rejected the idea the expiration of the Bush tax cuts would halve the deficit by 2021 (Center on Budget and Policy Priorities, nd). Discounting these data and evoking the shock doctrine, government foes targeted the popular entitlement programmes – once regarded as the ‘third rail’ of politics. The recently proposed Ryan (R-WI) budget goes further, with a long-term spending path designed to dismantle most of the federal government by 2050 (except for social security, health care, and defence).

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