The Rise of Neoliberal Public Finance

September 26, 2024 8:07 PM

What once looked like a slippery slope to the hyperinflation of wages is now openly embraced as a policy pathway to the hyperinflation of financial assets.

An essay by Melinda Cooper introducing her new book.
Previously, Previously.

posted by agentofselection (16 comments total)

This was interesting and well written…and sad. It's really weird to me that if you own stocks, you can easily "earn" more through asset appreciation in a month by sitting on your ass than you can by working super hard at a full time job for an entire year, and you pay less taxes on that money. Also, just out of curiosity, I looked to see if any countries are still on the gold standard, and apparently there are none.
posted by jabah at 9:27 PM on September 26, 2024 [4 favorites]

Money's collecting at the top, yes.

Global private equity and venture capital funds held a record $2.62 trillion of total uncommitted capital as of July 10 [1]

Romney: Obama waging 'war on job creators' [2]

So, combining spending increases, the 2018 tax cuts, we're paying $1.1T/yr in interest to these "job creators" [3]

naively, at $500K per job this $1.1T/yr flow should create 2.2 million jobs!

(this "supply side" stuff is not how the economy really works of course)

https://whorulesamerica.ucsc.edu/power/wealth.html hasn't been updated in 10 years, but I remember being shocked by this research 20 years ago now.

Theoretically the current economy is doing OK on the grossest level . . . initial unemployment claims are still coming in pretty low but sky-high rents and corporate profits ...

https://fred.stlouisfed.org/graph/?g=1up9O is real (2024 dollars) per-employee corporate profits, rising from ~$8000 last century to $24,000 now ...

are twin blood-funnels tapped directly into the working, non home-owner population.

Institutions to own 40% of houses [SFRs] by 2030 [4]

This is fine.
posted by torokunai at 10:19 PM on September 26, 2024 [10 favorites]

I read the first sentence

How did the American state come to be so extravagant in its recourse to fiat money creation and public debt issuance, yet so selectively austere in its public spending choices?

and my immediate thought was "whenever America does something inequitable but differently so from the way other nations do it, the reason usually ends up tying back to the mix of suppressed guilt and ongoing resentment we have over slavery, so I'm going to go with 'anti-Black racism' as my answer even if I don't know the underlying economics at all." A few paragraphs later,

Following the groundbreaking work of Nancy MacLean, I seek to contextualize Buchanan’s project within the longer history of the conservative Democratic South and its efforts to maintain white supremacy.

It's kind of depressing how predictable America can be.
posted by jackbishop at 3:59 AM on September 27, 2024 [16 favorites]

How did the American state come to be so extravagant in its recourse to fiat money creation and public debt issuance, yet so selectively austere in its public spending choices?

I know I sound like a broken record, but more than $10trillion has been spent on just road construction since 1950 or so, so people and stuff can be farther and farther apart and less convenient, just in the United States. and the vast majority of 'public debt issuance' is for maintaining various aspects of that $10trillion expenditure. Even if they'd spent only half that, the amount available for public expenditure for other stuff would be unimaginable.

Put it another way: our grandparents and parents made really stupid and wasteful choices.

you own stocks, you can easily "earn" more through asset appreciation in a month by sitting on your ass than you can by working super hard at a full time job for an entire year
Eh, not exactly. You have own a lot of stocks before this is true. But once you own a lot of stocks, then it's extremely true.
posted by The_Vegetables at 7:48 AM on September 27, 2024 [6 favorites]

I read the first two books by Mehrsa Baradaran and look forward to reading her third The Quiet Coup: Neoliberalism and the Looting of America. From an interview I got the impression she thinks Neo Liberalism is empty rhetoric that disguises the creation of law to privatize profit and socialize loss. As in the last big financial crisis. I'm not doing her justice. Also if anyone knows how to edit Wikipedia her page doesn't include her latest book.
posted by Pembquist at 9:12 AM on September 27, 2024 [2 favorites]

"Put it another way: our grandparents and parents made really stupid and wasteful choices". Totally true, but so are we (and given the status of global heating mitigation, we might end up making worse choices).
posted by WatTylerJr at 10:14 AM on September 27, 2024 [1 favorite]

How did the American state come to be so extravagant in its recourse to fiat money creation and public debt issuance, yet so selectively austere in its public spending choices?

Odd to see no mention at all of the Biden administration's decisive move away from austerity policies, and the fact that the U.S. is now less austerity-oriented than almost any other developed country in the world.

I sometimes think there's a wall of willful ignorance about this on the left, for some reason.
posted by Artifice_Eternity at 12:04 PM on September 27, 2024 [4 favorites]

so I'm going to go with 'anti-Black racism' as my answer

But not only the racism, according to the article:

...while more mainstream neoliberals might worry about ballooning welfare budgets and wage-push inflation, and more mainstream conservatives might lament the breakdown of the family and the proliferation of unmarried women on welfare, religious conservatives go straight to the heart of the matter: the loss of male sexual control over women. As they see it, the fiscal and monetary future of the nation rests on the subordination of women to the future life of the fetus.

posted by clawsoon at 6:03 PM on September 27, 2024 [3 favorites]

^ this is exactly where we are at after the 6-3 Dobbs decision in Red States, and we’re about 20,000 swing votes away next month from having this new reality being extended nationwide, assuming we don’t fall into a hot civil war over this.
posted by torokunai at 10:26 PM on September 27, 2024

One thing that interests me about all this is Kamala Harris is taking what would once have been considered foolish economic populism to the mainstream, and Trump is more than going along with it. Policies like not taxing tips, providing credits for first time homebuyers, and capping food prices are obviously economic foolishness to any undergraduate econ student, but because they sound good to the median voter (and the median tip worker) both parties are now aligned with these agendas. If she is elected I am interested to see if she goes through with it. Hopefully smarter and more experienced economic heads prevail.
posted by MtRChem at 7:31 PM on September 29, 2024

I think the modern issue with neoliberal economies have been their inability to change their fertility rates to be above replacement. Progressive taxation funded education and housing corporations. These were policies that made life affordable for young families. Oligarchs have no desire to use their incomes to raise other people's children, so the costs of parenting are transferred largely to the young parents. Neoliberals like JD Vance are trying to offer solutions, but they're being hypocritical. Elon Musk and JD Vance are aware there's now a problem. They're proponents of free markets and rational actors, but they have a cognitive dissonance that young people are also being rational actors by avoiding the costs of parenting. They create games like making child labor legal in red states or asking for grandmothers to step into indentured servitude. Neoliberal economies are beginning to look like death cults if their arrow of population growth is negative persistently.
posted by DetriusXii at 10:04 AM on September 30, 2024

JD Vance is a neoliberal? Is advocating for the forced deportation of millions of immigrants neoliberalism? Maybe he once was but I think many of his current policies are not about market-based solutions to problems.
posted by ch1x0r at 10:23 AM on September 30, 2024 [1 favorite]

I think the modern issue with neoliberal economies have been their inability to change their fertility rates to be above replacement.

This isnt really an economic issue. The poorest countries have the highest fertility rates in the world and the opposite is true for the richest (with the somewhat-exception of France). As people get educated and get good paying jobs they realize life is pretty good and don't want to have kids.

Thankfully immigration is an easy and obvious solution, unless you are a person who incorrectly thinks the United States has some sort of national identity not based on immigration that we would lose.
posted by MtRChem at 5:13 PM on October 1, 2024 [1 favorite]

ch1x0r: JD Vance is a neoliberal? Is advocating for the forced deportation of millions of immigrants neoliberalism? Maybe he once was but I think many of his current policies are not about market-based solutions to problems.

Molly Olmstead at Slate pins him as a member of the post-liberal right with Catholic integrationist leanings:

These anti-modern comments fit with a certain kind of worldview that prizes a traditional and family-oriented society above individual liberties—and even democracy. It’s a guiding philosophy of a new faction of the conservative movement that pulls from elements of both the left and far right, that champions populist economics and radically conservative social policies, and that promises a revolution in the entire political order: the postliberal right.

...

There’s a term for intellectual Catholics with a similar worldview: integralists. There’s no universally accepted platform uniting integralists; it’s more of an intellectual framework built around the idea that Catholic moral theology should govern society. Mat Schmalz, a religious studies professor at College of the Holy Cross in Worcester, Massachusetts, defined it simply as the idea of “integrating spiritual and worldly, or integrating church and state.” In other words: church before state.

posted by clawsoon at 7:47 PM on October 1, 2024 [3 favorites]

oh yeah, these people are absolutely foaming at the mouth waiting for the day they can start saying "error has no rights" again.
posted by adrienneleigh at 7:50 PM on October 1, 2024

Appears this $10 trillion number The_Vegetables quoted check out:

Government Funding for Highways
$245 billion in 2024, +5.5% annualized growth 2019-24

"In 2021, state and local governments spent $206 billion, or 6 percent of direct general spending, on highways and roads."

These U.S. Cities Have More Parking Lots Than Housing

At a high level, the US spends its money on stuff for Americans semi-broadly, including on its millitary, which helps steal more stuff for Americans semi-broadly, but nobody needed all this stuff, and it's all done in service of pumping the economic ponzi scheme. This is true both before and during neoliberalism.

Neoliberalism certianly transfered wealth upwards, in large part by pumping the economic ponzi scheme, but more directly too. Yet, that's extra beyond encuraging unecessary consuption and stealing the rest of the worlds resources.

Anyways, assets rise quicky because someone paid more recently, but assets could drop even faster whenever other things matter more, like because capital is being destoryed by conflict.
posted by jeffburdges at 3:09 AM on October 16, 2024