Friday lay day – neo-liberalism has compromised the concept of a citizen

Its my Friday lay day – which means I don’t write as much as I usually do and perhaps focus on different issues to my normal considerations. Remember back to 2007. In March 2007, an Australian citizen named David Hicks pleaded guilty to charges that he intentionally provided material support or resources to an international terrorist organisation engaged in hostilities against the United States. It set in place his return to Australia after he was illegally detained by the US, tortured and incarcerated at the Guantanamo Bay gulag without trial for more than five years, and deprived of his rights as an Australian citizen by the very government that is entrusted with defending our rights – our own Federal government. Upon his return to Australia he was incarcerated for a period of 9 months before being finally released. Today, the ABC news report (January 23, 2015) – US agrees David Hicks is innocent, lawyer says – reported that the US government has admitted that David Hicks was not guilty of any crime and a full pardon will be forthcoming. Why is this important?

Today, we read:

The United States has agreed that former Guantanamo Bay detainee, Australian David Hicks, is innocent ,,, [and] … the government did not dispute his innocence and also admitted that his conviction was not correct.

The hysterical right wing press has consistently been full of sanctimonious accusations about Mr Hicks since he came to the public attention some years ago after he was arrested and kidnapped to Guantanamo Bay with the knowledge of the Australian government.

Even as late as November 14, 2014, there were ridiculous articles being written that continued the campaign of vilification against him – Whingeing David Hicks has a lot to say sorry for.

Apparently, anyone who was concerned about the violation of his rights as a citizen and the unfair treatment he received are “leftist stooges”.

Fortunately, some articles in the popular media saw things differently. This UK Guardian article (November 18, 2013) –
David Hicks deserves an apology – documented the way in which Hicks was denied his basic human rights and the rights associated with citizenship.

The Prime Minister at the time, John Howard consistently accussed Mr Hicks of being a terrorist before he had been found to be so (whatever a terrorist actually is) by a legitimate court, which would be recognised by Australian law.

On January 15, 2002, Howard waxed lyrical to the Australian press about Mr Hicks:

He’s in detention. He knowingly joined the Taliban and al-Qaeda. I don’t have any sympathy for any Australian who’s done that.

Later in the year (August 2, 2002) he was asked whether it was fair to hold an Australian citizen indefinitely without any bail, and replied:

Well, given the circumstances of Afghanistan, I think it is, yes.

Meanwhile, Hicks was being tortured and denied all rights. Even the British government managed to negotiate the release of its citizens from Guantanamo and arranged for them to be dealt with in accordance to British legal processes – that is, given their rights as citizens.

Once the Hicks issue became a political issue in Australia (we were concerned with the denial of his rights), the sleazy Howard government started to pressure the US to get rid of the Hicks matter. He was then brought before a military commission, coerced into making a faux confession just to get home, and Howard then claimed he was solving the problem.

All it meant was that they could then claim Mr Hicks was guilty because he signed a confession.

I have no personal knowledge of what Mr Hicks was doing in war-torn nations, who he met, what training he received, what his motivations were.

But he is an Australian citizen like me. And a civilised society based on the rule of law ascribes basic rights of citizenship, which once breached take us back to the dark ages.

If Mr Hicks was was accused of breaking a law then he should have be tried according to the rules.

The handling of the David Hicks case by the Australian government goes to the heart of what we think of citizenship and the obligations of government to preserve the rights associated with citizenship. His treatment was the ultimate denial of citizenship.

In my 2008 book (with Joan Muysken) – Full Employment abandoned – we argued that the neo-liberal era, especially in the English-speaking world, was associated with a decimation of our rights as citizens.

David Hicks if you need the ultimate example of that trend.

The oil price crises in the 1970s provided the cover for the Monetarists to take back control of the policy debate and consign the Keynesian period, which had dominated the post WW2 period, to history. But it was more than an economic policy shift.

Three pillars – which we called the Full Employment Framework in our 2008 book – defined the Post World War 2 economic and social settlement in most Western countries.

1. The Economic Pillar was defined by an unambiguous commitment to full employment.

2. The Redistributive Pillar was designed to ameliorate market outcomes and defined much of the equity intervention by government. It recognised that the free market was amoral and intervention in the form of income support and wage setting norms was a necessary part of a sophisticated society.

3. The Collective Pillar provided the philosophical underpinning for the full Employment framework and was based on the intrinsic rights of citizenship.

This depiction is a stylisation and that there were many individual nuances in particular countries over the period considered.

The Great Depression taught us that, without government intervention, capitalist economies are prone to lengthy periods of unemployment. The emphasis of macroeconomic policy in the period immediately following the Second World War was to promote full employment. Inflation control was not considered a major issue even though it was one of the stated policy targets of most governments.

In this period, the memories of the Great Depression still exerted an influence on the constituencies that elected the politicians. The experience of the Second World War showed governments that full employment could be maintained with appropriate use of budget deficits.

he employment growth following the Great Depression was in direct response to the spending needs that accompanied the onset of the War rather than the failed Neoclassical remedies that had been tried during the 1930s. The problem that had to be addressed by governments at War’s end was to find a way to translate the fully employed War economy with extensive civil controls and loss of liberty into a fully employed peacetime model.

As a consequence, in the period between 1945 through to the mid 1970s, most advanced Western nations maintained very low levels of unemployment, typically below 2 per cent.

However, while both private and public employment growth was relatively strong during the Post War period up until the mid 1970s, the major reason that the economy was able to sustain full employment was that it maintained a buffer of jobs that were always available, and which provided easy employment access to the least skilled workers in the labour force. Some of these jobs, such as process work in factories, were available in the private sector.

However, the public sector also offered many buffer jobs that sustained workers with a range of skills through hard times. In some cases, these jobs provided permanent work for the low skilled and otherwise disadvantaged workers.

The full employment commitment (the Economic Pillar) was buttressed by the development of the Welfare State, which defined the state’s obligation to provide security to all citizens. Citizenship embraced the notion that society had a collective responsibility for the well-being of its citizens and replaced the dichotomy that had been constructed between the deserving and undeserving poor.

The Redistributive Pillar recognised that the mixed economy (with a large market-component) would deliver poor outcomes to some citizens, principally via unemployment.

Extensive transfer payments programs were designed to provide income support to disadvantaged individuals and groups.

Underpinning the Welfare State and the economic commitment to full employment was a sophisticated concept of citizenship (the Collective Pillar).

The rights of citizenship meant that individuals had access to the distribution system (via transfer payments) independent of market outcomes. Furthermore, a professional public sector provided standardised services at an equivalent level to all citizens as a right of citizenship. These included the public sector employment services, public health and education systems, legal aid and a range of other services.

The stability of this Post-War framework with the Government maintaining continuous full employment via policy interventions was always a source of dissatisfaction for the capitalist class. This was particularly the case in the late 1960s as national debates arose about trade union power.

Taking Australia as an example, there is compelling evidence to show that the captains of industry were pressuring government to create some labour slack in the economy and that the entreaties were received sympathetically by key conservative politicians. However, the chance to break the Post-War stability came in the mid-1970s.

Following the first OPEC oil price hike in 1974, which led to accelerating inflation in most countries, there was a resurgence of pre-Keynesian thinking. Inflationary impulses associated with the Vietnam War had earlier provided neo-liberal economists with opportunities to attack activist macroeconomic policy in the United States.

Governments around the world reacted with contractionary policies to quell inflation and unemployment rose giving birth to the era of stagflation. The economic dislocation that followed provoked a paradigm shift in macroeconomics.

The Keynesian notion of full employment, defined by Nobel Prize winner William Vickrey (1993) as ‘a situation where there are at least as many job openings as there are persons seeking employment’ was abandoned as policy makers progressively adopted Milton Friedman’s conception of the natural rate of unemployment.

This has more recently been termed the Non-Accelerating Inflation Rate of Unemployment (NAIRU) approach. This approach redefines full employment in terms of a unique unemployment rate (the NAIRU) where inflation is stable, and which is determined by supply forces and is invariant to Keynesian demand-side policies.

It reintroduces the discredited Say’s Law by alleging that free markets guarantee full employment and Keynesian attempts to drive unemployment below the NAIRU will ultimately be self-defeating and inflationary. The Keynesian notion that unemployment represents a macroeconomic failure that can be addressed by expansionary fiscal and/or monetary policy is rejected.

Instead, unemployment reflects failures on the supply side failures such as individual disincentive effects arising from welfare provision, skill mismatches, and excessive government regulations (OECD, 1994). Extreme versions of the natural rate hypothesis consider unemployment to be voluntary and the outcome of optimising choices by individuals between work (bad) and leisure (good).

As, what is now referred to as, neo-liberalism took hold in the policy making domains of government, advocacy for the use of discretionary fiscal and monetary policy to stabilise the economy diminished, and then vanished. In the mid-1970s the opposition to the use of budget deficits to maintain full employment became visible for the first time and the inflation-first rhetoric emerged as the dominant discourse in macroeconomic policy debates.

The rhetoric was not new and had previously driven the failed policy initiatives during the Great Depression. However, history is conveniently forgotten and Friedman’s natural rate hypothesis seemed to provide economists with an explanation for high inflation and alleged three main and highly visible culprits:

1. The use of government deficits to stimulate the economy.

2. The widespread income support mechanisms operating under the guise of the Welfare State.

3. The alleged excessive power of the trade unions which had supposedly been nurtured by the years of full employment.

All were considered to be linked and anathema to the conditions that would deliver optimal outcomes as prescribed in the Neoclassical economic (textbook) model.

With support from business and an uncritical media, the paradigm shift in the academy permeated the policy circles and as a consequence governments relinquished the first major pillar of the Post-War framework – the commitment to full employment.

It was during this era that unemployment accelerated and has never returned to the low levels that were the hallmark of the Keynesian period.
In many countries successive governments began cutting expenditures on public sector employment and social programs; culled the public capacity to offer apprenticeships and training programs, and set about dismantling what they claimed to be supply impediments (such as labour regulations, minimum wages, social security payments and the like).

Within this logic, governments adopted the goal of full employability, significantly diminishing their responsibility for the optimum use of the nation’s labour resources. Accordingly, the aim of labour market policy was limited to ensuring that individuals are employable. This new ambition became exemplified in the 1994 OECD Jobs Study.

As a result, successive governments in many countries began the relentless imposition of active labour market programs.

These were designed to churn the unemployed through training programs and/or force participation in workfare compliance programs.

The absurdity of requiring people to relentlessly search for work, and to engage in on-going training divorced of a paid-work context, seemed lost on government and their policy advisers.

That this approach seduced them at all is more difficult to understand given stark evidence that since 1975 there have never been enough jobs available to match the willing labour supply.

The abandonment of full employment presented neo-liberal governments with a new problem. With unemployment persisting at high levels due to the deliberate constraints imposed on the economy by restrictive fiscal (and monetary) policy, rising welfare payments placed pressures on the Redistributive Pillar.

These pressures were also erroneously seen as a threat to the fiscal position of government.

It is clear from the perspective of MMT that national governments (non EMU) are never financially constrained and so the neo-liberal justification for cutting welfare to ‘save money’ is flawed at the most elemental level.

However, the neo-liberals managed to convince policy makers that fiscal conservatism was necessary and that the only way to resolve the pressures on the Redistributive Pillar was to reduce the public commitment to income support and the pursuit of equity.

Accompanying the neo-liberal attacks on macroeconomic policy were concerted attacks on the supplementary institutions such as the industrial relations system and the Welfare State.

But, significantly, and the point of today’s blog, for these attacks to be effective required a major recasting of the concept of citizenship.

Governments, aided by the urgings of the neo-liberal intellectuals in the media and in conservative think tanks, thus set about redefining the Collective Pillar, which had been an essential part of the rationale for the system of social security.

The hallmark of the neo-liberal era is that individuals have to accept responsibility, be self-reliant, and fulfill their obligations to society.

Unemployment is couched as a problem of welfare dependence rather than a deficiency of jobs. To break this welfare dependency required responsibility to be shifted from government to the individual.

To force individuals to become accountable for their own outcomes, governments embraced a shift from active to passive welfare and the introduction of alleged responsibilities to counter-balance existing rights.

This is sometimes referred to as reciprocal obligation. Individuals now face broader obligations and, in many countries, their rights as citizens have been replaced by compulsory contractual relationships under which receipt of benefits is contingent on meeting behavioural criteria.

Reciprocal obligation was developed as a leading principle in several countries as a means of reintegrating the allegedly, welfare dependent underclass into the community.

Unfortunately, there is no reciprocal obligation on government to ensure that there are enough jobs for all those wanting work. The major shortcoming of the Full Employability framework is that the focus on the individual ignores the role that macroeconomic constraints play in creating welfare dependence.

It is a compositional fallacy to consider that the difference between getting a job and being unemployed is a matter of individual endeavour or preference.

Adopting welfare dependency as a lifestyle is different to an individual, who is powerless in the face of macroeconomic failure, seeking income support as a right of citizenry.

Conclusion

What happened to David Hicks was the extreme form of what has been going on for a few decades now under this neo-liberal dominance.

We have all had our citizenship compromised as governments allowed the destructive inner logic of capitalism to roam wider than in the past.

They stopped playing a role as an intermediary between labour and capital – a role which ensured the spoils were more evenly shared and that no-one went without a paid job. Instead, they became the support team for the financial sector and introduced policies that allowed that sector to capture increasing proportions of real income.

To accomplish that new role, the governments had to attack the fundamental notions of citizenship. The War of Terror has been a smokescreen to allow the state to erode our rights. The nations that the West have invaded with martial force are just fodder in that quest.

The World has become more unstable, economically vulnerable and more coercive as a result.

And then we wonder why young people want to blow themselves up and take as many of us with them as they can.

I hope David Hicks receives an official pardon and a state compensation payment is made to him. But then I am just a left-wing stooge!

Saturday Quiz

The Saturday Quiz will be back again tomorrow. It will be of an appropriate order of difficulty (-:

That is enough for today!

(c) Copyright 2015 Bill Mitchell. All Rights Reserved.