{"id":13166,"date":"2011-01-18T17:04:51","date_gmt":"2011-01-18T06:04:51","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=13166"},"modified":"2011-01-18T17:04:51","modified_gmt":"2011-01-18T06:04:51","slug":"imagine-if-we-treated-humiliation-itself-as-a-cost","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=13166","title":{"rendered":"Imagine if we treated humiliation itself as a cost"},"content":{"rendered":"

\t\t\t\tI am currently writing a piece for the US weekly The Nation<\/a> which is focusing my mind on issues relating to what a social democratic narrative should look like and in what way does it have to change from that which dominated government policy and the relationship the state had with its citizens in the Post WWII period up until the neo-liberal resurgence in the mid-1970s. It is an interesting topic and my deadline looms. Serendipitously, while I was driving back from the airport the other day I was listening to a repeat of an ABC radio program Big Ideas<\/em> (thank god for our public broadcaster) which was a repeat of a lecture – What is Living and What is Dead in Social Democracy?<\/a> – given by the late Tony Judt<\/a> as the 2009 Remarque Lecture<\/a> at New York University on October 19, 2009. The lecture nicely dovetailed into my current thoughts and challenged the “left” to wake up to themselves and revive the collective narrative and to get angry about what we have lost over the last 30 years. There are many memorable lines in this speech and the title – imagine if we treated “humiliation itself as a cost” is just one of them (more about which later).
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\nYou can hear the full lecture via the ABC<\/a>. You can watch the lecture via the Remarque Institute, NYU<\/a> and there is a transcript<\/a> available via the New York Review of Books, which is based on the lecture.<\/p>\n

As an aside, the conservatives have long been trying to privatise (read: compromise) the Australian Broadcasting Commission (ABC) because it consistently accuses it of left-wing bias. Interestingly, there was a study done last year during the federal election campaign which showed that in fact the ABC had given more airplay to the conservative ideas than those of the government.<\/p>\n

I laughed when I read that because in this modern era it is hard to tell the difference between a Labor government (founded as the political arm of the trade union movement) and the conservatives (who historically have represented the wealthy elites and corporate sector). Both aim to create budget surpluses of x per cent within x years (minor differences in magnitudes) and both promote welfare-to-work reforms (read: deregulate the labour market and reduce entitlements), privatisation (read: hand over public assets at below value to wealthy elites) and neither has a solution to poverty and inequality except to preach the benefits of market-led growth.<\/p>\n

But there is a slight difference and this relates to the lecture by Tony Judt where he says that today’s (so-called) social democrats need action not words to restore their place in the policy debate.<\/p>\n

I won’t go into a detailed line-by-line analysis of Judt’s excellent speech. I urge you all to listen to it and reflect on its message.<\/p>\n

He notes that social democracy evolved out of a period of insecurity which culminated in the twin events – the Great Depression closely followed by World War II. At the time there were two competing camps which aimed to address the question of the best way to maintain liberty in the face of totalitarianism (right and left) which had assumed dominance as a response to this insecurity.<\/p>\n

He compares the Austrian influence (Von Mises, Hayek, etc) who eschewed state intervention – believing it was intrinsically doomed to be repressive of liberty – and the social democratic response – which followed on from the work of Beveridge and Keynes among others. This alternative response understood that the state was a vehicle for collective action which could promote better outcomes for all within a democratic context (that is, devoid of totalitarianism).<\/p>\n

Judt notes that the latter position dominated until the mid-1970s and “(s)ince then, as we know, the Austrians have had their revenge” in the sense that the neo-liberal domination of economic policy has seen the pursuit of collective well-being severely retrenched and a new narrative (the old actually) has emerged such that:<\/p>\n

\n… when asking ourselves whether we support a proposal or initiative, we have not asked, is it good or bad? Instead we inquire: Is it efficient? Is it productive? Would it benefit gross domestic product? Will it contribute to growth? This propensity to avoid moral considerations, to restrict ourselves to issues of profit and loss – economic questions in the narrowest sense – is not an instinctive human condition. It is an acquired taste.\n<\/p><\/blockquote>\n

By restricting “public policy considerations to a mere economic calculus” we have abandoned the great gains of the Post WWII era. Most of us forget that this era of state intervention into the economy in the name of collective good was extraordinarily successful. Judt says that:<\/p>\n

\nThe welfare state had remarkable achievements to its credit. In some countries it was social democratic, grounded in an ambitious program of socialist legislation; in others – Great Britain, for example – it amounted to a series of pragmatic policies aimed at alleviating disadvantage and reducing extremes of wealth and indigence. The common theme and universal accomplishment of the neo-Keynesian governments of the postwar era was their remarkable success in curbing inequality. If you compare the gap separating rich and poor, whether by income or assets, in all continental European countries along with Great Britain and the US, you will see that it shrinks dramatically in the generation following 1945.\n<\/p><\/blockquote>\n

In my 2008 book with Joan Muysken – Full Employment abandoned<\/a> – we consider these themes in great detail.<\/p>\n

Judt considers the success of that welfare state was a double-edged sword. By reducing insecurity “their success would over time undermine their appeal”. In other words, we forget what we have and what our past generations fought for and why. We forget historical context and in many ways that reduces our sense of meaning with policy frameworks. That makes it easier for the neo-liberals to tear these policy frameworks down – especially during times of prosperity and growth.<\/p>\n

Our loss of collective memory only can be restored in times of hardship that align with the times that our forebears faced.<\/p>\n

Judt says that the benefits derived from the welfare state were:<\/p>\n

\nBy the late 1970s … increasingly neglected. Starting with the tax and employment reforms of the Thatcher-Reagan years, and followed in short order by deregulation of the financial sector, inequality has once again become an issue in Western society. After notably diminishing from the 1910s through the 1960s, the inequality index has steadily grown over the course of the past three decades.\n<\/p><\/blockquote>\n

He quotes data which shows that in the “US today, the “Gini coefficient” – a measure of the distance separating rich and poor – is comparable to that of China”. The policy frameworks that have supported this return to significant inequality and which are at present entrenching long-term unemployment around the globe are re-creating the conditions that led to our forebears considering the development of the welfare state.<\/p>\n

This is the terrain that the progressive agenda needs to be firmly fighting on. It requires a total rejection of the neo-liberal paradigm. Not bits of it. The whole shebang. A policy approach based on the “individual” without a value-system to ensure that all of us share in the spoils will never provide security and hope for the poor and disadvantaged.<\/p>\n

Judt’s lecture documents how the neo-liberal era has undermined the liberty of citizens around the world while enhancing the wealth and power of a few. He asks:<\/p>\n

\nWhy do so few of us condemn such “reforms” – enacted under a Democratic president? Why are we so unmoved by the stigma attaching to their victims? Far from questioning this reversion to the practices of early industrial capitalism, we have adapted all too well and in consensual silence – in revealing contrast to an earlier generation. But then, as Tolstoy reminds us, there are “no conditions of life to which a man cannot get accustomed, especially if he sees them accepted by everyone around him.”\n<\/p><\/blockquote>\n

It is the silence of the majority that has allowed this state of affairs to take control of the policy space. It will be the voice of that same majority that changes things. The alternative, as Judt clearly notes, is that more and more extreme responses will emerge as they did in the 1930s in Europe which crush liberty.<\/p>\n

The neo-liberal paradigm might give way to an equally oppressive totalitarian state. Neither is desirable.<\/p>\n

Judt went on to critique the neo-liberal dismantling of the state including the faux rationale for privatisation and the outsourcing of public services. He noted that it has been a fallacious notion of “costs” that has allowed the free market lobby to claim that private provision is superior to public provision. His historical record is impeccable.<\/p>\n

In Paul Ormerod’s 1994 book – The Death of Economics<\/em> – we read that during the period of full employment:<\/p>\n

\nA perfectly feasible outcome for the Western economics in the post-war period would have involved a much higher average level of unemployment, with everything else remaining exactly the same: Marshall Plan, monetary stability, high investment, rapid growth. The sole difference would have been that those in employment would have become even better off than they did, at the expense of the unemployed.\n<\/p><\/blockquote>\n

This bears on the issue of the way in which we construct the modern day debate. We seem to think that unemployment is inevitable (“its natural”) as a buffer against inflation. It is quite clear that this claim – which is central to the neo-liberal position – the so-called NAIRU argument – is erroneous. Please read my blog – The dreaded NAIRU is still about!<\/a> – for more discussion on this point.<\/p>\n

As I explained in this blog – Modern monetary theory and inflation – Part 1<\/a> – that there are two broad ways to control inflation and the use of buffer stocks are involved in each:<\/p>\n