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May 16, 2018

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Scratch

Perhaps the texts of transnational trade treaties might be the best place to search for a de facto definition of neoliberalism.

There's not much room to blur, obfuscate (beyond the natural impenetrability of legalese) or wreath around with dubious ethicism in these documents I'd imagine.

Luis Enrique

if it's a way of describing the prevailing economic system, does it make sense to describe people as neoliberals? Does that imply that everyone who is not a radical revolutionary (i.e. anyone who if they got their way in government would still be within normal variation in policies from a USA Republican administration to the Danish Labour party?). So the Koch brothers are neoliberals and Brad De Long is a neoliberal despite them disagreeing vehemently about most things?

I know we have lots of other words that are used in wildly inconsistent ways (capitalism, socialism) but I can't help being irked by the sheer incoherence of the things that neoliberals are accused of. Most recent example to come to mind, somebody in conversation with Will Davies on Twitter claimed neoliberals oppose redistribution (and Will did not correct him). FFS.

Mike W

Conway says:

'But, despite the fact that neoliberalism is frequently referred to as an ideology, it is oddly difficult to pin down. For one thing, it is a word that tends to be used almost exclusively by those who are criticising it - not by its advocates, such as they are (in stark contrast to almost every other ideology, nearly no-one self-describes as a neoliberal). In other words, it is not an ideology but an insult.'

Well political science and history uses models too. What is the problem of say David Harvey's definition in, A Brief History of ...that which doesn't exist (2007)?

Rather I think he means it upsets 'main stream' economics professors, to be called this term, and rather than opt for Wren Lewis gambit (there is such a thing as 'Media Macro' or 'Tory Macro', or 'Econ 101', which I found interesting as it happens) Conway has gone for pedantry and first year Politics student essentialism, ie what is Democracy? type stuff.

As it happens he is dated and plain wrong above.

https://www.adamsmith.org/blog/coming-out-as-neoliberals

Hope this helps Ed

Ralph Musgrave

Neoliberalism, at least in the UK, was in part a reaction by Thatcher & Co to the excesses of previous Labour administrations: excesses in the form of “if an industry looks like going bust, let’s pour whatever amount of taxpayer’s money into it needed to save it”. Thatcher & Co’s reaction was: “s*d that for a lark – the rules of the free market are better than industrial subsidies (especially industrial subsidies in cabinet ministers’ constituencies)”

Kevin Carson

Whether or not the present neoliberal system is the result of a single coherent ideology, it emerged from the 70s on as a set of related (if not deliberately coordinated) responses to the structural crises of the older postwar Keynesian system. And there was definitely a cluster of policy-making elites in the early 70s making similar observations about the failure of consensus capitalism.

Ben Philliskirk

"if it's a way of describing the prevailing economic system, does it make sense to describe people as neoliberals?"

Yes, these are largely people who reacted to the 'series of events' that occurred in the global economy in the 1970s by essentially accepting a certain set of policies and responses, many of which involved seeking to insulate the state against collective popular demands, intervening against organised labour, deregulating finance and targeting state intervention towards private business.
It is possible to have 'hard' and 'soft' neoliberalism depending on whether the state employs 'carrots' or 'sticks', but essentially almost the entire UK political system agreed that 'There Is No Alternative' until Corbyn became Labour leader. Many of these people were hardly hardcore ideologists but rather pragmatic
or unimaginative types that were unwilling to challenge the 'status quo' or the prevailing economic system, just as there were very few classical liberals from WWI onwards.

From Arse To Elbow

I think Will Davies has hit the spot with his definition of neoliberalism as "the disenchantment of politics by economics". In other words, neoliberalism is first and foremost a political praxis, not an economic theory. It is about power, hence the continuing importance of the state.

This instrumentality echoes Thatcher's insistence that "Economics are the method; the object is to change the heart and soul", which shows that there was more in play in the late-70s and early-80s than simply responding to the "structural crises of the older postwar Keynesian system".

Sarah Miron

You should be reading Philip Mirowski instead.

The economist and historian of science Philip Mirowski is considered the foremost expert on this subject, he has written many books on this the latest is:

"The Knowledge We Have Lost in Information: The History of Information in Modern Economics":

https://www.amazon.com/Knowledge-Have-Lost-Information-Economics/dp/0190270055/

*

Neoliberalism is a philosophy based on the metaphor/idea that the "market" is an information process ad it is quasi-omniscient, that "knows" more than any and all of us could ever know.

It makes certain claims about what "information" is and what a "market" is.

It's mostly started with the Mont Perelin Society think-tank.

Sarah Miron

Here's an intro:


https://www.the-utopian.org/post/53360513384/the-thirteen-commandments-of-neoliberalism

His papers:

https://nd.academia.edu/PhilipMirowski


Some lectures:

https://www.youtube.com/watch?v=sMDrVR59mTQ


https://www.youtube.com/watch?v=sw1TNf7YwHA

Blissex

«productivity and hence real incomes for most of us have stagnated for years.»

But for many, usually people who vote more often or more opportunistically, they have been years of booming living standards.

The core of the electoral appeal of thatcherism is that thatcherites whether Conservative or New Labour have worked hard to ensure that upper-middle (and many middle) class voters collectively cornered the southern property market, creating a massive short squeeze on people short housing.

So many champagne leftists of some age talk about policies and concepts, but for the many the number one problem for decades has been managing to pay rent.

Blissex

«neoliberalism is first and foremost a political praxis, not an economic theory. It is about power, hence the continuing importance of the state.»

That's a very good point, but I would rather say that's a good description of New Right/thatcherite (and "third way" clintonian/mandelsonian) politics, and neoliberalism is the economic policy aspect.
There is after all something called "The Washington consensus" that is a "standard" set of neoliberal economic policies.

Blissex

«Neoliberalism is a philosophy based on the metaphor/idea that the "market" is an information process»


Written that wait it evokes Polanyi's "Great transformation" where markets mechanisms have displaced social mechanisms in many areas.

But Just yesterday I realized that Polanyi was subtly off-target: it is not markets-vs-society (two fairly abstract concepts) but instead institutions-vs-businesses.

That is the Great Transformation and neoliberalism as its current phase are about turning institutions into businesses (including marriage), and part of this is "managerialism".

This is not done because businesses are inherently better for every purpose than institutions, but because businesses are better vehicles than institutions for tunnelling (looting) by their managers.

Blissex

«the "market" is an information process ad it is quasi-omniscient, that "knows" more than any and all of us could ever know»

There have been a few books arguing that "the market", being omniscient, all powerful, and just in judging everybody and giving them exactly what they deserve, has replaced God, and today's sell-side neoliberal Economists are its preachers:

www.theatlantic.com/magazine/archive/1999/03/the-market-as-god/306397/
www.psupress.org/books/titles/0-271-02095-4.html
www.theguardian.com/commentisfree/2010/may/18/brain-food-markets-politics-religion
www.thebaffler.com/salvos/the-god-that-sucked

Nanikore

Economists started using the term neo-liberalism a bit later, after it became a derogatory term - and after 2008 began to disassociate from it (a few, and very few, did after the Asian Financial Crisis).

It is important to realise I think that it is a term that closely linked to political science - and in particular a branch of international relations. The person most associated with Neo-liberalism is Francis Fukuyama. What he did was link capitalism and democracy; both he said had triumphed and because they respect the freedom of individual liberty and they allowed markets, which are the most efficient way of allocating resources, to operate liberally. Its heyday was at the time of the collapse of the Berlin Wall - "the end of history" as FF famously said.

Political scientists see neo-classical economics and neo-liberalism as very compatible, because of the formers basic construct of individual optimisation, rational choice and market efficiency. Often they are grouped together and contrasted with radical and realist (realpolitik) approaches. For neo-liberals and neo-classicists, markets get prices right, whether they do so with a lag is a minor point.

NK.

Nanikore

Neo-liberals are not opposed to all types of government intervention. But like neo-classical economists, they believe ultimately in the price mechanism to allocate resources - in the long run, if not the short.

They have no problem with welfare states. Like neo-classical economists they accept the second welfare theorem.

They are pro-globalisation: they don't like international trade, capital or immigration controls. Why? Because they impact on individual liberty and distort market prices.

International relations were often guiding reasons behind economic policy that were pro-globalisation. By encouraging globalisation, you were encouraging international capitalism and thereby the spread of democracy (a la Francis Fukuyama). International relations policy was close to the PM, and run from the Cabinet Office.

I would argue that Blair and Jonathan Portes are prime examples of neo-liberals. And indeed the Clinton/Blair years were quintessentially neo-liberal in the formerly correct use of the term. Thatcher, as a strong opponent of the welfare state, was not.

Nanikore

One further point. Neo-liberals are progressively and socially liberal, as well as economically liberal. They believe in cosmopolitanism and diversity and put much emphasis on minority and women's rights.

NK.

Anarcho

"In fact, though, as Will Davies and Adam Curtis have said, neoliberalism entails the use of an active state."

It has always been like that -- Kropotkin was attacking Marxists for suggesting otherwise over a hundred years ago.

"In the mid-80s nobody argued that the share of GDP going to the top 1% should double. Of course, many advocated policies which, it turns out, had this effect. Some of them intended this. But those policies were justified on other grounds, often sincerely."

Yes, different rhetoric was often used -- but the net effect was always obvious, and pointed out at the time. But you get better results with honey than vinegar...

In terms of sincerity, Milton Friedman asserted in "Capitalism and Freedom" that the more a society was "free market," the more equal it was. Come the preface to 50th anniversary edition, he simply failed to mention that applying his own ideology had refuted his assertion (and it was an assertion).

Neo-liberalism never been about reducing "the State" but rather strengthening it in terms of defending and supporting capital. Hence you see Tories proclaim they are "cutting back the state" while also increasing state regulation on trade unions -- and regulating strikes, and so the labour market.

Luis Enrique

how coherent are the comments above?

fr'instance

"intervening against organised labour"
China bans unions, doesn't it? Are they in this tent too?

"targeting state intervention towards private business" not quite sure what that means but pre-1970 import substitution industrial policy is what?

am I a neoliberal because I think markets do process dispersed information and that competition does some good things (I am worried about monopolies, I would be worried about non-competitive government procurement) or am I not a neoliberal because I am nowhere near thinking markets are omniscient and could write long essays on how markets fail?

am I a neoliberal because I think the Washington Consensus is broadly sensible (with some reservations) or not a neoliberal because I'd like to see far more social housing?

and so on

Nanikore

Somewhere along the line neo-liberalism got associated with austerity and small-government policies. The latter I think was because they are (correctly) associated with promoting privatisation and deregulation policy. But neo-liberals have never been against welfare states in principle or counter-cyclical policy in principle. Key-neo-liberals, however, were pro-austerity policy after the Asian Financial Crisis - but this included most of the mainstream economics establishment (most crucially of all Stanley Fischer at the IMF). Their rational (naturally enough) related to consistency, credibility, incentives and moral hazard arguments. There were a few who protested (eg Stiglitz). But they were exceptions.

NK.

e

@ Luis Enrique
I don't think you'd make the grade as a 'true' neo-liberal unless you'd be happy for your social housing to be less then optimal and only for the destitute. Do you see moral hazard if the housing market is once again sidestepped in favour of decent homes for average every-day heroes, or do you subscribe (explicitly) to the view that the state must sanction and hurt in order that individuals strive?

C Adams

@Blissex

"There have been a few books arguing that "the market", being omniscient, all powerful, and just in judging everybody and giving them exactly what they deserve, has replaced God...."

But the market is the creation of man. It has no power, no judgement, other than that bestowed on it by us.

My problem with neoliberalism is the belief that decisions can be made on the basis of a money metric whereas we know that money is not necessarily a good measure of value.

Ben Philliskirk

@ Luis Enrique

'"intervening against organised labour"
China bans unions, doesn't it? Are they in this tent too?'

Well yes. They have taken it further than most countries, stripping back their welfare system while increasing state promotion of capitalist development.

'"targeting state intervention towards private business" not quite sure what that means but pre-1970 import substitution industrial policy is what?'

Import substitution industrial policy is protectionism, not neoliberalism. I'm referring to governments' privatisation and outsourcing of public services and industries, taking them out of political responsibility and collective provision, while at the same time providing them with subsidies and guaranteed markets.

Luis Enrique

Ben, ok protectionism is a different tactic than outsourcing but it's intervention towards private business so maybe that's not a defining characteristic of neoliberalism?

And if the Chinese Communist party is neoliberal and also the Koch brothers I am not convinced this is a useful nomenclature

Avraam Jack Dectis

.
Is Productivity Growth like Evolution ?
.
Is it possible that productivity growth is like evolution: It can be a fortitous accident or it can happen due to competitive pressure.

The fortuitous accidents are the new technologies whose advantages are so obvious they are quickly adopted.

The competitive pressures can be constraints on profits or resources that force greater efficiency.

Perhaps, now, in the UK, there is no shortage of reasonably priced personnel, infrastructure and goods.

So, if productivity growth is low, you can be certain neither requirement has been met.

If neither requirement has been met, then, it may well be that there is excessive unused capacity and, if that is the case, GDP growth has been suboptimal.

Which leads to the best question: Is greater GDP growth the result of greater efficiency or is greater efficiency the result of greater GDP growth?

The conclusion is that it may be a mistake to guide policy under the assumption that GDP growth must he preceded by productivity growth. Failing to realize this may be a cause of unnoticed suboptimal GDP growth.
.


https://bankunderground.co.uk/2018/03/29/the-uks-productivity-puzzle-is-in-the-top-tail-of-the-distribution/

https://m.facebook.com/story.php?story_fbid=1252641211533237&id=100003621095394

Hubert Horan

1. Neoliberalism is real, but only describes background theoretical claims. It is wrong to apply the term to the broader political movement it supported. The political movement was dedicated to maximizing the power and freedom of action of large-scale capital accumulators. Lots of ideas from neoliberal intellectual argumentation were used to increase the power of capital accumulators, and neoliberal economists tended to ignore many aspects of the political movement they supported (strongr state power, crony capitalism, monopoly power) not strictly part of neoliberal theory

2. The overlap and confusion between neoliberal theory and the political movement for unfettered freedom for capital accumulator is consistent with the broader history of movement conservatism. After WW2, conservatives (broadly defined) had a fixation with developing an intellectual foundatation/justification for their policy preferences. Partly as a reaction to the perception that FDR-LBJ era liberalism was based on theories published by Ivy League professors. The Mont Pelerin intellectual thread that Mirowski and others describe was part of this process. But (even for the liberals) it was always a mistake to claim that intellectual/ideological theorizing lead to political policy and action. It was sometimes the opposite; usually the theory was just a weapon used in internal battles or as a PR tool to mask less savory political objectives.
3. Democratic neoliberalism (Brad DeLong) was always a totally different animal. It was a reaction to the economic crises of the 70s/80s--New Deal policies written in 1934 didn't seem to be working; maybe would should incorporate market forces a bit more. At the same time Republican neoliberalism had abandoned all pretense of detached analysis and was now strictly a tool supporting the pursuit of power.

Calgacus

"Put it this way. In the mid-80s nobody argued that the share of GDP going to the top 1% should double. Of course, many advocated policies which, it turns out, had this effect. Some of them intended this. But those policies were justified on other grounds, often sincerely. Instead, the belief that the top 1% “deserve” 15% of total incomes rather than 7-8% has mostly followed them getting 15%, not led it. "

This is just not true. People did argue that, did announce the intent of these policies in public. Bill Mitchell's former student Victor Quirk is great on such declarations of war on the poor from the rich throughout history. Mitchell himself wrote that he was surprised how many and how blatant these declarations were.

Blissex

«But the market is the creation of man. It has no power, no judgement, other than that bestowed on it by us.»

But the neoliberal thesis is that it is all-knowing, all-powerful, all-judging. "vox populi vox dei" taken to an extreme.

«My problem with neoliberalism is the belief that decisions can be made on the basis of a money metric»

That to me seems a very poor argument, because then many will object that ignoring the money metric means that you want someone else to pay.

Consider the statement "everybody has a right to healthcare free at the point of use": it is mere handwaving unless you explain who and how to pay for it.

The discussion in the money yes/no terms is for me fruitless, because there are two distinct issues in a project: the motivation for there being the project, and the business of doing the project.

Claiming that the *only* motivation for a project should be money seems to me as bad a claiming that given a good motivation how to pay for a project does not matter.
Projects don't reduce to their motivation any more than they reduce to the business of doing them.

An extreme example I make is marriage: for me it is (also) a business, as it requires a careful look at money and organization issues, but hopefully the motivation to engage in that business is not economic, but personal feelings.

That's why I mentioned a better-than-Polanyi duality between businesses and institutions: institutions as a rule carry out businesses but for non-business motivations, while "pure" businesses have merely economic motivations.

For example a university setup as a charity versus one setup a a business: both carry out business activities, but the motivation of the former is not merely to do business.

Blissex

Repeating the message: "neoliberalism" has a pretty much official definition, the "Washington Consensus".

And the core part of the "Washington Consensus" is "labour market reform", that is in practice whichever policies make labour more "competitive" and wages more "affordable".

The "free markets" of neoliberalism are primarily "free" labour markets, that is free of unions.

Mike the Mad Biologist

I would argue that, in terms of practical working definitions, Max Sawicky's definition of neo-liberalism seems to work well, at least in the U.S. context (second half of post): https://mikethemadbiologist.com/2017/04/28/remember-the-victims-of-the-nebraska-public-power-district/

C Adams

@ Blissex "ignoring the money metric means that you want someone else to pay."

Not sure I follow. If payment is made via money then that is not ignoring the money metric, i.e. money as a measure of value. Do we want someone to do the project and is someone willing and able to do it? If, yes, then money is not (or at least does not need to be) the constraint. It is a mechanism to facilitate the project. If we want universal healthcare, money is not the constraint, the constraint is the ability of society to train and sustain (feed and house) the required expertise.

dilberto

"What is neoliberalism?"


Neo-liberalism is an economic idea based on the conjecture that by reverting the level of state spending and regulation of an economy to that which existed at an earlier stage of its economic development will produce the same level of economic growth which the economy experienced then.

But the level of output of an economy is a reflection of the level of the efficiency of that economy, the level of economic growth therefore reflects the rate of increase in its efficiency in terms of increased economic output as the economy develops, a measure which inevitably reduces in its order as an economy approaches its maximum level of efficiency and output. So the rate of economic growth of an economy will inevitably be progressively reduced as an economy matures as the opportunities for efficiency improvements are exploited and the number that remain diminish.

The level of state spending and regulation typical of economically developed societies are responses to the social change which economic development itself has brought about. Abolishing those responses therefore is likely only to serve to reintroduce the social problems which led to their introduction and to make the social consequences of economic development more arduous for the lower social and economic groups disfavoured by that process of social change.

Neo-liberalism is, like other materialist ideology of the progressive left and right, a predominantly economic idea which is a product of the affluent and intellectual classes who themselves, being a product of their elevated economic condition, being dependent upon it and therefore having a vested interest in its continuance, are imbued with a bias which sees the improvement in the general economic condition as a natural unmitigated good and are therefore oblivious or apathetic to its non-material consequences as material progress causes a society and its population to diverge from its native and surviving character as it adapts to the historically exceptional conditions of modernity and undermines its cultural foundation and ultimately threatens its long term cultural future.

nicholas

It seems clear from the above posts that there is no clear consensus about what neo-liberalism actually is.
I suggest the use of the term is little more than a cloak used to cover up an uncomfortable reality for those on the left. Traditional left wing policies, such as nationalisation, state intervention in the economy such as rent controls, high marginal tax rates, and strong trade unions systematically failed to deliver prosperity. States which moved to economic models involving more reliance on markets to shift labour and capital to new activities seemed to prosper far better. Rather than say that conservatives such as Friedman were proved right about the fundamental propositions about how an economy should be organised, the soft left adopted conservative policies, and have dressed it up as 'neo-liberalism' to save face. Indeed, some on the left, such as 'filthy rich' Mandelson, embraced the market economy with the zeal of converts, and have ignored its faults and problems, and have failed to seek to mitigate or remedy these faults and problems.

Nanikore

@nicholas

The best thing to do is consult a first or second year undergraduate political science or international relations text. Burchill "Theories of International Relations, Palgrave is a good one, and used in many UK universities. There will be a chapter on neo-liberalism in them. These texts give you the standard blurb on what neo-liberalism really is (as well as what the other major schools of thoughts are together with critiques of all of them).

Neo-liberalism is very much a coherent (but by no means flawless) theory.

Neo-liberalism comes from the subject of international relations. Fukuyama is the most representative neo-liberal. Important is the notion of 'soft power': the spread of capitalism and western culture and other forms of globalisation spreads western notions of democracy and human rights. It was important to integrate countries into the international capitalist (and engage them in the multilateral) system. At the time of the fall of the Berlin Wall this seemed to be a convincing theory. It was very much adopted as a key foreign policy strategy in the UK and the US. One of its biggest blows, however, is the lack of political reform we have seen in China. What this showed was that democratisation does not necessarily follow capitalism and globalisation.

NK.

Nanikore

Just to qualify what I said above - the would not use the term "western notions". Ie they would not associate democracy or human rights with being western. They are very cosmopolitan, and believe in the notion of universal, (not relative), values.

Blissex

«"ignoring the money metric means that you want someone else to pay."
... then money is not (or at least does not need to be) the constraint. It is a mechanism to facilitate the project. If we want universal healthcare, money is not the constraint,»

Oh please, this is just two-bit nominalism: "money" then is just the mechanism by which "you want someone else to pay" and indeed:

«the constraint is the ability of society to train and sustain (feed and house) the required expertise.»

That is the *physical* aggregate constraint, regardless of whoever pays, the practical constraint, given that physical stuff is purchased with money, creating or obtaining that money.

The question is then distributional, who is going to pay the money to “train and sustain (feed and house) the required expertise”. Unless there are ample unused resources, someone will have to pay.

What right-wingers object to is the idea that “universal health care” is paid for as a percent of income, so that someone on £100,000 a year pays £8,000 a year for exactly the same level of service that someone on £10,000 a year pays £800 a year for.

Jo Park

@Luis Enrique: Correct - you are not a neoliberal as you'd like to see far more social housing? A neoliberal believes in more economic freedom, so you achieve the aim of housing people who need state help for housing, food, energy etc by giving them the money to buy a basic level of those things. The State should not be in the business of saying this house here is not a social housing one, but this next that gets built is.

Calgacus

Blissex: "Oh please, this is just two-bit nominalism: "money" then is just the mechanism by which "you want someone else to pay""

Umm, no. In real terms, the someone else who is paying in health care is mainly the health care professional treating you.

"Unless there are ample unused resources, someone will have to pay."

But in all modern capitalist countries there are ample unused resources as far as the eye can see. Medicine is one way to use them up, nearly cost-free, and all benefit. Most people value "not being dead" highly. As Paul Samuelson said responding to stupid worries about the cost of the US health care system, so it's 15% (or whatever). It's the best 15% of the economy.

The real problem is that "socialized medicine" is too efficient in real terms, and doesn't create corrupt and powerful satrapies to demand public money, as the US health system does. Since the UK has the most efficient health care system, it has the least real resource "someone has to pay" problem, but it causes the biggest demand gap, the true longterm, macro problem. The opposite for the USA. The real right wing concern is that the underpeople get health care at all, not some smokescreen triviality about nominal taxation.

Most written about health care, as about war, follows the backwards, mainstream way. C Adams is following the correct, MMT/Keynesian way. If that is two-bit nominalism, we need more of it.

Robert Mitchell

Blissex: "Oh please, this is just two-bit nominalism: "money" then is just the mechanism by which "you want someone else to pay""

"Unless there are ample unused resources, someone will have to pay."

The Fed proved in 2008 it has ample resources, created with keystrokes, without limits.

In normal times banks and private money markets create dollar-denominated credit at will; in a panic, the Fed backstops the private credit.

Thus, print to pay for social spending. Index incomes to price rises. You can print faster than prices will rise ...

Blissex

«But in all modern capitalist countries there are ample unused resources as far as the eye can see.»

That is highly debatable: consider the case of the UK, which has a large trade deficit; if the UK has ample unused resources, why do they need to make use of foreign resources to get what they need? And similarly the USA. A large trade deficit usually is a sign of significant supply constraints...

What the MMT automatons need to consider is the difference between a "general glut" and a "partial glut"...

Robert Mitchell

The UK and the US have such ample monetary resources they can buy what they want without worrying about trade deficits. Their money is preferred by private firms worldwide for settlement. When the private money markets shut down access to monetary resources in 2008, all in a panic, the Fed proved it can produce as many monetary resources as needed to meet private sector funding needs.

Scarcity of money is imposed as a proxy for assumed scarcity of physical resources. But oil is not scarce; its supply is throttled. Food is not scarce, we produce more than enough to feed everyone. Metals are not scarce: it is cheaper to level mountains than recycle. Same with trees; we can factory-farm indefinitely instead of re-using. Physical resources do not demonstrate the scarcity economic models assume. Economists thus declare money must be kept scarce for social spending to rescue their scarcity-obsessed model, while ignoring the ability of private financial firms to create money as credit as they wish. Once again, in a panic, the Fed manufactures as much money as necessary to backstop all the privately-created credit. But Greece and Detroit are not banks, so the Fed won't bail them out ...

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