The Rise of Neoliberalism
The word "neoliberalism" was first coined by British economists, interwar continental thinkers, and philosophers to describe an economic theory that supported deregulation, privatization, and free markets while opposing the state and public institutions. In this situation, the government dismantles unions, liberalizes the economy, lowers taxes for businesses and the wealthy, cuts funding for public services, and oppresses the weaker members of society. Early in the 1970s, the liberal consensus that had developed since the close of World War II was accepted by academia, the media, and the western government as to how markets and states interacted. These periods marked the epitome of capitalism whereby the government, labor and capital had reached a consensus that markets resulted in social ruins when left to operate independently. There was need to mitigate the existing inequity and produce basic services through a combination of fiscal and monetary means in order to get rid of the rising capitalism. During the early 1980, most of the changes had been made and now the governments joined large media segments and the academia. This conjunction resulted in the declaration that the free markets were capable of doing nearly everything better than the government. The result of free markets promotion led to pronouncement that state meddling caused most of the economic crises experienced in the past.
U.S. Transformation: From Expansive Welfare State to Neoliberalism
The latter parts of the 1960s and 1970s witnessed significant developments that led to the shift in paradigm of the America politics. The political coalition forged by Franklin Roosevelt was broken and there was an economic crisis that made the traditional liberal problems difficult to solve. There was a significant shift in the population and economic resources in the Sunbelt of the West and South. Activists and conservative Christians formed coalitions wit the Republican Party and this resulted in numerous setbacks for the United States. This collaboration in unison with the collapse of Roosevelt's coalition led to the growing popularity of conservative's ideas and the understanding of freedom.
The Impact of Neoliberalism Policies
The rise of conservatism in the 1960s led to backlashes among the former Democratic voters and the black community. During the 1970s, the elongated periods of consumer prosperity and Vietnam postwar economic expansion came to an end. This was succeeded by slow economic growth and increased rates of inflation. This was for the first time in the American history since 1930s that they became poor during the end of the 1970s. The end of capitalism, also well known as the "golden age" was influenced by several factors. The seemingly unassailable prosperity of America and their weakening military system at that time, the successive administration focused little or no attention to the economy of the country due to the effects of the Cold War. In order to reverse this scenario, the United States promoted industrial reconstruction of Japan and Germany. This led to the emergence of new manufacturing centers n areas like South Korea and Taiwan. The American administration at that time also encouraged the local companies to adequately invest in overseas plants. This development led to the strengthening of the American dollar fueled by Bretton Wood's agreement of 1944 that even made it difficult for other American gods to be sold overseas.
In 1971, the United States experienced merchandise trade deficit whereby more goods were imported rather than exported. By 1980, nearly all American products were competing with the imported foreign products. This competition led to the fallout of the American manufacturing workers by a large percentage. During the same year, president Nixon announced a radical change in economic policy since the great Depression. This announcement took the United States off the gold standard and ended the Bretton Woods agreement that limited the value of the dollar and other currencies to gold. This movement led to the enabling of currencies to float in relation to one another. The move by Nixon to lower the dollar value was in anticipation of promoting exports of American products and reduces the importation of products from other countries. This move however proved fatal as I injected a new element of instability into the economy of the United States of America. The economic instability made Nixon to order for prices and wages freeze for 90 days. This was followed by various Neoliberalism policies in the country.
Impacts of Neoliberalism Policies
The policies that were formulated by Nixon temporarily reduced inflation and curtailed imports. However, a brief war broke in 1973 between Israel and is neighbors Syria and Egypt. These countries in the Middle East retaliated against the support from the western countries towards Israel. They quadrupled the cost of oil and suspended the exportation of oil to the western countries such as the United States of America for several months. This suspension led to a standstill in the American economy and long lines of cars were seen lining along the gas stations due to lack of sufficient supply. The rise in the price of oil disturbed the economy and significantly contributed towards the stagnant economic growth and high inflation known as stagflation. The rate of inflation grew between 1973 and 1981 and was 10% annually compared to the 2.4% annual growth.
The Neoliberalism policies resulted in massive inequalities, reduced immigration, section in labor, racial discrimination due to profiling and weakening of the finical capabilities of the American citizens at that point in time. The rate of unemployment and inflation stood at 10.8 when the decade begun. This figures doubled by 1980 as the oil prices kept raising.
Postwar social compact broke down as a result if the economic crisis experienced by the implementation of the Neoliberalism policies. There was a decline in the profits and competition from the overseas increased in magnitude. Well paying manufacturing job were eliminated from the context of these policies as they advocated for automation of services and shifting of the country's production to areas with low wage demands. Detroit and Chicago lost more than half of their manufacturing jobs within a span of three decades.
The transfer of manufacturing jobs in low wage states resulted in an influx of investments in those states and the economic and policies leaders in these regions took advantage of the Neoliberalism policies to better their states. In New York, World Trade Center was constructed. The World Trade Center displaced most of the small printing and electronics companies and other firms in the region and led to loss of thousands of jobs.
The Neoliberalism policies nurtured inequality during the four decades. The gap between the poor and the rich was so immense due to the introduction of the neoliberal economic reforms. The developments through neoliberalism were based in personal gains at any cost. The major beneficiaries were persons, business corporations or specific industries. This created the jeopardy of democracy, financial incapacitation of the less privileged. Racial segregation and discrimination also emerged as a result of the limited opportunities that were only distributed to few individuals belonging to a particular race.
The government through neoliberalism policies maintained the interest rate of the ultra rich individuals and taken over the public assets. It also restricted economic growth and led to the promotion of global trade, massive debts and consumerism in the country.
Deregulation of companies such as those in the airline industry led to reduction of the airline fares but also drastically reduced the airline services. Before the deregulation of such services, the airlines would seek for many customers and provide quality services at affordable prices.
Conclusion
Neoliberalism has been defined as the initiative taken by the government to deregulate, privatize, decrease taxes on corporations, defunds public goods and services and destroy unions in efforts to reclaim the stability of its economy. The periods after World War II marked the epitome of capitalization and the economy of United States of America experienced its worst performance. The poor performance of the economy led to non-performance of the country and resulted also in several inequalities. The country was forced to import product from other countries de to it incapacity to manufacture and export its own products. The introduction of neoliberalism policies resulted in massive inequalities, loss of manufacturing jobs, racial profiling and discrimination, deterioration of public finances and ultimate decline of the democracy of the country.
Bibliography
Erick, Foner. Voices of Freedom. New York: Norton & Company Ltd, 2017
Erick, Foner. Give me Liberty. New York: Norton & Company Ltd, 2017
