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Ditch the Ideology

Let’s ditch the ideology. That was the title of an opinion piece I recently read in our local newspaper. It discussed how people are becoming increasingly frustrated with the conventional economic and political wisdom that free markets and unrestrained capitalism are the best way to achieve prosperity for everyone. It listed the respected groups in New Zealand society currently either striking or considering the option: radiographers, teachers, doctors. These are the sort of people we should be rewarding and encouraging to work here, not insulting with poor pay and conditions.

And it listed the assumptions – all of which are totally unproven – that the neo-classical economic ideologues would try to make us think are true: that private enterprise is always better than the public sector, that markets will always work in favour of the consumer, that regulation is bad, the list goes on.

It seems to me that recent (and not so recent) events show all of those ideas to be untrue. I think the people who espouse them genuinely believe they are right but any impartial examination of the facts will show they are basing their opinions on some non-existent ideal world rather than the real one.

New Zealand suffered from this scourge more than most when a vicious regime took over in 1984. Ironically it was New Zealand’s party of the center-left which was involved after they were hijacked buy the economic liberals lead by the dreadful Roger Douglas. The same Roger Douglas who is so despised that the current (center-right) prime minister here would refuse to work with him as leader of a coalition partner even though their political views would normally be viewed as quite compatible.

Now the whole world is suffering because of the incompetence, greed, and pure evil of the economic “geniuses” of the major banks. The people who are the victims of this dishonest and almost criminal group are asked to accept lower wages, poor conditions, and generally worse living conditions while billions (and trillions) are paid out to save the institutions whose incredible negligence caused the problems in the first place. It should be obvious to everyone: pure capitalism just doesn’t work. It should also be obvious that the bankers and financiers might be smart but they are also corrupt and uncaring. They deserve no respect at all.

And the idea that the best way out of the financial crisis is to cut back on spending doesn’t seem to make a lot of sense. Australia is one country which seems to have been affected least and it has a Labour (center-left) government and a broad policy of not to cut back. Sure there are other factors involved, but I think the “austerity” approach to economic recovery is another convenient lie the world of politics and economics has fed us.

It clearly hasn’t worked here in New Zealand. We are struggling to recover under the fairly inept and totally unimaginative leadership of the center-right. Of course, their supporters always have a way to excuse that. In their fantasy world the problems were all caused by the previous leftist government (even though we were doing really well until the global crisis) and the new right wing government just hasn’t had a chance to fix their mistakes yet. So if we succeed it’s because of the right and if we fail it’s the fault of the left apparently. How would these people ever know if they were wrong? They have a fantasy to cover every possibility!

And they even have a fantasy to excuse the crisis. The libertarians are particularly wacky when it comes to this one. According to them the problem wasn’t caused by too little regulation. It was caused by too much including Fannie Mae and Freddy Mac, the two institutions set up by the government in the US. The fact that no serious economist attaches much of the blame to them and the fact that they are both private institutions driven by the same greed and focus on short term profits as everyone else is conveniently forgotten by the libertarian faithful.

The facts, while interesting, have no bearing on what these people believe. Well let’s get real people. It’s time to focus on political and economic pragmatism. And it’s time to ditch the ideology!

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