The neoliberal revolution combines the free markets of classical liberalism with the income transfers of modern liberalism. Although this somewhat oversimplifies a complex reality, it broadly describes the policy changes that have transformed the world economy since 1975. Markets in almost every country are much freer than in 1980; the government owns a smaller share of industry; and the top MTRs on personal and corporate income are sharply lower. The United States, starting from a less-socialist position, has been affected less than some other countries. But even in the United States there have been neoliberal reforms in four major areas: deregulation of prices and market access, sharply lower MTRs on high-income people, freer trade, and welfare reform. Many other countries saw even greater neoliberal policy reforms, as once-numerous state-owned enterprises were mostly privatized.
There is an unfortunate tendency to associate the term \”neoliberal\” with right-wing political views. In fact, the quite liberal social democracies of northern Europe have been among the most aggressive neoliberal reformers. Indeed, according to the Heritage Foundation\’s Index of Economic Freedom, Denmark is the freest economy in the world in the average of the eight categories unrelated to size of government.1 The Nordic countries2 have begun to privatize many activities that government still performs in the United States. These include passenger rail, airports, air-traffic control, highways, postal services, fire departments, water systems, and public schools, among many others. These countries do have much larger and more comprehensive income-transfer programs than the United States has, but are not otherwise particularly socialist.
It\’s worth reading the whole thing.
But in that nugget there is part of what so annoys me about the British left. OK, sure, I don\’t share some of the ideals (I\’m a lot less worried about equality and \”social justice\” for example).
But given that what they say they want is something like those \”liberal social democracies of northern Europe\” (Polly\’s \”We must be more like Sweden!\”) why in hell won\’t they take the effort to work out what it is that makes those places work?
They are classically liberal economies with lots of redistribution on top. So, if we want to be more like them we\’ve got to be a classically liberal economy with lots of redistribution on top. We need the classically liberal economy in order to generate the moolah to be redistributed.
I\’m not in favour of that lots of redistribution, this is true, but why is it that they cannot see the point about the classically liberal economy? Whether we do the lefty thing of redistributing or the Worstall thing of not doing so, we still require the classically liberal economy.
That is, if the lefties really did want what they say they want (or, to be less charitable, understood what it is that they want and how to get there) then we\’d all be in agreement about how to structure the ecnoomy. The only argument left would be about how much of it the government gets to redistribute.