The economy, we are told, is booming—a message coming from self-serving politicians to be sure, but also from many who claim to be serious economic analysts. The Dow Jones Industrial Average, as we know, has topped 29,000 (can Dow 36,000 finally be on the way?) and we are in the midst of the longest economic expansion in US history. Yet the economic unease that is so pervasive right now should tell us something. If this is how the economy feels in “up” times, how scary will it be when—not if—the next recession occurs?
In NPQ, we have outlined some reasons for today’s economic anxiety, such as the nation’s $1.6 trillion student debt overhang. Also, communities of color still have not recovered from the loss of over a trillion dollars of household wealth in the Great Recession. Today’s economic problems—including that student debt burden and a growing homeownership gap between black and white, and young and old—can often trace themselves to the dominant approach to economic policymaking the past four decades, known as neoliberalism.
The famed Marxist economist David Harvey defines neoliberalism as a set “of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade.” Privatization and “deregulation” (better said, corporate-favoring regulation) are also central tenets, as is reduced funding for public goods and services, such as higher education (hence that $1.6 trillion debt). Margaret Thatcher and Ronald Reagan are identified with the approach, although centrists such as Tony Blair and Bill Clinton also embraced many of its key features. In the corporate world, there is a matching ideology of shareholder value maximization, which contends that businesses have few obligations beyond legal compliance and earning profits.
These days, neoliberalism is in tatters. In fact, we know the exact day its demise began: September 15, 2008, the day Lehman Brothers went under. Neoliberalism did not end that September, but the crash exposed the vacuity of so many economics assumptions.
After Lehman, sure, one can continue to pretend there is a free market. But, really? Yep, it must be the “free market” that explains why the Federal Reserve spent $4.5 trillion—in other words, close to $14,000 per person—on “quantitative easing” (pumping money into the economy) in the years after the Lehman Brothers bankruptcy to shore up corporate balance sheets. The invisible hand has rarely been so conspicuously visible.
Nonetheless, many would prefer to act as if nothing happened. The “zombie doctrine staggers on,” observed the British social critic George Manbiot in a 2016 book titled How Did We Get Into This Mess? in an excerpt published in the Guardian.
Meanwhile, for an economy that is allegedly operating on all cylinders, something is clearly awry. This is glaringly obvious to so many in the nonprofit sector who must deal with the collateral damage on a daily basis. At NPQ, as we’ve noted often, we are now firmly ensconced in a second gilded age of record inequality. But it is more than that.
Who ever heard of an economic expansion that—until a slight recovery last year—had seen three consecutive years of declining life expectancy, to say nothing about the spectacular rise of