![Sample our Politics & International Relations journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/5947/TOC-Subject-Sample-2021-Politics-International-Relations.jpg"})
ABSTRACT
Throughout the twentieth century, American capitalism has proved strategically flexible and successful at periodically restructuring itself to take advantage of global opportunities that arose due to world wars, economic crises, and technological change and innovation. On three major occasions in the twentieth century, the American capitalist system successfully restructured itself. The first and second restructurings occurred during1912–1917 and 1944–1953, respectively. The third restructuring, beginning after 1978, is often identified with what is called neoliberalism. Neoliberalism underwent a period of crisis as a consequence of the 2008–2009 global financial crash and great recession. Its restoration under Obama failed. Beginning in 2017, a new more aggressive and virulent form of neoliberalism has begun to emerge under Trump. Whether the Trump restoration of a new neoliberalism 2.0 will succeed has yet to be determined. And should it fail, will that failure usher in a transition period in the US and global economy in the 2020s decade that will lead to a fundamentally different US and global economic restructuring after 2020? What lies ahead in the remaining two years of the Trump regime, 2019–2020, will likely answer these questions.
Disclosure Statement
No potential conflict of interest was reported by the author.
Notes on Contributor
Jack Rasmus is Adjunct Associate Professor of Economics at St. Mary’s College, Moraga, California, USA. He is author of Alexander Hamilton and the Origins of the Fed (Lexington Books, 2019), Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression (Clarity Press, 2017), and Systemic Fragility in the Global Economy (Clarity Press, 2016).
Notes
1. Elements of neoliberal policy actually emerged under President Jimmy Carter, in the period 1978–1980, just prior to the Reagan regime that began in 1981. Shifts toward neoliberalism in both monetary and tax policy, industry deregulation, and other neoliberal policy initiatives were either proposed or implemented during Carter’s final two years in office.
2. Emerging under Reagan, neoliberal policies would continue to evolve—expanding and deepening—under Clinton and George W. Bush, until confronted by the crisis of 2008–2009.
3. See especially Part II of this work (Rasmus Citation2016, 160–317), addressing the 9 fundamental changes and variables associated with the instability in the capitalist global economy especially since 2000.
4. For a description of the evolution of Obama policy proposals during the 2008 campaign, see Jack Rasmus (Citation2012, 22–34), and subsequent chapters for the evolution of his real policies through the first three years of his first term.
5. The programs were called “cash for clunkers” and “first time home buyers” (Farley Citation2009). Both were direct cash payments to households.
6. See Rasmus (Citation2012, 38–43) for details of the recovery plan.
7. See Zakaria (Citation2011). That’s $150 billion more a year, every year, over even that at the close of the Clinton administration in 2000.
8. See Jack Rasmus (Citation2013a) for the deal with the Republican Congress. The estimate of $3.8 trillion is from table 2 of report of Ruffing and Horney (Citation2011, 10).
9. Why has the “multiplier effect” deteriorated is the next logical question. It is often noted that the increase “debt overhang” for households is the cause. With greater debt to service (principal interest to be paid), when a given amount of income is pumped into the economy by fiscal spending or tax policy, less of it gets actually spent by households due to their need to use it pay down debt. But the lack of growth of real wage incomes has had the same effect, as well as escalating costs of health care, college education, and housing rents and mortgages. The fiscal stimulus is used to cover the rising costs, which does nothing for increasing real economic output. A similar diversion occurs for business spending and investment multipliers: the business tax cuts and direct subsidies from government spending get diverted to financial asset markets, to offshore investment (real and financial), to finance mergers and acquisitions, or shifted to offshore subsidiaries of multinational corporations, or just simply hoarded on company balance sheets. For all the above reasons the “marginal propensity to consume” and “marginal propensity to save”—the basis for the multiplier effects for both households and businesses—decline and with it so too the multiplier effect. So fiscal policy is increasingly less effective in generating normal economic recoveries in the twenty-first century advanced economies.
10. For the narrative on Bernanke’s Fed rate policy, see chapter 5, “Bernanke’s Bank: Greenspan’s ‘Put’ on Steroids” in Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression (Rasmus Citation2017, 106–141).
11. Especially so when adjusted for spending on buildings and structures associated with the artificial housing and commercial property bubbles of the Bush years.
12. The Fed balance sheet of debt peaked out at $4.5 trillion in December 2014 and remained at that level until December 2017, even as QE new bond buying ceased and old bonds matured. The reason was “rolling over” and repurchasing new bonds by the Fed as the old matured. As of mid-year 2018 Fed held debt has declined to only $4.32 trillion (Economic Research of Federal Reserve Bank of St. Louis Citation2018).
13. Writer’s calculations based on weight of rollovers to total debt.
14. For why the Fed has evolved from a “lender of last resort” bank bailout function to a permanent bank subsidization function, see “Subsidizing the Banking System in the Name of Financial Stability” (Rasmus Citation2017, 297–302).
15. This permitted workers to unionize quickly by simply signing an authorization card saying they wanted a union. A union would be established if 60% signed. Card check provided a way to bypass business legal maneuvers delaying elections for months, during which anti-union law firms were used to intimidate and browbeat workers with fear tactics about how a union would mean they’d lose their jobs, their benefits, and even current wages.
16. While the US labor force remained stagnant at around 154 million during Obama’s first term, it began to grow again in the second term after 2012 to around 160 million. While it grew, union membership, in contrast, continued to decline—a shift from past periods when membership typically grew while the labor force expanded. Union membership was now virtually unaffected by growth of the economy.
17. These numbers are adjusted for inflation but represent only full time workers. If contingent, part time were included the earnings would be much lower and the declines even greater. See Median Usual Weekly Earnings of Wage and Salary Workers: Fourth Quarter (Bureau of Labor Statistics Citation2009, Citation2013b, Citation2017b).
18. The Dodd-Frank Act (fully known as the “Dodd-Frank Wall Street Reform and Consumer Protection Act”) is a United States federal law that places regulation of the financial industry in the hands of the government. For details, see https://www.gpo.gov/fdsys/pkg/PLAW-111publ203/html/PLAW-111publ203.htm.
19. “The Patient Protection and Affordable Care Act” (PPACA), often shortened to the Affordable Care Act (ACA) or nicknamed Obamacare, is a United States federal statute enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010. For details, see https://www.govinfo.gov/content/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf.
20. While quietly having chief economic advisor, Austin Goolsbee, contact Canadian businesses and politicians during the election to tell them Obama’s public references to renegotiating NAFTA was just campaign talk and Obama didn’t really mean to repeal or even change NAFTA. See Jack Rasmus (Citation2012, 24).
21. How this economic restructuring and these policies require political institutional change for their full realization—and how the latter in turn influence the economic restructuring and policies—are a separate analysis not addressed in this essay but necessary for a complete understanding of neoliberalism.
22. Should even a mild recession occur, the growth rate for the remaining decade would have to be 5% a year—a rate never attained in US history in modern period. Mnuchin’s claim thus required US GDP to grow at more than double the annual rate in the coming decade compared to what it had the preceding decade.
23. Actual US GDP for first quarter 2018 was barely half the predicted 4%, at 2.2% and down from the prior 4th quarter 2017. Most economists currently predict US recession in 2020. This writer’s prediction for the past six months is that US next recession will begin in 2019. See Rasmus (Citation2018a) and Shear and Tackett (Citation2017, 17).
24. For details see journal report, “The New Tax Law” (Wall Street Journal Citation2018). For the “pass through provision, ranging from $40 billion in 2018 to $60 billion in 2024,” see Joint Congressional Committee on Taxation (Citation2018, 4, table 3).
25. The $924 billion is based on estimate of $4 trillion hoarded offshore and $2 trillion repatriated in the first year, 2018–2019, and paid at 8%–15.5% instead of 35%. Over the remaining decade, another $1.1 trillion tax cut would be realized as US multinationals would no longer pay tax on profits earned offshore.
26. In addition to stock repurchases and dividend payouts, the repatriated cash was used for mergers and acquisitions.
27. For example, Goldman Sachs in February 2018 estimated buybacks rising 23% to $650 billion in 2018 over 2017, while JP Morgan predicted a 50% rise to $800 billion. Buybacks in the first quarter exceeded $200 billion, thus making the JP Morgan forecast more likely, according to Akane Otani (Citation2018, 1).
28. In January 2018, as the Trump Tax Cuts were signed into law, $15.5 billion more in ACA related taxes were also cut for two years affecting taxes on medical devices and on health insurance companies. These and other ACA taxes will almost certainly be made permanent in coming months—effective for the next 8 years at a cost of more than $100 billion more in tax cuts.
29. For the low end estimate, see Congressional Budget Office (Citation2018a).
30. Congressional Budget Office (Citation2018a, 4). While tax revenues will fall below 2017 in each year through 2023, spending would steadily rise. Debt as a percent of GDP will increase at twice the average of the most recent five years, 2013–2017.
31. Most independent sources forecast a $7.1 trillion addition to the current $21 trillion national debt, but without factoring in any assumptions about recession nor the higher Federal Reserve interest rate trends of 2018–2019 (Rasmus Citation2018a, 32–33).
32. Nixon’s 1971–1973 NEP (new economic plan) was also primarily US exports focused, and by collapsing the Bretton Woods Agreements in effect up to then, sought to devalue the rising dollar and make US companies more export competitive vis a vis European companies.
33. For the August 2017 origins of the offensive against China, see Presidential Memorandum for the United States Trade Representative, August 14, 2017, in the US Federal Register, 89 FR 39007, or at https://www.whitehouse.gov/presidential-actions/presidential-memorandum-united-states-trade-representative/.
34. Canada the largest at 16.1%, then Brazil next largest, followed by South Korea with about 10%. China’s steel exports to the US constitute only 2.2% of total steel exports to the US. Data from US Census Bureau, US Commerce Department, and Fact Set, as reported in Wall Street Journal, June 4, 2018.
35. For further comment on the splits in US trade team, see Jack Rasmus (Citation2018d).
36. Jack Rasmus’ Central Bankers at the End of Their Rope (Citation2017) traces the evolution of the dollar policy from 1985 to the present.
37. For the full list of EOs, see Zoppo, Proença, and Hudgins (Citation2017).
38. “Open shop” is the provision in contracts that makes it illegal for unions to negotiate a clause requiring all workers in the bargaining unit to join the union after a probationary period. “Agency shop” is when not everyone is required to join the union but, if not joining, should pay their fair share of bargaining costs since the union must negotiate for everyone, whether a union member or not.
39. In the northeast and pacific coast of the US public union membership is typically 60%–72% (Wolf and Schmitt Citation2018).
40. One of the first actions by the Trump-Republican Congress was to introduce legislation for a National Right to Work Law that would apply to all unions, private and public sector alike.
41. For a description of the business and right wing political movements behind the Right to Work movement and the Janus decision, see Mary Bottari (Citation2018), also, most recently, Scheiber and Vogel (Citation2018, 1).
42. See Bureau of Labor Statistics (Citation2018). Real average hourly earnings for all workers over the past year under Trump (May 2017 to May 2018) have completely stagnated, from $10.75 an hour to $10.74, and for the 111 million non-supervisory workers, from $9.25 to $9.23. When “averages,” which don’t capture the skewing toward the high end, are replaced with median real wages and weekly earnings, there has been an actual decline under Trump.