Het Neoliberale Geloof 44

'Losing the Economy to Mythology
By Paul Craig Roberts
06/04/07 "ICH"

Economic discussion in the United States is trapped in ancient ruts. Both right and left are stuck in old habitual ways of thinking. Neither shows inclination or ability to think independently of ideology. For a country beset with economic problems, this is problematic. The ascendency of free market economics during the past quarter century has removed some constraints on corporate power. It is difficult to argue that this is a desirable result. For example, the concentration of media ownership permitted by the Clinton administration in the 1990s has destroyed the independence of the US media, thus reducing the accountability of government. Deregulation has had unintended consequences. The growth of corporate influence has facilitated the reach of special interests into universities and think tanks and turned some from pursuit of truth to “for-profit activities” that compromise the independence of studies and publications. The left-wing, which refuses to accept that the Great Depression was caused by the Federal Reserve’s mistaken monetary policy and still blames corporate power and greed for the 1930s decade of high unemployment, is disturbed at the loosening of the leash on corporate power. Generally speaking, the left blames President Reagan for boosting corporate power by cutting taxes and for spear-heading union- busting by firing the striking air controllers. John Kenneth Galbraith was correct that unions provided a countervailing power, one that has been removed. The left-wing is correct that corporations have grown in power and that income inequality has worsened. But the left is wrong in attributing these developments to tax cuts and dismissed air controllers. The purpose of Reagan’s reduction in marginal tax rates was to cure stagflation and worsening trade-offs between inflation and employment that had undermined Jimmy Carter’s presidency. Reagan’s tax policy brought a record economic expansion that did not require rising rates of inflation to sustain. It is impossible to argue that the decline in inflation and home mortgage rates benefitted the rich more than others. The rich have a lot of margin in their budgets. The poor have none.'

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