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July 28th, 2020 
Awake Goy 
- Neoliberalism has prevented the governments from controlling effectively the initial outbreak of the corona virus.
- Neoliberalism has made the wave of virus propagation higher and wider, especially in the U.S.
- Neoliberalism can shake the foundations of the U.S. economy.
- Neoliberalism may not survive the corona virus crisis in the U.S.
- To save democracy and the global economy, We need a new economic model which supports the future of humanity, which sustains human livelihood Worldwide.
The most important part of neoliberalism is the relation -often of a corrupt nature- between the government and large corporations. By corruption, we mean illegal or immoral human activities designed to maximize profit at the expense of people’s welfare. In this relation, the government may not be able to control and govern the large corporations. In fact, in the present context, the corporations govern and oversee national governments.
Hence, when the corona virus broke out, it was difficult for the government to take immediate actions to control the virus break-out to save human lives; It was quite possible that the price of stocks and large corporations’ profit had the priority.
The theory known as neoliberalism distinguishes itself from the old liberalism prevailing before the Great Depression.
It became widely accepted mainly because of its adoption, in the 1970s and 1980s, by Ronald Reagan, president of the U.S. and Margaret Thatcher, prime minister of Great Britain as an economic policy agenda applied nationally and internationally.
The justification of neoliberalism is the belief that the best way to ensure economic growth is to encourage “supply activities” of private sector enterprises.
Now, the proponents of neoliberalism argue that public goods (including health and education) can be produced with greater efficiency by private companies than by the State. Therefore, “it is better” to let the private enterprises produce public goods.
In other words, the production of public goods should be “privatized”. Neoliberals put profit as the best measure of efficiency and success. And profit can be sustained with government support. In turn, the private companies’ policy is that of reducing the labour costs of production.
Government assistance includes reduction of corporate taxes, subsidies and anti-labour policies such as the prohibition of labour unionization and the abolition of the minimum wage.
Under such circumstances, Americans do not trust the government directives and guidelines, allegedly implemented to protect people from the virus.
The guideline of the CDC (Centers for Disease Control) for self quarantine, social distancing and wearing face masks has little effect. There is another product of neoliberalism which is troublesome. I mean its credo of unbounded competition.
It is true that competition promotes efficiency and better quality of products. However, as competition continues, the number of winners decreases, while that of losers rises. The economy ends up being ruled by a handful of powerful winners. This leads to the segregation of losers and leads to the discrimination of people by income level, religion, race and colour of skin.
In the present context, largely as a result of government policy, there is little to no social solidarity; each individual has to solve his or her own problems. I was sad when I saw on TV a young lady in California saying:
“To be killed by the COVID-19 or starve to death is the same to me. I open my shop to eat!”
This shows how American citizens are left alone to fight the coronavirus. Furthermore, neo-liberalism has another unhappy legacy; it is the widening and deepening income inequality.
The U.S. is the richest country in the world, but it is also a country where income inequality is the most pronounced. I will come back to this issue in the next section. In relation to the corona virus crisis, income inequality means an army of those who are most likely to be infected and who are unable to follow CDC guidelines of testing, self quarantine and social distancing. Finally, the privatization of public health services has made the whole country unprepared for the onslaught of the virus.
In fact, in the U.S. there is no public health system. For three months after the first breakout of the virus, the country lacked everything needed to fight the virus.
- There was shortage of testing kits and PPE (personal protective equipment);
- there were not enough rooms to accommodate the infected;
- there was shortage of qualified medical staff;
- there was lack of face masks.
- In the U.S. the richest 1% of the population has 40% of all household wealth. (2017 data)
- More than 20% of the population cannot pay monthly bills.
- About 40% do not have savings.
- 31% of private sector worker do not have medical benefits.
- 57% of the workers in the service sector have no medical benefits.
- 30% have to get loans to pay unexpected expenditure of $ 400. (2019 data)
- 78% live from pay-check to pay-check. (2017)
These data give us an idea on how so many people have to suffer from poverty in a country where per capita GDP is $65,000 (2019 estimate), the richest country in the world. Most of the Americans work for small- and medium-sized companies (SMEs). In the U.S., there are 30 million SMEs. They create 66% of jobs in the private sector. The SMEs are more severely hit than big companies by the coronavirus.
In fact, 66% of SMEs are adversely affected by the virus against 40% for big firms. As much as 20% of SMEs may be shut down for good within three months, because of the virus. Under the forty years of neoliberal pro-big corporation policies, available financial resources and the best human resources have been allocated to big firms at the expense of the development of SMEs.
The most damaging by-product of neoliberalism is no doubt the widening and deepening unequal income distribution for the benefit of the big corporations and the uprooting of SMEs. This trend means the shrinking domestic demand and the disappearance of jobs for ordinary people.
The destruction of the domestic market caused by the shrinking consumer demand and the disappearance of SMEs can mean the uprooting of the very foundation of the economy.
The experience of Japan shows how this can happen. The economic depression after the bubble burst of 1989, Japan had to endure 30-year deflation. The government of Japan has flooded the country with money to restore the economy, but the money was used for the bail-out of big corporations neglecting the healthy development of the SMEs and impoverishing the ordinary Japanese people. South Korea could have experienced the Japanese-type economic stagnation, if the conservative government ruled the country ten more years.
The neo-liberal pro-big company policy of Washington has greatly depleted consumer demand and SMEs even before the onslaught of the coronavirus. But, the COVID-19 has given a coup de grâce to consumer demand and SMEs To better understand the issue, let us go back to the ABC of economics. Looking at the national economy from the demand side, the economy consists of private consumer demand (C), the private investment demand (I), the government demand (G) and Foreign demand represented by exports of domestic products (X) minus domestic demand for imported foreign products (M).
GDP=C + I + G + (X-M)
In 2019, the consumer expenditure (C) in the U.S. was 70% of GDP, whereas the government’s spending (G) was 17%. The investments demand (I) was 18%. The net exports demand (X-M) was -5%.
In 2019 the composition of Canadian GDP was: C=57%; I=23 %; G=21 %; X-M=-1%.
Thus, we see that the U.S. economy heavily depends on the private domestic consumption, which represents as much as 70% of GDP compared to 57% in Canada. The government’s contribution to the national demand is 17% as against 21% in Canada. In the U.S. a small government is a virtue according to neoliberals. In the U.S. the private investments account for only 18% of GDP as compared to as much as 23% in Canada. In the U.S., off-shoring of manufacturing jobs and the global value chain under neo-liberalism have decreased the need for business investments at home. It is obvious then that to save the American economy, we have to boost the consumers’ income. But, the consumer income comes mainly from SMEs. We must remember that the SMEs create 66% of all jobs in the U.S. Therefore, if consumer demand falls and if SMEs do not create jobs, the US economy may have to face the same destiny as the Japanese economy. This is happening in the U.S. The corona virus crisis is destroying SMEs and taking away the income of the people.
The coronavirus crisis is about to demolish the very foundation of the American economy.
It is therefore timely to find a system where we care for each other and where we share what we have.
Source Article from https://www.globalresearch.ca/what-will-happen-to-neoliberalism-after-the-covid-19-crisis-will-it-survive/5719364
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