Monday, April 7, 2008

Are Invisible Eyes Watching Neoliberalism's Invisible Hand?

The map in the waiting room of Upwardly Global, an organization that provides job training and resources to immigrants in the United States, has been cut into small squares and rearranged at random.

The map represents the way in which globalization and economic foces send workers, factories, and products to all parts of the world—separating and intermixing according to today's neoliberal economic rules—often presented to us by the Bush administration as “natural” law.

However, with the current recession and the recent, massive government bailout of private investment bank Bear Stearns, it may be time to reassess just how “natural” these economic forces really are.

The Federal Reserve Bank used $29 billion in taxpayer dollars to save Bear Sterns, a move that flies square in the face of a self-correcting, free market-based economic policy.

In an LA times blog, Federal Reserve Chairman Ben Bernanke said, “If you want to say we bailed out the market in general, I guess that's true.”

This would be a worrying turn of events if it weren't for the warm, soothing air in the palms, the beautiful 1950's Fords cruising by, the perfectly rolled Havana...wait! We're still in the United States you say??

The government buying out a private enterprise is textbook socialism, like Chavez's recent move to nationalize Venezuela's cement industry, or President Evo Morales purchase of Bolivia's gas production.

However, the US Senate approved the buyout of Bear Stearns with a 94-1 vote. Because of the financial ties of so many companies to Bear Stearns, allowing it to fail “might have caused global markets to collapse,” reported the Economist.

Which raises the question, what does it mean when the free market fails us? Should we forge boldly ahead, purifying our free market strategy with even less regulation, or should we finally question our dependence on the invisible hand of the market?

In an editorial for the Christian Science Monitor, professor of economics James W. Brock sees a solution in the increase of antitrust laws.

“The consolidation process has raged through most major American industries, from telecommunications and oil to pharmaceuticals and defense weapons. In the banking and finance sectors, the urge to merge has spawned the very behemoths that the Fed is now compelled to prop up.”

As the two terms of George W. Bush come to a close, it is becoming apparent that complete deregulation can be harmful, just as harmful as Soviet-era governments relying on inefficient, state-run companies. Whether it is Clinton, Obama, or McCain, the economic policies under the next president will help us determine just how “natural” neoliberal economic policy ever really was.

No comments: