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What the "Experts" Got Wrong about the Global Economy

Oxford UP,

15 min read
10 take-aways
Audio & text

What's inside?

Conventional neoliberal wisdom about global economics does more harm than good.

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Editorial Rating

8

Qualities

  • Controversial
  • Innovative
  • Eye Opening

Recommendation

The fall of communism seemingly settled the great economics debate – if you want a prosperous nation, look no further than the free market ideology of neoliberal economics, which holds that privatization, deregulation and a skimpy safety net will make everyone richer. Economist Mark Weisbrot believes this conventional wisdom has a major flaw: It’s wrong. Weisbrot proclaims that neoliberal policies are an abject failure. He says that from Greece to Indonesia to Argentina, punitive austerity packages and hard-nosed reforms have hamstrung growth and created human suffering. Weisbrot points to China as the ultimate example of a thriving economy that ignores neoliberalism’s strictures. He describes turnarounds in Argentina and Bolivia, two nations that gained economic stability only after they sent the International Monetary Fund packing. Weisbrot’s support of democratic socialism will turn off free-marketers, but he makes some intriguing arguments nonetheless. While always politically neutral, getAbstract suggests his ideas to investors and policy makers seeking an out-of-the-mainstream analysis of global economics.

Summary

Neoliberalism

The man behind the throne in The Wizard of Oz famously protested that he wasn’t an evil fellow, just “a very bad wizard.” A similar assessment of ineptitude applies to the International Monetary Fund (IMF) and other global institutions for their decades-long history of ineffective economic wizardry. Amid crises in Europe, Latin America and Asia, the IMF prescribed the same old remedies of neoliberalism, a policy driven by “outworn bad ideas.”

Neoliberalism holds free markets in the highest regard and discourages social democracy. Neoliberalism deems that state-owned enterprises are inherently inefficient, financial markets do best when deregulated, central banks should be independent, free trade across national borders boosts growth, governments should protect intellectual property and labor rights are unnecessary.

Neoliberal economic policies have led to decades of tepid growth. The United States embraced neoliberal economics, yet the country’s only significant growth in recent years came from an ill-fated housing bubble. Tellingly, the great economic success story of the past generation has been the one nation that shuns neoliberalism...

About the Author

Mark Weisbrot is co-director of the Center for Economic and Policy Research in Washington, D.C. He earned his doctorate in economics from the University of Michigan.

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