{ prima facie } the Temple Law newspaper

By Matthew Pillischer

The scramble for economic solutions to the current recession will likely mean the end of 25 years of neoliberalism. Keynesian economics had been the accepted form of capitalism starting in the 1930s. But in the 70s and 80s there was a return to liberal, laissez-faire economics.

Under President Reagan we saw deregulation of the economy, union-busting, cuts in social welfare, and massive wage-cuts for the working class. On the other hand, Reagan provided tax cuts for the rich and promised the money would “trickle down” to everyone else.

In Britain, conservative prime minister, Margaret Thatcher, coined the slogan TINA: There Is No Alternative to free market capitalism. We are now seeing the instability and dangers of TINA and the neoliberal model.

The U.S. economy has almost tripled since 1973, but it’s all gone to the top. Real wages are lower today than they were 35 years ago. People are dipping into savings, and 34 million Americans are borrowing against their houses.

Tens of thousands of people with subprime mortgages who thought, and in many cases were told by their banks, they would be able to readjust high interest rates were not able to when the housing market collapsed. Those who won’t lose their homes may be left with mortgages more expensive than the value of their property.

The housing crisis is also being felt by the banks going into debt and investors around the globe who bought up securities comprised of these mortgage interests. U.S. Central banks have been pouring money into private banks to prevent the paralyzing of the credit system.

As an effort to lessen the effects of the previous Asian recession, interest rates were cut in 2001, which then set the stage for an artificially pumped-up housing boom. This, along with high-interest rates and adjustable mortgages, was the beginning of the housing bubble that we now see vastly deflating.

At the same time many people are forced onto food stamps, forced to take low-paying jobs, and forced to skip doctor visits for fear of costly bills, the U.S. government continues to spend billions of dollars to carry out the occupations in the Middle East. Additionally, taxpayers spend millions of dollars to keep a privatized prison system filled. A recent study reported 1 in every 100 Americans is behind bars. The wars abroad are logical extensions of neoliberal economic policy. A government that works for unbridled freemarket capitalism and the success of its capitalist class in America logically must cross borders to access new markets and new resources. Strategic control of materials in the region means control of the market, and control of the world economy. But the policy in the Middle East is another crisis for the powers that be, which will likely also be dealt with in an imminent shift in tactic (but not the basic backing goal).

The big business solution to the neoliberal crisis at home and abroad will almost certainly be the Democrats in 2008. With any hope there will be some major changes in the system, bigger safety nets for average people, and corporate accountability for their part in creating the mess we’re in. But Democrats won’t bring the extent of change most Americans would like to see.

The majority of the American public, as well as physicians and nurses, believe there should be a single-payer universal health care system. Democratic Presidential candidates Obama and Clinton are against this. A majority of people want the U.S. out of Iraq. The Democrats won’t get us out because it’s too important as a strategic position for the American ruling class. If we’re going to see a real overhaul of the system, it will take normal people organizing for social and political change independent of the two-party system.