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Student perspective: Neo-liberalism — how one wonky economic term just won’t leave me alone

on March 3, 2010

Down, down WTO! cry some 3,000 protesters, most of them Asian, as middle-aged farmers dance wildly, trampling an American flag with skulls instead of stars on it, while Korean drums thunder down the massive, empty streets beyond the barricades. A few hundred yards away, riot police watch us with expressions both aggressive and nervous, cracking their nightsticks threateningly against the metal gates. Above us looms an overhead walkway where the press snaps photos and curious Hong Kong residents gawk. Later, I would learn that they stood blocks away from where the World Trade Organization held their final night of negotiations during the 2005 summit. Upon hearing that the protesters were so near, security guards locked the entrances, and a few delegates, panicked, fled by boat.

Some of the farmers from Korea told an observer that they had mortgaged their land in order to buy their plane tickets in order to stand outside the summit, trying to make their case to the public that the WTO talks should be derailed and the current global financial system dismantled. “Either we go to Hong Kong and stop neo-liberalism, or we will lose our livelihoods and homes anyway,” a 55-year-old rice farmer told a friend of mine.

I am not, nor have I ever been, a farmer, and none of the fine print in the World Trade Organization’s agreements has ever seemed to directly threaten my livelihood. At the time of the Hong Kong protests I was 25 years old, and I held a US passport. I was an aspiring journalist who wanted to tell this story that was so familiar to others I’ve heard from protesters in my travels to places as distant from each other as the Pacific Northwest US, Southeastern Mexico, and China.

There were stark differences in the details, of course, but there was an astonishing sense of common loss: All of these groups complained of having their livelihoods, cultures and even governments threatened by US corporate expansion and trade liberalization. These disparate groups of people used one word to explain that what was happening to them was no accident. It was a wonky word with an unattractive “ism” at the end, and it showed up in muffled bullhorn speeches and on cardboard posters signs – unexpected English letters jumping out from hand-painted text like invading bold font.

So, what is neo-liberalism? It’s not liberal in the way people talk about “liberal” in US politics. The term comes from the British use of “liberal” to indicate free market economics, low taxes and “small government.” In the so-called First World, “neo-liberalism” is often used to describe privatization – which, simply put, is what happens when a government which takes money from a given resident population abandons and sells off programs and services that have historically been understood to be public goods in many countries: education, water, roads, broadcast airwaves and social welfare programs. Those programs and services are sold to private investors or corporations and run as for-profit businesses. Whatever does not make a profit gets slashed.

Neo-liberalism isn’t a word that people use much in the US, but as I hear people talking about the privatization of the UC system, where I go to school, it has been coming to mind lately, a lot. Here at UC, so far, “privatization” doesn’t mean outright selling of parts of the school to corporations, so far. It looks more like shifting the burden of paying for of the costs of education from the state, to the students themselves. In the halls of Sacramento, legislators now routinely talk of higher ed as a product, as something that should be sold, not given back to the public with their tax dollars. It sounds familiar, and I wondered: Does the concept of “neo-liberalism” help to connect seemingly different struggles fought around the world against a common economic system that slashes taxes for the rich while de-funding public services that poor and middle-class people depend on?

I first encountered the term in pamphlets and zines passed out during a different World Trade Organization protest in Seattle in 1999. I saw fifty-year-old steelworkers weeping and shouting in the streets, mourning the loss not of mere jobs but of a way of life. The entire rural Pacific Northwest was losing its longtime base of industries that had defined the very towns that sprung up around them. I learned that neo-liberalism meant that the economy was not something that ordinary people got to decide – but they have much to suffer by how it changes.

In Hong Kong, the farmers and fisherpeople I met told me of a slightly different version of “neo-liberalism.” In their countries, they said, neo-liberalism often meant market deregulation – what happens when a country’s borders are forced open to let in US corporations and products, and a sovereign government is no longer able to defend the social welfare of its populace against the rights of foreign corporations.

“With the coming of the imported goods, small farmers collapse. We cannot compete. We demand subsidies from the government, protection of the agricultural sector,” a chain-smoking Indonesian farmer had told me at that blaring rally in Hong Kong.

What do US foreign policies, tariffs, trade barriers and price controls have to do with my own small life? I’ve puzzled over the question during the last decade, on my unlikely, bumbling path – a working-class Chinese-American New Yorker zigzagging haphazardly around the world, chasing big ideas and fierce dreamers from the rural US to Latin America and East Asia. I was looking for big-picture answers to how so many people in the world, separated by oceans and continents, can be so connected yet so unequal in the global economy. I was looking for what makes us similar as people, and what makes our lives so different. I knew the answer was crucial and complicated, and that “neo-liberalism”— which I was still trying to understand — had a big part in it.

Last November, four years after the Hong Kong WTO and ten years after the Battle of Seattle, to my surprise, I found myself remembering the farmers in Hong Kong, the steel workers in Seattle, and the word “neo-liberalism.” I was behind barricades again, that word ringing in the air – this time at the University of California in Berkeley.

Whose university? OUR university! echoed across the campus as students fought university police who kept mobs from flooding the Chancellor’s office. Students, with some faulty and union support, occupied buildings to shut down campus and demand an end to lay-offs, fee hikes, and mandatory furloughs. “No to privatization” signs draped windows across campus.

I came to Berkeley as a journalism grad student. During my first semester, labor unions and students organized two huge strikes to protest state budget cuts to education as well as the UC Board of Regents’ approval to raise student fees (the equivalent of tuition) by 32 percent.

The question hangs over the university like a guillotine blade: Will the UC system be privatized? But we may be asking the question rather late in the game; already it seems to have started. The cost of education has been incrementally shifting from the state to the students for the past 19 years, and it has tripled since then, according to the 2010-2011 budget report presented to the UC Board of Regents. “Fees paid by students have risen as funding from the State has declined,” the report states.

Many opposed to privatization blame Proposition 13, an infamous law passed in 1978 that opponents say led to nearly irreversible tax breaks granted to homeowners and corporations passed by politicians. That year, economist Jean Ross from California Budget Watch said you could hear a “big sucking sound” in the state budget.

Others say that corporations have been untaxed for too long. A red-and-black stenciled banner held by demonstrators outside Sproul Hall last September read, “Tax oil, not students” – a reference to Assembly Bill 656, which would tax oil companies 9.9 percent to provide funding for higher education. The bill has now passed the State Assembly – but it has been modified so that oil companies only have to report what they would have paid in taxes if the 9.9 percent severance tax had been applied. They would not have to pay a dime. California is the only state that does not tax oil.

As the next strike on March 4th approaches and students and union members prepare to storm the capitol as well as shut down the schools, I imagine what the Korean farmers I met in Hong Kong would do. They were clear that the problem they faced wasn’t just that for the first time in centuries, suddenly tens of thousands of people couldn’t make a living being rice farmers anymore. They didn’t accept the idea that it was time for a mass career change.  They knew that what they were doing had inherent value – both culturally and materially. They saw the real problem as being neo-liberalism – a system that took away from them a way of life, land and values that is rightfully theirs, and that they intend to keep. Here at Berkeley and throughout the state, UC students say they intend to keep the state from ending a half a century of subsidizing affordable higher education.

Neo-liberalism has found me again – and this time, not as an outside observer, reporting on its effects, or an activist acting in solidarity with others. This time, neo-liberalism holds my future at ransom.

Puck Lo took part in a student occupation of a UC Berkeley building last November while on strike from school and her duties as a reporter for the journalism school’s site, Oakland North. On March 4, she will be on strike once again.

1 Comment

  1. Ashley St.Claire on April 1, 2010 at 8:02 pm

    “Will There be a Recovery from Capitalism”.

    March 29, 2010 by

    As you know, for quiet some time, I have been concerned with Anarcho-Capitalism (capitalist economy with no or little government regulation), and the future of the U.S. economy. I found Cage Innoye’s article to have a fresh and different perspective on the subject.

    With permission from the author for reprint, here is the article. Enjoy.

    Professor Mekonen Haddis
    Will There Be a Recovery From Capitalism?

    By Cage Innoye

    Some are saying that US will have a “W” shaped recovery, that is, an upswing and then another decline. The bitter fact may well be that the “W” will be followed by a “triple U” and then a “quadruple U” and then a “quintuple U” and so on. The US economy is entering a long period of diminishing expectations with fluctuations but no overall substantial growth.

    And because of this, it is time for the nation’s citizens to consider a completely different economic system, as this one will not get us out of our long term malaise. The present system of capitalism will only drive us down further.

    Why the dismal prognosis? The US has lost its share of world production as other nations have come up quickly in the last 10 years; we are in a far more competitive world.

    Much wealth was destroyed by the mortgage and financial crash. The costs of the bailout were enormous. These funds must be paid for by Treasury bond sales, and then eventually higher taxes to pay for the bonds. We have the continuing high costs of wars that cannot be politically, morally or financially justified.

    The value of the dollar is declining, 13% to the Euro since the crash. This is the “other shoe dropping”, for as the dollar careens our prestigious Reserve Currency status and all of its advantages will end. US Bonds that nations have been buying will fall in value, as the dollar is worth less. This will lead to demands for higher interest rates on bonds to recoup losses, thus raising general rates in America and leading to inflation. If the dollar becomes too unreliable, nations will look elsewhere to find safe havens of investment. New financial instruments like mixed bonds from many strong economies may appear; these can spread the risk, removing a major source of funds for the US.

    The future is grim. But it is not inevitable that we languish in stagnation, we can dig our way out of this hole, however, not with the same people in leadership who got us here in the first place — for as we dig they will supervise and take bonuses while we sweat and stress. We cannot continue with the same system based upon profit, greed, selfishness, corporate monopoly, lobbyists and political corruption.

    The first thing to do is consider a new economic system, one that is not capitalism….or socialism either. What is needed are new economic principles and new economic institutions. And then we can have a comeback, one that is solid and not based upon

    absurd loan policies, Wall Street gambling, war and war economics, trivial consumer production, environmental havoc, the lowering of cultural standards, the neglect of education, poor healthcare, avoiding the consequences of mass poverty and more.

    A Diverse Economy is a new idea, it takes the best of a market system but leaves the worst behind; this is the next stage economics. What is a Diverse Economy?

    A Diverse Economy is an economy of diverse performance targets, diverse social leagues, diverse ownership and a diverse market.

    A Diverse Economy could also be called a Metric Economy because of the use of a varied set of metrics for key performance targets.

    This economy could also be called a League Economy for the use of economic leagues including those for business but also for other social groups.

    Sports Economy might be a term that relies upon an analogy with sports where teams compete, achieve stats and join franchises that agree to follow a specific set of standards and policies.

    A “Diconomy” might be another term that merges diverse and economy into one word.

    The starting point of this thesis is the nature of money and profit. Money is held to be special kind of metric that measures supply and demand. It is used to price and purchase. Price is determined by an agreement between buyers and sellers. Price has nothing to do with product quality or ethics or values of any sort. It is purely a measure of supply meeting demand and nothing else. Price goes up one day and declines another.

    Money has an important role to play as a supply and demand metric. Its job is to tell us about the market, about need, about the immediate value of things, about the immediate direction of things, the flow of resources dictated by purchasing. It however is only one kind of metric that can be used. When it is the sole metric in an economy it distorts and undermines all other values within a company and in society at large.

    A Diverse Economy would employ a diversity of metric performance targets. These might include: standard measures of efficiency, raw production and consumer data, product quality, innovation, environmental management, charity, community relations, customer relations, employee relations and reward, equity, family support, community service, marketing and advertising ethics, planetary cooperation and aid, measures of long-term investment, raising product standards and many more things

    The list is unlimited. These metrics would work with money. Money would be used to tell us of supply and demand factors in a marketplace, the flow of resources. The other metrics serve their intrinsic uses.

    We would thus have a system where other values are being achieved along with the monetary and profit. In this system we have quantified the values — leaving behind a longstanding philosophical, moral and scientific argument about quantity and quality. Quantity, that is pure money, has given in to qualities (values, principles, morals); and qualities have given in to quantity and are now ready to be standardized and measured.

    When using these metrics together we have differing methods. In one method we have money and beside it we have our other metric list, the two methods stand side and side.

    In another method we may merge the money and metric for practical purposes.

    Systems of measure can be very simple as in a one to five or ten measure spectrum. Or we can have equations that yield more precise values though complex.

    But the method is not important; this is subjective based upon issues to measure itself — its convenience or importance. What we can say is that the overall method is very simple yet it yields an infinity of applications, something pure money cannot do.

    An attendant science is that of a philosophy measure, a general measure theory which can be applied to sciences and sociology and psychology.

    When we have this metric arrangement, companies can have a set of measures. A hierarchy of targets can be created by priority. A general list of performance goals now drive the actions of a firm, money is merely one of the aims. Further, in a metric method, goals can change over time; they can be staged or altered as conditions demand.

    Now a company is achieving many goals instead of the singular goal of money and profit.

    The list of goals is now business and economic, Human and moral, and social and environmental. Previously we had one measure of success, now we have a diversity of measures.

    We are now creating money, creating a new money. Money which was formerly not in our control, this wild and chaotic thing is now in our control. Our new money is a combination of many things, it is our new measuring tool and exchange unit, composed of many elements instead of a singular, narrow thing such as profit.

    Nothing is fundamentally altered as far as business goes, we now simply have another layer of issues. Companies before competed on the basis of price, now they compete also around metrics. At first price will go up when a company installs these metrics, customers will flock to firm, then as competition appears, because other companies imitate the metrics or surpass them, you will see prices drop.

    Education is a process here, the new economy grows by stages. As people become familiar with the new concepts, then products and companies on a metric basis will gradually become popular. A new identity will develop.

    Basic management issues for metric companies are the same — efficiency, distribution, marketing, personnel management and so on. Companies compete and strive to grow.

    All of the fundamentals of a market economy are still in place, we inherit the best techniques and experiences from capitalism. This is the next stage of a market economy. We leave behind the negative experience, the worst of capitalism, a leap is made. The power of a market economy is in its diversity, this is a sacred principle of new economics.

    Market experience now merges with the key concepts of measure and diversity. We have an economy that is competitive and innovative, moral and socially minded.

    Consumers choose the best metrics. Communities rate the performance of local firms. Investors invest in companies with the highest standards. Minority groups, women, environmentalists, groups for the disabled and many other social strata actively rate firms and their products. Small business forms its own unique leagues with its particular needs and support institutions.

    Society now is directly involved in economics and business when before they were excluded. Leagues are formed. First is the industrial league with its metrics, these are the associations of businesses that unite and pledge to follow the new metric standards.

    Then there are consumer, investor, community leagues and more. When before only businesses made decisions about economics and production, now all of society is involved in the economy, as it should be. Everyone has a stake in the economy, the days that business dictates to society are over. A check and balance system is created.

    A diversity of economic organizations is formed, an economic diverse becomes a specific expression of the general social diverse.

    Many new performance targets are added to a firm’s list –diversity, the environment, safety and health, giving to the community. Companies can help take some responsibility for relieving poverty. They can join with others to stop the killing of pets in pounds. They can support experiments in public education.

    Principled marketing techniques can be established, particularly in relation to children.

    General cultural themes are taken on. Consumerism can be ended, bad media and entertainment reformed. New metrics can help push for the raising of product and service standards and thus lead to raising cultural standards, instead of the general lowering to the lowest common denominator.

    Executive compensation becomes a focus. Shareholder democracy becomes an issue.

    We now become accustomed to a more harmonious culture where firms have high standards and help out the community, where executives do not only think of themselves, and money is not the bottom line.

    The alternative is, of course, to continue to create cultural crisis and want, and the reduction of all Human values to profit.

    To be continued

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Oakland North is an online news service produced by students at the UC Berkeley Graduate School of Journalism and covering Oakland, California. Our goals are to improve local coverage, innovate with digital media, and listen to you–about the issues that concern you and the reporting you’d like to see in your community. Please send news tips to:

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