Interesting article, Dr Steven Hail, but in my opinion we have not had the Neoliberalism that Milton Friedman was talking about in Free to Choose. Instead we have seen an ever greater government, higher taxes (don’t confuse higher top rate tax rates with overall high tax rates, as inflation has pushed more of the middle class into higher tax brackets), the increase in government was largely thanks to Blair’s Labour government, greater deficits, and the power grab of government by big business which has rigged the game is its favour have come as a result. Government once established has a vested interest in keeping its power and funding (from us) Government doesn’t have any money. We fund the government.
If you actually spent any time studying Friedman you might have recognised your error. There’s lots of his lectures and interviews as well as the TV series Free to Choose, all well worth watching and still largely relevant. We never has neoliberalism, we had growing socialism (state) and the classic situation where power is captured by vested interests. This is the opposite of the free market system that Friedman spent his life promoting.
Lets’ look at your bullet points about what orthodox economists (which?) have been ‘drumming into our heads’.
– Maximising economic growth is the over-riding objective of policy.
There shouldn’t be any kind of ‘government economic policy’. This is the problem. The government should not be involved in economic elements, as it cannot be effective at it. This is has surely proved. This should be left to the market. Government should stick to its function; law and order, defending private individuals and property rights, protecting the country, and legislating the kind of rules we want to live by. ‘Government Policy’ is a communist concept, well-meaning but ultimately flawed, and out of sorts with the free-market, neoliberalism you berate.
– Reducing the higher personal tax rates and making the tax system less progressive sharpens incentives for investment and risk taking and raises productivity growth.
Reducing the higher tax rates encourages people to invest their money in productive schemes. If you are going to pay 75% tax on any earnings, that will did incentivise you taking the action and those you might have employed in the process and your customers are worse off as a result.
– Budget surpluses, or at least balanced budgets, promote economic stability and growth.
The alternative; running massive deficit is not working out so well is it? Ever greater borrowing is delusional. If the government cannot be responsible it should give up and go home and pass things over to the people to manage.
– A deregulated and bigger financial system promotes economic efficiency and growth.
Maybe not bigger (I don’t think this was ever stated) but deregulation is beneficial, but, and this is a big BUT, banks and other vested interests must be allowed to sink or swiike any other business. If they want to get clever, they must pay the price if they fail. No special treatment, no bank bailouts by the taxpayer. Buyer beware is the motto in a free market. Banks have to behave themselves or go bust, and when they answer to their customers, rather than the government, their behaviour will change or they will go bust. As long as they have the government to lean on, banks will misbehave or take excessive risks. In the event of a bank failure, the government can protect the mortgages and savings of the public; it needn’t however save the bank shareholders.
– The best way to promote social well-being is to cut top tax rates, deregulate, financialise, and allow those at the bottom to benefit from the higher growth via a trickle down effect.
The best way to promote social well-being is for the government to mind its own business, which I stated above, and to let people get on with the rest. In a free enterprise system, you don’t have big government you have people choosing where they spend their money. Big business comes from big government, but when big government disappears there will be far fewer large unwieldy behemoth businesses, using their power to protect their privileged positions and prevent new market entrants. You don’t have a trickle down effect. You empower the individual to make for himself.
Nice try, but this article needs a bit more thinking. I’m sure Milton is looking down and smiling, as he always did when debating proponents of socialism, safe in the knowledge that he knew he was right.