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The Anti-Neoliberalism Election: What Chait Gets Wrong

Writer: Jake BrowningJake Browning

In a recent article, Jonathan Chait argues that Democrats failed in the last election despite they aggressive populist economic policies--and, as such, suggests that maybe voters just don't care about economic populism. This is taken as evidence that a standard, lefty theory of Trump's success is wrong. He notes,

The theory holds that Donald Trump’s 2016 election represented a voter backlash against “neoliberal” economic policies that had impoverished people in the heartland, who in their desperation turned to a populist outsider promising to smash the system that had betrayed them.

For Chait, Biden-Harris's failure is evidence that opposition to neoliberalism isn't at the heart of Trump's success. Despite Biden making extensive efforts to promote manufacturing jobs, push antitrust efforts, and support unions, voters ultimately just didn't care. At the end of the day, Chait suggests, Democrats were foolish to depend so heavily on anti-neoliberalism to carry them through.


There's some food for thought in the article, but a chief failing is Chait's unwillingness to define neoliberalism. In fairness to him, the term is used in a vague, hand-wavy way in many cases, and is often blamed for every contemporary sin. But to say a term is overdetermined isn't to say it is meaningless. Neoliberalism has a straightforward definition: support of expansive free-markets and opposition to efforts--like regulations and unions--to limit the market. And if you understand the definition, it is clear why Democrats weren't as anti-neoliberal as they claimed--and, also, why the Republicans were also pushing a brand of anti-neoliberalism. The whole election was anti-neoliberal--though both sides disagreed on what needed to go.


The Pull of Neoliberalism

Neoliberalism has a particular moment to point to that exemplifies the movement: the Reagan-Thatcher push to break the unions, cut back on social spending, stop inflation at all costs, and largely gut civil society. When the Soviets fell, this made up the "Washington Consenus" that was stamped onto post-Soviet economies, institutionalized in World Bank and IMF policies, and then made supranational through the European Union and Euro, the World Trade Organization, and NAFTA. In all of these countries, policies pushed strongly against any barriers to the market with the assumption that doing so was in everyone's best interest.


To be clear, neoliberalism wasn't an absurd idea. Lots of barriers to the market protect a small minority of people and harm a great number of people. For example, requiring interior decorators to be licensed is pretty dumb, but it helps protect incumbents and limit competition. Similarly, import restrictions and tariffs benefit local companies and workers, but they also shield them from competition. The result is that American-made cars, clothes, and electronics were utter crap for decades. It is impossible to explain to Gen Z folks how exciting foreign brands--like Nintendo, Sony, and Honda--were back in the 80s and 90s, and how awful cars like the Ford Pinto and Chrystler Minivan were.


Neoliberalism's solution was simple, elegant, and plausible: break down barriers helping a small minority and provide diffuse benefits to the majority. Economists whipped out great charts explaining why lowering taxes, deregulating, off-shoring, limiting labor protections, and so on actually made us all happier. We were promised that, even if China's ascension to market status cost us some jobs, we'd all benefit from cheap imports. That's still the argument used to justify the harms of Walmart and Amazon.


And, helpfully, it was a two-way model: if China embraced the free-market, it would inevitably lead to freedom. This might seem an odd argument, but the logic is simple: competition and breaking down barriers improves not just the economic market, but all "markets"--including the social and political market. If China, Poland, and Estonia all opened up their economies to competition, its leaders would eventually recognize that competition is not to be feared but instead cultivated because it benefits everyone. Political barriers--such as voting restrictions or dynastic rule--bred corruption, inefficiency, and stupidity. Competition, by contrast, demands efficiency and weeds out the corrupt or stupid to provide it. As the original liberalists argued, in the marketplace of goods, services, or ideas, more competition leads to a better product.


The Unappreciated Danger

Neoliberalism has been very "successful," on its own metrics. The global economy has grown, poverty rates have plummeted, and the world has become more integrated. Many venture capitalists and tech bros have re-asserted the "greed is good" ethos of the early neo-liberal days. But, as Marx noted, there's a dialectic at the heart of economies: you push too far in one direction, you often receive a pretty vicious correction. And neoliberalism's success is now causing its pushback.


At heart, the problem with neoliberalism is that people like barriers to the market. Governments are, at their heart, a kind of barrier to the market, and so we demand our government impose certain barriers on our behalf to protect us from competition. Most everybody agrees with this premise: some barriers matter, some things aren't for sale, and some things shouldn't be determined by the market. National parks protect wildlife and beautiful scenes from being torn up by corporations or bought up by billionaires. Many central aspects of life--like clean water, breathable air, uncontaminated food, safe drugs, and untampered liquor--all stem from governments pushing back on the market. Labor, health, and schooling laws, such as those prohibiting pre-teens from being in a coal mine rather than school, are broadly popular. In short, government is there to protect us from the market, and people are happy it does so.


The problem of politics is, of course, that we can't agree on what barriers are essential. People diverge over whether we need consumer protection, tariffs against competition, unemployment insurance, and so on. Neoliberalism broadly hates all of these, and governments--under both Democrats and Republicans--largely fought to limit these regulations to ensure business kept booming. And citizens, while often decrying this or that regulation disappearing, broadly didn't notice much when banks became deregulated, or labor laws loosened. And many people enjoyed privatization efforts that allowed for competition to slow, insufferable public services, such as when companies were allowed to own for-profit DMVs.


The danger of neoliberalism, not appreciated at first, was not that taking away numerous barriers eventually leads to new diffuse harms. If you gut unions, you may increase wages and jobs in the short-term. But, in the long term, the lack of collective bargaining will harm everyone, since unions typically also campaigns for higher minimum wages and better labor protections. Similarly, losing some licensing requirements is good, but losing all of them leads to unsafe working conditions and poor services. Allowing consolidation in an industry might benefit consumers in the short-term, but over time leads to underinvestment, high prices, and subpar products. Deregulating some aspects of banking and auditing might have been minor, but the financial crash showed that it also lead to foolish investments that cost everybody.


As neoliberalism spread, the harms to workers compounded: labor protections shrank, free trade led to offshoring and outsourcing, big box stores killed small businesses, and small towns hollowed out. And many workers came to recognize how unwise it is to have health and life insurance tied to an employer only too late, when they were abruptly laid off in their 50s. The diffuse benefits of the market slowly turned brutal and awful, and people only recognized the numerous barriers that had gone missing.


The Anti-Neoliberal Dissensus

The progressive case against neoliberalism is pretty obvious: it promised everyone would be better off in a free market and, to some extents, this panned out. But it did so by destroying the welfare state--which, for its part, was a response to the same stupid problems that afflicted the original liberalism: monopolies, brutal working conditions, a lack of consumer protection, a failure to provide health, pension, and disability services through the market, and a moneyed elite that prevented regulations. The mid-20th century response to liberalism--FDR, the Beveridge report, and the Marshall plan--all took seriously that pure liberalism didn't work: an unregulated market is a self-destructive one.


But if Biden-Harris pushed this anti-neoliberal approach, then does that mean the workers who supported Trump are pro-neoliberal? This is wrong: the conservative working class also hated neoliberalism and largely agreed with Biden's policies. They were just also angry about different barriers that neoliberalism broke down. Conservatives abhorred Biden's refusal to uphold other barriers--most saliently immigration.


Immigration was foundational to Reaganite neoliberalism: Reagan's farewell address encourages immigrants to come to the US, NAFTA nearly permitted the free movement of labor (alongside goods and services), and George W. Bush had a mostly open border policy until his immigration bill failed. The hyper-libertarian Koch brothers pushed open borders far more than any Democrat ever did, diverting tons of funding to it. And the EU does have the free movement of labor, at least within its borders, which was adopted during the neo-liberal push of the 1980s and early-90s.


Economists have tried--largely in vain--to convince anti-immigration folks that closed borders produce narrow benefits to a small group of workers but diffuse harms to us all. They acknowledge some people lose their jobs but, on the whole, immigrants create more jobs than they take, and so it isn't zero-sum. They also contend that, if the US is growing, it will be nearly impossible to stop immigration: if there's a demand for labor, the supply will come.


But a lot of conservatives just don't listen because they don't think it's an economic issue. It's one of those "not for sale" things, where there should be strong barriers preventing "the market" from doing what it does. They may not be pure anti-immigration; they may support "legal" immigration, or allowing international students to study at university, or skilled immigration, or whatever. But the point is the same: they don't think it shouldn't be up to the market to decide. Even if the US demands more labor, it shouldn't be up to the migrants whether that demand is met; it should be up to "them."


We the People

In this sense, the populist push world-wide has largely been an anti-neoliberal push. But nobody is the pure anti-neoliberalism party. The problem for Republicans is that they are rabidly pro-business in some sense, and so folks like Musk and Thiel are pushing absurdly neoliberal economic policies that are as anti-populist as they come. Biden-Harris's anti-neoliberalism targeted this plutocratic neoliberal trend, hoping to split off the working class from the rich Republicans. As such, they focused on breaking up monopolies, protecting consumers from exploitation, and building more public infrastructure--all things people really, really liked.


But the problem for Democrats is that they're not comfortable with re-imposing the pre-neoliberal barriers, like tariffs and immigration controls. For progressives like me, immigration is a moral issue, despite its neoliberalism--which is apparent in that Chait ignores it. Chait instead alludes to it only briefly in the recognition that everybody--from Reagan to Clinton to Bush to Obama--was "pro-globalization" before Trump, but even then Chair only mentions the free movement of goods and services. The free movement of labor is still treated as somehow outside neoliberalism, despite its historic centrality. When Bernie Sanders--part of the pre-neoliberal leftist mode--argued against free movement in 2016 and 2020, and more recently argued that H1B Visas were harming American workers, many progressives treated it as cryptoracism. Treating immigration as an economic issue--whether for the right or left--is considered offensive to many progressives, in much the same way that it offends many conservatives. Even talk of the "free movement of labor" strikes many as offensive now, since it reduces migrants to their labor-capacity and ignores their moral status as persons.


For this reason, framing the election narrative around "did social issues trump economic issues" is confused. Neoliberalism opened markets and borders in the same go and in the same spirit. Everybody now agrees some of this opening did harm. The difficulty--for both parties--is that no one can return to the pre-neoliberal era. Conservatives are split between a working class that hates immigration and the obscenely wealthy, neoliberal donor class. Liberals are broadly pro-government regulation and introducing barriers, like labor and the environment, to the market, but they also believe anti-globalist barriers to immigration (but, also, the free movement of goods and services) are shameful and racist.


In short, the working class wants tariffs and a halt to immigration, as well as labor protections and limits to monopolies. Neither party can give them everything, and they chose the anti-globalist aspects of anti-neoliberalism over the anti-corporate power parts. I (like most progressives) think this choice will harm more than help the working class. But I can't regard it as "pro-neoliberalism." The disagreement still shares a broad distrust of the "opening up" of markets from 1980-2010.


Which is why Chait's article is only half-right. Democrats did try and run on an anti-neoliberalism agenda--but so did Republicans. The problem is that Democrats and Republicans both agreed on one anti-neoliberal point: immigration shouldn't be up to the market. Voters just came to radically different conclusions about what to do about it.





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