neoliberal economics illustration

(Gabriela Vega / Daily Titan)

The irony of neoliberalism is built into its name; millions of people have lost their economic freedom for the sake of unbridled growth. 

According to Investopedia, neoliberal economics refers to a policy model that prioritizes a laissez-faire market through deregulation, privatization and reduction in government spending and regulation. However, this has enabled extremely wealthy people to cut corners on democracy, workers’ rights and environmental protections.

Neoliberal economics thrives off of inequality and rewards greed without any caution about environmental and societal impacts. 

This economic policy allows for major corporations to enrich themselves and take advantage of their employees. The Roosevelt Institute released an empirical study about the effects of neoliberal policies. It highlighted that fewer antitrust laws are connected to increases in monopolistic or oligopolistic activities across industries, which reduced economic growth. 

Contrary to neoliberal supporters’ beliefs, emphasis on privatization and deregulation is actually preventing innovation and healthy competition within the market. As companies continue to swallow each other, both investors and consumers will fail to find diverse businesses that deserve their attention, leading to slower economic growth. 

Neoliberal policies are not only unhealthy for the economy, but it is harmful for workers. The promise of deregulation has failed to create efficient markets or lead to economic growth by allowing wealth to “trickle down” the socioeconomic ladder. Regressive policies, such as, deregulation, privatization and lower tax rates for corporations and the historically wealthy, stifles economic growth and social mobility, further increasing income inequality and wage stagnation, according to the Roosevelt Institute’s report. 

In theory, deregulation could allow companies the freedom to redistribute profits to productive employees accordingly. However, that is not the case. Without regulations, grand businesses and corporations are allowed to exploit their workers without proper compensation. Greater economic inequality prevents people from participating in the economy, causing economic growth to lag. 

In a thriving economy, people’s rise and fall in socioeconomic status may be seen as fair. However, greater inequality reinforces the present wealth gap, allowing the rich to get richer and the poor to get poorer. As inequality increases, economic opportunity decreases, which means that more people would not be able to improve their socioeconomic standing. 

Neoliberal economics also exacerbates racial inequalities. The Roosevelt Institute’s report stated that people of color experience higher unemployment rates, lower wages compared to their white counterparts and accrue less wealth, regardless of education level. Since the neoliberal ideology perceives  education and skill-building as prevalent issues that individuals need to handle on their own, advocates overlook the systemic factors that lead to inequality in the first place. 

Neoliberalism also fails to address racial inequality, assuming that employers are unbiased, which is utterly false. The report states  instances when employers would choose to not interview applicants with nonwhite-sounding names and channel people of color and women into low-paying jobs. The connotation of some careers, with femininity, as seen with nursing, has led to employees, including white men, being paid much less than counterparts working in other fields. 

Neoliberal economic theory does not take into account human confounding factors, like bias and historical discrimination, ultimately  failing  to benefit the masses of people that it allegedly aids. 

Capitalism relies on limitless growth and neoliberalism provides the mechanisms to do so; this infinite growth would lead to environmental collapse. Unfortunately, this deathly combination would inevitably end in both natural and man-made disasters. The current global economy demand is exceeding the environmental capacity. In fact, as efficiency is achieved in the economic sector, efforts are directed toward growth and consumption, rather than risk and disaster mitigation, according to the University of Melbourne. 

Undoubtedly, people will become poorer due to climate change. Food insecurity will rise. Infrastructure and homes will be threatened by natural disasters. Climate refugees and conflict over resources may increase in correlation with climate change. It is clear that neoliberal theory does not translate perfectly into reality, and economists should not pretend like it does. Neoliberalism’s focus on limitless growth cannot realistically thrive on finite resources. 

There are economic alternatives to neoliberal capitalism, like socialism. More federal regulations on corporations and safeguards for democratic participation can address inequalities and uplift marginalized populations. 

Ultimately, greed is the driving force behind neoliberal policies. It justifies the exploitation of workers and the environment with arbitrary rules about how the market works. In a perfect world,  neoliberalism could succeed. However, workers and people of color in the real world deserve an economic system that supports the public good, not personal greed.

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