Neoliberalism

Neoliberalism

Trickle down effect

Historical Background

Main ideas

What is Neoliberalism?

Washington Consensus

Reaganomics

Margaret Thatcher

Neoliberalism and globalization

What is Neoliberalism?

Policy model that encompasses both politics and economics.

It favors private companies and seeks to transfer the control of economic factors from the government to the private sector.

Many neoliberal policies concern the efficient functioning of free market capitalism and focus on limiting government spending, government regulation, and public ownership.

• It favors private companies and seeks to transfer the control of economic factors from the government to the private sector.

• Many neoliberal policies concern the efficient functioning of free market capitalism and focus on limiting government spending, government regulation, and public ownership.

Main ideas

• Economic growth as the means to achieve human progress
• Confidence in free markets as the most-efficient allocation of resources
• Its emphasis on minimal state intervention in economic and social affairs
• Commitment to the freedom of trade and capital.

Historical Background

• The key ideas of neoliberalism arose in the 1940s and 1950s in small corners of academia in Europe as a conservative, intellectual response to progressive, social welfare efforts by the governments in Western Europe and the United States.
• Main authors: Friedrich von Hayek, Ludvig von Mises, and Milton Friedman

Trickle Down Effect

• The theory that tax breaks and benefits for corporations and the wealthy will trickle down and eventually benefit everyone.

• Tools like reduced income tax and capital gains tax breaks are offered to large businesses, investors, and entrepreneurs to stimulate economic growth.

Info

Neoliberalism and Globalization

Neoliberalism has been associated with globalization, or the integration of the world’s economies, since the late 1980s.

• Neoliberalism promotes freedom of trade, benefiting both sellers and buyers.
• Elimination of economic frontiers such as tariffs.

• Minimal taxes for foreign investment.
• Acces to a great amount of products from different places.

Neoliberalism and Globalization

• Money and financial markets are homogenized under the dominance of a few nations.
• A new social Darwinism puts across the message that only the strong and worthy survive in society and on the market.
• The nation-state is transformed into a competitive state: there is competition for good conditions of economic investment between nation-states

Washington Consensus

• A list of policies that had gained support among Latin American policymakers in response to the macroeconomic turbulence and debt crisis of the early to mid-1980s.
• These policies also had the backing of experts at international institutions, especially the International Monetary Fund and the World Bank, to help the recovery from the debt crisis.

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The 10 recommended policy reforms1. Reduce national budget deficit2. Redirect spending from politically popular areas toward neglected fields with high economic returns. 3. Reform the tax system 4. Liberalize the financial sector with the goal of market-determined interest rates 5. Adopt a competitive single exchange rate 6. Reduce trade restrictions 7. Abolish barriers to foreign direct investment 8. Privatize state-owned enterprises 9. Abolish policies that restrict competition 10. Provide secure, affordable property rights