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Global Elections in the Shadow of Neoliberalism

While scandals, culture wars, and threats to democracy dominate the headlines, the biggest issues in this super election year ultimately concern economic policies. After all, the rise of anti-democratic populist authoritarianism is itself the legacy of a misbegotten economic ideology.

NEW YORK – Around the world, populist nationalism is on the rise, often shepherding to power authoritarian leaders. And yet the neoliberal orthodoxy – government downsizing, tax cuts, deregulation – that took hold some 40 years ago in the West was supposed to strengthen democracy, not weaken it. What went wrong?

Part of the answer is economic: neoliberalism simply did not deliver what it promised. In the United States and other advanced economies that embraced it, per capita real (inflation-adjusted) income growth between 1980 and the COVID-19 pandemic was 40% lower than in the preceding 30 years. Worse, incomes at the bottom and in the middle largely stagnated while those at the very top increased, and the deliberate weakening of social protections has produced greater financial and economic insecurity.

Rightly worried that climate change jeopardizes their future, young people can see that countries under the sway of neoliberalism have consistently failed to enact strong regulations against pollution (or, in the US, to address the opioid crisis and the epidemic of child diabetes). Sadly, these failures come as no surprise. Neoliberalism was predicated on the belief that unfettered markets are the most efficient means of achieving optimal outcomes. Yet even in the early days of neoliberalism’s ascendancy, economists had already established that unregulated markets are neither efficient nor stable, let alone conducive to generating a socially acceptable distribution of income.