‘Neopopulists’ Should Consider the World without ‘Neoliberalism’

American politics is experiencing a “new centrism,” according to New York Times columnist David Leonhardt. Market skeptics across the political spectrum are cooperating on issues such as trade and industrial policy, an economic approach Leonhardt calls “neopopulism” because these policies are popular with the American public. Of course, the more traditional definition of economic populism—one focusing on protectionism and government intervention—also seems to fit quite well here, especially as a foil for, as he puts it, “neoliberalism.” From the NYT piece:

One defining quality of the new centrism is how much it differs from the centrism that guided Washington in the roughly quarter-century after the end of the Cold War, starting in the 1990s. That centrism — alternately called the Washington Consensus or neoliberalism — was based on the idea that market economics had triumphed. By lowering trade barriers and ending the era of big government, the United States would both create prosperity for its own people and shape the world in its image, spreading democracy to China, Russia and elsewhere.

A loose definition of neoliberalism: the late 20th century shift toward less government intervention in the economy and more reliance on market capitalism—as a response to the perceived failures of Keynesian economics—including deregulation and privatization. In the US, one could date the neoliberal turn to the Carter administration’s deregulation efforts in the late 1970s, followed by tax cuts and further deregulation of the Reagan administration in the 1980s. Other key neoliberal events would include the Greenspan era at the Federal Reserve, the North American Free Trade Agreement in 1994, welfare reform in 1996, light-touch internet regulation in 1996, support for China’s 2001 entry into the World Trade Organization, and the George W. Bush tax cuts of 2001 and 2003.

To be clear, Leonhardt thinks neoliberalism has failed:

In the U.S., incomes and wealth have grown slowly, except for the affluent, while life expectancy is lower today than in any other high-income country. Although China, along with other once-poor countries, has become richer, it is less free—and increasingly assertive.

That handwave misses quite a bit. For example: While incomes did grow fastest for the top fifth over the past four decades or so, up 123 percent in real terms, income growth was nearly as fast for the bottom fifth, up 94 percent, and decent for the middle three quintiles, up 59 percent. Faster income growth across the board would have been better had productivity growth been faster. And at least in one way, that would have required more neoliberalism, at least in terms of greater deregulation. Then there’s this from The Economist:

It is fashionable to criticise untrammelled globalisation as the cause of inequality, the global financial crisis and neglect of the climate. But the achievements of the 1990s and 2000s—the high point of liberal capitalism—are unmatched in history. Hundreds of millions escaped poverty in China as it integrated into the global economy. The infant-mortality rate worldwide is less than half what it was in 1990. The percentage of the global population killed by state-based conflicts hit a post-war low of 0.0002% in 2005; in 1972 it was nearly 40 times as high. The latest research shows that the era of the “Washington consensus”, which today’s leaders hope to replace, was one in which poor countries began to enjoy catch-up growth, closing the gap with the rich world. The decline of the system threatens to slow that progress, or even throw it into reverse

What would the world look like without neoliberalism? How much more global poverty would there be? How much more infant mortality? How much less productive would the US economy be? Would the major tech companies all be American companies? Would the 1970s Great Inflation still be with us? All good alt-history questions for the neopopulists to ponder.