The return of the state: because statism is again the paradigm even if liberalism has not failed

So the state has once again become the panacea for all problems. The decade of Reagan and Thatcher seemed to have changed the paradigm, considering the state as a problem and not the solution. This was followed by a period of great economic growth that not even the 2008 crisis, despite its severity, was able to stop. Now, according to what the leaders of the G7 say, there is only one way to rebuild the economies destroyed by state intervention, justified by the pandemic: the state must intervene even more. Few are realizing it, those who have not forgotten that they are conservatives in the old Anglo-Saxon way (like James Forsyth in The Spectator ) and those classical liberals who have not yet been attracted by the sirens of the new Keynesianism and ecologism.

The cover photo of the Spectator

Biden presented to Congress and reaffirmed a $ 6 trillion infrastructure plan at the G7, Johnson follows him with a trillion dollar one, which is much higher in proportion to the British GDP. All the Big 7 promise a spectacular figure for reconstruction: 12 trillion dollars. As you can see, the line-up is now absolutely transversal: the Democrat Biden, the conservative Johnson, the secular centrist Macron, the Christian Democrat Merkel and the technocrat Draghi, all think the same about this. Statism is again the paradigm of economic thought.

There are political and economic factors that justify these choices. Cheap: borrowing money, in an era in which central banks fix the interest rate around 0 costs very little, even in terms of consensus. In Margaret Thatcher's time, public debt spending should have been offset by a tax increase, nowadays politicians seem to "create" money out of thin air and spend even without raising taxes. This game is nice, but it will not last long, because it will pay off in terms of inflation, therefore a decline in purchasing power and a loss of value of savings. But in any case, in the short term, between now and the next election, government politicians will be allowed to spend more and those in the opposition will be allowed to ask to spend even more.

Political factors: The West has been rocked by a series of crises, terrorism, great recession, sovereign debt crisis, large immigration and finally Covid . All amplified by a media system that now follows the agenda of social networks and increases the emotionality of each event. With every crisis, as usual, the average citizen asks for more protection and asks for it from the state. Covid has allowed western democratic states to assume extraordinary powers, as in wartime, with the full consent of their populations. And it is not certain that we will return to normal once the pandemic is over.

Considering these contingent factors, however, it is good not to be under any illusions. This returning statism is not a bolt from the blue, but the culmination of a trend consolidated in the last three decades and now capable of changing the paradigm definitively. Even in the days of Reagan and Thatcher, the free market was by no means accepted lightly. In his usual irony, the late conservative philosopher Roger Scruton wrote that with Thatcher's victory, British intellectuals were finally happy: they had someone to hate. Economic films in the Reaganomics era, just think of Wall Street , are anything but pro-market. The withdrawal of the state from the economy is a policy that has been accepted with gritted teeth and with a thousand reservations in the economics departments in faculties throughout the Western world. Already in the nineties, the almost unanimous effort of the academic world was the search for a "third way", which seemed to be embodied in Clinton and Blair: liberalism yes, but …

At least the concepts of the mother-state and the entrepreneur-state, however, had been overcome. Or not? No, obviously, because they are back in vogue, even before Covid . How was this possible? Because alongside economists who accepted (with gritted teeth and with a thousand reservations, we repeat) the paradigm shift of the Eighties, there were just as many who remained stainless Keynesians, stainless Marxists and even degrowthists, therefore contrary to the very concept of economics for as we have always understood it. These schools of thought literally exploded with the 2008 crisis, when in our most authoritative newspapers and in our universities, theses that, until a few years earlier, would have been considered simply wrong, by rejection, by pencil correction, returned to the office. blue. If scientists "have a hard head", let alone economists, who don't even have to test their theories with laboratory experiments.

And so we started again (or started) to feel theses like: the state must be able to print money as much as it wants and so it can create wealth, debt is not a problem, inflation is not a problem, taxes must be raised for the rich to enrich the poor, the state must pay subsidies to those who do not work and without conditions, the state must be the entrepreneur and the innovator, the state must protect national production. In addition to even more daring theses which, by now, are considered practically "normal" even by moderate politicians: man must be able to do without work, consumption must be reduced, agricultural self-subsistence must be striving, produce and if anything we must limit ourselves to recycling.

Proposals that were previously limited to a few circles of far-left intellectuals or the most naive kids in social centers, today we hear them imposed by central bank presidents and G7 leaders, such as the global tax on the richest companies: everywhere in the world, regardless of the nationality of the seat and of the owner and its tax legislation. It is the destruction of tax law as we have known it so far and, potentially, it is the end of tax competition, therefore the only real reason why today there are Amazon , Apple , Facebook , Google , Microsoft , Netflix and other large competitive companies and innovative (which have grown thanks to legal, favorable tax regimes).

What is most surprising in this paradigm shift is that the previous system has not failed at all. The anti-statist paradigm was established following the overt failure of the Western welfare state , of the British one ("great sick man of Europe") in particular. It then spread further when the real socialist systems of the former USSR and its European satellites literally imploded. In that case it was understood how much damage the State did to its citizens and it was understood that at least its intrusiveness should be limited. Today we live in a much richer world than that of the 1980s. The 2008 crisis was taken as the first pretext to change the economic paradigm and revive statism, but it has by no means buried free market systems. Indeed, the freer economies, such as those of the United Kingdom, Ireland and the Baltic countries, just to name the most striking examples, are the ones that have taken the least time to recover.

There has been no "failure of neoliberalism", except in the university classrooms and, consequently, also in the newsrooms of almost all media, mainstream and alternative. If the change of cultural paradigm does not reflect reality at all, we can however venture a hypothesis as to why it is liked so much. In addition to the fact that intellectuals (who are those who form our minds) and artists (who are those who condition our hearts) have never accepted the anti-statist paradigm, which has never been accepted in the last thirty years of globalization is precisely the increase in wealth. Because it happened unevenly. It is wrong to say, as many do, that "the rich are getting richer and the poor getting poorer" (old Marxist mantra that is always green). The second part of this period is wrong, because the poor of today are much richer than those of thirty years ago. Fewer and fewer people are in extreme poverty . The fight against poverty, net of Covid , has been largely won, better than the best predictions, not because of successful social plans, but precisely only thanks to the globalization of the free market.

What frightens the masses, however, is that "the rich of today are much richer than the rich of yesterday, compared to their poor contemporaries". This would be the correct sentence. Wealth has not decreased, but inequalities have increased. And inequalities are perceived as unacceptable by the dominant culture and morality. But they shouldn't be a problem. The problem is in fact only poverty and the goal is to beat it, not to reduce the difference in assets between Bill Gates and the writer. It is a defeat of the conservatives and classical liberals that they failed to explain to ourselves that we must rejoice at the end of poverty and we must not cry with envy because there are people who are better off than us. Even on the right, however, the easy narrative of social envy prevailed. Of "I will give you what is yours too". Which is then at the basis of statism once again triumphant.

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This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL on Sat, 19 Jun 2021 03:57:00 +0000.