The neo liberals be it in NZ with the ACT party or propaganda think tanks in USA like Hoover institute or podcasters like Daily Wire are always banging on about reducing government size , deregulating industries and reducing tax and how bad minimum wages are.
If that were true we wouldnt be in a mess from the 1980s with a financial meltdown in 2000 dot.com and again in 2008 with stagnant real wages and increasing debt and increasing wealth gap.
Yet the answer to these problems is more of the same neo-liberalism. NZ has just elected a National/ACT/NZ First coalition to do that and USA has just elected Trump to do that.
Heres a summary of Ravi Batras book Greenspan's Fraud: How Two Decades of Mismanagement Destroyed the Global Economy, published in 2005, that dispels these right wing myths.
Greenspan's Fraud: How Two Decades of Mismanagement Destroyed the Global Economy, offers a powerful critique of Alan Greenspan, the long-serving chairman of the Federal Reserve, whose policies played a significant role in shaping U.S. economic policy from 1987 to 2006. It delivers a scathing critique of Alan Greenspan, the former Chairman of the Federal Reserve, and his economic policies that, according to Batra, contributed to the global financial crises of the early 21st century. Batra argues that Greenspan’s adherence to deregulation, free-market principles, and his favoring of the wealthy ultimately destabilized the U.S. economy and, by extension, the global economy. Batra contends that Greenspan's policies, particularly his insistence on minimizing government intervention and his devotion to the myth of the "efficient market," laid the groundwork for economic inequality, asset bubbles, and financial crises.
Main Arguments in the book:
Appointment Based on Favoritism, Not Merit:
In Greenspan's Fraud, Ravi Batra argues that Alan Greenspan's appointment as Chairman of the Federal Reserve in 1987 was driven by political favoritism rather than merit. Despite lacking formal qualifications or significant experience in economics, Greenspan’s appointment was influenced by his close ties to influential circles, including his association with Ayn Rand's Objectivist philosophy, which promoted free-market capitalism. Batra suggests that Greenspan’s ideological alignment with neoliberal and elite interests—rather than his technical expertise—was the key factor in his selection, laying the groundwork for policies that disproportionately favored the wealthy and entrenched neoliberal economic principles in U.S. policy.Greenspan's Economic Philosophy: Batra frames Greenspan as an economic ideologue, who, despite his expertise, was more committed to promoting laissez-faire capitalism than to managing the economy for the benefit of all citizens. As a protégé of Ayn Rand, Greenspan adopted the belief that markets could self-correct without government oversight. However, Batra argues that this philosophy failed to account for the realities of economic power and class disparities. He asserts that Greenspan’s policies contributed to the enrichment of the wealthy, exacerbated income inequality, and undermined the long-term stability of the financial system.
The Role of Deregulation: A central theme of the book is the role of deregulation in exacerbating financial instability. Batra highlights Greenspan’s push for reducing regulatory oversight in the banking and financial sectors. By supporting policies that allowed for greater risk-taking, including the repeal of the Glass-Steagall Act, which had separated investment and commercial banking since the Great Depression, Greenspan opened the door for financial speculation and the creation of dangerous financial products like subprime mortgages. Batra argues that this deregulation ultimately led to the 2008 financial crisis, as it allowed banks and financial institutions to engage in reckless lending and speculative activities without proper oversight.
Monetarism and Its Failures: The book critiques monetarism, the economic theory that underpins much of neoliberal thought. Monetarism asserts that the money supply should be tightly controlled to maintain economic stability, with little regard for the social implications of economic policy. Batra explains how Greenspan’s monetary policies, which included keeping inflation low and interest rates minimal, often resulted in bubbles in asset markets, such as the housing market, and contributed to unsustainable debt levels. Batra argues that monetarism failed to address the structural issues in the economy, leading to instability and a lack of growth for the working class.
Greenspan’s Influence on Tax Policy and Support for Lower Taxes:
Although Alan Greenspan served as Chairman of the Federal Reserve from 1987 to 2006, and did not have direct control over taxation (which is determined by Congress), his views on taxes were highly influential in shaping U.S. economic policy. As a strong advocate for supply-side economics, Greenspan argued that reducing taxes—especially on high-income earners and businesses—would stimulate investment, foster economic growth, and create jobs. His support for these principles aligned with his broader neoliberal economic ideology. While Greenspan could not enact tax laws directly, his extensive influence, particularly during the George W. Bush administration, helped push through tax cuts such as those in 2001 and 2003, which disproportionately benefited the wealthiest Americans. His economic views and advocacy were crucial in shaping the tax policies of the era, reinforcing a fiscal approach that prioritized tax relief for the rich and corporations under the guise of promoting free-market growth.Economic Inequality and the Myth of Trickle-Down Economics: Batra critiques the philosophy of trickle-down economics, which posits that cutting taxes on the wealthy and reducing government intervention would lead to greater economic growth and benefit society as a whole. According to Batra, this approach ignores the negative effects of wealth concentration on overall demand and economic stability. He argues that the wealthy tend to save more of their income, rather than spending it, and as a result, a disproportionate concentration of wealth among the elite leads to economic stagnation and financial bubbles. The result is not economic growth, but rather an unstable economy that is prone to crises. Batra calls for more equitable wealth distribution through policies like higher minimum wages and higher taxes on the wealthy.
The Financial Crisis of 2007-2008: Although the book was written in 2005, before the 2007–2008 global financial crisis, Batra presents a critique of Greenspan’s policies that laid the groundwork for the crisis. Batra argues that Greenspan’s devotion to deregulation and his failure to rein in speculative financial practices created an environment ripe for economic instability. Greenspan’s refusal to regulate risky lending practices, along with his belief in the self-correcting power of markets, allowed financial institutions to take excessive risks. Although the specific collapse of the housing market and subsequent financial crisis occurred after Batra’s book was published, he foresaw how Greenspan’s laissez-faire approach would lead to disaster.
Economist Thorstein Veblen’s 50-Year Study on inequality: One of the key elements in the book is reference to this study which reinforces Batra’s argument that wealth concentration leads to economic instability and stagnation. One of the key elements of Greenspan’s Fraud is Batra’s reference to a 50-year study by economist Thorstein Veblen, which he uses to reinforce his argument about the dangers of economic inequality. Veblen’s study looked at the long-term effects of wealth concentration on economic growth, arguing that as wealth becomes more concentrated in the hands of the few, overall economic health suffers. According to Veblen, the wealthy class tends to invest in speculative ventures rather than in productive activities that benefit society as a whole. As a result, the economy becomes distorted, with capital not flowing into areas that would spur long-term growth, such as job creation or infrastructure development.
Veblen’s work shows that inequality leads to economic stagnation, as the rich hoard their wealth while the broader population is left with less purchasing power. The result is a cycle of economic crises, as the excess wealth in the hands of the few fails to generate sufficient demand in the economy. Batra uses Veblen’s analysis to show how Greenspan’s policies, which favored wealth concentration and deregulation, directly contributed to the financial instability that led to the 2008 crisis. By failing to understand or address the effects of wealth inequality, Greenspan’s approach ultimately exacerbated the economic conditions that led to the collapse.
Reforms and Solutions: Batra advocates for a comprehensive overhaul of economic policies, calling for stronger regulatory frameworks to ensure financial stability, such as stricter oversight of banks and financial institutions. He also supports a more progressive taxation system, which taxes the wealthy more heavily and redistributes wealth in ways that benefit the broader population. Batra emphasizes the importance of raising the minimum wage and investing in education and infrastructure as essential steps toward fostering long-term economic stability and sustainable growth. He argues that the solution to the economic crises of the 21st century lies in government policies that promote economic equality and regulate financial markets to prevent future crises. These proposals align with what USA Americans would consider progressive policy's which the rest of the West calls social democratic policies.
Ultimately, Batra’s Greenspan’s Fraud is both a critique of neoliberal economic theory and a call for a more progressive, regulatory approach to economics that prioritizes fairness, stability, and long-term prosperity for all.
To read a PDF of the book click on this link and download one of the slow downloads. here
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