In the last few years, we have seen the political spectrum take a huge leap to the Right. Why? The last time the Right had this much support, war erupted to devastate much of the world. What makes anyone think this time will be any different?

The circumstances of our current position seem to stem from the Conservative economic push to move away from Keynesian economics.

In 1944, the Allied powers held a conference in Bretton Woods, New Hampshire to provide a framework for how international trade would proceed at war’s end. The major figures here were economists John Maynard Keynes, UK, and Harry White, US.

Keynes wanted to regulate international trade, make sure that trade was balanced between nations. If trade was too heavily tipped in one nation’s favor, then it was up to that nation to find ways to balance it. This, Keynes thought, would remove one of the largest barriers to peace in the world. Nonsense of course, but finding a lasting peace was behind all his thinking.

White, on the other hand, fought vigorously against that idea, blocking any such moves. The idea of the US dollar being the international trading currency rather than the pound sterling too was a more attractive option for a number of reasons. White was successful in these things and while Keynes didn’t get everything, they were able to reach agreements that provided a key for the longest single growth period in economic history.

The reconstruction of Europe and parts of Asia, the greening of Asia and Africa, the advance of trade were all underpinned by these Bretton Woods Agreements but we never heard a lot about them. They set up the European Reconstruction Bank, which later became part of the World Bank, and the International Monetary Fund.

What we also don’t hear about was the longer term impact this had on world growth. Essentially from 1945 to the Oil Crisis in 1973, the world, especially the reconstructed world, enjoyed the longest period of economic growth we had ever seen.

Some would object to this statement saying that yes, there was growth, but there also intermittent crashes too. True, but the idea was that any crashed that occurred would not be a repetition of the 1929 crash. Each period of growth would peak higher than the previous peak. Each crash would not crash as deep as the previous crash. This “boom/bust” cycle was inherent in Keynesian economics and it was this cycling that the Chicago School, in particular, objected to.

The 1970’s started well, but with the Recession of 1973-75, things started going wrong and Milton Friedmann had his opportunity. The calls were, essentially, too much regulation was hampering growth. Too much government involvement in what should be private enterprises was hampering growth. Big National Debts were hampering growth. Government itself was too big so needed to get lean and mean, and in doing so, would allow for large decrease in the size of governments. In turn, this would mean that taxes could be greatly reduced, and they have been.

Didn’t that catch the eye of a lot of Right wing politicians. They now had an economic framework they could develop. This was Neo-Liberal Economics. It has a number of names, Neo-Conservative, “trickle down”, “supply side”, “voodoo economics”, but it promised a lot. Ronald Reagan and Maggie Thatcher were likely the biggest names attracted to this, for different reasons though.

For Reagan it was a way of making huge promises that he really didn’t have to fulfill. And make them he did. Then left his successors to ride the wave and the crashes. For Thatcher, she wanted a weapon to break union power in the UK, and she did. The initial flurry of increased economic activity took everyone by surprise, I suspect, winning a lot of support, but this also meant they did not see the looming pitfalls.

For the private sector, huge efficiencies could be gained by making better investments extra-nationally. Local, often expensive labor, could be replaced by cheaper labor in other nations. Globalization, it was called but essentially, it was outsourcing jobs to cheap labor pools. Diversification became the order of the day, large companies purchased outright, or took large shares, in smaller companies. There was no control, no reason except to become bigger companies.

This has caused a pyramid to form, with a few huge corporations at the top owning a wide variety of business and manufacturing companies. Often previous competitors became subsidiaries. Diverse companies would then buy or sell parts of their operations to rivals, “rounding out” their portfolios.

The Ford Motor Company was, perhaps, the first really large company to reveal the shortcomings of Neo-Conservative economic thinking. Ford went in, boots and all, falling into line with the new rationale and in the early 2000’s posted its largest loss ever. This was a precursor to the Global Financial Crisis of 2008.

The GFC was initiated by banks. In particular, Lehman Brothers. A series of bad investments, loans and seriously dodgy management, labeled the “sub-prime mortgage crisis” brought the world’s economic system to its knees. The US government advanced nearly $1 TRILLION to keep the economy going, barely. The official response to this incredibly poor situation was to put one man in jail, blame teachers and poor people, letting everyone else off the hook.

The current downside of Neo-Liberalism is that the concentration of wealth upwards has left an increasing number of people sharing an ever decreasing amount of wealth whereas a decreasing group of people are sharing a growing amount of the national wealth.

The problems for governments are again mounting with issues from the Pandemic to rearming because of Russian and Chinese belligerence raising concerns. Perhaps for government, the largest single problem is the lack of tax dollars with which to be able to do the things they need to do to make economies work, to tackle basic problems. Tax cuts have now revealed themselves to be inequitable. A larger portion of the tax burden is now falling on lower paid employees, while high income earners are enjoying larger tax cuts.

President Eisenhower resolved this issue by simply imposing a tax ceiling of $400,000 and earnings over that amount would be paying 92% in tax. This is a model that would still work well except for one major problem. Countries have been changing their tax laws so much that there are so many loopholes in them that tax avoidance, not outright tax evasion, is now a major industry all over the world.

We’ve had the Panama Papers and various nations have had numerous tax scandals, but nothing is happening to remedy a lot of those problems. Money can be moved so rapidly today that tax officials can no longer keep up with it. Proper record keeping can become so murky it is not even proper record keeping any more. In the meantime, the US Internal Revenue Service is facing funding cuts while going after non-paid taxes of the ultra-wealthy.

All of these issues stem from adopting Neo-Liberal economic theories. Even then, this is a misnomer, originally it was called “Horse and Sparrow Economics.” The story is that if you feed a horse enough oats, sparrows will feed on the oats in the horse shit. Given that the horses are the wealthy, then the sparrows are the plebs, that means ordinary people are eating the shit left by the wealthy. Not a pretty picture at all. Tried in France in the 1890’s it failed to achieve its goals and led to a recession in France around 1905.

Why then do we keep trying to repeat the mistakes of the past? They don’t get any better the second time around.