Neo-liberalism and impoverishment

This paper is about reasons why neo-liberalism creates the impoverishment of many people with severe disabilities, through reducing government services. I look to define general aspects of neo-liberalism and I further analyse their market approach analysing its possible impoverishment of many people with severe disabilities.

Neo-liberalism is a political economic theory and practice that emerged in the 1960s, and has increased in prominence at the policy level since the 1980s. The neo-liberal approach rejects social democratic doctrines. Neo-liberalism focuses politically on the establishment of a stable medium of exchange, the reduction of localised rules, regulations and barriers to commerce, and the privatisation of state run enterprises.

This contemporary dominant economic ideology of most western countries is referred to as neo-liberalism because it is a modern version of the classical liberalism that initially arose in the 18th century. Moreover, neo-liberalism claims to be a political system designed to highlight both the political limitations of the market economy in the nation-state, and the economic efficiency and effectiveness of the market economy when it is freed to operate on a global scale.

However, Raymond Plant, in his 2010 article published in the UK titled “The Neoliberal State”, argued that in 2010, while the neoliberal financial regime may have crumbled, the political agenda to defer authority to the market remains the same.

This highlights the persistent inequalities that exist in the ideology and theory of classical liberalism and today’s form of neo-liberal economics. Neo-liberalism and classical liberalism identify themselves with the position that, as the economy expands, everybody will share in its prosperity. Neo-liberal economists believe social progress is merely a by-product of economic growth. As Kotz in his 2003 article titled “Neoliberalism and the US economic expansion of the '90s” puts it:

Contemporary neoliberalism has become fully dominant among mainstream thinkers in the United States and Britain. This new conventional wisdom holds that the many economic and social problems of the decades following the Second World War resulted from government meddling in the economy. The rediscovered “free market economy” is, we are told, the route to optimum efficiency, rapid economic growth and innovation, and rising prosperity for all who are willing to work hard and take advantage of available opportunities.

Kotz argues further that neo-liberal economics is capable of affecting nearly every facet of social life. For example, over the past 25 years neo-liberal reforms have affected not only the economic lives of individuals, but have had a direct impact on the social lives of many people.

Since its inception world-wide, neo-liberalism has only further widened the gap between rich and poor and created insecurities within the nature of work. Neo-liberal politics has brought about a poor quality and inflexible source of public services by reducing, restructuring and reforming government and its link to public services.

Advocates of neo-liberalism say it aims to achieve progress by combining the operation of a free market with measures of social justice, in particular focused around the concept of meritocracy, which will, at least in theory, also contribute to economic growth.

Katha Pollit in her 1995 article titled: “Subject to debate (equal opportunity vs. equal results” announces the political motivation behind the neoliberal political actions to enforce a new form of meritocracy. That is, to increase the effectiveness and efficiency of a market driven economy, neo-liberals have introduced what it theoretically announces to be a global form of meritocracy. Anthony Giddens, the renowned political academic, argues that this form of equity is flawed, creating deep inequalities of outcome that threaten social cohesion. Roy Hattersley of the British Labour Party believes that meritocracy only offers shifting patterns of inequality, unfairly exalting the rich, while condemning the poor to false hopes of individualised social mobility.

Meritocracy is defined by government policies promoting the principles of merit. The actions pursued by advocates of meritocracy are fundamental to the belief that people get out of the system what they put into it based on what they deserve according to market based principles. It is a political vision for the future based on merit, and opposed to the traditionally conservative theories of the aristocracy. However, Michael Young a world renowned writer on the subject has argued that “meritocracy is even worse than aristocracy because it attempts to acquire plus points because it connotes power and privilege as merited rather than born with”. He further argues that meritocracy is detrimental to those with disabilities. Young in his 1998 article titled: “Meritocracy revisited: assessing the social implications of meritocracy” puts it like this:

… showing how sad, and fragile, a meritocratic society could be. If the rich and powerful were encouraged by the general culture to believe that they fully deserved all they had, how arrogant they could become, and, if they were convinced it was all for the common good, how ruthless in pursuing their own advantage.

As a result, today we may have the worst of both worlds. It is portrayed by today’s social reality that the rich are getting richer, while the poor are getting poorer. In the case of people with disabilities, their capacities under such a system are rarely deemed worthy of reward as being meritorious.

More than 20 years ago, Hugh Stretton told us of a “Cult of Selfishness” in his book Political Essays that spoke of the emergence of neo-liberalism which now provides us with significant cultural hindsight.

Other interests saw opportunities to change the direction of development: to improve the mixed economies’ efficiency by means which would incidentally make the rich richer, business freer, welfare cheaper and the poor more self-reliant. Those means were described as deregulating, privatising, restoring competition, cutting welfare, rolling back the boundaries of government.

Neoliberals cutting welfare

This is further acknowledged in the Australian government’s (ALP) Shut Out report which is a broad government publication of issues confronting people with disabilities:

The extraordinary gap between the level of income support and the cost of disability was seen as restricting the ability of people with disabilities both to live independently and to enjoy a decent standard of living … Disability support recipients live lives of fear and desperation. Sooner or later every disability support recipient I know has confessed to the concern they feel over the “what if” factor - what if government stops paying social security/disability support?

This horrifying issue for many people with disabilities may again be on the neoliberal agenda. For example, in the 2010 election campaign the leader of the Coalition, Tony Abbott, pledged to reduce government spending by $47 billion. It is something that he believes will take pressure off interest rates. Does this mean there is a possibility that disability funding will also take a cut as it is part of the government spending?

Looking at the recent past policy agenda, the proposed welfare/pension reforms by Australia’s Federal Liberal coalition, I feel is just one attempt to "reform" welfare/pensions that was part of the Federal Liberal Coalition's policy prior to the October 2004 federal election. At the time a federal Liberal coalition cabinet submission concerning welfare was leaked. According to Josh Gordon, in The Age, the plan was that more than one million Australians would have their, necessary, disability pension payments eroded. This was part of a secret Coalition bid to save money.

The leaked submission of the federal Liberal coalition argues that the current social security system undermines the policy goal of increasing labour market participation and that it is in the best interests of the Coalition parties to fix the welfare/pension problem immediately, as each year of delay will result in greater costs to the state.

The government spends about $24 billion each year on working-age income support, with the cost rising by about $1.5 billion each year. The cabinet submission highlights the problem that since 1997 pension payments have been locked in at 25 per cent of average male weekly earnings, while allowances have always been linked to changes in inflation. For example, disability support pensioners now get $37 a week more than people receiving the single allowance, compared with a gap of $22 in 1999. The gap was expected to widen to $50 by 2006 on past trends. Instead, the submission urges cabinet to “seriously consider” the indexation arrangements, suggesting that the government’s guarantee to maintain pensions at 25 per cent of male earnings should be abandoned.

The submission stated that such welfare payments should be merged with those, such as, Newstart and Youth Allowance to enable a single working age welfare payout, saving the government about $1.3 billion.

To succeed in reforming the discrimination of people with disabilities, the economic system must undergo serious practical changes which allow for an ethical and social focus on people with disabilities in society. Neo-liberal economic processes are a contributing factor in the backlash against the social policy agenda, blaming the poor structure and enforcement of such policies for the failure of people with disabilities to seek social inclusion and find work. The result of the dominance of neo-liberal political economics has been a system of ongoing rising inequalities.