Neoliberalism as the just-world fallacy

Monday, February 15, 2021 - 2:50pm

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Design by Madison Grosvenor

For a week, the impeachment was on display in full force, and I’m sure you’re very excited to hear yet another person talk about it for hours on end without an actual resolution. But that’s not what I’m here to talk about. I want to talk about something more nebulous — something more dogmatic than material and far more consistent than Trump’s impeachment. I want to talk about the basis of neoliberalism and its fallacies. 

What is neoliberalism? Well, it’s pretty much the de facto ethos many post-industrial nations adopt when governing. It’s defined by market practices like privatization and globalistic libertarianism. Revered scholar Noam Chomsky, in describing neoliberalism, said, “What it’s called is ‘freedom,’ but ‘freedom’ means a subordination to the decisions of concentrated, unaccountable, private power. That’s what it means. The institutions of governance—or other kinds of association that could allow people to participate in decision making—those are systematically weakened.” 

It’s essentially the prioritization of private power over government power, emphasizing capital and wealth because neoliberalism assumes that those forms of power are equally accessible to all. It assumes the just-world fallacy, i.e. that everyone is held accountable for their bad actions and rewarded for their good ones, and that the world is a meritocracy.

Neoliberalism is an ideology that is most associated with Ronald Reagan and Margaret Thatcher, two of the most influential leaders of the 1980s. Reagan’s economic approach, trickle-down economics or Reaganomics, is practically a joke among some economists, who see it as a failure visible to nearly everybody except the wealthiest of us. Per capita GDP and unemployment rates were virtually the same after five years in countries that slashed taxes on the rich and in those that didn’t, meaning that trickle-down economics does practically nothing for the common individual. All it does is congeal wealth at the top and concentrate capital in corporate hands. 

Reagan made an address to the nation in October 1982, a debriefing of the current status of the economy. In said speech, he detailed the supposed qualms from Americans who were dissatisfied with the then-current status of the material state of the average American. 

He quotes a letter he ostensibly received from a woman named Judith in Selma, Alabama. “We’ve worked hard. We conserved. We planned. We were frugal, careful. We feel so out of control. We don’t want a handout. We just want to help make the system well again.” 

And in response, Reagan says “Well, Judith, I hear you. And millions of other men and women like you stand for the values of hard work, thrift, commitment to family and love of God that made this country so great and will make us great again. And you deserve to know what we’re doing in these very difficult times to bring your dream, the American Dream, back to life again, after so many years of mistakes and neglect.” Handouts are supposedly the problem — piles of bureaucracy supposedly hurting the American Dream and the common man. 

Neoliberalism seeks to bolster that individual “agency,” believing in and pushing a meritocratic system that prides hard work and frugality as a way to fulfill dreams of wealth and opulence. But the American Dream is a lie, and has long been one. 

America is a land of opportunities in a theoretical sense, but social mobility in this country has been falling for decades, even during Reagan’s time. In 1980, when Reagan was elected, about 50% of children grew up to make more money than their parents, declining from a high of 90% in the 1940s. A similar decline happened in education, where 70% of Americans were expected to attain a higher education level than a parent in the 1940s, but only 45% were expected to in the 1980s. 

As of 2018, Pew Research states that America’s income inequality is growing, and COVID-19 has exacerbated that. The World Economic Forum puts the United States as the 27th highest country when it comes to social mobility, which is pretty abysmal considering we are one of the richest countries in the world. Former President Donald Trump’s tax cuts are an example of the legacy of Reaganomics in the modern context. 

Hopefully, President Joe Biden won’t follow suit, but with his pick for director of the National Economic Council, Brian Deese, being a former Global Head of Sustainable Investing at BlackRock — an asset management company worth over $8.5 trillion as of Dec. 31 — my hopes are wary at best. 

Neoliberalism is a lie perpetuated by the elites in hopes to transfer wealth to the top. It supposes the concept of a just world, a meritocracy where people are rewarded for their hard work and personal effort. In reality, the world is much more deterministic than they would ever give it credit for. Americans are fed the lie of the American Dream to lay the blame upon themselves rather than the people who legislate to keep the money away from them. 

The problem is not you. It’s them. You aren’t a failure because you didn’t work hard enough. You’re unfairly maligned by a system that seeks to disenfranchise you and take your capital. Our rulers need to be held accountable, lest they keep parasitically leeching off the labor you produce. 

Sam Fogel can be reached at samfogel@umich.edu.


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