By Murray Hunter
The growth of the neoliberalism school in the 1990s, with zealous implementation through variations of Thatcherism, Reaganomics, Rogernomics, and economic rationalism in Australia, has cleared the rich forests of local manufacturing enterprises that once existed in Europe, the US and Australia. Now barren level playing fields exist after being blasted with a cocktail of philosophical actions, which included market deregulation, privatisation of state-owned enterprises, near elimination of tariffs, with lower direct taxation, and higher inequitable indirect taxation.
Local economy was destroyed in the name of seeking a 'mythical' national comparative advantage, where each country would compete upon the global stage, doing 'what it could do best'.
One of the deep costs of neoliberalism has been the destruction of local economies for the lowest common denominator. A McDonaldscape exists in most places, where communities now tend to look physically the same. Through the rise of 'big business', most companies that serve the needs of local communities are outlets or franchises of multinationals. One part of a city looks like any other, and one town looks like another.
This brave new post-industrial world is a bland one. Not only is it bland to the local vista, but bland in opportunity for any growth in employment due to large businesses moving their manufacturing centres offshore to the lowest bidder, while new technologies decrease the need for labour.
Today, small businesses find it difficult to survive, let alone grow due to the rush of market/business concentration that has occurred since the 1980s. Most businesses are now parts of chains or franchises, with most of the choice small family companies and brands having been taken over by conglomerates.
High barriers of entry which are almost insurmountable now exist due to market centralization. There are now fewer independent channels of distribution and very few independent retail chains around. And although markets have been deregulated in terms of competition, government has heavily regulated procedures and imposed so many operational requirements, that the cost of opening a new business is prohibitive. This has favoured the large chain businesses which can afford the high set up costs, come in over the small family businesses.
Today, the majority of goods and services consumed in local communities come from large rather than small business.
The socialscape in Europe, the US, and Australia now boasts almost a whole generation of dispossessed youth in terms of economic and entrepreneurial opportunity. The youth of today have few vocational skills relative to previous generations, experience in industry, or any sense of the strong work ethics that once existed as a cornerstone of society.
The above has occurred both in urban and rural regions where these countries have become the barren fields of material and spiritual poverty, with a distinct lack of hope running through the younger generation.
Contemporary governments seem to be void of any visions of how to build their respective societies within their countries. The politicians of today seek election to run and operate government, rather than seek government as a means to enact new visions and directions for society.
Governments have become regulators, adding thousands of new laws and regulations to the statute books each year. Regulation, in the opinion of the author, has been one of the destroyers of community vitality, and as stated above, made the costs of opening and operating a business almost prohibitive.
Overzealous regulation by government has ripped out the soul of 'Western society'.
Somehow, the above problem must be remedied before there is a major backlash. The rise of Nazism and Islamic fundamentalism in Europe are in some ways early symptoms of dispossession. These scars can fester into the nightmare of what happened in Germany during the 1930s, if change does not occur.
An unsustainable high cost of living exists across the developed world. This is creating unnecessary poverty and creating high barriers for new local community businesses to be created.
While governments have increased spending on items such as defence, hospital and other social protection services face chronic stress from cutbacks.
New paradigms of government are required from leaders who are willing to make the difficult decisions.
The aim of any new paradigm of government would be to bring back truly small community based government, with a central government looking after the national issues of defence, etc. From the financial point of view, this is absolutely necessary, i.e., to find a way to have small government, due to the eroding tax base and aging populations within most countries of the developed world. Otherwise massive fiscal deficits will continue to grow in national budgets to the point where 'failed governments' will be a common occurrence.
This extreme situation could occur within a single generation from now, where the Greek crisis today is a prelude of the future facing the 'west'.
Secondly, the regulating away manufacturing and industry to the third world in the name of safety and environment needs to be reversed. The cost of this has been too high for society to bear. HACCP, GMP, OSHA, and other regulations have made it so difficult to open and operate a business for the small entrepreneur. Today the streets of Europe are sterile, while the streets of Asia are vibrant. There are lessons to be learnt here and public discussion is so badly needed about what type of society government should allow.
Thirdly, the current banking system needs to be overhauled. Banks are not acting in the greater social interest, and through their promotion of property speculation, have played a role in putting housing out of the hands of the people who need it. The banks are hesitant to lend to small business and in the writer's opinion, a return to small banks and savings societies needs to consideration.
The current trends in banking are not healthy for competition and rebuilding local community enterprise.
Next, industry protection and import replacement are not the dirty words that the economic rationalists made us believe. It's time to protect local industry, particularly the SMEs, just like japan, South Korea, and almost all of the rest of the world are doing.
Finally, cities are becoming far too big and rupturing as they struggle to provide the necessary services to inhabitants. There should be a focus on regional development where richer lifestyles can exist. Regionalization is the best way to reinvent community, as we ask the question; How big should our cities grow?
Life is not about the 'grand plan' of developing a new universe based on national comparative advantage, particularly if the social costs are too high. Unemployment and poverty issues are more important than seeking some form of theoretical efficiency that is exploitive and partly artificial in the first place.
Government needs to promote and develop local community industry as a prime tenant of its economic policy.
We must not be scared of decentralization. Australia tried to centralize government, and the EU is one massive failed experiment. We need to restock and take another look at new models of regional cooperation that can promote the advantages of large markets, yet recognize the need to maintain local community markets.
This is another area that requires a new economic dogma for politicians to jump on-board. New economic philosophy/policy wanted here.
In such as world, we can put the focus back onto community. This is where the economists have to work hard, not to develop regional and global economic models, but to give birth (or rebirth) to the area of community economics. This must be inspiring to the politicians.
We need politicians who are committed to community economy, rather than those who run to Canberra, Washington, or Brussels, and live within their 'bubble worlds' in those places remote from their constituencies.
The cost of not doing this in the near future could be drastic. We already see extensive urban prairies in places like Detroit, closed businesses in small townships, the selling of iconic brands which gave employment to generations of workers, and countries going into bankruptcy.
Australia like many other western countries faces fiscal problems which are being repaired within the current fiscal/economic paradigm of cost/revenue management, by manager politicians. The end of the resource boom is further putting strain on the economy. The US is heavily paying for its wars. Its military expansion has led to many social and economic problems at home. Europe is fiscally grieving over the loss of its industry to the east.
It's time to think about this and change the economic paradigms we exist within today before we become overcrowded with cars and have no enterprise to pursue. The world could return to mass poverty, relative to previous generations very easily. The majority of people won't be able to afford medical services, and three decent meals per day.
The Americans came to realise that they would have to either leave the region or weaken their presence there. It is Russia that is filling the vacuum now