Fair criticism. To be honest, I just (arrogantly) assumed we'd reached a point and accumulated enough evidence to remove any argument that the 20th century's experiments with communism and socialism and the recent 25 year infatuation with neoliberalism were anything other than overall failures. Judging by the down votes I'm getting, I'm clearly wrong and the idealogical battles rage on (mine included).
In what way has neoliberalism been a failure? Most prosperous countries are the ones that practice it the most (Switzerland, Hong Kong) and EU countries who have gotten better lately have been the ones taking neoliberals measures by cutting state spending (UK) and in South America the best economies have freed their ecomonies the most. There is nothing that can beat a free market economy, sure you can regulated to some extend if you want and it is all around the world, but a healthy free market economy with as few regulations as possible is still the best way to go as reality has shown, call that neoliberalism or mixed economy with as few regulations as possible or whatever you want, but it's not a failure and it's not going away.
It's the "few regulations as possible" part of neoliberalism that has, for me at least, been the unquestionable failure.
The following could all have been avoided or had the scope of their damage drastically reduced had better regulation been in place:
LTCM and the Asia crisis in the 90s, the flood of bad IPOs in the dotcom era, the subprime and CDO disaster that sparked 2008, the asset bubbles over the last three decades (e.g. the UK housing market after mortgage LTV regulations were relaxed), the extreme widening of the gap between rich and poor.
A more nuanced and sensible approach to regulation than neoliberalism promotes doesn't (in my opinion) mean we'll suddenly see a reversal of all the good bits a very lightly regulated, market orientated economy has brought us and the return to inefficient, planned economies. It just means removing the shocks, excesses and some (by no means all) of the inequalities an uncompromising belief in 'free market economics over everything else' appears to invite.
I just don't understand how 2008 was obviously because of deregulation. Not only is that a contestable claim, but you're simplifying the entire crash to a convenient cause that clearly confirms your biases.
Just take a walk over to Wikipedia[1], and you can clearly see that ascribing the crash in 2008 to only deregulation is complete and utter nonsense:
The Housing and Community Development Act of 1992 established an affordable housing loan purchase mandate for Fannie Mae and Freddie Mac, and that mandate was to be regulated by HUD. Initially, the 1992 legislation required that 30 percent or more of Fannie’s and Freddie’s loan purchases be related to affordable housing. However, HUD was given the power to set future requirements. In 1995 HUD mandated that 40 percent of Fannie and Freddie’s loan purchases would have to support affordable housing. In 1996, HUD directed Freddie and Fannie to provide at least 42% of their mortgage financing to borrowers with income below the median in their area. This target was increased to 50% in 2000 and 52% in 2005. Under the Bush Administration HUD continued to pressure Fannie and Freddie to increase affordable housing purchases – to as high as 56 percent by the year 2008.[22] To satisfy these mandates, Fannie and Freddie eventually announced low-income and minority loan commitments totaling $5 trillion.[23] Critics argue that, to meet these commitments, Fannie and Freddie promoted a loosening of lending standards - industry-wide.[24]
And if you can't ascribe 2008 to deregulation, then your point starts to become watered down: maybe deregulation isn't the "unquestionable failure" you claim it to be.
You can read on to see about other things that government had their hands in, such as the CRA and lower interest rates. (Among other things, such as the institutions of Fannie and Freddie themselves!)
Thanks, many people keep repeating the "2008 crisis was caused by deregulation" myth when in fact it was quite the opposite and when I try to tell them so they look at me like if I was a mad man. Can't believe how ignorant people are on the issue even some of my highest educated friends. Goes to show that people tend to believe anything without questioning as long as their beliefs match their worldview.
My understanding was that Freddie (and later Margaret Thatcher's imitation with selling council houses in the UK) were policy decisions made on advice from the then nascent neoliberal movement.
