Some of the prevailing social and economic problems in America are attributed to the neoliberalism in the country. This paper suggests that neoliberalism in America is the cause of 2008 financial crises, inequality, the detrimental situation for workers and the economic growth, reduced social welfare, and aggravated crime.
Economic Impact
One of the major economic impacts of the neoliberalism in America is the 2008 financial crises. Among the other white collar crimes associated to the neoliberalism, financial crime is another nightmare attributed to the introduction of the free market. According to Burton (10), various studies have indicated that the neoliberalism in America was the stepping-stone for the crises that started early in the 1980s. During this era, the United States along with the United Kingdom embraced the neoliberalism as a new financial model, which promoted deregulation of the financial sector and privatization of the public sector. (Burton 10). Consequently, the financial sector gained the power to control economic growth and contributed to the unrestricted economy. This implied that the individuals in charge of the financial sector were in a position to make hasty and risky decisions for personal gain.
Another study supports that the neoliberalism in America distorted the regulatory system in the financial market and hence causing financialization. According to Kotz (1), financialization is defined as a quantitative expansion of the role of the financial sector in the economy. In the United States, the growth of financial profits was realized after the emergence of the neoliberalism system in the financial sector. This indicates that that the cause of the financialization is the introduction of neoliberalism. Kotz argues, "Financial deregulation set the financial sector free, allowing the process of financialization to develop" (Kotz 8). The financialization gave rise to the financial criminality that subsequently contributed to the rise of financial crises. Burton (11), asserts that the financial criminality can be associated with the deregulation policy of neoliberalism that resulted to more unethical and fraudulent financial sector than ever before.
Neoliberalism has also contributed to the inequality in the America and hence widening the gap between the poor and the rich. Scholars supporting the neoliberalism argues that this economic ideology is healthy because it reduces the absolute inequality. However, scholars such as Coburn and Uvin argue that neoliberalism is the cause of relative inequality and argue that neoliberalism ideology either is unassociated with or enhances absolute inequality (Smith). Smith argues that literature has proved that neoliberalism promotes capitalism, which consequently contributes to the rise of inequality (Dean 77). In this sense, neoliberalism enhances inequality through uneven wealth distribution and development of economies and through the distortion of class power to favor the elites. In the United States, the capitalism has contributed private ownership of capital and hence allowing the firms to acquire monopoly power in both labor and product market. Consequently, this has widened the gap between the poor and the rich in the states and America continent in large. The inequality in American and between other countries began in 1980 when the neoliberalism ideology was established under Kohl, Thatcher, and Reagan (Smith).
It can also argue that the neoliberalism in the United States has contributed to the detrimental situation for workers and the economic growth. According to Scipes, the percentage of workers in the US labor force has decreased since 1979. For instance, in 2005, only 10.7 percent of US workforce was in the manufacturing sector compared to the 21.6 percent in 1979. In addition, the neoliberalism in the United States had contributed to the decline of the minimum wage level until 2007, when the minimum wage was increased to $5.85 per hour (Scipes). In addition, few workers in the economy have access to the health care benefits after securing a job. For instance, the percentage of the college graduates with health coverage decreased from 71 percent to 61 percent between 2000 and 2005. Scipes also conducted research that indicated that the non-supervisory employees are offered less in real wage today about 1973. In 2005, workers in the United States had less stable pensions, increasing health care costs, and fewer benefits. In other words, Scipes posits that the economic situation of the individuals in America is deteriorating due to neoliberal policies in the country.
The establishment of the neoliberal policies in the America is also associated with the decline of the labor movement in the country. For instance, Scipes argues that the number of non-agricultural workers in unions has decreased from 35.3 percent from 1954 to about 12 percent of the American labor force in 2006 (Scipes). This decline is attributed to the number of factors facilitated by the neoliberal policies in the United States. Such factors include reform of labor law and the free trade that was enhanced by the enactment of the North American Free Trade Act (NAFTA). However, Scipes admitted that it has become hard to measure the impact of the neoliberal policies because such policies are hidden under different "cultural wars" such as premarital sex, abortion, drugs, gun and control, the marriage of lesbians and gays.
The Social Impact
The consequences of neoliberalist policies have affected the social life of American citizens. For instance, neoliberalism reforms have led to income inequality amongst the population. The sale of state-run enterprises also created a loss of jobs and increased rates of unemployment. The exclusion of subsidies from basic commodities like food, fuel, and social services have increased their prices. As a result, the citizens have found it difficult to afford the basic commodities without straining. Besides, Neoliberalism promotes privatization, which is said to concentrate wealth to a few individuals and at the same time force the public to pay higher to its needs (Walton 179).
Nonetheless, the stiff competition between countries towards large corporate investments creates the need to offer incentives free, infrastructure and reduced taxes. The resources used to fund the incentives are supported by the budget of the United States. Instead, such funds could be used to programs and initiatives that focus on improving the social welfare of the people. The corporate investors' benefits more from these incentives as the citizens continue to suffer. The budgetary process is placed into the hands of transnational corporations instead of the democratic populous. The policies made by large and powerful corporations maybe fail to work to the benefit of the majority, and by this way, the state of democracy is negatively affected. Neoliberalism creates a situation where people lack the audacity to control the distribution of resources.
Nevertheless, neoliberalism has resulted to aggravated crime, which leads to social harm. In the American society, the crimes of the powerful people go unpunished as they are protected by the states. The law is placed to handle the crimes of the poor and protect the upper-class society. The growing inequalities and increasing street crimes affects the low-class members of the society as they are pushed towards social deprivation and poverty. Moreover, white collar crimes allow the powerful individuals, businesses, or corporations to break the law as the prosecution is not popular amongst such people. The class bias means that the common people are affected by high prosecution rates, but the powerful persons are immune to the wrath of the law. The criminal justice system is not in a position to ensure equality and fairness as long as justice is concerned (Brown 690-694).
According to Smith, Neoliberalism affects social welfare as human behavior is thought to be explained by logical, individualistic, and selfish goals. It is regretful that individuals rather than structural challenges are blamed on the high rates of unemployment, poverty, and inequality. The American Society is focusing on individuals instead of the entire community. This leads to increased rates of suicide, depression, alcoholism, and domestic violence amongst others. Neoliberalism is not designed to benefit the whole population but only works to the advantage of the few people.
Neoliberalism focused on eliminating the notion of public good or the community, to promote individuality or self-interest (Kamat 155). In the process, the poor in the society are expected to come up with strategies that will help them to fight the lack of better health services, social security, or education. The poor are labeled as lazy, and the government appears blameless. In the United States, neoliberalism affects welfare programs, attacks the rights of labor, and cutbacks social programs. When the government is not held responsible, it means that policies and strategies to solve the existing problems will not be implemented. The poor will continue to suffer as long as neoliberalism exists within the society.
Works Cited
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