The Hidden History of Neoliberalism: How Reaganism Gutted America and How to Restore Its Greatness

By Thom Hartmann and Greg Palast

America's most popular progressive radio host and New York Times bestselling author Thom Hartmann reveals how and why neoliberalism became so prevalent in the United States and why it's time for us to turn our backs to it.

With four decades of neoliberal rule coming to an end, America is at a crossroads. In this powerful and accessible book, Thom Hartmann demystifies neoliberalism and explains how we can use this pivotal point in time to create a more positive future.

This book traces the history of neoliberalism-a set of capitalistic philosophies favoring free trade, low taxes on the rich, financial austerity, and deregulation of big business-up to the present day. Hartmann explains how neoliberalism was sold as a cure for wars and the Great Depression. He outlines the destructive impact that it has had on America, looking at how it has increased poverty, damaged the middle class, and corrupted our nation's politics.

America is standing on the edge of a new progressive era. We can continue down the road to a neoliberal oligarchy, as supported by many of the nation's billionaires and giant corporations. Or we can choose to return to Keynesian economics and Alexander Hamilton's American Plan by raising taxes on the rich, reversing free trade, and building a society that works for all.

• Language: English
• Publisher: Berrett-Koehler Publishers, Inc.
• Release date: Sep 13, 2022
• ISBN: 9781523002344

Thom Hartmann

Thom Hartmann is the host of the nationally and internationally syndicated talkshow The Thom Hartmann Program and the TV show The Big Picture on the Free Speech TV network. He is the award-winning New York Times bestselling author of 24 books, including Attention Deficit Disorder: A Different Perception, ADHD and the Edison Gene, and The Last Hours of Ancient Sunlight, which inspired Leonardo DiCaprio’s film The 11th Hour. A former psychotherapist and founder of the Hunter School, a residential and day school for children with ADHD, he lives in Washington, D.C.

Book preview

Cover: The Hidden History of Neoliberalism: How Reaganism Gutted America and how to Restore its Greatness

The great innovation of Hayek and Mises was to create a defense of the free market using the language of freedom and revolutionary change. . . . Even as the welfare state and the mixed economy were coming into existence, Hayek and Mises set as their political imperative tearing them down.

—Kim Phillips-Fein, Invisible Hands: The Businessmen’s Crusade Against the New Deal

Neoliberal democracy, . . . [i]nstead of citizens, it produces consumers. Instead of communities, it produces shopping malls. The net result is an atomized society of disengaged individuals who feel demoralized and socially powerless. In sum, neoliberalism is the immediate and foremost enemy of genuine participatory democracy, not just in the United States but across the planet, and will be for the foreseeable future.

—Robert W. McChesney, introduction to Profit Over People:

Neoliberalism and Global Order, by Noam Chomsky

The Hidden History of Neoliberalism

Copyright © 2022 by Thom Hartmann

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed Attention: Permissions Coordinator, at the address below.

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First Edition

Paperback print edition ISBN 978-1-5230-0232-0

PDF e-book ISBN 978-1-5230-0233-7

IDPF e-book ISBN 978-1-5230-0234-4

Digital audio ISBN 978-1-5230-0235-1

2022-1

Book production: Linda Jupiter Productions. Cover design: Wes Youssi, M.80 Design. Edit: Elissa Rabellino. Interior design: Good Morning Graphics. Proofread: Mary Kanable. Index: Paula C. Durbin-Westby.

CONTENTS

FOREWORD by Greg Palast

INTRODUCTION: The Plot to Save the World

1. Save Us from the Utopians

2. The Birth of Neoliberalism

3. Neoliberalism’s Fathers: Mises, Hayek, and Friedman

Ludwig von Mises and the Critical Race Theory of Neoliberalism

F. A. Hayek vs. the Birth of Democratic Socialism

Milton Friedman

4. Neoliberalism Goes to Work

5. Worldwide Neoliberalism Experiments

6. Milton Friedman Hearts General Pinochet

7. Neoliberalism Comes to America

8. Bill Clinton Hearts the Neoliberal Revolution

9. George W. Bush Pushes Neoliberalism Even Further

10. Neoliberalism Blows Up in Bush’s Face

11. Obama Rescues Neoliberalism from Itself

12. Trump Attacks Neoliberalism

13. Biden Challenges Neoliberalism’s Core Concepts

14. How Neoliberalism Changed America in 40 Years

Taxes

Trade

Health Care

Education and Higher Education

Finance

Employment

Homelessness

Inflation

Media and News

The Environment

15. Privatizing the Commons

16. Destruction of Democracy

17. Breaking with 40 Years of Neoliberalism

18. #TaxTheRich

19. Rebuilding a Middle Class Gutted by Neoliberalism

20. Trade: Returning to Alexander Hamilton’s American Plan

21. What Is Real Wealth?

22. Hamilton’s 11-Step Plan Worked for 188 Years

23. Tariffs Built America

24. But What About the Cost of American-Made Goods?

25. How China Escaped Neoliberalism

26. America Adopted Neoliberalism, and All I Got Was This Made-in-China T-Shirt

27. Neoliberal Trade Policy Rejected by South Korea

28. Reverse Privatization of Core Government Functions

29. Break Up the Monopolies

30. Progressive Populism to Replace Progressive Neoliberalism

31. Standing on the Edge

NOTES

ACKNOWLEDGMENTS

INDEX

ABOUT THE AUTHOR

FOREWORD

by Greg Palast

Milton Friedman’s feet didn’t touch the floor. This was the University of Chicago, 1975, and Professor Friedman was God. God sat in a chair, the little man’s feet dangling, as he humiliated students who deviated in the slightest from the Gospel of Friedman, what he dubbed neoliberalism.

I kept my head down. Friedman didn’t know I was sent to study with him and his Chicago Boys by the city’s labor leadership. They wanted to know if this Friedman was as dangerous as he seemed. Friedman was the not-so-hidden hand behind the new dictatorship of Chile’s Augusto Pinochet. Pinochet liked to throw dissenters out of helicopters—whatever it took to create what Friedman called The Miracle of Chile, a radical right-wing makeover of the nation’s economy.

Bless Thom Hartmann for exposing the neolib Genesis story: the Miracle in Chile was a con. Hartmann notes that Chile’s economy went into free fall under the Chicago Boys’ regime; unemployment hit 30 percent.

Hartmann’s book is a beautiful history of an ugly idea: that greed is good and uncontrolled greed is better, even if it leads to mass misery.

Squeezed into this thin volume is a huge amount of I didn’t know that! info that’s both horrifying and weirdly fun. I didn’t know that George W. Bush’s Medicare Modernization Act of 2003 resulted in the quiet privatization of nearly half of Medicare’s services. Yow!

Hartmann’s most original contribution is to posit that the antidote for neoliberalism’s poison is not a new New Deal, but rather Alexander Hamilton’s American Plan. In 1791, at George Washington’s request, Hamilton drafted a guide for strategic tariff protection, government support for jobs and industry, government regulation of products, and direct control of banking.

Hamilton’s American Plan made America rich—and China too. Hartmann dismisses the baloney that China’s manufacturing boom was the result of throwing the economy into the free-market soup. Hartmann was studying in China in 1986 when Chairman Deng and Premier Zhao came down on the side of Hamilton after a two-year fight with Friedmanite economists within the Communist Party.

The losing neolibs had wanted China to take One Big Step and follow the Soviet Union’s shock therapy—that is, jump straight into the freezing waters of totally rule-free markets, uncontrolled international trade, privatization of industry, and shrunken government.

We know what happened: Russia is still in shock—wages and production have shriveled, life expectancy has fallen, while China’s government-guided industry now produces one-eighth of the planet’s goods and services.

And the United States? As Hartmann puts it in a chapter title: America adopted neoliberalism, and all I got was this made-in-China T-shirt.

The neolibs’ useful idiot, pundit Thomas Friedman, praised deregulation as [t]he Golden Straitjacket . . . [which] first began to be stitched together and popularized by British Prime Minister Margaret Thatcher . . . [and] was soon reinforced by Ronald Reagan.¹

Hartmann, a happy-ending kind of guy, tells us how America can unhook the straitjacket, tear off the T-shirt, and escape the neoliberal madhouse.

That’s quite a feat in 192 pages.

Greg Palast, an economist turned investigative reporter, is coauthor of Democracy and Regulation and The Best Democracy Money Can Buy

INTRODUCTION

The Plot to Save the World

Back in 1938, a group of economists and philosophers met in Paris to consider how to save the world from itself.¹ At the time, Mussolini, Hitler, and Franco were turning their nations into fascist concentration camps, while in Russia Stalin was killing millions of citizens he considered disloyal or unreliable, using everything from famine and gulags to firing squads.

After those three European democracies had gone full fascist, and Russia had bypassed democracy altogether to embrace a tyrannical form of communism, the Paris delegates were understandably worried about the future of democratic governance both in Europe and around the world. And the rise of communism and fascism had impacted every one of their lives personally.

The promise of fascism had been law and order, while the promise of communism had been no more hunger and want; all needs are met. Neither had lived up to its promise. And in both cases, economics were at the core of the systems.

Fascist governments embraced their largest corporations so tightly that Mussolini had functionally replaced most of the Italian Parliament with representatives of his fascist corporations.² The fascist theory was that when the business and government sectors operated in lockstep, they’d bring along the people with them.

The Soviet Union, on the other hand, rejected corporate control or even participation altogether, banning corporations outright. The government controlled every sector of the economy, the theory being that when government provided housing, education, and jobs, they’d bring the people along with them.

In both cases, though, the main outcome for the people was a loss of freedom and general misery.

How, these men who’d gathered in Paris asked, could modern democratic government be reinvented so that it wouldn’t be so vulnerable to flipping either fascist or communist? How could a utopian society be created where everybody (or nearly everybody) had maximum freedom, maximum prosperity, and maximum control over their own lives?

And was it possible that economics could be the force that drove the process? Marx, after all, was an economist, as were Mussolini’s main advisers. Who better than economists to invent the world anew?

The idea that the Paris group came up with was straightforward and comprised three main parts.

First, they believed that markets were both accurate and largely infallible: billions of tiny decisions were made in the marketplace of a country every day as consumers and businesses chose which products to buy or sell and which vendors to buy them from or sell them to. There was no way any group of government bureaucrats could second-guess that sort of data/computing horsepower, and, indeed, they believed that the experience of the Soviet Union, which had shattered and then outlawed markets, proved them right.

So, they reasoned, markets should drive everything possible in a society for that society to work with maximum efficiency and the best possible outcomes. Literally everything. Market logic should drive business, of course, with profit being the determiner of winners and losers, but that same market logic should drive decisions in government and even within families.

Second, they believed that democracy was inherently dangerous and needed to be constrained. In a democracy, there was always the risk that the people would vote to disrupt the healthy, normal, near-magic economic order that would result from a free market.

The people might, essentially, vote to take wealth from the rich and give it to themselves; this would disrupt markets so badly that it would render them senseless. Indeed, the Paris economists believed that was exactly what had happened with National Socialism, or Nazism, which relied heavily on a free national single-payer health care system and free education for its support among the populace. Democracy had been too strong in those countries: it led them straight to fascism.

So instead of legislators sitting around and making their best guesses about how society should run, their main job should be to simply get out of the way so that the magical marketplace could drive all the major decisions. Democracy was fine when it came to deploying armies and police forces, or courts to adjudicate business disputes, but it needed to be blocked from interfering in moving income or wealth in any way not dictated by the marketplace.

Market forces driving all political decisions would, the Paris group believed, even end war. If governments were converted from active agents of the will of their people into passive vessels for capitalism to do its magic, the countries of the world would be so busy trading with each other that they’d never want to destroy everything with warfare.

Third, these idealists had an answer for the inevitable question: If the government isn’t going to decide what’s legal and what’s not, what’s acceptable behavior in both the marketplace and the public square, then who should?

If democracy were to be so hobbled that it could no longer interfere in the normal and healthy functioning of a nation, what would replace it as the arbiter of right and wrong?

Their answer was straightforward. Humans, they believed, had developed—over thousands of years of trial and error—a natural moral order with its own set of rules. Everybody, for example, knew that it was wrong to steal and wrong to kill.

So instead of regulating businesses so that they or their executives couldn’t steal from or kill their customers or workers, let the free marketplace just single out, shame, and make examples of them when they did.

As thefts or deaths were exposed by