The failure of neoliberalism in a post-pandemic world

By Moustafa Youssef

More than ten years ago, during one of San Diego’s warm winter evenings, I  had a long discussion with an old friend of mine who works as a consultant at NASA, and as an executive in one of the major high-tech companies, about the future of technology industry in the United States and the rest of the West. It was a somber conversation, as he told me that the flames of globalization had reached his colleagues. Nearly 30,000 engineers and programmers had lost their jobs in companies such as HP and Qualcomm and were replaced by engineers located in China and India. The CEO of a Fortune 500 company fired more than ten thousand engineers with a compelling reason – the salary of an engineer in China or India represents less than 8% of the salary of an engineer in Silicon Valley. Accordingly, the CEO was rewarded with a gift of $150 million on the restructuring plan. This absurd scene did not cross the minds of many who have read Milton Friedman, who made a tremendous impact on influencing public opinion on the importance of global trade liberalization.

Structural Problem

When the globalization train set off, there was unprecedented publicity from the media and endless support from international institutions such as the International Monetary Fund “IMF”, World Bank, World Trade Organization “WTO”. All these international bodies, TV channels and international newspapers preached to the world, promising unprecedented economic growth for the West and generous loans to help third world countries that are labor-intensive achieve high growth rates. All this propaganda did not result in any added value. The falsely promised fruits of this growth did not equally manifest in all sectors of society- unlike what globalization theorists and advocates promoted. In the United States and the rest of the Western industrialized countries, massive profits have been limited to a very narrow category – the giant investors and senior executives – while in developing countries and the rest of the poor countries, the powerful, the privileged, the corrupt politicians and military generals reaped all the fruits. Unfortunately, income and wealth inequality continue to widen globally.

An unholy alliance between corruption, tyranny, and billionaire tycoons 

The richest in the United States, less than 0.25% of the population, make 80% of political donations in the country. Likewise, the multinational companies that were the first beneficiaries of globalization in its brutal form of merciless capitalism, continuously contribute 10 times as much in election campaign contributions than what labor and non-profit organizations spend on election campaigns. Naturally, the agendas of politicians match the agendas of these companies, and laws that are in the interest of the globalized economy are passed, despite all the cries of sociologists and environmental advocates. This explains the International Monetary Fund’s insistence that the agreements it enters into with governments are not international agreements and do not require the approval of the parliaments of these countries, and requires confidentiality of these agreements, until the complete approval of these agreements that serve the agendas of multinational companies and the governments that revolve in their orbit. To understand the necessity of this secrecy, we must study the reasons for Penny Goldberg’s resignation from her position as chief economist for the World Bank, sparking an international scandal.

The bank refused to publish a research paper analyzing the relationship between grants and loans provided to third world countries and the surprising inflated bank accounts of these officials in their offshore tax havens. The research was then published on the website of the University of Copenhagen (“Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts”) to demonstrate the corruption of these international organizations and their cover-up of systematic looting. This is just the tip of the iceberg that explains the systematic and institutional corruption by the two largest international financial institutions.

Inevitable post-pandemic changes 

We all need alternatives focused on the independent need of each country to produce basic supplies of food, medicine, and many other essential commodities. Reliance on other countries to produce basic commodities has proven unsuccessful in emergencies, as we have witnessed recently during the intensification of the pandemic. Domestic production processes must be strengthened, and national industries encouraged. We expect to not only see a change in the travel and entertainment industries, but also structural changes in the labor market and academic specializations. To learn from our mistakes, fundamental changes in international trade and customs protection laws are needed in order to protect national and local industries and encourage local businesses. This should in turn lead to decreasing unemployment rates and minimizing risks of dependency on external resources and imports.

On the threshold of a new future

An intense battle and a major conflict are expected to take place in the coming months, after the end of the pandemic, and the gradual return to normal life. On one side there are the promoters of globalization- the populist right, authoritarian dictatorships, the sponsors of military coups, multinational corporations, international institutions -with their evident corruption- and the rest of the international corruption system with their wealth and – at times – misleading media. Meanwhile on the other side there are the supporters of the human-economy, defenders of the environment, social justice and democracy, with their insistence on supporting the noble human values. Let us look towards a future in which freedom, brotherhood and fairness are realized, and where equality and equity govern our everyday lives.

Moustafa Youssef is the Director of Global Development Studies Center (GDSC)

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Foreign Policy News is a self-financed initiative providing a venue and forum for political analysts and experts to disseminate analysis of major political and business-related events in the world, shed light on particulars of U.S. foreign policy from the perspective of foreign media and present alternative overview on current events affecting the international relations.

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