What happened in the mid 1970s? – Editor
We thank Stephen Tardrew for providing the graph below. So what happened in the mid 1970s? In a nutshell, neoliberalism began to take hold.
This graph shows the point in recent U.S. history where, after the post War period where social equity was high, a growing disparity of wealth and income began. It is the point where people in the U.S. accepted the ‘greed is good ethos’ that flows from Milton Friedman’s reworking of economic models after the economic mainstream, in the wake of the oil shock and stagflation, concluded that Keynesianism does not work.
This false economic analysis was accepted by president Ronald Reagan and entrenched into what is now called neoliberalism. Which incidentally has nothing to do with liberalism as a social philosophy. The move to neoliberalism also occurred in the United Kingdom under PM Margaret Thatcher.
Australia retained a more progressive economic model until the Keating era, And now Paul Keating himself has said that Australia’s turning in the direction of neoliberalism (which he enthusiastically supported at the time he was Treasurer and PM) in hindsight was a mistake.
The problem with gross domestic product is the gross bit. There are no deductions involved — all economic activity is accounted as if it were of positive value. Social harm is added to, not subtracted from, social good. Thus a train crash which generates £1bn worth of track repairs, medical bills and funeral costs is deemed by this measure as beneficial as an uninterrupted service which generates £1bn in ticket sales. — George Monbiot