Bill Clinton hearts the neoliberal revolution
Your weekly excerpt from one of my books. This week: "The Hidden History of Neoliberalism: How Reaganism Gutted America and How to Restore Its Greatness"
Bill Clinton hearts the neoliberal revolution
Texas billionaire Ross Perot jumped into the race to take on the two neoliberal “free traders” George HW Bush and Bill Clinton. If America signed NAFTA, Perot warned, there would be “a giant sucking sound from the south” pulling jobs out of America.
Worse, Perot warned, this would eventually become a national security issue: when we reached the point where we couldn’t make an aircraft carrier or missile without parts from China or another foreign country, our ability to defend ourselves would be severely compromised.
“If we keep shifting our manufacturing jobs across the border and around the world and deindustrializing our country,” Perot said, “we will not be able to defend this great country...”[lxxxvii] And today, as CBS News reports, we’re there: “The hellfire missile – launched from helicopters, jets and predator drones – has been a critical weapon in the war on terror. But the propellant that fires the missile must be imported from China.”[lxxxviii]
The 1992 election represented the first American revolt against neoliberalism: Perot took almost 20 percent of all votes. Bill Clinton was elected with only a 43 percent plurality of the vote.
Perot’s movement aside, by 1993 the Democratic Party had largely embraced a slightly-softer (still allowing for public schools and some social programs) form of neoliberalism.
The American and British groupthink consensus across major political parties was that Freidman and his Mont Pelerin buddies were right: the rich should rule the world, labor unions were a pain-in-the-ass, and government regulation simply stifled innovation.
Everything that could be privatized should be, and stockholder returns should be the only metric business used for decision-making, discarding “old” notions of corporate responsibility to workers, customers, communities and even the institution of the corporation itself. If increasing profits and thus dividends meant screwing workers, producing substandard products, demanding huge tax breaks from or polluting communities, or even breaking up and selling off the company, so be it. Even the Supreme Court was now onboard, having fully embraced Robert Bork’s notion that profits were the singular North Star.[lxxxix]
Reagan’s destruction of the union movement added a critical problem for the Democrats: unions had been their major funding source. Democratic consultant Al From came up with the idea of the Party embracing corporate America and neoliberal ideology to make up for the lost union money; he traveled to Arkansas to pitch it to Governor Bill Clinton, who agreed to run for president on that platform.
From later (2013) wrote a book about the experience and the need for the Party to run and govern on the basis of “economic centrism, national security, and entitlement reform…”[xc]
Democrats had now joined Republicans in the back pocket of American business, although to differentiate themselves they embraced “clean” industries like banking, insurance and tech, leaving money from the “dirty” industries like coal, oil and chemicals to the Republicans.
Clinton embraced with gusto the neoliberal idea that “free trade” was the ultimate way to end wars between nations. In December 1996 New York Times columnist (and billionaire) Thomas Friedman (no relation to Milton) laid out what came to be called The McDonald’s Doctrine, positing that no two nations who each had a McDonald’s would ever go to war.[xci] (In a more recent column, he revises the idea from the Golden Arches Theory of Conflict Prevention to the Dell Theory of Conflict Prevention.)
After all, when nations are economically interconnected, don’t they have an incentive to not bust up that relationship with something as gross as military conflict?
The idea was an idiocy on its face then and still is today, but it flew. Books were published, articles written, speeches given. Free trade agreements flowed like champagne, while America continued to hemorrhage good paying manufacturing jobs and slid towards becoming a “Do you want fries with that?” service economy.
Clinton also took a meataxe to the nation’s welfare programs, apparently convinced of the conservative message that even survival-level benefits caused laziness -- or he’d decided that buying into that myth was politically useful.
If that premise were true, by the way, it would be a great selling point for taxing all inheritances at 100%. After all, who would want to inflict laziness on their children by leaving them enough money that they don’t need to work?
But, of course, it was just another idiocy promoted by the very rich (who will pass along their wealth to their children without worrying it’ll cause laziness) to justify cutting tax-funded programs for “lower class” folks, particularly people of color, so they can keep their tax dollars in their money bins.
Nonetheless, Clinton proudly declared in a State of the Union speech that he had brought about “the end of welfare as we know it.”
Meanwhile, the Soviet Union had undergone a controlled demolition, guided by the hand of Mikael Gorbachev, who genuinely hoped to turn his nation from a corrupt communist oligarchy into a democratic-socialist success story along the lines of the Scandinavian countries.
Gorby explicitly hoped for Russia to emulate Sweden and become a “socialist beacon for the world,” as described by Marshall Pomer and Lawrence Klein in their book The New Russia: Transition Gone Awry.[xcii]
In December 2015, Louise and I attended a banquet in Moscow with former President Gorbachev, President Putin and a few dozen others. Gorbachev, who had spent hours with my friend and colleague Leila Connors (we made several environmental documentaries together, along with Leonardo DiCaprio) for her movie The Arrow of Time, still hoped for the best.
“Many of these ideas might appear Utopian or unachievable in the context of the present political order,” he’d told Leila a few years earlier when the movie premiered in Switzerland, “and that is precisely because they address the roots of the current issues.”
Nonetheless, when I saw him he looked like a broken man. His project to create a Scandinavian-style democracy had been hijacked by Bill Clinton and other leaders of the G7 countries at a meeting of that group in 1991 when they explicitly told him he must embrace neoliberalism if he wanted western loans to help with his transition project.
“Their suggestions as to the tempo and methods of transition,” Gorbachev is quoted in The New Russia, “were astonishing.”
Naomi Klein in The Shock Doctrine quotes the Russian newspaper Nezavisimaya Gazeta, noting at that time that “for the first time Russia will get in its government a team of [neo]liberals who consider themselves followers of Friedrich von Hayek and the ‘Chicago school’ of Milton Friedman.”
After a single year of Friedman’s “reforms,” Klein chronicles the outcome:
“[M]illions of middle-class Russians had lost their life savings when money lost its value, and abrupt cuts to subsidies meant millions of workers had not been paid in months. The average Russian consumed 40 percent less in 1992 than 1991, and a third of the population fell below the poverty line. The middle class was forced to sell personal belongings from card tables on the streets – desperate acts that the Chicago School economists praised as ‘entrepreneurial,’ proof that a capitalist renaissance was indeed under way, one family heirloom and second-hand blazer at a time.”
The country was gutted like a fish, its assets sold off for pennies on the dollar to the men who we now know as “Russian oligarchs,” fabulously rich billionaires who float above the Russian landscape the way Jeff Bezos blasts himself into outer space over America.
In December, 1994 I was working with the German-based international relief organization Salem International and visited their newest project in Kaliningrad, Russia. It brought me face-to-face with the destruction of the Chicago Boys’ neoliberal reforms: vodka was cheaper than potable water, organized crime ran most of the commerce in the city, and the families I visited kept baskets filled with scraps of newspaper next to their toilets to use as toilet paper.
This city, where Immanuel Kant once lived, had disintegrated after its parts had been stripped, monetized and sold off to the highest bidder. Here’s an excerpt from the diary I kept of that trip:
“I landed at about noon on a gray, blustery, raw-cold day in Kaliningrad. ... A once-beautiful old river, now black and fouled with sewage and industrial waste, runs through the city...
Herr Burkhardt took me for an afternoon walk. A cold wind cut through the stone streets, and most of the buildings looked like a typical 19th century (or earlier) European city, although there was no color anywhere. No paint, no signs, no colorful curtains. Everything was gray, from the leaden sky to the grime-covered buildings to the slushy sidewalks and cobblestone streets.
We crossed the river on a long bridge, and walked a few blocks into town, navigating around gaping 2-foot-diameter open manholes in the middle of the sidewalks, opening down into black pools of sewage ten feet below the surface.
The streets were filled with people, bundled against the wind, their faces lined and cracked by weather and hard lives in this dismal place. I saw not a single smile: everybody seemed in a hurry to get somewhere, and few people talked among themselves. ...
Back at Olga’s house, the TV was on in the living room. ...When the show ended, a man’s face filled the screen. He was giving some sort of speech, and his face was twisted with an insane anger. He pounded his fist and shook his finger at the camera, then became soft and soothing in his voice, then began shouting again. He was followed by what was obviously a news anchorwoman, sitting behind a desk, making commentary.
“What’s that?” I said to the room in general.
“Vladimir Zhirinovsky [the extreme right-wing candidate],” said Olga in German. “He’s a candidate in tomorrow’s election, and he said that if he’s elected then we should work more closely with Germany, reestablish our old border with them.”
“Isn’t Poland in between you and Germany?”
“That’s what he means,” Olga said, shaking her head in disbelief. “Get rid of Poland.”
I shivered. ...
Boris Yeltsin won the election and continued his neoliberal reforms with the help of the Chicago Boys, paving the way for President Putin’s rise to power in 2000, finally killing altogether Gorbachev’s Scandinavian hopes. Russia is truly the clearest example of the consequences of full-blown neoliberalism, and Zhirinovsky was their version of Donald Trump, who himself rose to power in America as a backlash against 40 years of somewhat slower and softer neoliberalism here.
Back in America, the zeitgeist of the era was personified by the hot new thing for Democrats to do in the Clinton 90s: make an annual pilgrimage to the World Economic Forum at Davos, Switzerland to rub elbows with the world’s bankers and billionaires. Philanthropy could take care of people’s needs, the neoliberal billionaires asserted, and in his 1996 State of the Union speech Clinton declared, “The era of big government is over.”[xciii]
Taking that theory to its logical next step, in 1999 Clinton signed the Financial Services Modernization Act (FSMA) that unraveled banking regulations dating back to FDR’s Glass-Steagall law that had outlawed the dangerous 1920s practice of banks gambling in the stock or other markets with depositors’ money.[xciv]
Comments on the Saturday Report
Saturday Report 5/9/26 — While the FAA was collapsing, the Transportation Secretary was filming a reality show
Trump’s nuke threat is no surprise. He doubles salivates at the thought of being the first president to shoot a nuke since WWII. That military losses across the Middle East dwarf damage to Iran is the price of hiring people for their physical appearance and sycophancy, not competence. That also explains the chaos that is today’s air transportation industry, and an $$ rather than an FBI (more Burbon?).
~ Tomonthebeach
Standard action for Project 2025. The Administration are diversions to the American implosion. All planned.
~ US Taxpayer
Thanks again, Thom. This reads like an endorsement of every Democratic Socialist one can think of. They (we) are the path forward.
Thank you for this info- it’s becoming really clear why people say “both parties are the same”- one party needs to promote explicit clarity that they are doing a 180 on this -right now- yesterday even better.