 Hi, this is Professor Gerald Friedman, Department of Economics, University of Massachusetts, in Amherst. And we're here to talk about the neoliberal era, which started in the mid to late 1970s. It's usually attributed to Ronald Reagan. It actually started under Jimmy Carter. And it's continued down to the present day, although the current crisis, we could see as a logical consequence of the neoliberal era. The policies of that period led to the crisis. And we would like to think maybe that something different will emerge out of it. Until something different is created, it's not clear that we'll be able to emerge from the current crisis. But let's talk about the neoliberal era from the context of one of its defenders, Ben Benanke, head of the Federal Reserve of the United States. Economist trained in MIT, nice guy. And Benanke has been trying hard to defend what increasingly is clearly indefensible, the policies that led to the crisis. As we talked about last time, he tried to score him out of the crisis saying it was all China's fault. It doesn't really wash, doesn't make sense. Before the crisis came on, he went around talking about the great moderation, pointing out that the variance in economic growth rates from quarter to quarter had dropped dramatically in the 1990s and the early 2000s. The great moderation, inflation was down, economic growth was moving along at a more steady pace, and while he tried to acknowledge that there were other things that might have gone into it, he clearly wanted to take credit for this. He wanted to give the new policies of the neoliberal era, the monetary policies of restricting, concentrating on fighting inflation, letting unemployment rates vary more, accepting higher unemployment, free trade, deregulation. He wanted to argue that those policies had caused the great moderation. In fact, the great moderation doesn't look as moderate when you include the current recession. When you add to the period that Benanke is looking at the next few years, then the neoliberal era doesn't look like one of moderation. Nor does it, is that moderation to be seen as such a success? Yes, we had a huge expansion of foreign trade. Yes, we had a great decline in unions, deregulation really made a difference. Inflation rates came down, no question about that. The neoliberal era really was what it was advertised to be, increased globalization, weaker position for working people. Was that really such a good thing? Profits did fine. Profit rates actually are higher now than any recorded data that we have. Corporate profits are doing fine. Behind that is something interesting though. While corporate profits overall went up in the neoliberal era, they went down for domestic non-financial businesses. They went up for financial businesses who were taking as close to half of total corporate profits right before the crash. And they went up for foreign operations of American businesses. American businesses increasingly earning its profits outside of what used to be seen as the core activities of Americans making things and doing things in the United States. American businesses are able to make profits regardless of what's happening in that core area of employing people. They make money, as Dan and I were talking about, by employing people in China. And what do you have in the United States? You have a few designers and a few engineers and the CEO. They design things, they plan things and they have people all over the world making them and the profits come back here. So that's one aspect. Profits have been fine, but in a different way. In every other way, the neoliberal era looks bad. Unemployment rates were higher in the neoliberal era than before. Even without the recent crisis, even before 2007, unemployment was higher. Wage growth slowed to a halt while CEO wages and salaries and profits soared so that CEOs now make 500, 700 times as much as workers in American businesses, up from 30. Unemployment duration rose. Economic growth slowed compared to where we would be if we had stayed on the trend from the pre-neoliberal era. Our GDP is 20% lower now than it would have been if we had remained on the trend from 1947 to 78. If we had just continued on that trend growth rate, we would have 20% more stuff to consume. We would be much wealthier people and the income distribution would be much more egalitarian. So for normal Americans, it would not only be 20% more, but it would be more than that because we wouldn't have had the redistribution up to the 1% that has happened in the neoliberal era. So, moderation, maybe, maybe not on every other dimension. If there was moderation, we paid a very steep price for it. The neoliberal era was great for the 1%, lousy for everybody else. So, thank you very much and have a nice day. Bye bye.