Tenets of a neo-liberal democracy

Tenets of a neo-liberal democracy
A neo-liberal democracy is one which the economy is regulated by market
forces. The market is, however, under the government because the
government is the one that comes up with rules that guide the operations
of the market. The government is, however, impartial and none
meddlesome. The main mode of operation is through fair competition and
free enterprise. Thus, neoliberal democracies have no government price
controls, removing trade barriers, deregulation of capital markets, and
general reduction of government influence on the economy through
privatization.
A neoliberal economy has the following five tenets reduced government
spending on social welfare programs, lessening the tax burden,
developing corporate- friendly climate to stimulate growth through a
trickle-down effect, encouraging privatization of all aspects of
society, and letting the free market be the regulator of economic and
social development. This means that the government plays a very small
role in how the society and the economy operate as this is majorly left
to the forces of the economy operating in society.
To begin with, in neoliberal economies, the government does not involve
itself on social welfare programs. These are left to private
organizations, mainly through non-governmental organizations that focus
on social welfare programs, and corporate bodies through corporate
social responsibility. This removes government influence over the
economy because the money collected by the government is used to take
care of larger social and economic issues. This includes providing
proper infrastructure so that businesses can operate in a friendly
environment.
Neo-liberalists argue that government spending on social welfare
activities interferes with the forces within the market. This is because
too much money is availed to the economy which increases spending and
thus, saturates the monetary economy (Tronto, 2013). Too much money in
the economy then increases demand for goods and services and this causes
and increase in commodity prices. Thus, it is argued that government
spending on social welfare programs is a waste of money that can better
be used to improve other facilities that make the market economy
friendlier for businesses to operate.
On the other hand, it is necessary for the government to spend on
social welfare programs so as to empower the society. This is because
freedom that is not backed up by opportunities cannot help anyone.
Instead, only those with strong economic power benefit from the freedom
while the vulnerable remain under their mercy. The corporate engage in
corporate social activities that are aimed at retaining their customer
loyalty and not to help the vulnerable (Tronto, 2013).
The corporate social welfares also do not tackle societal problems such
as healthcare in its totality. This is mainly because they only perform
such activities within communities where they are based, and those
outside such communities cannot benefit (Tronto, 2013). Thus, it is
necessary for the government to get involved in such social welfare
activities as the government can spend money based on each community’s
needs. The government also seeks to have an impact on the whole society
as compared to the corporates’ areas of operation. With this in mind,
it is best for the government to get involved in some social welfare
activities that are extremely crucial and benefit the society by
targeting the most pressing needs.
Secondly, neo-liberalists argue that governments can provide more money
to the citizens through lowering of tax burdens. This is because taxes
push up the prices of commodities and thus, people have to spend more
money on single items. This reduces the availability of money to the
citizenry as much of the income is spent on the most essential goods and
services. The non-essential items take a back seat as the money
available can only be spent on the most necessary items.
However, if the government reduces that tax burden, there will be more
money available for citizens to spend. This has an effect of reduced
government spending on such issues as healthcare because people can then
afford most of the things in the market. Corporate can also get more
involved in investments that involve social welfare and projects that
can benefit the society, which will reduce demand for money from the
government. This is because there is increased business.
On the other hand, reducing taxes has an effect on government income.
This is especially because in neo-liberal economies, governments invest
very little in the corporate sector. Reduced government income can
affect government spending and this may affect the vulnerable who depend
on government social welfare programs. It can also lead to high
inflation due to too much money in the economy which pushes product
prices up.
Neo-liberal democracies also encourage better corporate and business
friendly climates so as to stimulate economic growth through
trickle-down economics. Business friendly climates attract investments.
This leads to increased job opportunities and thus, increased spending.
Increased income for citizens also increases the government’s tax base
and thus, the government has more money to spend on projects.
Business friendly climates include reduced government interference by
letting the market forces regulate the economy, reduced tax burdens,
better infrastructure, and lower trade restrictions. All these attract
investments from multinational corporations and local investments. These
require labor and thus, more employment opportunities. This leads to
increased ability to spend, and more people are able to open up
businesses. This trickle-down effect improves the overall economy as
citizens have better standards of living. Increased spending also
increases government revenue, which leads to increased funding for
government projects.
However, improved business climate in most cases only benefits large
corporate which benefit from better economies of scale. This can lead
small scale entrepreneurs out of business as they are unable to benefit
from the economies of scale. In the long run, the small business owners
are pushed out of business because they are unable to compete with large
corporations favorably.
Neo-liberal democracies also have increased privatization of business.
This leads to reduced government involvement in direct business
transactions. Privatization is said to save the government form spending
a lot of money. There is also increased efficiency in private companies
as compared to government-run companies (Tronto, 2013). This is due to
better accountability systems with functioning checks and balances
systems. Privatization also allows more flexibility in how businesses
are run and managed because there are fewer protocols, and decision
making is localized. This allows companies to adapt to market changes
quickly thus, maintaining their relevance and business.
However, as much as privatization is good, it comes with numerous
challenges. Top of the list is reduced quality of goods and services.
This because corporate are more concerned about profits and they use any
means possible to reduce costs and increase profits. Privatization also
leads to reduced staffing and, this renders many people jobless.
Additionally, private entities do not have as much flexibility as
imagined. There are protocols and rules operation that must always be
enacted to address any changes and this lowers decision making and
flexibility.
Neo-liberal economies allow free market trade to regulate economic and
social development. The factors of the economy determine market trends
and monetary circulation. This has an effect of the social and economic
development of the society because it develops along those market
margins. This, however, makes the markets unpredictable because there
are no external forces of control. This unpredictability may influence
spending patterns of individuals and thus, affect the circulation of
money.
Government control on the free market increases stability and market
security and people are able to plan how they will spend their money
thus, better economic and social welfare. Free trade should also be
controlled so as to reduce chances of corporate to exploit the citizens
(Tronto, 2013). This also reduces chances of corporate entities from
manipulating the forces of the economy which can affect the social and
economic development of the society.
Government subsidization of sport facilities presents contradictions
because it can lead to increased tax burden and corporate welfare. For
example, the charlotte stadium that was government funded led to a
classic case of contradictions. This is because the local government had
to raise funds through increased taxes so as to fund the project. The
sports facility is built to benefit the community through improved
sports facility (Wilson, 2013). However, increased taxes put pressure on
citizens, and this reduces their spending.
On the other hand, such projects are advantageous to the community
because they facilitate increased business opportunities (Wilson, 2013).
This is because they are used for holding sports activities that attract
huge numbers of people who spend their money on local businesses. Thus,
traders have opportunities to increase their revenues by directly
dealing with users of the stadium. This leads to corporate welfare
through reduced pressure to spend money on improving the stadium
facilities, but increases their spending on taxes. The corporate
entities also benefit from increased expenditure on their goods and
services to users of the stadium.
Additionally, better sports facilities also attract usage of the
facility. This leads to sharpening of sports talent. Considering that
sports are a source of employment for many people in modern day, this
will lead to more employment opportunities for members of the community.
This leads to improved living standards and thus, more spending powers,
which lead to increased circulation of money in the local economy.
The local community can also benefit from increased salary caps because,
the stadium facilitates improved skills. Thus, sports people are better
able to negotiate for increased salary caps because their increased
professionalism leads to higher demand of their skills. This may not,
however, be beneficial to corporate entities that invest in sports
welfare because it can increase their spending on salaries for sports
people. This while keeping in mind that the goal of businesses is to
reduce costs and increase profits. However, the corporate entities can
be able to attract better talent, which makes them competitive, and this
generates more revenue through ticket sales and sale of branded
merchandise.
Improvement stadium facilities will also require a contribution of funds
from the private and public sector. This will lead to revenue sharing
based on investments contributed into the project. This is a positive
outcome because both the government and the private sector will have
more sources of revenue. Increased revenue leads to improved provision
of services primarily to the local community.
Additionally, there is better revenue sharing though direct expenditure.
The hotels and restaurants around the facility become the biggest
beneficiaries due to a rise in demand for their services. This increases
their revenue and thus, more taxes for the local authority. This sharing
of revenue is an advantage to both entities as they increase their
revenue generated by the facility. Thus, the stadium will benefit
corporate entities as well as the local authorities through increased
sources of revenue. Considering that the hospitality industry in North
Carolina employs about eleven percent of the state’s workforce,
increased revenue in the sector can lead to increased employment
opportunities. This leads to an improved economy due to economic
empowerment of the society.
Given the importance of sports in modern society, it is evident that
sports and society enjoy a mutual benefit relationship. This is because
sports directly employ sports men and women from the society and this
increases employment opportunities to the traditional ones. Sports also
lead to increased employment to industries that directly serve the users
of sports facilities. Such users increase demand for services offered
especially by the hospitality industry which can expand its operations
(Wilson, 2013). This requires more personnel who are directly employed
by the industry to serve the increased demand.
In conclusion, subsidies by the state authorities on sports facilities
are necessary to the city that they are located. This is mainly because
the facilities improve revenue generation to the city while employing
more people. Politically, subsidies can be unfavorable especially in
cases where they lead to increased taxation. However, the mayor of
Charlotte can get support for the project through organizing social
gatherings that emphasize on the economic and social gains of the
project. It is also common knowledge that school education does not
always lead to success. In modern neo-liberal democracies, talent is
essential in success. Therefore, sports talents can be natured in the
NFL stadium, and this creates opportunities for talented young people to
use their talents to improve their lives.
Improved sports facilities are thus, valuable because they serve those
who go to school and those who do not. A better sports facility will,
therefore, be an advantage to the whole society. The local authority can
also use incentives to increase the chances of a team staying in the
facility. This can also be done by improving the stadium on a constant
basis, so as to retail teams.
References
Tronto, J, C. (2013). Caring Democracy: Markets, Equality and Justice.
New York: NYU Press.
Wilson, J. (20/02/2013). “NC Restaurant Group Decries Proposed tax for
NFL Stadium” Charlotte Business Journal. California: American City
Business Journals.
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