The Birth of Neoliberalism: How Milton Friedman Tricked the Hippies into Loving Ronald Reagan

It was a devil's bargain

At 2 am on August 16, 1969, Joan Baez, joined by her bandmate Jeffrey Shurtleff, stood on a stage in front of half a million concertgoers and sang “Drug Store Truck Drivin’ Man,” a song written by Gram Parsons and Roger McGuinn of The Byrds.

Shurtleff introduced the song by saying “We would like to sing this song for the governor of California, Ronald Reagan.”

The song began:
“He’s a drug store truck drivin’ man,
He’s the head of the Ku Klux Klan…”

This was the Woodstock Music and Art Fair that Baez and Shurtleff were singing at. Held at Max Yasgur’s dairy farm in Bethel, NY on August 15-18, 1969, and attended by half a million people, the event was the pinnacle of the wild, tumultuous, radical, revolutionary, transformational, anti-establishment, anti-war peace movement, civil rights changing, and peace and love 1960s.

And Ronald Reagan, who Shurtleff dedicated the song to, and at the time was governor of California, would eleven years and a few months after Woodstock, become president of the U.S.

Reagan’s election ushered in a paradigm shift, the age of neoliberalism. And leading up to Reagan’s election, the economist Milton Friedman, whose notions on trickle-down economics (derided as voodoo economics by Reagan’s vice-president, George H.W. Bush) were the heart and soul of Reagan’s legacy, tricked many of the very same hippies who attended Woodstock to adopt the idea as their very own.

And by doing so, neoliberalism took hold—and still hasn’t let go to this day.

Neoliberalism advocates freedom of expression, free market economic policies, and the political values of an open society. Foundational to the neoliberal belief is that the free market is the best arbiter of society, and free enterprise can and should replace many functions provided by government entities.

The origins of neoliberalism came out of the concern of the creeping totalitarian regimes of Hitler’s fascism in Germany and Stalin’s communism in the Soviet Union.

Friedrich Hayek, an Austrian economist who fled to Britain to escape the Nazi regime in Austria, felt that government planning crushes individualism and would eventually lead to totalitarian control.

His 1944 book, The Road to Serfdom, was widely read, especially by the wealthy, who, concerned by what they believed to be the socialism of FDR’s New Deal, sponsored a think tank started by Hayek.

On emigrating to England, Hayek taught at the London School of Economics; in addition, he taught at the University of Chicago, home to the Chicago School of Economics, the academic home of Milton Friedman. It was Friedman who coined the term neoliberalism.

Through their academic association, Hayek and Friedman became friends and influenced one another.

There was actually a touch of idealism in the ideas of Hayek and Friedman, and it was this idealism that allowed Friedman to trick the hippies: Hayek and Friedman felt that humans, left to their own devices, can thrive to their greatest aspirations.

Most of the 60s was about freedom and being able to make free choices: free love, freedom to protest against the Vietnam War, freedom for people of all races to be equal, freedom to live a life of one’s choosing, freedom to be anti-establishment, and more.

And many songs of the 60s and 70s were about freedom: “Me and Bobby McGee,” by Kris Kristofferson; “Freedom,” by Richie Havens; “I’m Free,” by The Who; “Like a Rolling Stone,” by Bob Dylan; “Free Bird,” by Lynyrd Skynyrd; and many more.

Freedom was the anthem for the countercultural generation: the folks of this generation wanted to be free, without strictures, and without authority telling them what to do.

A popular phrase of the time was “do your own thing.”

And Joni Mitchell, in her landmark song “Woodstock,” wrote lyrics that stated “got to get back to the land and set my soul free.”

Milton Friedman saw this and figured out how to language his ideas to make them appealing to the hippies.

His concepts appealed to some of the people coming of age during the free-wheeling 1960s, as it resonated with the ’60s ideals of freedom, do your own thing, the establishment sucked, and the government couldn’t be trusted.

The neoliberal philosophy was a new way and a radical departure from how things were done, giving people—and businesses—the freedom to choose.

At first blush, it felt empowering, even egalitarian, to suggest that everyone had the free choice to do what they wanted.

It fit right in with the prevailing motif of the 1970s, a decade that the writer Tom Wolfe deigned “The Me Decade,” in honor of the unleashing of the baser narcissistic survival drives that gave permission to engorge at the altar of a malignant capitalism.

Friedman further pushed his philosophy with his magnum opus, his 1970 book Free to Choose: A Personal Statement, with a concurrent 10-part PBS series.

The book and television series promulgated Friedman’s philosophy that the free market engenders prosperity, and that it can solve problems where other approaches have failed.

His book and PBS series were the Bible for all libertarian thinkers everywhere. As the hippies began coming of age in the 1970s, and with 18 years olds having been granted the right to vote in 1971, this young generation was feeling empowered, and also intoxicated on the substance of this new idea.

And it all came together when the drug store truck drivin’ man of Woodstock, Ronald Reagan, became president.

Reagan had an infamous saying, “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”

In certain ways, this was anti-establishment talk emanating from Reagan: he was saying the government was not your friend.

During the course of the 1970s, there were certain political revelations that reinforced the idea that government was not your friend.

Richard Nixon had his Watergate scandal; there also was the Pentagon Papers, and in 1975 there were explosive revelations about the role the CIA, FBI, National Security Agency, and the Internal Revenue Service played in covert operations both in the U.S. and abroad over a period of years.

Trust in the government was at an all-time low, and Reagan’s election of 1980, and his belief that government was not your friend, was the perfect expression of that.

Reagan’s election victory in 1980 was a landslide over Jimmy Carter, with Reagan winning 91% of the electoral college vote, which was bested by his 1984 reelection victory over Walter Mondale, when Reagan won 97% of the electoral college vote, with Mondale winning only his home state of Minnesota.

Part and parcel of Reagan’s winning totals were members of the 1960s generation, who saw in Reagan a kindred spirit.

The so-called Reagan Revolution brought a paradigm shift in economics, bolstered by the neoliberal theories of Milton Friedman. Core to the tenet of neoliberalism and getting government out of the way was cutting taxes, especially for the wealthiest.

That’s why Friedman’s economic ideas were called trickle-down economics, because the idea was pushed that if you cut the taxes on the wealthy, then the benefits would trickle down to everyone else.

Friedman’s trickle-down ideas were a radical experiment never done before. But thanks to the affable and telegenic Reagan, with his folksy charm, it was successfully sold to an unsuspecting public.

The great majority of people were buying—witness Reagan’s landslide victories.

There was one flaw in this—human psychology. Greed and avarice have always been a part of the psychological makeup of humans, rooted deep in the reptilian brain. And left unchecked, with no restraints, greed and avarice rear their ugly heads time and time again.

With free market as savior now being the guiding philosophy, there were less and less guardrails on human behavior to protect against greed and avarice.

When you combine the base human psychological traits of greed and avarice with a philosophy that allows for people to do whatever they want, what can you expect?

Oliver Stone summed it up perfectly in his film Wall Street, when the character Gordon Gekko uttered these famous words: “Greed is good.”

It was a time of a gold rush mentality that said goodbye to restraints that buffer the worst characteristics of humans.

It was as if the words of Karl Marx—“Workers of the world unite! You have nothing to lose but your chains!”—had been appropriated by the neoliberal gods to state that it was the corporations of the world who needed to lose their chains.

And lose their chains they surely did, to the mutant strains of neoliberalism, which unleashed a predatory and unfettered capitalism.

The financial crash of 2008 was an implosion that was the end result of three decades of this malignant philosophy. In the aftermath of the crash, when reforms could have been put in place to cease the plundering by the banks and wealth class, nothing changed.

There was no good reason for neoliberalism in the first place. From 1945 to 1979, all income groups in the U.S. saw their income increase at roughly the same rate, and every income group saw their share of the national income remain roughly the same.

The poorest Americans saw their incomes double while the richest Americans saw their incomes double as well.

In the years since 1980. the poorest Americans have barely seen their incomes rise while the income of the wealthiest Americans have skyrocketed. All the benefits of economic growth have gone to the wealthiest, and in so doing, have given rise to massive levels of inequality.

Now, massive income and wealth inequality are the norm.

The 50 richest Americans, with a worth of $2 trillion, hold almost as much wealth as half the country. In addition, the top one percent of Americans have a combined net worth of $34.2 trillion, while the poorest 50 percent—about 165 million people—hold just $2.08 trillion, or 1.9 percent of all household wealth.

At the same time, wages have stagnated over the last few decades, while worker productivity has increased. When there’s an increase in productivity and no concurrent rise in wages, the end result is more profits for the corporate owners and shareholders.

This is trickle-up economics, with wealth flowing upwards from the middle and working classes to the upper strata of society. It’s extractive capitalism at its finest.

The hardest hit is the millennial generation, those born between 1982 and 2000. They control just 4.6 percent of U.S. wealth, even though they are the largest segment of the workforce, with 72 million millennials working.

On top of this, most are saddled with large student debt: More than 43 million borrowers hold over $1.7 trillion in student loans, a sum that over the past 13 years has more than tripled, exceeding what Americans owe on credit cards or auto loans and trailing only mortgages.

Here’s some other alarming numbers: Income for young folks has increased $29, adjusted for inflation, since 1974—and that’s not per year, that’s the total, over the decades; college tuition has gone up over 500% since the 1980s; homes are on average 400% more expensive than they were 40 years ago; health care costs have exponentially increased; and more than half have credit card debt.

That’s why the phrase “Ok boomer” is a pejorative thrown out by millennials and Gen Zs at the hippies of the 1960s: because they bought into the neoliberal nightmare and helped bring it to fruition.

But the hippies bought into it because they got sold a bill of goods. They were told this would allow them to have their freedom forever. They were co-opted.

Fortunately, the tide has finally turned. Over 40 years of neoliberal devastation has shown what a purgatory trickle-down economics is. Wealth inequality, climate change, the Covid pandemic, the potential collapse of democracy, and other crises are a direct result of neoliberal policies.

The great majority of people know this.

Even Joni Mitchell, in writing “Woodstock,” knew this. The last verse of the song goes,

“We are stardust, we are golden
We are caught in the devil's bargain
And we've got to get ourselves
Back to the garden.”

It was truly a devil’s bargain the 1960s generation made.

The time is upon us to end this devil’s bargain, for once and for all.