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"Inequality for All"
The Practical Choice: Not American Capitalism or 'Welfare
Robert Reich Become a fanThe Practical Choice: Not American Capitalism or 'Welfare State Socialism' but an Economy That's Working for a Few or Many
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It was a questionable assumption to begin with, relying to some extent on our collective amnesia about the first three decades after World War II, when tax rates on top incomes in the U.S. never fell below 70 percent, a larger portion of our economy was invested in education than before or since, over a third of our private-sector workers were unionized, we came up with Medicare for the elderly and Medicaid for the poor, and built the biggest infrastructure project in history, known as the interstate highway system.
But then came America's big U-turn, when we deregulated, de-unionized, lowered taxes on the top, ended welfare, and stopped investing as much of the economy in education and infrastructure.
Meanwhile, Canada and Europe continued on as before. Soviet communism went bust, and many of us assumed European and Canadian "socialism" would as well.
That's why recent data from the Luxembourg Income Study Database is so shocking.
The fact is, we're falling behind. While median per capita income in the United States has stagnated since 2000, it's up significantly in Canada and Northern Europe. Their typical worker's income is now higher than ours, and their disposable income -- after taxes -- higher still.
It's difficult to make exact comparisons of income across national borders because real purchasing power is hard to measure. But even if we assume Canadians and the citizens of several European nations have simply drawn even with the American middle class, they're doing better in many other ways.
Most of them get free health care and subsidized child care. And if they lose their jobs, they get far more generous unemployment benefits than we do. (In fact, right now 75 percent of jobless Americans lack any unemployment benefits.)
If you think we make up for it by working less and getting paid more on an hourly basis, think again. There, at least three weekspaid vacation is the norm, along with paid sick leave, and paid parental leave.
We're working an average of 4.6 percent more hours more than the typical Canadian worker, 21 percent more than the typical French worker, and a whopping 28 percent more than your typical German worker, according to data compiled by New York Times columnist Nicholas Kristof.
But at least Americans are more satisfied, aren't we? Not really. According to opinion surveys and interviews, Canadians and Northern Europeans are.
They also live longer, their rate of infant mortality is lower, and women in these countries are far less likely to die as result of complications in pregnancy or childbirth.
But at least we're the land of more equal opportunity, right? Wrong. Their poor kids have a better chance of getting ahead. While 42 percent of American kids born into poor families remain poor through their adult lives, only 30 percent of Britain's poor kids remain impoverished -- and even smaller percentages in other rich countries.
Yes, the American economy continues to grow faster than the economies of Canada and Europe. But faster growth hasn't translated into higher living standards for most Americans.
Almost all our economic gains have been going to the top -- into corporate profits and the stock market (more than a third of whose value is owned by the richest 1 percent). And into executive pay (European CEOs take home far less than their American counterparts).
America's rich also pay much lower taxes than do the rich in Canada and Europe.
But surely Europe can't go on like this. You hear it all the time: They can no longer afford their welfare state.
That depends on what's meant by "welfare state." If high-quality education is included, we'd do well to emulate them. Americans between the ages of 16 and 24 rank near the bottom among rich countries in literacy and numeracy. That spells trouble for the U.S. economy in the future.
They're also doing more workforce training, and doing it better, than we are. The result is more skilled workers.
Universal health care is another part of their "welfare state" that saves them money because healthier workers are more productive.
So let's put ideology aside. The practical choice isn't between capitalism and "welfare-state socialism." It's between a system that's working for a few at the top, or one that's working for just about everyone. Which would you prefer?
ROBERT B. REICH's film "Inequality for All" is now available on DVD and blu-ray, and on Netflix. Watch the trailer below:
Eurosocialists - European socialists & socialism history
Eurosocialists - European socialists & socialism history
Eurosocialists - European socialists & socialism historySocialism aims to banish evils of capitalist economy
Socialism aims to banish evils of capitalist economySocialism may have lost its sheen with the unrelenting wave of democratic revolutions during the last part of the 20th century, but socialism history shows that the ideals behind it never left the consciousness of many people who find reasons to complain about the failures of a capitalist market economy in their own experiences. The bastions of democracy like the US and the EU have lately slipped off the mark and their own peoples are voicing reforms that echo socialist sentiments. One need only look at the “Occupy Wall Street” movements sweeping across the US to see a marked desire to instill social responsibility among capitalists that have proven to hold the nation by the neck.
Looking for an exact all-embracing definition of the philosophy is futile as there are dozens of flavors resulting in various socialist political movements since the concept first became recognizable as such in the late 19th century.
Having said that, there are fundamental core themes common among European socialists. These include a general bent towards social equality, responsibility and economic security which private ownership and capitalist control have largely ignored in the pursuit of personal enrichment. Another is the view that collective control of the nation’s resources and productive facilities results in more social justice and economic equity among the people. In other words, socialism espouses that society as collective whole rather than individual enjoying competing freedoms fosters human equality, individual productivity and a resulting social justice for everyone. It allows no room for poverty, unemployment and social inequality, and no justification for laziness or useless work in the society.
All these echoes socialist advocacies that promise to end the recession gripping the world pointing to an overhaul of the current capitalist economies as the cure. It is no wonder that many countries now have political parties that espouse the concept but without denigrating basic democratic freedoms of elective governance, speech and expression that people hold dear. This time, the socialist agenda gets tempered with the ideals that put more conscience of social justice to economic policies that had otherwise created record unemployment and economic disenfranchisement.
As the late world-renown physicist Albert Einstein once said, socialism carries a political view “directed towards a social–ethical end.” Now that’s really at the heart of the matter. Capitalism makes everyone busy accumulating wealth with little regard for the social-ethical consequence, not even a myopic one. It’s all about, “he who has the money, rules the world.” Socialism history has shown that the European socialist experiment has been a dismal failure. But with what many are experiencing today, who’s to say that capitalism is no less a failure?
European Socialists support 'coalition for democracy’ from Hungary’s opposition
Sergei Stanislev, Interim President of the Party of European Socialists (PES) welcomes the protest initiatives of Hungary’s political opposition parties that staged a massive pro-democracy protest right in the heart of Budapest last January 3. The protest rally voiced the people’s angst against measures undertaken by FIDESZ, Hungary’s ruling party, which was perceived by European socialists and the locals as increasingly authoritarian. Specifically, it was voicing a united opposition against curtailing the independence of its central bank, media, and the judiciary, that were seen as damaging the democratic institutions in the country. More than a hundred thousand Hungarians were reported to have joined the mass rally. Attila Mesterhazy who heads the local Socialist Party (MSZP) had played a pivotal role in coalescing various opposition parties and for which Stanislev singled out with praises, saying; "Attila Mesterhazy is helping to building a domestic coalition for democracy. The coalition is based on the most powerful force in any society - its people".Mr. Stanislev further highlighted the commitment of his PES to support the coalition and assist in creating global consciousness about Victor Orban’s regime that has flouted democratic institutions. He adds that the people must now match Attila’s resolve and encourage global condemnation of Orban and his government.
It will be recalled that Hungary has been a democratic country since the fall of communism in the state in 1989. The old ruling party turned to socialism and was renamed simply as the Socialist Party or MSZP in the local tongue to shake off its old autocratic image. But it lost to the new Hungarian Democratic Forum or MDF in the election of 1990. The MDF has since slowly given way to the emerging FIDESZ that is now in power under Orban.
Over the years, transitioning powers between the MSZP and FIDESX/MDF have been rocked with protests that peaked in 2006 after the socialism-centric MSZP was unmasked by then Prime Minister Ferenc Gyurcsány's to have lied to win the 2006 elections. The rallies supporting socialism turned into riots ended with the resignations of several high ranking officials in 2007 and promptly entered as a class struggle in European socialism history.
Today, the political tide seems to be doing a reversal of fortunes. Orban’s bent on authoritarian policies have fueled a coalition of opposition parties to preserve the democracy it won more than 20 years ago. This is the second time in the country’s socialism history that several parties coalesced, the first being the SZDSZ coalition of democratic parties in the 1990 elections after the fall of communism. Philip Cordery, PES General Secretary said that the European People’s Party which has FIDESZ as a member has been silent on the issue. PES has called on the European People’s party to have FIDESZ suspended until the independence of democratic institutions in the country is restored. The PES had earlier condemned the arrest of Members of Parliament who had been vocal against the constitutional distortions perpetuated by the FIDESZ regime.
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The term socialist has been thrown around quite a bit in the past few years. Not since the cold war has the term garnered so much attention in the press and from politicians. But when you look at countries who actually have a socialist economic structure, you can see some similarities to the United States – but there are some really stark differences.
Below, you will see some of the most socialistic nations in the world today:
- China
- Denmark
- Finland
- Netherlands
- Canada
- Sweden
- Norway
- Ireland
- New Zealand
- Belgium
China
In China the government manages and controls the economy. Many of the domestic companies are owned and run by the government. Recently, the Chinese economy has become more geared towards capitalism, but is still officially socialist. Life in China remains relatively less stressful and more relaxed than life in capitalist countries like America.
Denmark
Denmark has a wide range of welfare benefits that they offer their citizens. As a result, they also have the highest taxes in the world. Equality is considered the most important value in Denmark. Small businesses thrive, with over 70 percent of companies having 50 employees or less.
Amagertorv in Copenhagen, Denmark (image CC BY 2.0 by Furya via Wikimedia Commons)
Finland
Finland has one of the world’s best education systems, with no tuition fees and also giving free meals to their students. The literacy rate in Finland is 100 percent. Finland has one of the highest standards of living in the world. Like Denmark and other European countries, equality is considered one of the most important values in society. Whereas in the Netherlands, government control over the economy remains at a minimum, but a socialist welfare system remains. The lifestyle in the Netherlands is very egalitarian and organized, where even bosses do not discipline or treat their subordinates rudely.
Paasitorni by the Sea in Helsinki, Finland (Image CC BY-SA 3.0 by Kati Kosonen via Wikimedia Commons)
Canada
Like the Netherlands, Canada also has mostly a free market economy, but has a very extensive welfare system that includes free health and medical care. Canadians remain more open-minded and liberal than Americans, and Canada is ranked as one of the best top five countries to live in by the United Nations and the Human Development Index (HDI) rankings.
Sweden
Sweden has a large welfare system, but due to a high national debt, required much government intervention in the economy. In Norway, the government controls certain key aspects of the national economy, and they also have one of the best welfare systems in the world, with Norway having one of the highest standards of living in all of Europe. Norway is not a member of the European Union.
Ireland
Ireland has arguably one of the best welfare systems in the world, with unemployment checks higher on average than Denmark or Switzerland’s average. Around 25 percent of Ireland’s GDP goes towards paying for the welfare system, as compared to 15 percent of America’ GDP towards America’s social support programs.
New Zealand
New Zealand may not be a socialist country, but the welfare system in the country is very wide ranging, offering support for housing, unemployment, health, child care, and education as well. Therefore, New Zealand has many of the characteristics of a socialist country, even while remaining officially free market.
The location of Hobbiton, as used in the Lord of the Rings films. Near Matamata in New Zealand (image CC BY 2.0 by Rob Chandler via Wikimedia Commons)
Belgium
Lastly, Belgium has most of the same social security benefits that New Zealand offers, including invalid and old age pensions. The welfare system causes much of the country’s budget deficit though, and so is considered by some to be a burden on society.Het Plein at the Hague, Belgium (image: CC BY 2.0 by zoetnet via Wikimedia Commons)
Why U.S. conservatives should embrace socialist, European
Why U.S. conservatives should embrace socialist, European-style economics
Paul Ryan is probably not eager to ape the economic and social policies of Belgium. And yet... (Chip Somodevilla/Getty Images)
February 12, 2014
America has a two-party political system, but that doesn't mean we have two perfectly coherent and consistent parties. Inside each party, of course, are a variety of diverse factions. Within the GOP, for instance, are social conservatives eager to maintain "traditional" cultural forms, and fiscal conservatives who want to install laissez-faire economic policies. On good days, these two broad goals do not come into conflict, and the conservative coalition works together in harmony. But this is not always the case. The goals of traditionalism and laissez-faire economic policy inevitably collide from time to time. And it is in those instances that the dominant faction of American conservatism is revealed.The prediction last week that ObamaCare would enable individuals to reduce their work hours presented precisely this core conflict. According to the Congressional Budget Office, American workers, freed by ObamaCare from dependency on their employer for health care, will reduce the number of hours they work by up to 2 percent. When you add all those hours up, you get an hours reduction that is equivalent to 2.5 million full-time jobs.
From a traditionalist perspective, you can see how this might be good news. It enables more people to reduce their market labor and spend more time tending to the household — something traditionalists would surely prefer working mothers to do.
In a truly multiparty system, you might expect the social conservative faction to come out in favor of ObamaCare — or at least this aspect of ObamaCare — on this basis. The laissez-faire faction of the GOP would surely come out against it. But as both factions are crammed together in our system, consistent messaging demands that one give way. And in this case, as in most others, it is the traditionalists that give way to the laissez-faire advocates.
Fox News has been blasting this ObamaCare development as proof of that the law is a job-killer, even though the reduction in hours worked is a function of people opting out of work, not being unable to find any. Paul Ryan, whose wife quit her job to tend a traditionalist household, decried the news as indicative of ObamaCare interfering with the dignity of work.
Among the conservative commenting classes, the primacy of laissez-faire institutions over traditionalist outcomes received clear endorsement. Charles C.W. Cooke at the National Review conceded the point that ObamaCare's effect on labor supply would, in some sense, free people to work less, but that it is no freedom at all "for a person to choose not to work because others are being forced to subsidize his well-being." For Cooke, laissez-faire economic distributions are deeply real (as opposed to socially constructed) and deviations from them, even when they generate otherwise positive traditionalist results, are intolerable. With the narrow exception of Tim Carney, this has been the consistent conservative line.
France's incestuous, exploitive political culture
It does not have to be this way. Consider Belgium, Germany, France, Italy, and the Netherlands. Speaking broadly, women tend to work less, if at all, while men are the primary breadwinners. According to Lane Kenworthy, these countries have the lowest numbers of hours worked per working-age adult in the developed world. The proximate causes of this are very strong unions that push for more vacation, shorter work weeks, and earlier retirement. Additionally, their dominant Christian Democratic and Social Democratic parties construct welfare states that dwarf our own, and include generous paid maternity leave as well as robust public health insurance systems.This is what a serious political effort at supporting traditionalist family structures looks like. In the United States, more than half of all dual-earner families would be in or near poverty if the woman stopped working. Robust social provision is necessary to permit the kind of labor force reductions that widespread adoption of traditionalist structures would require. The kinds of economic outcomes laissez-faire institutions generate are in direct conflict with such widespread adoption, but conservatives in America keep on pushing these institutions nonetheless.
So while the conservative coalition certainly carries the torch of the traditional family in America, that torch-bearing is bounded by its more primary commitment to right-wing economic institutions. Whenever the two come into conflict, the dominant conservative priority is made crystal clear. ==
European Socialism: Why America Doesn't Want It
Capital Flows Contributor
Guest commentary curated by Forbes Opinion. Avik Roy, Editor.
Opinions expressed by Forbes Contributors are their own.
Opinion 7,474 views
Confessions of An American European-Style Socialist
By David Schrieberg
I’m an American One-Worlder Pacifist Socialist enjoying the largesse of the European Nanny State.
Perhaps I exaggerate. I think of myself more as a progressive Democrat, although the prevailing wing of the Republican Party would probably buy my first description. If Mitt Romney reads this, he’ll likely agree, even if I’d like to think that as an avatar of the capitalist ethos, he’d applaud the rest of me: An entrepreneur, founder of several start-ups, a journalist-turned-small-aspiring-big businessman with an ambitious shot at growing an idea into a global enterprise.
In short, I embody the American Dream, the indomitable business spirit the Republicans believe they represent.
Fact is, it’s also the Luxembourg Dream. Nine years ago, I moved to the Grand Duchy, a tiny nation of barely 500,000 people that also happens to feature the world’s second-highest GDP and sits among a handful of countries that could legitimately claim to offer the planet’s best quality of life.
Yet, by pretty much any definition, when Romney and the Republicans deride European-style Socialism, they’re talking about Luxembourg, a global banking center, with nearly 150 private banks serving 385,000 “high net worth individuals,” and serving as the world’s second-ranked center of global investment funds with $2 trillion under management.
Traveling around this Rhode Island-sized, landlocked pastoral jewel, you’ll drive on excellent highways and back roads, through charming villages and towns. You’ll enjoy superb public infrastructure and note new construction throughout the country, much of it publicly-funded. While poverty, some social tensions, and imbalances in public spending certainly exist – we’re not talking Nirvana – you won’t find slums or destitution. You’ll note a high-yet-reasonably taxed population that’s 40% foreign, for the most part well integrated, and fluent in at least three and often more languages. You’ll find health care for everyone and a generous pension system under pressure like everyone else’s. There’s a government of technocrats as well as old-style politicians who suffer the usual human-nature infighting and squabbles and egos and sometimes-murky financial interests, but generally do the right thing because it works so well.
Oh, right. You also have ministries controlled by the Socialist Party and the dominant centrist Christian Social People’s Party, who govern as a coalition and would be considered Socialist-leftist by Romney & friends.
I’ve lived through enough American presidential campaigns to know the silly season induces a lot of, well, silliness. But some of it is just too much to ignore. I’m thinking specifically of the ridiculous Republican charges that President Obama is a European-style Socialist because, for example, he allegedly derides American businessmen when he says things like: “If you were successful, somebody along the line gave you some help….If you’ve got a business, you didn’t build that. Somebody else made that happen…The point is that when we succeed, we succeed because of our individual initiative, but also because we do things together….You’re not on your own. We’re in this together.”
What’s to disagree with? Yet, Romney calls the president’s contention that government investment has helped small businesses thrive “very strange and in some respects foreign to the American experience type of philosophy.” Conservatives, according to the New York Times, consider the president’s statements that government should help small business as “evidence that Mr. Obama is sympathetic to European-style social democracy.”
Let’s consider Romney’s notion of ‘foreignness’ in my case. I had an idea for a business that creates personalized information for financial professionals and their clients. I took that idea to the Luxembourg Ministry of Economy and Foreign Trade. If I could convince private investors that it’s worthy, the ministry would match their investment with a seed grant up to €100,000.
So I got the investment and the Ministry kept its promise, with minimal red tape getting there.
Next step: Build the business, get customers, and come time for the next round of investment, assuming my business plan passes its rigorous test, the Ministry will give me another matching, non-dilutive grant up to €1 million. If there’s Research & Development involved, I can apply for another grant to cover 45% of those costs. I could get still more help when I’m ready to export. And down the road, I could invite the government to take an equity stake in the company in exchange for its capital investment.
There’s a broad selection of these kinds of financing facilities provided by the Luxembourg government and the European Union for new and innovative businesses across the spectrum, but especially in the life sciences, green tech, ICT, and space technology, among others. Maybe these are free, Socialist-style government handouts, but it sure doesn’t feel that way to me. I’m working my tail off 24/7 to get there, and to earn the government’s helping hand.
Why here? Because in this land of strangeness and foreignness there’s an official drive to create an American-style culture of innovation and risk, a feeling that indeed we’re in this together. That’s not easy in a culture that’s largely risk averse, and whose national motto is “mir wolle bleiwe wat mir sinn,” Luxembourguish for “We want to stay as we are.” But this ‘European-socialist’ government recognizes that change is critical and the success of my business is good for the country, the Eurozone and the global economy.
So bravo to the Nanny State ‘foreignness’ – the European Dream – that seems to me to be very American. You could even call it very Republican.
David Schrieberg, former South America Bureau Chief of Newsweek, is the Co-Founder and CEO of VitalBriefing, a personalized financial news service in Luxembourg.
Luxembourg (Photo credit: jepoirrier)
Perhaps I exaggerate. I think of myself more as a progressive Democrat, although the prevailing wing of the Republican Party would probably buy my first description. If Mitt Romney reads this, he’ll likely agree, even if I’d like to think that as an avatar of the capitalist ethos, he’d applaud the rest of me: An entrepreneur, founder of several start-ups, a journalist-turned-small-aspiring-big businessman with an ambitious shot at growing an idea into a global enterprise.
In short, I embody the American Dream, the indomitable business spirit the Republicans believe they represent.
Fact is, it’s also the Luxembourg Dream. Nine years ago, I moved to the Grand Duchy, a tiny nation of barely 500,000 people that also happens to feature the world’s second-highest GDP and sits among a handful of countries that could legitimately claim to offer the planet’s best quality of life.
Yet, by pretty much any definition, when Romney and the Republicans deride European-style Socialism, they’re talking about Luxembourg, a global banking center, with nearly 150 private banks serving 385,000 “high net worth individuals,” and serving as the world’s second-ranked center of global investment funds with $2 trillion under management.
Traveling around this Rhode Island-sized, landlocked pastoral jewel, you’ll drive on excellent highways and back roads, through charming villages and towns. You’ll enjoy superb public infrastructure and note new construction throughout the country, much of it publicly-funded. While poverty, some social tensions, and imbalances in public spending certainly exist – we’re not talking Nirvana – you won’t find slums or destitution. You’ll note a high-yet-reasonably taxed population that’s 40% foreign, for the most part well integrated, and fluent in at least three and often more languages. You’ll find health care for everyone and a generous pension system under pressure like everyone else’s. There’s a government of technocrats as well as old-style politicians who suffer the usual human-nature infighting and squabbles and egos and sometimes-murky financial interests, but generally do the right thing because it works so well.
Oh, right. You also have ministries controlled by the Socialist Party and the dominant centrist Christian Social People’s Party, who govern as a coalition and would be considered Socialist-leftist by Romney & friends.
I’ve lived through enough American presidential campaigns to know the silly season induces a lot of, well, silliness. But some of it is just too much to ignore. I’m thinking specifically of the ridiculous Republican charges that President Obama is a European-style Socialist because, for example, he allegedly derides American businessmen when he says things like: “If you were successful, somebody along the line gave you some help….If you’ve got a business, you didn’t build that. Somebody else made that happen…The point is that when we succeed, we succeed because of our individual initiative, but also because we do things together….You’re not on your own. We’re in this together.”
What’s to disagree with? Yet, Romney calls the president’s contention that government investment has helped small businesses thrive “very strange and in some respects foreign to the American experience type of philosophy.” Conservatives, according to the New York Times, consider the president’s statements that government should help small business as “evidence that Mr. Obama is sympathetic to European-style social democracy.”
Let’s consider Romney’s notion of ‘foreignness’ in my case. I had an idea for a business that creates personalized information for financial professionals and their clients. I took that idea to the Luxembourg Ministry of Economy and Foreign Trade. If I could convince private investors that it’s worthy, the ministry would match their investment with a seed grant up to €100,000.
So I got the investment and the Ministry kept its promise, with minimal red tape getting there.
Next step: Build the business, get customers, and come time for the next round of investment, assuming my business plan passes its rigorous test, the Ministry will give me another matching, non-dilutive grant up to €1 million. If there’s Research & Development involved, I can apply for another grant to cover 45% of those costs. I could get still more help when I’m ready to export. And down the road, I could invite the government to take an equity stake in the company in exchange for its capital investment.
There’s a broad selection of these kinds of financing facilities provided by the Luxembourg government and the European Union for new and innovative businesses across the spectrum, but especially in the life sciences, green tech, ICT, and space technology, among others. Maybe these are free, Socialist-style government handouts, but it sure doesn’t feel that way to me. I’m working my tail off 24/7 to get there, and to earn the government’s helping hand.
Why here? Because in this land of strangeness and foreignness there’s an official drive to create an American-style culture of innovation and risk, a feeling that indeed we’re in this together. That’s not easy in a culture that’s largely risk averse, and whose national motto is “mir wolle bleiwe wat mir sinn,” Luxembourguish for “We want to stay as we are.” But this ‘European-socialist’ government recognizes that change is critical and the success of my business is good for the country, the Eurozone and the global economy.
So bravo to the Nanny State ‘foreignness’ – the European Dream – that seems to me to be very American. You could even call it very Republican.
David Schrieberg, former South America Bureau Chief of Newsweek, is the Co-Founder and CEO of VitalBriefing, a personalized financial news service in Luxembourg.
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