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America turns into a social democracy

May 7, 2021, 5:35 a.m.

In his speech to a joint congressional session last week, US President Joe Biden advocated nothing less than the kind of social democracy that most of America's European partners have long taken for granted. The united opposition of Congress Republicans could prevent him from realizing that dream. But just by introducing the boring but far-reaching American family plan, Biden has raised two profound questions: Why has America been so "extraordinary" in this regard and what has now changed to make the unthinkable so much possible?

First, some nomenclature clarity. "Social democracy" is not "democratic socialism", even if many avowed partisans of the latter seem to really want the former. Democratic socialism is socialism – the public ownership or effective control of economic resources – with a human face. Social democracy allows markets to thrive, but uses tax and spending policies to fund the types of welfare goods promised in the American family plan – free general education, child benefits, family and sick leave, and access to health care (which Biden has promised to improve) in a separate Invoice). The plan would achieve many of these goods through tax credits rather than the direct subsidies used in much of Northern Europe – a quintessentially American twist on the social democratic formula.

Why was the United States lacking social democracy? Progressive thinkers from the time of historian Charles Beard have argued that the US plutocracy has used control of the nation's politics to maintain its privileges and thwart reform efforts. In his recent history of populism, The People, No, economist Thomas Frank claims that the same business class that put down the populist insurrection of the late 19th century also restricted Franklin D. Roosevelt's New Deal reforms and the Democratic The late 20th century party ushered in the shallows of the Third Way, which included limited government and market hegemony.

More recently, thinkers on the left have attributed the American exception to race rather than class. In The Sum of Us, policy analyst Heather McGhee describes the workings of a zero-sum paradigm that has forced poor whites to deprive themselves of social goods so that blacks do not benefit from those goods and threaten the racial hierarchy that keeps them at the top. Citing a study attributing America's low tax rates to white racism, McGhee concludes: "Without race as an issue in American politics, fiscal policy in the US would look very similar to fiscal policy in Northern Europe."

Recent history confirms both hypotheses. After Lyndon Johnson's war on poverty, Conservatives, and especially Ronald Reagan, perfected a magic trick that blurred the distinction between government spending and helping poor black people that Reagan commonly referred to as "welfare queens." If government was good for poor blacks, it was bad for whites – maybe even poor whites. The class theory seems just as convincing: one only has to think of the tens of millions of dollars that the typically plutocratic Koch brothers put into the cause of "limited government".

The shortcoming of these two statements is that they assume that people cannot honestly represent their views, especially when they run counter to their own material interests. So the Americans were tempted to oppose social democracy. An earlier generation of thinkers, including progressives like Walter Weyl and Herbert Croly (authors of The New Democracy and The Promise of American Life), attributed American resistance to an activist state to a Jeffersonian tradition of individual autonomy that had endured (thank you no most recently corporate power) despite the enormous changes in the US economy. The limited state spoke to the deepest values ​​of Americans.

The United States has always been different from Europe in this regard. In a 2001 paper examining why the United States does not have a European-style welfare state, a group of Harvard economists attributed the social spending gap to the birth of the welfare state around 1870. Only the catastrophe of the Great Depression forced the Americans to accept the need for large-scale government intervention – although even then the gap with Europe remained large. (Still, the authors anticipate McGhee's argument and claim that "America's problematic racial relations are clearly a major reason for the lack of an American welfare state.")

The final element of the America exception is success. One of the main reasons the New Deal's energy for reform after World War II died out, and doomed Harry Truman's Fair Deal, is because Americans felt they were doing well on their own. Hourly production wages tripled between 1940 and 1960. Inequality shrank (partly thanks to high marginal taxes). Economic theories dealing with the allocation of scarce resources lost importance in what John Kenneth Galbraith called the "Age of Prosperity" in his 1958 book The Affluent Society.

In short, American opposition to social democracy has been burned into national culture, economics, and racial and class systems. Then what happened to weaken those powerful foundations?

Certainly, revelations about police systemic abuse of black people and the dire suffering of poor, and especially black people, during the pandemic did something to undermine the zero-sum paradigm. But how much? Half the country still voted for Donald Trump. And Biden has carefully avoided racial economic plans and programs aimed only at the poor in order to avoid the tragic mistake of Johnson's Great Society, which actually turned middle-class benefactors against the poor and black beneficiaries of the welfare state.

There is also encouraging evidence that what was once a monolithic property class has become fragmented. For every billionaire who holds his nose and votes for Trump to keep his taxes low, there is a Warren Buffett or Bill Gates calling for higher taxes to do more government services. But the debilitating grip of the plutocracy feels like a dependent variable on something else.

That is in the realm of belief. The free market goose stopped laying golden eggs for the middle class about 45 years ago when incomes stopped growing. It took a generation for this economic fact to cause changes in the level of belief at all. The tech boom of the 1990s further delayed this moment of reckoning. Economic libertarianism began to hit the wall when President George W. Bush, fresh from his re-election, proposed that social security be partially privatized so that ordinary Americans can play in the market with their retirement money. This was the Rubicon that free market purists led by Newt Gingrich had been waiting to cross. And the plan failed. Asked to choose between security and what is known as market freedom, ordinary Americans chose security.

Trump understood that at least intuitively. Among the 2016 Republican candidates alone, it offered security rather than freedom to a public that was increasingly concerned about the brittleness of their reputation, both economically and socially. Trump pledged to protect Americans from market forces as well as from immigrants and terrorists, to receive social security and medical care, and to hold the evildoers on Wall Street accountable. He never touched those claims, and he quickly agreed to massive government spending to stave off the worst economic fallout from the pandemic. But he left most Americans far less safe than he found them.

Donald Trump's immense popularity is proof that the United States has not conquered the demons of the race. we have still tamed the superclass. However, it does not seem to be the insurmountable barrier to a fairer society that the critics on the left have envisioned. The Reagan Switcheroo has stopped working. The Americans no longer see "us" as self-sufficient and only "they" as needy. Thanks to a combination of many years of precariousness and the COVID-19 crisis, everyone is injured or just a little unlucky with real misfortune. The neo-Jeffersonian ideology that once enabled the American Medical Association to fend off Medicare by portraying doctors as vulnerable small business owners or conservatives to ridicule subsidized childcare as Swedish socialism is in full and possibly permanent retreat. This ideology has proven remarkably robust. Croly predicted his death more than a century ago. In a recent poll, two-thirds of respondents endorsed Biden's surprisingly bold plans for both physical infrastructure and social spending. If they are passed in a form even close to what he proposed, the American exception will end for good.

Of course, a future Republican Congress and President could undo what a Democratic Congress and President did. The United States is far from the kind of social consensus that allowed Europeans to forge a welfare state in the years after World War II. But universal benefits turn out to be pretty sticky. Dwight Eisenhower made no attempt to reduce social security; Even Ronald Reagan kept his hands off Medicare. People love these pillows against the shocks of life very much.

It is very strange to think that at a moment when liberal democracy seems to be retreating around the world, including at home, the United States is on the verge of the most radical experiment in government activism since at least the 1930s. However, this is not a contradiction in terms. Still, economic failure has forced the world's democracies to prove, as Biden reiterated before Congress, that they can provide the security and prosperity their citizens crave. Perhaps our deepest hopes will be realized, although it is dangerous to believe so.

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