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November 28, 2005

Silly Americans

This, by Hacker, through Krugman, and behind Times Select, is a great point:

We like to think of ourselves as rugged individualists, not like those coddled Europeans with their oversized welfare states. But as Jacob Hacker of Yale points out in his book "The Divided Welfare State," if you add in corporate spending on health care and pensions - spending that is both regulated by the government and subsidized by tax breaks - we actually have a welfare state that's about as large relative to our economy as those of other advanced countries.

The resulting system is imperfect: those who don't work for companies with good benefits are, in effect, second-class citizens.

What we have isn't a small welfare state, it's an inefficient, fragmented one. And thanks to the holes in our patchwork, we end up paying more for less, overspending on the unnecessary, and creating all manner of bizarro-world economic incentives. No corporation would ever run like this, Wal-Mart's great advance has been the coherency and integration of its operations. Nevertheless, we're continually taught that this inefficient atrocity has been blessed by the free market's kiss, and is therefore untouchable. Lady Competition has decreed that a series of World War II-era tax quirks would incentivize employer-based health care and the vagaries of the business cycle would decide who received benefits.

It's bullshit. And it should be labeled as such.

Update: Brad has more, including the numbers.

November 28, 2005 | Permalink


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Thank you for saying it so clear. I am from Germany, and for years now, I hear this nonsense from the opposite direction. America is always the shining example in market individualism. Last year, Horst Köhler was elected to become national president (a representative, if powerless position) came back from Washington, were our “social democratic” former chancellor Gerhard Schröder had promoted him at the head of the IMF, and since then the media buzz is almost unbearable that tries to portray his presidency as some kind of collective apprenticeship for our “over-socialized society” to “arrive in reality” and learn the benefactions of free market. Now, Ms. Merkel is chancellor and relentlessly goes on dismantling what is left of the original, and very successful idea (!), of said social market economy. She cannot do as freely as she had dreamt of prior to election, for she has to rule with the renegades of the social democatic party (who still try to keep their grounds against the new-founded, and stigmatized, left party, which really continues the programmatic of the SPD), instead of with the libertarians of the (small) free democratic party, but nevertheless, her course is dangerous for the very stability of the German society and European power architecture. It will require a re-awakening of public involvement in politics, even though I think, if there is to come a breakthrough for true economic populism to save us from neo-feudalism, Americans will be ahead of us again.

Your statement, I think, will yet come in handy for me to recommend it to others for this purpose.

Posted by: Martin Bauer | Nov 28, 2005 7:23:59 AM

Of course the alternative is the Socialism that Martin Bauer champions. If you wish to laud this system, you had better get prepared to wear the label as well.

Posted by: Fred Jones | Nov 28, 2005 8:18:00 AM

I'm not sure I see the value, ultimately, in this exercise; at some point, there's a rather fundamental difference between business based benefits and government social programs, and that distinction seems rather fundamental to how we differ, operationally, from our European counterparts. Equating the two, or blurring the distinctions, may be interesting as an academic exercise, but it doesn't tell us much - at least it's not telling me much - as to how to address inequalities within the systems. I'm not casting a value judgement here; in many ways our US systems are deeply flawed and badly in need of reform. But then, so are the European systems.

In part, this has changed for me as I've gotten older - and spent more time working for those "companies with good benefits" - the fact that corporations, however inexpertly, feel that they are in some measure responsible for their workers - that, in essence, we have to care for one another - strikes me as something positive and to be encouraged. And in that, I think, is a challenge to liberals, particularly traditional liberals who think government is often the answer and look to European models as their justification. This equation seems too easy a dismissal of how things work here. It's a mistake to try and gloss past such major differences.

Posted by: weboy | Nov 28, 2005 9:11:09 AM

Sorry, weboy, but I genuinely do not understand it. How is pleading for a more local organization of social security (within the firm) compatible with complete capital market deregulation or tax cuts for the large companies, which are simply not interested (any more) in sustaining trustful relations with their employees? As for me, I do not plead for government poking its nose into everything at all, and I don’t think, Ezra does. It’s just necessary that the state does the things which only the state can do to preserve a kind of competition that allows for social progress. Neither can I see how Ezra “identified” both systems, he just belied a facile way to call the American way superior. Of course, we may quarrel if the American is really as inefficient as Ezra claims? At least it strikes me, it would be a very burning question to conservatives how they square their longstanding big business policy with the task of preserving social conditions in their own more rural or regional social environments.

Moreover, isn’t it exactly the European (at least German) model, which – as long as policy held by it – favoured such local realms of entrepreneurial responsibility shared with their employees for health-care, accident insurance, education and further training? Only the pensions and retreat system was completely nationalized (even though it is about being discredited and eviscerated now), which simply is the most efficient way to organize it, imho, – as long as you have no system of remuneration by profit sharing, in any case.

Posted by: Martin Bauer | Nov 28, 2005 10:06:00 AM

so... what's so wrong with socialized healthcare? do you want those who are in the sweet spot between insurance and medicaid to just suffer? why do you hate the insanely large % of america without insurance?

Posted by: almostinfamous | Nov 28, 2005 10:53:24 AM

That's what I ask me all along, at least since I learnt (in the presidential debates last year) that intrusive government (wherever it really is) is a "liberal" vice (you may miss to understand how queer that looks from standpoint of European terminology). I ventured a little satire on it here ("ventured" because I am not sure that my English may not sometimes sound rather silly, just laugh in such cases, please).

Posted by: Martin Bauer | Nov 28, 2005 11:03:29 AM

Well the point isn't to blur major distinctions but crush erroneous ones. We don't have some lean, mean, safety net that encourages innovation and drops prices, unlike thoswe bloated European models. Instead, we've burdened businesses with pension programs and health care tabs, two things they're not at all equipped, and shouldn't have to learn, to do. And, because of the nature of businesses, we've created an unequal society that offers economic security and generous benefits based on a complex calculation of regional luck, industry age, union strength, tax shelters, and so forth.

I'm all for corporate responsibility, but I'm not ready to support a weakened, fragmented, inefficient safety net simply because it encourages good impulses among the business world. Let business do what they're good at and the government do what it's good at -- nothing irresponsible about that. And if you don't buy the distinction, show me one pension or health plan with the administrative efficiency of Medicare or Social Security.

Posted by: Ezra | Nov 28, 2005 11:38:09 AM

Fred -

Out of curiosity, what is wrong with socialism? I ask this as someone who was raised in a strongly conservative Republican family and who has had very little exposure to socialism outside of epithets about how "socialism is bad".

Europe and Canada seem to like it quite a bit - so much so that their health care and safety net systems are their "third rail" of politics. Universal health care seems like the Christian thing for a country to work towards. Helping out folks who have hit hard times is definitely the Christian thing to do.

So I'm curious what the actual "bad" part of socialism is. Where are the negatives? Why is the knee-jerk reaction always "but that would be SOCIALISM". 10 years ago I could have spouted off a litany of talking points about why socialism is bad - but the situation we're in with health care now is far worse than any socialized nation's health care service, so I'm not seeing these points as being valid anymore.

Posted by: NonyNony | Nov 28, 2005 11:39:27 AM

Incidentally, Fred's answer here is really the last refuge of the scoundrel. It's not an argument, or an alternative policy proposal, but a threat of future name calling. Do X and you'll be red-baited. That's what he's down to.

Posted by: Ezra | Nov 28, 2005 12:08:02 PM

I took as an honor too. The frankness of the guy is charming.

Posted by: Martin Bauer, the Bogy-Man (Socialist) | Nov 28, 2005 12:20:46 PM

...the fact that corporations, however inexpertly, feel that they are in some measure responsible for their workers - that, in essence, we have to care for one another - strikes me as something positive and to be encouraged.

Good point, Weboy.
When Big Brother takes over, who needs to care anymore? A similar change happened with the social safety nets for individuals. Families who previously were 'responsible' for its members now have the state to look to for guaranteeing food, shelter, etc. and have been cut free of all responsibility. I'm not saying that the net results weren't worth it, but don't think that major changes such as government provided health insurance would not have some unintended consequences.

Posted by: Fred Jones | Nov 28, 2005 12:26:23 PM

Gag. "Socialism" is the partial or total government ownership and/or control of the means of production, e.g., factories and utilities. Post-WWII Austria a fairly successful example.

It should never be confused with welfare-state capitalism.

Posted by: bob mcmanus | Nov 28, 2005 1:11:10 PM

"cut free of all responsibility" - If you want to prove a caring father you can still look to it that your children get a sound education (at home, in school and further), a nice but not sumptuous material endowment in their youth and you can give them a cheerful attitude to life, knowledge, wisdom, practical abilities, respect for others and, what's most, care and time. You can even teach them how to feed reasonably (i.e. that ketchup is no vegetable, as some famous president thought). It's all open to you, really. No need to feel tickled at your own generosity to help little Oliver Twist from starving and gutters. And to look at those irresponsible menials of society who, apart from working in two or three jobs every day find no time or no spirit to uphold real family relations.

Fred, let me tell you a secret: Wild West is over. Was a nice time, I'm sure, but the rest of us live in the 21st century, a society with tv, internet, porno and the US stock exchange. Those are the real powers that make the social safety nets flimsy.

Posted by: Martin Bauer | Nov 28, 2005 1:12:48 PM

Ezra - Dude, I love you (and your postings and your insights) not in an entirely gay way - but calling Medicare administratively well run is somewhat humorous. Ask an old person (oh, like, my Mom) about having to chase down who will be paying for this or that doctor visit or x-ray or what have you, and it's far from well organized. Insurance companies at least know where the "no" button is. But in any case, health care cost management is an administratve nightmare, and one pressing reason for health care reform - which, by the way, I am in favor of, just not in any of the plans I've seen so far, particularly the "everyone in Medicare" variations currently in vogue.

I don't think America's social welfare system is superior, or an effective safety net; far from it. But lumping the health care and other benefits workers receive from companies in with welfare programs to prove a point about comparability to Europe seems the wrong way to make the case, at least to me. I don't mind looking at Germany or France or Sweden or Outer Mongolia for alternative solutions, if they'll help. But each society has unique characteristics and an internal history that helps to explain how they got where they are and, in the end, most are more different than similar to the US, for a variety of reasons. That strikes me as the starting point, not a "we're just like Europe, only some of the funding is corporate" example. By all means, let's examine whether a more centralized safety net will help - I think it's problematic, partly because we do have an engaged private sector that provides some useful services - but let's not oversimplify what it takes to get there (something I think is all too often the case in the health care debate - and I've said that, repeatedly... with love).

Without some grounding, I think this discussion becomes what Fred - who I don't particularly agree with, ever, though he's onto something with that Big Brother thing - sort of touches on in his overbroad criticism: a vaguely socialist plan that ignores the realities on the ground, sounds lovely over cocktails, and can never happen. I love those discussions - as much as I used to love the cocktails - but again, now that I'm older, I'm more interested in what's actually doable. I thought that was the point.

Posted by: weboy | Nov 28, 2005 1:14:33 PM

Ezra --

You must stop or Fred will label you again!

Over the past six years I've decided that I'll just call myself a commie pinko because I just find it so funny that anyone outside this far right-wing view is labeled such.

Posted by: Magenta | Nov 28, 2005 1:17:58 PM

You forget that unless you can win elections, you can't do anything and all of this talk is just that....talk. In order to win elections, you must align yourself with the voters...not the other way around. So now the question becomes: "Is this what the voters want?"

Well, is Socialism what people of the United States really want? Really??

It's times like this that I must remind myself that most here on this board are not representative of the typical Democrat. As with many other issues, I don't see the Democratic politicians falling all over themselves to champion this idea. So, again, I must point out to you that yours is the idea of an outliergroup who is not at all in touch with even your own party....and it shows.

Posted by: Fred Jones | Nov 28, 2005 1:32:01 PM

Fred, again: you are charming. Where do you live? “Align yourself with the voters”. Do you think Mr. Bush has “aligned himself with the voters” to get re-elected or didn’t he rather draw them over? Make them believe it was really him they wanted?!. In Germany we had a national election where both “block” (left and right) failed majority and demoscopy said explicitly it was because they distrusted the likewise neo-liberal (i.e. rugged individualism emulating) conceptions of how to “reform” our welfare state (again I say, our “reform” concepts are dismantling plans). So, they just formed the grand coalition to regale us nevertheless with what shunned to adopt, but were equally unable to bluntly reject.

Bottom-line of all: Unless American voters are of an utterly different fibre, you must not align yourself with voters but you must finally stand up for something in earnest and try to shift the Zeitgeist once more. Of course, you do a nice thing from your standpoint: Distract us democrats from a promising strategy. Well done, indeed.

Posted by: Martin Bauer | Nov 28, 2005 1:44:15 PM

A few nails on the head were hit in here. One was bob mcmanus, who correctly identified socialism. As such any reference to that term that is incorrect ought to be completely ignored.

The second was Ezra, "Let business do what they're good at and the government do what it's good at -- nothing irresponsible about that." And nothing socialistic about that either. Healthcare as a business runs on the wrong incentives, unless of course one doesn't believe that Healthcare ought to be a necessary good in the 21st century...

Posted by: Adrock | Nov 28, 2005 2:24:43 PM

Martin Bauer,

It's great that you try to keep up with politics here in the US. If I were in your shoes, I would do the same because what happens here *MATTERS*.

That being said, you don't live here and don't have a reference for how people feel here. If you think those on this board and others like it are how the American people feel, you are sadly mistaken. There are no American politicians who promote Socialism, unilateral disarmament, homo marriage, soak-the-rich tax schemes or any other of the wild ideas you might see here. These people are certainly by any measurement radicals and extremists. But, like you, I find it an intersting place. I also like to go to the zoo.

Posted by: Fred Jones | Nov 28, 2005 2:59:44 PM

No, I've finally brought him to answer back. All the same, the only one who even imagined "promoting Socialism" were you.

Posted by: Martin Bauer | Nov 28, 2005 3:32:46 PM

Well, is Socialism what people of the United States really want? Really??

Ask any middle class American to describe what they want the government to do and it will sound an awful like the Social-Democratic system of Canada or most of the EU.

Tell them that what they want is "Socialism" and they'll get confused, because of the likes of Fred, who ahve labeled everything more progressive than Reagan's Voodoo Economics as "The Evil That IS Socialism." Which of course, is the point: keep people off kilter so they just throw their hands up, say, forget it. Then mug them with convoluted scams like Medicaid Reform.

Posted by: Keith | Nov 28, 2005 3:37:50 PM

If you wish to be a duck, then be prepared to be identified as a duck...that's all I'm really saying.

Posted by: Fred Jones | Nov 28, 2005 4:15:17 PM

Elect people who think government is bad, and you will get what? Bad government. Of course, the cynics will say that proves the point, and folks who judge of presidential candidates on the grounds of whom they would like best to drink a beer with him will be inclined to believe them. But even this does not prove democrats will be seen as the better choice for government if only they succeed in better vilifying it.

Posted by: Martin Bauer | Nov 28, 2005 6:11:56 PM

Fred Jones,

You are asking the American people if they want to continue to pay more money than the remainder of the first world for substandard health care. I completely understand why you want to put a perjorative label on the obvious alternative. The current system sucks for everyone concerned.

The great irony, of course, is that we will end up with "socialized" health care because corporations are starting to realize there's no advantage to them in the current system.

Posted by: Magenta | Nov 28, 2005 9:47:03 PM

Great post. For Mr. Fred Jones above, may I offer a different take? Despite conservative rhetoric, advanced welfare states are not synonymous with lower growth and opportunity - the correlation is actually slightly positive. This statement is not partisan: it comes from many academic works that have run statistical regressions on growth rates and the size of the 'public' economy, controlling for the usual economic variables. In other words, there's no evidence that we're presented with a choice between growth and security - both Liberal (i.e., non-social) and social democratic economies do about as well. Given that, there are lots of reasons why we might do better with a social democratic economy of some sort - living standards would be higher, economic instability would decrease, and everyone would have healthcare. The last point is improved by the fact that universal healthcare would be cheaper, so we'd pay less for more. There are real efficiencies of scale to be gotten.

So, given this, is there any way to wed a social democratic economy with the type of economy we already have - i.e., one where workers are expected to move from one job to another as the market demands? The answer is 'yes'! Universal healthcare, pensions, and unemployment insurance would actually complement our economy - By providing these forms of insurance (where efficiencies of scale are large and important), the government wouild free business to concentrate on moving capital to where it is most needed in the economy, rather than being forced to continue paying for workers it no longer needs or derives profits from through healthcare and pensions. Ironically enough, at this poiint in time in this country, the liberation of the people from economic insecurity is also the liberation of capital! As Ben Stein's dad put it, 'if something can't go on forever, it won't' - and GM is the proof.

Posted by: Padraig | Nov 29, 2005 2:39:05 PM

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