April 9, 2008
The end of the American exception
Here is a subject that preoccupies me at the moment. Europe continues, slowly and reluctantly, to deregulate its economies. In this it is following the US example. The American economy has some problems at the moment, but the EU’s governments are ever mindful of, and oppressed by, the long-term success of the American model. What is interesting is that the United States has been moving the other way. If the Democrats control both the White House and Congress next year, which seems very likely, America’s hitherto-gentle drift in Europe’s general direction will accelerate. One day, might the lines actually cross?
This piece for The Atlantic takes a first stab at the question. I offer it as an introduction to the topic. I intend to return to it.
That the United States stands apart is something Americans and Europeans have agreed on for a long time. It goes back to Tocqueville, like most things. Many of the differences of character and culture he noted in the first half of the 19th century are still there, no doubt, but some more recent contrasts are looking questionable. Since 1945, American exceptionalism has been asserted with particular confidence—but gradually diminishing validity—in economic affairs. America is to Europe as private enterprise is to the public good, as selfish individualism is to social partnership, as “compensation” is to work-life balance. Modern America has limited government, weak unions, high-powered incentives, capitalism red in tooth and claw. Post-war Europe has tax-and-spend, transport strikes, six-week vacations, and the welfare state. Or so, on both sides of the Atlantic, we fondly imagine.
Living in the U.S. for several years after decades as a restless Brit, I continue to be struck by two things. First, this idea of rival economic paradigms appeals to both audiences: Neither would have it any other way. This may be why the notion persists so tenaciously, despite not being true. That is the second thing. Caricatures are well and good, but this one is just too much. In economic matters, America is far more like Europe, and Europe more like America, than either cares to admit. Moreover, the differences continue to shrink, and the pace of convergence seems about to accelerate. We will see whether the idea of America as the land of uncushioned capitalism—the timid and work-shy need not apply—will outlast a faster approach to the European norm.
The Democrats’ promise of comprehensive health reform—something the country finally seems to want—is what prompts this line of thought. Over the past ten years, it seems, many Americans have come to think it wrong that a country as rich as theirs fails to guarantee access to health care. For much longer, almost all Europeans have thought it both incomprehensible and shameful. This is America’s biggest social-policy exception (unless you count capital punishment as social policy). And it is marked for abolition.
Universal health care, if it happens, will be an enormous change in its own right, of course, but also one with further implications. It is going to push taxes up—in the end, possibly way up. The plans lately under discussion have not been properly costed, but figures of $50 billion to $75 billion a year in extra spending—the sorts of numbers bruited for the Democrats’ proposals—are optimistic. Beyond the initial outlay, whatever that proves to be, is the likelihood that people will gradually migrate (at their own initiative, or more likely at their employers’) from private insurance schemes to the new (and presumably subsidized) public alternatives. Everything depends on how the system is managed, but it is easy to foresee, in the fullness of time, a far bigger increase in the cost to taxpayers than the current plans envisage. And if American health care coverage and financing get more European, American taxes will have to as well.
The rest of the article is here.
I cannot help wondering if there is not something slightly outdated in Clive Crook’s implicit assumption that the world is divided between America and Europe, when Asia is clearly the fastest growing and most dynamic region of the world by any reasonable standard. Nor would it be surprising if, perhaps in another 5-10 years, if not even earlier, we start to see a tidal wave of books, articles, blogs, seminars, etc. on the growing economic clout of Africa, remote as that posibility may seem as we watch the newscasts of the contuing horrors in places like Zimbabwe, Somalia and Sudan, to name only a few.
Should not more FT columnists be preparing themselves for this to a much greater extent than they seem to be doing now?
Posted by: algasema | April 9th, 2008 at 11:40 pm | Report this comment“possibility”, not “posibility”. My apologies once again.
Posted by: algasema | April 9th, 2008 at 11:42 pm | Report this commentalg,
Exactly. But your optimism on Africa is misplaced. Africa is an irredeemable basket case and will unfortunately always remain so.
Posted by: RCS | April 10th, 2008 at 1:01 pm | Report this commentRCS, ever since the time of Hegel, who famously wrote that Africa had no history, people in the west have been saying the same thing, in effect. I would agree that dictators like Mugabe are doing their best to ensure that as much of Africa as possible remains a basket case. However, given Africa’s oil and other resources, the fact that there is good, or at least improving, governance in places such as Ghana and Botswana, not to mention the functioning democracy in South Africa, imperfect though it may be (and how many examples are there of perfect democracies anywhere in the world?), and the fact that there is still a great deal that developed countries could do to give Africa greater access to their markets and reduce its burden of debt, I would hesitate to write off this whole continent.
Perhaps I am being too optimistic. But thirty years ago, most people thought that China was an incurable basket case. Going back fifty years, I remember taking a course about Southeast Asia as a Harvard undergraduate. The course was known as “Rice Paddies”. I’m sure that these days, similar courses are probably known by entirely different names, such as possibly, “Computer Chips”? Of course, this could just be due to the rice shortage.
Posted by: algasema | April 10th, 2008 at 2:58 pm | Report this commentDear algasema,
I applaud your good-natured belief in humanity, but the ingredients of success include much more than an endowment of natural resources, or else Africa would have hit the road long ago. You cite the example of South Africa, but the fact remains that that country, founded by non-Africans, is now in decline.
Posted by: RCS | April 10th, 2008 at 3:41 pm | Report this commentDear Mr. Crook,
You seem to display the same inflated sense of ego and omniscience that most European Commission bureaucrats do, although you represent yourself as an objective journalist and ‘man of the people;, as well as, one who spent an ‘enlightened’ few years in America.
It appears as though you haven’t learned very much from that experience. Also, it would seem that you are too ready to concede the superior individual rights -based governance framework of the time-proven Anglo-sphere and the unrivaled US constitutional system. Do you honestly prefer the European continent-based paternalistic welfare state and the Napoleonic communalism which dictates what people can and cannot do?
Perhaps Britain and its citizenry are actually far weaker than they appear to be. How else to explain why nuanced tax & spend liberal Laborite Gordon Brown, who is ideologically in lockstep with Brussels bureaucrats, has been able to reneg on his public pledge and deny the British people a say over whether the UK accedes to the EU constitution/treaty? Why is Gordon Brown so eager to accede to kumbaya regionalism with Brussels based on the authoritarian/socialist proclivities of Berlin and Paris legislators/ regulators? Were Britain as strong and self-sufficient as it once was during the enlightened Thatcher era, this would never have been even a possiblility.
Sorry to say, contrary to your prognostications, American exceptionalism (individual rights-based federalism, checks and balances, due process of law, limited government and national sovereignty) will continue whether Europe likes it or not. As long as the EU and its member states continue to wield a 27-1 voting margin in international fora, the US will continue to refuse to play ‘UN’ ball. In fact, I would venture to say that the US might even play an obstructionist role in international affairs in order to preserve the unique constitutional precepts upon which it was founded (e.g., ‘negative’ exclusive private property rights as compared to Europe’s
‘positive’ property rights readily subject to public interest/ ‘public goods’ override), and thus, its national sovereignty.
One could even imagine certain circumstances under which the ‘BRIC’ nations of Brazil, India, China and Russia would be justified in considering NOT to surrender their national sovereignty to UN bodies, in order to stem the advance of top-down unaccountable UN global governance based on the EU regional model. This way, national and local constituencies (each nation’s citizenry) rather than some global/regional collective of arrogant but incompetent bureaucrats/philosopher kings) could be held to some modicum of constitutional due process and accountable framework of checks and balances. Without national sovereignty and federalism-based constitutionalism as a bulwark, international bureaucrats would be free to run amok and trample upon the individual rights of nations’ citizenry, especially those in constitutional representative democracies.
Lastly, as concerns your prediction about the likely result of the American presidential elections, if I were you, I would refrain from counting your chickens before they hatch. Madame Clinton’s ’solutions’ and Monsieur Obama’s
‘change’ policies, clearly harken from the European hinterlands (THERE IS NOT AN ORIGINAL POLICY IDEA BETWEEN THEM, INCLUDING UNIVERSAL HEALTHCARE).
You are correct in intimating that the ideology of top-down governance, welfare state economics and communitarian thinking of the liberal wing of the US Democratic Party, which both candidates represent, is closer to that which now prevails in the socialist European Union than many people on both sides of the Atlantic recognize or are willing to admit. Were the Democrats to seize the White House in 2008 and to retain a majority in Congress (an abysmal thought if there ever was one), one thing is certain: There WILL be many more stringent draconian regulations of all flavors and textures adopted and much higher tax liabilities of all sizes and shapes imposed upon the working people of America, including union laborers, entrepreneurs and inventors - and upon the millions of America’s small businesses which have historically served as the backbone of American free enterprise, economic freedom, individualism, national independence and political and military strength.
Therefore, Americans should pay careful attention to what Ms. Clinton and Mr. Obama say and don’t say during the present election cycle, because their words, gestures and intimations will likely affect their daily lives for the worse. Indeed, once Americans understand what these candidates truly stand for (the surrender of US sovereignty and constitutional rights to an unaccountable global collective), they are likely to vote with their hearts and minds at the polls. And, when they do, they will likely remember and/or relearn why the American Revolution occurred in the first place.
As my friend and mentor, Professor O. Lee Reed of the University of Georgia, has clearly articulated in his scholarship, “Historians of the colonial era are virtually unanimous in concluding that the American Revolution was fought over private property and the English refusal to apply to their own colonists the great constitutional principle of England: legitimate taxation of privately owned resources can derive only from the people’s elected representatives. Said John Wilkes, Lord Mayor of London, during this time, ‘If we can tax the Americans without their consent, they have no property, nothing they can call their own.’”
With this in mind, I look forward to receiving your response.
Sincerely,
Informed Lawyer USA
Posted by: Informed Lawyer USA | April 12th, 2008 at 6:47 pm | Report this commentA few comments in answer to “Informed Lawyer USA”. I am also a lawyer, and I can claim to be informed about a couple of things you have not mentioned in your comments. There is good reason to see the US as slipping into an almost third world income inequality, with 40 million Americans unable to afford health care, while a small elite at the top take home hundred million dollar bonuses for running their companies into the ground, and up to 2 million subprime mortgage holders are in danger of losing their homes because of predatory lending (followed by “securitization”) amounting to almost Enron-like fraud.
The Iraq war, which was entered into on false pretenses, as now almost everyone admits, has been a trillion dollar boondoggle (according to Steiglitz, who, I am willing to bet, knows a good deal more about economics than either of us) in which elite defense contractors and oil company barons have made billions while ordinary Americans (and Iraqi civilians) die.
As our country slides into bankruptcy and the dollar becomes worthless because of deficits resulting from the huge Bush/Cheney tax cuts for the wealthiest (with minute tax cuts for the rest) our democracy is rapidly disappearing, as torture is on the rise and due process erodes. America is not yet like Zimbabwe in fact, but the theory of our supposed democracy (and economy) is not much different. Europe may have its faults. But it is doing a better job of taking care of its citizens (and, for the most part, immigrants as well) and preserving its freedoms than we are doing over here on our side of the Atlantic. And your “free market” ideology is nothing more than a meaningless slogan, intended solely to preserve the privileges of the rich, as we saw most recently from the Bear Sterns bailout.
Posted by: algasema | April 13th, 2008 at 5:12 pm | Report this commentA clarification on my above comment concerning “Enron like fraud”: I do not have specific information concerning subprime fraud convictions or dispositions relating to any specific lender, nor do I mean to imply this. However, it is a well known fact that the FBI and the SEC have been investigating the lending industry for subprime related fraud, as mentioned in a Financial Times article dated August 8, 2007.
Therefore, using this word is, in my opinion, not out of bounds. Unless my recollection is mistaken, I believe that Martin Wolf also used this term in a recent article on this topic. So did Alan Greenspan in his FT article of last week, though merely as a possibility, not a definite conclusion. My use of this word in connection with subprime lending has the same intention. It would be very hard to imagine that there could have been so many subprime loans issued on such harsh terms to people clearly unable to pay the sky-high “adjustable” interest rates, nor would so many institutions have bought worthless securities backed up by these mortgages, without conduct by the lenders which, if not actually fraudulent as a matter of law, can reasonably be assumed to have come as close to the line as possible.
Posted by: algasema | April 13th, 2008 at 9:47 pm | Report this commentRCS,
can you name me an African ‘country’ that was NOT founded by non-Africans?
We all have our responsibilities and our parts to play in ensuring that Africa does not remain a ‘basket case’ (which is in itself a distortion of a much more complex situation)…
Posted by: David | April 15th, 2008 at 2:02 pm | Report this commentDear Algasema,
You seem so emotionally distraught over these issues that I promise to refrain from using loaded political terminology and from making legal accusations that are NOT factually based.
You see, my statements are based on fact (I can present much documentary evidence) concerning high-cost and non-science-based Euro-over-regulation creep within America. I can also provide documentary evidence which clearly points to which one of the two main US political parties embraces the moribund welfare-stated-based European Dream and along with it, the Euro-regulatory creep, especially as concerns the environment, universal healthcare and notions of weaker private property rights, including IP, which can be more readily overriden by claims of ‘public interests’.
So, when I state that I can prove that policies favored by Madame Clinton and Monsieur Obama who glowingly speak of their European ‘friends’, I CAN, IN FACT, trace them directly to Europe, and even to particular EU member states.
Can you back up your assertions similarly?? I strongly doubt it!!
What Americans need to do, is ask Madame Clinton and Monsieur Obama about how they will grow American government through exhorbitant welfare-like ’spending’ programs modeled after those in Europe and other socialist governments around the world (e.g., Brazil). Americans should also ask these candidates about how they will call for the imposition of layer upon layer of new opaque high cost regulations (e.g., carbon dioxide cap and trade) and all kinds of new taxes on economic activity, based on a strong notion of ‘public interest’ to correct the wrongs of the marketplace which have ‘endangered’ public health and the environment of the planet.
Oh, I almost forgot. The policy positions of Madame Clinton, Monsieur Obama and their US Senate colleagues (e.g., Sen. Leahy) also seem to favor the weakening of US intellectual property rights which are presently the envy of the world, namely patents and trade secrets. Can you demonstrate how their policies will NOT impair America’s ability to invent and innovate and generate small business investment in new technologies during this 21st knowledge-based century?
Interestingly, the stance of Madame Clinton and Monsieur Obama on patents, technology transfer and international trade seems to resemble and dovetail with that of the European Commission! Whoaa!!! Unfortunately the unions in the US only see this in connection with the current patent reform debate; they do not yet see how blocking bilateral trade agreements with Colombia, Korea, etc. on the grounds that there are relatively weaker labor and labor laws in these countries, has no impact on the US government’s ability to preserve jobs here in America! But give them some time to see through the campaign rhetoric.
American unions already realize that (they are NOT the ‘Joe six-pack’ chumps these candidates take them for), if US patents are weakened and compulsory licenses which can diminish patent rights can be issued by the US government at less than fmv, as Senator Leahy has sought to do in his prior bill (The Life-Saving Medicines Export Act Of 2006), based on the pretense of preserving an ‘important public interest’ (e.g., to improve America’s image abroad), then the chance of union members, once retrained, to capitalize from becoming garage inventors themselves - i.e., to reap the pecuniary rewards of temporary but exclusive market-based patent royalties for the time, discovery efforts and monies they have expended, will ultimately vanish.
You see, patent rights will become effectively weakened if patent infringement damage awards are limited as a matter of statute. Foreign competitors would be provided the wrong signal and would be encouraged to infringe upon US technologies and products containing them, knowing what the maximum all-out cost of a damage award could yield. Such arbitrage would also occur among compulsory license-loving centrally-planned foreign governments enamored of the ‘public interest’.
Can you provide evidence that candidates Clinton and Obama won’t pursue any of these ‘changes’? That foreign governments and foreign competitors won’t engage in patent infringement arbitrage at the market and government levels???
The public and I welcome your response.
Once the facts get out that candidates Clinton and Obama will give away American constitutional sovereignty, cutting-edge technologies, private property rights and yet-as-known sources of new 21st century American jobs, as a gesture of foreign policy - international charity and solidarity - and for the sake of ‘improving America’s ‘tattered’ image abroad’, these candidates will need to answer to the public. Only the American people, through transparent and open public debate, can sanction such initiatives. Do you not agree?
All the Best,
Informed Lawyer USA
Posted by: Informed Lawyer USA | April 17th, 2008 at 7:50 pm | Report this commentHow can any sentient person vote republican ever again.
For over 6 years they controlled the entire government.
Look around you at what they have done. Are you happy with what you see?
Than by all means vote for more bush/cheney, ie mcsame.
What is your personal misery index under these jokers?
Posted by: david galie | April 21st, 2008 at 4:11 pm | Report this comment