[North-NV-Greens] Re: [CitizensForum] Social Democracy, Anyone?

Fri Dec 10 10:53:20 PST 2004

Sounds to me like it is time to join, recruit, bolster, and support the
Organized Labor movement again in the USA.  Once again working men and women
will have to show corporations and politicians who they have hurt.

----- Original Message -----
From: "terra_digita" <no_reply at yahoogroups.com>
To: <CitizensForum at yahoogroups.com>
Sent: Friday, December 10, 2004 10.36
Subject: [CitizensForum] Social Democracy, Anyone?

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Social Democracy, Anyone?

J. Bradford DeLong
http://www.tompaine.com/articles/social_democracy_anyone.php
December 10, 2004

In the search for new, big ideas, Brad DeLong is onto something. Now
that America is competing in a global economy, companies are less
willing to fund health care and pension programs. Unless we want to
accept a massive trend in downward mobility, we need to do something.
That means a hard look at the relationship between corporate
subsidies, social welfare and taxes.

---------
J. Bradford DeLong is professor of economics at the University of
California at Berkeley and a former assistant U.S. treasury secretary.
---------

Almost all of the world's developed countries consider themselves, and
are, social democracies: mixed economies with very large governments
performing a wide array of welfare and social insurance functions, and
removing large chunks of wealth and commodity distribution from the
market. The United States is something different. Or is it? Whatever
it has been in the past, the United States in the future will have to
choose whether, and how much, it will be a social democracy.

Once upon a time, according to mythology at least, America had little
downward mobility. On the contrary, before the Civil War you could
start out splitting rails, light out for the Western Territory, make a
success of yourself on the frontier, and wind up as president-if you
were named Abraham Lincoln. In the generation after World War II, you
could secure a blue-collar unionized manufacturing job or climb to the
top of a white collar bureaucracy that offered job security,
relatively high salaries, and long, stable career ladders.

This was always half myth. Setting out for the Western Territory was
expensive. Covered wagons were not cheap. Even in the first post-WWII
generation, only a minority of Americans-a largely white, male
minority-found well-paying stable jobs at large, unionized,
capital-intensive manufacturing companies like GM, GE or AT&T.

But if this story was half myth, it was also half true, particularly
in the years after WWII. Largely independent of education or family,
those Americans who did value stability and security could grasp it in
the form of jobs with "a future." Even for those not so lucky,
economic risks were usually fairly low: the unemployment rate for
married men during the 1960s averaged 2.7 percent, and finding a new
job was a relatively simple matter. It was during this era-roughly
from 1948 to 1973-that sociologists found that a majority of Americans
had come to define themselves not as working class, but as middle class.

The post-WWII period stands as a reference point in America's
collective memory, but it was in all likelihood an aberration. In the
early postwar decades, foreign competition exerted virtually no
pressure on the economy, owing to the isolation of America's
continental market from the devastation of WWII. At the same time, the
war left enormous pent-up demand for the products of mass production:
cars, washing machines, refrigerators, lawn mowers, television sets
and more.

Government policy back then began with a permanent military program of
spending and R&D and continued through massive public works program
and suburbanization, underpinned by the Federal Highway Program and
subsidized home ownership loans from the Federal Housing
Administration. The regulatory institutions and behavioral norms that
originated in the New Deal and developed during WWII came into full
force: Social Security, a system of unionized labor relations, market
regulation.

Favorable macroeconomic circumstances, the absence of foreign
competition, a system of government support and regulation, and
large-scale private provision of what in Europe would have been public
social insurance all combined to give post-WWII America many of social
democracy's benefits without the costs. The economy did not stagger
under the weight of ample benefits or high taxes. Americans-at least
white, male Americans-did not have to worry about tradeoffs between
security and opportunity, because the United States offered the
advantages of both. Corporate welfare capitalism substituted for what
in Europe would have been government provided social democracy.

America was thus a special place. It had its cake and ate it, too: a
combination of security with opportunity and entrepreneurship. It
seemed that this was the natural order of things. Hence there was
little pressure for government-sponsored social democracy: Why bother?
What would it add?

Now things are very different. The typical American employer is no
longer General Motors. It is Wal-Mart. Private businesses are
providing their workers with less and less in the form of
defined-benefit pensions, health insurance, and other forms of
insurance against life's economic risks.

Sharply rising income inequality has raised the stakes of the economic
game. A government that cannot balance its own finances cannot be
relied on to provide macroeconomic stability. Indeed, former chairman
of the U.S. Federal Reserve Paul Volcker sees the United States as so
macroeconomically vulnerable as to be running a 75 percent chance of a
full-fledged dollar crisis over the next several years.

The coming generation will be one of massive downward mobility for
many Americans. The political struggles that this generates will
determine whether America will move more closely to the social
democratic norm for developed countries, or find some way to accept
and rationalize its existence as a country of high economic risk and
deep divisions of income and wealth.

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