Jim Manzi’s article in National Affairs is in my view a tremendous exposé of the challenges America faces in the 21st century (and if you haven’t read it so far, you should do so now).
Obviously there are a lot of things that a smart lefty can find to debate about it, but there is something that strikes me as weird about Jon Chait’s criticisms. Beyond the apothecary arguments about proper GDP figures, Chait’s contention that
Manzi does a terrible job of establishing his premise that social democracy (…) destroys growth and innovation
seems not only unkind (you can argue with Jim, but I haven’t seen any evidence of him ever doing “a terrible job” of anything), but simply off the mark.
After all, coming from a European perspective, people here will tell you that the point of social democracy (broadly understood) is to privilege social cohesion and equality over growth.
Outside of electoral campaigns where Free Lunch thought reigns supreme, this is what politicians will tell you, and this is how supportive citizens of social democratic countries will explain to you the tradeoff of their social contract.
When you run opinion polls in France, Germany or Sweden, on whether it is better to have more growth at the expense of equality, except during the pits of recessions, a vast majority of respondents say no. And outside electoral campaigns, so will politicians. Germans will tell you that the great thing about the Sozialmarktwirtschaft is precisely that it does not bow to the neo-liberal dogma of economic growth but privileges other, deeper values. Same for the vaunted (inside our borders) French “social model”.
But the bargain rests on a postulate, that social equality and cohesion are to be preferred over economic growth. And it is a moral and honorable one in principle — certainly if the choice was between sleepy Sweden and 1970s Brazil-style inequality, I know where I would stand.
The argument, it seems to me, is whether the social democratic bargain undercuts the very goals and does a disservice to the very people that it seeks to protect — that more flexible labor markets allows immigrants and mothers to integrate better into the workforce, that welfare dependency limits the horizons of the poor, that industrial policy benefits wealthy and connected insiders first, that entrepreneurial innovation brings goods and services, from the Model T down to Google, that hugely improve the lives of the many, and so on.
Obviously, this is not the terms that Barack Obama would frame the debate in, partly because Americans care more about growth than Europeans, and partly because politicians everywhere, and US Presidents of all stripes especially, are ardent proponents of free lunch-ism (remember how tax cuts would raise government revenue?). And supporters of Barack Obama’s agenda can dispute whether his policies constitute, in fact, European-style social democracy.
But from my perspective, disputing that social democracy discourages growth more than more market-friendly policies is not disputing its effects, it is disputing its principle.