Wait, you mean social democracy is... social?
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.
“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,”
Of course they do, until they don’t and begin driving income inequality, stagnating real wages for workers, and leaving millions in a state of quasi-unemployment. The real argument is where you draw the policy lines to avoid those two polar outcomes.
“…that welfare dependency limits the horizons of the poor,…”
Of course it does, until it doesn’t and forces millions of indigent citizens to fend for themselves like the Okies during the Dust Bowl. The real argument is where you draw policy lines to avoid those two polar outcomes.
Etc.
— Troy · Jan 8, 02:59 PM · #
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.
That may be true.
But social cohesion fail is driving the education and immigration problems and the inequality gap.
Dr.Manzi suggests we can fix education and immigration by making those domains into mini-free markets instead of addressing the root cause. SES inequality is already survival of the fittest.
The white patriarchy model of social cohesion has been rendered non-viable by demographic and cultural evolution of the American population.
Dr. Manzi apparently is going to pay lip-service to EGT in his book….but he should remember that the laws of evolutionary games only apply within deme.
So we are back to the social cohesion problem.
I am very willing to accept Dr. Manzi’s thoughtful, elegant, meticulous analysis….but what is the social cohesion model that will replace white patriarchy?
What model do you suggest to replace it PEG?
— matoko_chan · Jan 8, 03:06 PM · #
Pardon, I meant the cooperation and altruism laws of evolutionary games theory only apply within deme.
;)
— matoko_chan · Jan 8, 03:18 PM · #
Troy: That’s absolutely right, and these are very interesting and necessary arguments to have, but it’s not the argument Chait and Manzi are having, and the one I was commenting on.
— PEG · Jan 8, 03:23 PM · #
Premise, principle, conclusion, whatever you want to call it, a world where people are secure to pursue their passions, without the risk of their families going without necessities, is a world where innovation is at the forefront, much more than one of capitalism. We are confusing pro-growth with pro-short-term-growth, which is really what our VC culture demands.
Educated, passionate minds striving for importance and purpose (our natural state) produce a lot more long-term innovation than minds focused on the quarterly demands of Wall Street. Worry hinders out-of-the-box thinking, so a social democracy built around negating worry about necessities and letting passion and discretionary income be the incentives… how does that do anything BUT foster innovation? Why is the candle problem wrong?
Linus Pauling and Niels Bohr weren’t making discoveries to get a good health plan.
— Dwight · Jan 8, 03:53 PM · #
Dwight: Ok, so you agree that it’s better to have all those great things you describe, even if it comes at the cost of lower year-on-year GDP growth?
— PEG · Jan 8, 03:59 PM · #
Of course Chait is challenging the “principle”, but I don’t think you understand the discussion Chait and Manzi are having.
Chait isn’t rejecting the notion of social democracy politically privileging solidarity over economic growth. Using Manzi’s own evidence, Chait is questioning the economic accuracy of the assumption underlying the political (ideological) choice — that when a system chooses more solidarity that it will inevitably produce less growth. That there is in fact a necessary trade-off between solidarity and growth. Chait is saying the evidence Manzi himself presented suggests that potential outcomes are a lot more complex than a trade-off.
You’re right that political discourse — whether politicians or pundits or opinion polls — is premised on a trade-off between (i) an individualistic market-oriented system which in theory produces more dynamic economic growth and less social solidarity and (ii) a social democratic system which in theory produces less growth but more solidarity. And Manzi started out with some numbers that appeared to illustrate that the hoary dichotomy has been true in practice over the last some odd decades in the most-developed economies, using the US and Europe (initially quite poorly defined for his purposes) for comparison.
And Chait said, whoa, wait a minute, Jim. This is actually a more interesting problem than your simple trade-off assumption would suggest. Your numbers don’t necessarily show that the premise in fact holds up over the past some odd decades. So maybe we ought to question whether the simple trade-off everybody assumes in political discourse is actually all that clearcut in reality. Maybe some of that government investment in collective goods and social solidarity in Europe hasn’t been all that economic growth killing but has actually been contributing to economic growth. Or maybe if the US had done a bit more on the collective and solidarity side, its individualistic dynamic growth might have been higher. We don’t know — we’ll have to look a lot closer at data and think harder about its implications. But the evidence suggests that a simple trade-off is just an ideological assumption — shared by both market-lovers and solidarity embracers alike.
You argue: “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.” Chait is pointing out that Manzi’s own evidence suggests that maybe that solidarity stuff isn’t actually producing those negative effects that you assume it produces. That the “social democratic bargain” appears not in fact necessarily to undercut “the very goals and does a disservice to the very people that it seeks to protect.”
Manzi is now trying to salvage his growth-solidarity trade-off by bringing US defense spending into the mix and suggesting that his trade-off still holds, it’s just that Europe has been getting a free ride that allows its economic activity to contribute to its growth rather than diffused across the globe in providing global collective goods. I’m not sure how this works in his national accounts — defense spending is going to be reflected in GDP or GNP numbers somewhere on the globe. But his adding the US’ outsized spending on defense is certainly a useful line of inquiry.
— nadezhda · Jan 8, 04:22 PM · #
I think Defense spending increases our GDP, unless we are buying weapons and renting soldiers from other countries, which we are not. It’s run on tax money, yes, but it takes taxes from well off people—money that mght been saved or spent on foreign made goods—and directs them into the salaries of less well off soldiers who will spend most of it on food and rent and to American factories.
— cw · Jan 8, 05:05 PM · #
“Premise, principle, conclusion, whatever you want to call it, a world where people are secure to pursue their passions, without the risk of their families going without necessities, is a world where innovation is at the forefront, much more than one of capitalism.”
Uh, no it isn’t. Necessity is the mother of invention and a society that incentivizes success instead of ameliorating failure is almost always going to be more dynamic. If you satisfy all of a man’s needs, he’s far more likely to sit on his ass and watch TV than anything else.
Mike
— MBunge · Jan 8, 05:10 PM · #
I have to admit I am puzzled by the whole line of argument…..our current woes are caused by social cohesion fail….right?
How is deregulation going to fix that?
What Manzi proposes for education won’t work. There is evidence that charter schools work, because charter schools select for parental involvement, and some even enforce it. There is evidence that increasing teacher/student ratios works, because that models parental involvement with teachers subbing for parents.
There is no evidence that vouchers or “privatizing” schools or “merit pay” can ever work.
I see merit pay as a supremely stupid idea….it is like NCLB…mandating that all children shall be “above average”…merit pay is mandating that all teachers shall be “above average”.
The reason this country is evolving into a social democracy is that the old paradigm of social cohesion failed and the market dissolved in an econopalypse of greed.
If social cohesion fail caused market fail…….how can any quantity of market success ever fix social cohesion?
— matoko_chan · Jan 8, 05:13 PM · #
At some level….you have to accept…that social cohesion is the only thing that can keep the invisible hand of the market from punching everyone in the face.
— matoko_chan · Jan 8, 05:26 PM · #
Oh, don’t I know it…
— PEG · Jan 8, 05:27 PM · #
MBunge, not so fast with your false choice between calorie-burning invention and fattening TV appreciation.
Add free-flowing capital to one sit-com-kitten-turned-plucky-entrepreneur, and we can have the best of both:
http://www.suzannesomers.com/Suzanne-Somers-ThighMaster-Gold-P7C3.aspx
— turnbuckle · Jan 8, 05:32 PM · #
You seem to have missed the part where Manzi was unable to demonstrate that it does come at the cost of lower year-on-year GDP growth. Chait and the Economist have been quite convincing in this regard.
— Chet · Jan 8, 06:52 PM · #
cw, even if defense spending increases GDP, there is the question of whether we should care about the composition of GDP. If our entire national income were spent building weapons, that would not have much utility for our society.
Setting that aside, GDP conisists of consumption plus investment plus government expenditure. You are saying that the taxation of the wealthy will increase GDP, but I don’t see how, at least not via the mechanism you postulate. If the wealthy are taxed to pay for the government defense expenditure, then as you say they must forego either saving that money or using it to buy foreign goods. Money saved is money invested, so if they fund the tax out of investment, GDP has not changed. If they buy a foreign good, now there is a foreigner holding the dollar. Unless he puts it in his mattress (which we love – exchanging paper for real stuff is a good deal), that dollar makes its way back here one way or another. It may be spent on goods or services – so it is back in GDP again, or it may be invested by a foreigner, once again, back in GDP.
Someone might argue that there is a greater multiplier effect if the defense spending is viewed as a way to move wealth from the wealthy to the defense sector’s laborers. I guess that’s possible but I would be surprised if the net effect of that is large.
Meanwhile, most expenditures on defense are not productive capital expenditures that will allow the economy to produce more next year than it did this year, so defense spending is detrimental to GDP growth – except of course to the extent that without any defense spending you could find your GDP suddenly belonging to someone else.
— andrew · Jan 8, 09:08 PM · #
Of course! That explains why Scandinavians are all such fat fucking layabouts, why Germany produces so many of the world’s blockbuster movies and television shows, why every French and British household has an enormous flat-screen TV and 500 digital channels, and why Americans are internationally regarded as clever, healthy, fit, knowledgeable, and innovative.
— Chet · Jan 9, 12:10 AM · #
“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.”
OK, but the question of whether growth is depressed in social democratic systems is an empirical one. And the data seem to indicate that any reduction in growth is minimal. Perhaps the social democrats in Europe underestimated the effects of universal healthcare, top notch education and secure pensions would have on facilitating growth, in spite of their costs reflected in higher taxes.
You seem to be doing all you an to avoid grappling with the empirical data summarized by Chait and Yglesias.
— Ben · Jan 9, 03:09 AM · #
Ben / Nadezhda:
I don’t think that is a quite accurate summary of the empricial issue.
The empirical question on the table would presumably be “Can we idenitfy the causal impacts of US vs. European policies on outcomes of interest (e.g., total growth, GDP / capita, health outocmes, etc.) through analysis of the the historical data, and if so, what are they?”
My answer to that question, btw, is “No, historical econometric analysis is insufficient to identify causality”. This is one reason why I never claimed that I was presenting empiricial evidence for the proposition that less regulated markets create higher growth under many circumstances. (If I were to attempt such a thing, btw, I would never do it in such a simple-minded way as an unadjusted comparison of some outcome between the US and Europe over some time frame, and assume this difference was caused by the policy differences).
But, by the same token, you can’t draw the conclusion form the fact of similar growth rates in GDP / capita between the US and Europe over the past several decades means that the causal impact of the repsective eocnomic policies was identical. We don’t know the counter-factual. As an example, Western European growth rates in GDP / capita were higher than those in the US from 1950 – 1980.
— Jim Manzi · Jan 9, 04:13 AM · #
“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.”
bzzzzzt! Retread of Trickle-Down Warning!
PEG……no one believes you.
we already tried that.
— matoko_chan · Jan 10, 04:12 PM · #
Then to which “edge” were you referring to when you entitled your article “keeping America’s edge”? How were you able to assert:
All of your critics have perceived you as making the argument that less regulated (less “social democratic”) markets create more growth than more regulated, more “social democratic” ones. They have this perception not because you’ve been unclear, as you now suggest, but because that’s exactly the argument you made.
— Chet · Jan 10, 07:06 PM · #