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Wealth, Inequality, and Europe January 15, 2010

Posted by Dwight Furrow in Dwight Furrow's Posts, Political Philosophy, politics.
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American political writers constantly claim that Europe, although a nice place to visit, doesn’t really produce enough wealth to make it livable. This column by Ross Douthat is the most recent of the genre. This belief is part of the narrative that social democracies, because they devote lots of resources to public goods and a social safety net, are less efficient than full-blown capitalist economies.

Matt Yglesias has the right response to this argument.

There are three main differences in living standards between the United States and Europe. One is that the US has long been somewhat wealthier than the biggest European countries, dating back to the 19th century. Two is that the US is much less egalitarian than Europe—a bigger share of European output is in the hands of the poor and the middle class, and a smaller share in the hands of the rich. The third is that Americans work more than most western Europeans…

These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth.

This article by Lane Kenworthy contains a primer on the correlation between inequality and growth—it turns out there isn’t any. Here is one of his charts:

doesmoreequality-figure1-test

Aside from the outlier, Ireland, it is hard to see a correlation between growth rate and inequality.

This is another right-wing talking point that needs to be scrapped.

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com

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Conservatism European Style October 1, 2009

Posted by Dwight Furrow in Dwight Furrow's Posts, politics.
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Stories like this one in the Baltimore Sun about the recent German elections are fundamentally misleading:

In a year when capitalists and bankers are widely reviled, German voters did something strange; they dumped the pro-worker, pro-low-unemployment Social Democrats and chose the centrist, pro-business Free Democrats as Ms. Merkel’s coalition partner. The Social Democrats were trounced from the center and the left because of the economy, and the Free Democrats filled the gap. Even though Ms. Merkel remains at the helm, many policy differences will likely result from this coalition – changes that matter to the U.S.

Social Democrats are losing elections in Europe but social democracy is alive and well because, in Europe, there are responsible conservatives who accept the responsibility of government to improve the lives of citizens.

As Steve Erlanger writes:

Europe’s center-right parties have embraced many ideas of the left: generous welfare benefits, nationalized health care, sharp restrictions on carbon emissions, the ceding of some sovereignty to the European Union. But they have won votes by promising to deliver more efficiently than the left, while working to lower taxes, improve financial regulation, and grapple with aging populations.

Europe’s conservatives, says Michel Winock, a historian at the Paris Institut d’Études Politiques, “have adapted themselves to modernity.” When Nicolas Sarkozy of France and Germany’s Angela Merkel condemn the excesses of the “Anglo-Saxon model” of capitalism while praising the protective power of the state, they are using Socialist ideas that have become mainstream, he said.

In the U.S., by contrast, conservatives are preoccupied with ripping apart social safety nets, promoting violent coups, and making sure every barfly has a gun.

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com