Monday, October 27, 2008

Obama's Redistributive Instincts: Prelude to an Administration

As our Republic considers the specter of buyer's remorse after November 4, voters contemplate what an Obama presidency with a Reid/Pelosi Congress might mean for its future.

One contribution is an archived 2001 interview from WBEZ, a Chicago NPR affiliate, in which then-state legislator Barack Obama speaks to the question of redistributive economic policies as the unfinished work of the civil rights movement. We invite gentle readers to turn away from the screen below, which annoyingly offers comments on what is obvious from listening, and merely listen:

Another indicator is Rep. Barney Frank's comment that he expects to finance increased infrastructure spending and unemployment benefits with a 25% cut in military spending.

Another is an opinion article in today's WSJ (still arriving free on the SWNID driveway: is this a preview of socialism under Obama--free newspapers for Republicans?), part of a series comparing the two candidates' positions, that details Obama's labor policies, which would give the United States its most onerously anti-growth labor laws in its history.

An analytical article in the same paper notes that historically the only means to "close the gap between the rich and the middle class" is to go through a prolonged recession. We know which party is aiming to do that, and which is depending on higher taxes on those soon-to-be-less-rich folk to finance what John Kerry calls "New Deal II."

And Democratic Party ads continue to promote trade protectionism as a means of economic growth. Mr. Smoot and Mr. Hawley, call your publicists.

As the Big Three automobile manufacturers--the last relics of the post-Depression, post-WWII economy in which highly unionized American manufacturers managed profitability because the rest of the world's manufacturing capacity was either destroyed by war or didn't exist yet--break under the burden of their uncompetitive obligations to workers and retirees, the revitalized liberal wing of the Democratic Party salivates at the opportunity to finish the work that FDR started.

There has arisen a generation that knows not the 1970s, when policies like these had what we hoped was their last appearance. But the experience of the United States in that regard is nothing as compared to our European--and especially British--cousins, whose miserable experiences we seem determined to imitate. To impoverish a nation, one need merely remove the natural incentives to be productive and soften the natural disincentives to be unproductive.

A personal correspondent recently complained to us that when elected, the Democrats will once again save the country and once again get no credit for it. We say that credit should be given where it's due. We duly credit Johnson and Carter for the economic impact of their policies: stagflation. We duly credit Nixon's wage and price controls for their miserable contribution as well. We duly credit Clinton for acceding to political and economic reality under a Republican Congress by reducing capital gains taxes, passing NAFTA and welfare reform, and restraining government spending. We credit Reagan with having changed the debate, though it now seems not once for all, and so changing the economic direction of the country for some 25 years, a move of which everyone in the world is currently a beneficiary, if not for long.

And we will credit the once-and-future Democrats for whatever they will do, and the American electorate for noticing and responding . . . if not in this election, then perhaps in the next.

But back to Obama. His notion of redistribution as the endgame of civil rights strikes us not just as self-defeating but also as completely paternalistic. Do people of color, long the objects of discrimination in our Republic, suffer from a shortage of redistribution or a shortage of opportunity? Not a member of the minority community, we still find it condescending that Obama, himself not the descendant of plantation slaves who have experienced the worst of American racism, implies that the minority community is largely incapable of attaining equality by any means besides redistribution.


Anonymous said...

I'm confused about your comment about European countries struggling. They may be struggling from the highest percentage of rich people, but those countries are still considered developed nations, and they have less homeless people, a lesser gap between the rich and the poor, and plenty of incentive to work. Check out Japan. They produce electronics and cars like crazy even though the top percentage gets taxed pretty heavily. That's a weak argument.

Bryan D said...

In certain parts of Glasgow the life expectancy is less for a male is less than 40 years. Now, this is a country with free health care and extensive welfare programs. There is no place in the "western" world where the "gap" is perhaps any greater. The argument is strong, my anonymous friend.

Bryan D said...

Pardon the redundancy there in the first sentence.

Anonymous said...

In certain parts of Glasgow? That's like saying, in one section of Harlem people die young. Is the disparity between the rich and the poor as a whole in the UK or in Scotland as great as that in the U.S.? How are you going to take a small section of one city and compare it to our nation as a whole?

Anonymous said...

Plus my primary argument has to do with incentives to work, which still are present in Glasgow, but I do believe that the disparity between the rich and the poor is a side-argument that is still supported. As a whole, a lower percentage of people are in poverty and the gap is smaller in the European nations than in the U.S.

Bryan D said...

Well, I'm not sure where the incentive line comes into to play. If anything, wealth redistribution programs eliminate incentive to work. Of all the people I know on benefits, only those who cannot work due to disability actually want a job. I would maintain that this is largely true of welfare beneficiaries around both the Americas and Europe.

The point I was making is directly related to SWNID's regarding the lessons we should learn from European experience; namely, that benefits programs don't work. If they did, there would not be pockets of the UK which are like third world countries. These neighborhoods (each containing tens of thousands of people) in which life expectancy is so low are obviously among the poorest areas in Europe and are ruled by Europe's wealthiest welfare state. It is rather apparent that the measures being taken are not working and cannot work.

Many American liberals (which may or may not include anonymous personalities) have a lofty view of what they think European socialism is. By little fault of their own, they are given the green tinted goggles of Oz without realizing it. 900,000 Scots live in poverty, that's 18% of the total population whereas 12% of Americans are in poverty (37 million in 2008 out of a population of 301 million).

Most of what gets thrown around by the American left these days about the successful European socialist states is purely mythological. I'm not saying that this is the end of the argument in terms of political philosophy, but liberals need to be able to demonstrate why their reforms won't end up like Europe's rather than pointing their fingers across the ocean and relying on their listeners to be too uninformed to call their bluff.

Let me be clear, this is not an ideological statement on my part, but an empirical one.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

By nearly any objective measure except the envy-related gap-between-rich-and-poor (yet again we ask, who cares how rich the rich are if nearly everyone else is doing OK), Americans are better off than Europeans. Bryan D enumerates many of those ways, which any American expat knows intimately. Your list is simply false on the facts.

Europe's cities have slums and crime every bit as bad as America's. What they're only beginning to obtain is social mobility. In Europe the poor have stayed poor much more than in this country.

In our post we referred most poignantly, however, to the Britain that existed before Baroness Thatcher's beneficent return of the kingdom to sanity. If the UK is well today at all, it's because of less focus on redistribution, not more.

Obama's stated policy goals make him look much more like Harold Wilson or James Callahan than Mrs. Thatcher. They will make the Republic look like the 1970s Kingdom.

On the way out, we'll note that the major powers of Europe are currently governed by center right parties, with the half exception of the UK, which has an unpopular centrist government on the verge of defeat by the center right.

Japan, by the way, is not in Europe and is only now emerging from 15 years of economic lethargy. You rightly note that they "tax like crazy," however. Only their corporate tax tops ours. Everyone's in Europe's is lower. Everyone's.

Japan's high individual tax rates are the consequence of its historic emphasis on exports and restraint of consumption, a quasi-merchantilist notion that many economists would say is largely to blame for its recent "lost decade." If there's a country to imitate for fiscal policy, nobody would nominate Japan these days.

Anonymous said...

This is all interesting stuff. Please know that I challenge and question not to convince but to learn. My views aren't set in stone. I'm curious to know why European nations have tended to stay so liberal if it hasn't been working for them? What's the point of keeping socialism if it isn't doing its job? Also, isn't European right-wing politics significantly to the left of U.S. right wing politics? Maybe there is a healthy mix between the two, no?

Jim Shoes said...

Anon, the current rate of unemployment in the Eurozone is 7.2%, expected to rise to 8.5%, much higher than the USA's 6.1%. That's just one of many ways our cousins in the old country aren't living in the socialist paradise that Democrats envy.

There's a cool map here that shows relative unemployment rates globally. The USA appears in a favorable shade of deep blue.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

OK, more discussion. Let the seminar continue.

Europeans tend to be more statist than Americans largely because of their histories of class and class conflict and the trauma of war. Don't underestimate the influence of Marxist dogma on intellectuals of the previous generation, either. Still in the early 1990s the British Labour Party sang the "Internationale" (a famous Communist anthem) at the end of every party conference. Thank Tony Blair for the end of that embarrassment.

Europe is, nevertheless, trending away from socialism and toward free markets. With occasional, brief turns to the left, it's been moving right since the 1980s, just like this country (until next Tuesday).

No, the European right is not to the left of the American right. Their governments are starting from a position further to the left, so at any given point, they're governing a more statist regime. Mrs. Thatcher wasn't and Monsieur Sarkozy and Frau Merkel aren't ideologically anywhere to the right of the Bushes or McCain or even Reagan.

There still exists in Europe (France, Spain, Austria), sadly, a small far "right" that is nasty. These folk are remnants of the racist/facist movements of the middle of the last century. They have nothing in common with the free-market conservatism of the United States or the center-right parties of Europe.

Asking why Europeans remain socialist if it doesn't work is like asking why Americans want to try socialism even though it doesn't work. People make bad choices. You're reading this blog, aren't you?

Here's our question: where'd you get the idea that Europe is way better than the United States? It wasn't from Democrats, was it? Or the news media.

Pardon the redundancy there.

JB in CA said...

Jim Shoes: Isn't Sweden the country whose health care system is the one most envied by Democrats? I ask only because I noticed that Sweden is also shaded a dark blue on your map. Elsewhere (on the U.S. Department of State website), I found that Sweden's unemployment rate was 6.2% in 2007 and is expected to drop to 5.8% in 2008, the latter significantly better than the U.S.'s.

Jim Shoes said...

I wouldn't want to speculate on which country Democrats envy most. You can complete the sentence "Democrats envy . . ." with almost any object and speak the truth. Envy is to Democrats what carbon is to life forms.

It's tough to compare giant, diverse countries to small, homogeneous countries. Sociologists and anthropologists have widely observed that Swedes have done well whether in Sweden or elsewhere (e.g. Minnesota). Same for the Norse and Danes. It seems to have less to do with Scandinavian politics than Scandinavian culture, at least in the post-viking era.

And unemployment is but one measure of social welfare. Buying power, social mobility, cultural history, patterns of immigration and the like must be taken into account as well.

For every Sweden there are many Irelands, Polands, Singapores, and the like.