Friday, June 15, 2018

Our Social Democratic Future: The Progressive 2020's

One of my favorite analysts, sociologist Lane Kenworthy, is out with a terrific new article in Foreign Affairs on "How the Safety Net Can Survive Trump". Kenworthy opens his piece as follows:
"During his campaign for the U.S. presidency, Donald Trump promised to protect the foundations of the United States’ public insurance system. “I was the first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid,” he tweeted in May 2015. “The Republicans who want to cut SS & Medicaid are wrong,” he added two months later.
Trump’s commitments to the safety net set him apart from his Republican competitors during the campaign. But since taking office, the president has fallen in line with Republican leaders in Congress who seek to roll back the social programs he pledged to preserve. Last year, with Trump’s support, Republican lawmakers tried and narrowly failed to slash Medicaid, which helps pay for health services for low-income Americans, as well as government subsidies for private purchases of health insurance. Speaker of the House Paul Ryan of Wisconsin and Senator Orrin Hatch of Utah, the chair of the Senate Finance Committee, have said they will seek to scale back Medicare this year. The partial privatization of Social Security could be on the table, and food stamps, disability benefits, and housing assistance are also likely targets.
Such proposals seem to threaten the progress the United States has made toward social democratic capitalism—a system that features modestly regulated markets, a big welfare state, and public services meant to boost employment, such as childcare and job-placement assistance. The evidence suggests that social democratic policies improve economic security and well-being without sacrificing liberty, economic growth, health, or happiness. Contrary to conventional wisdom, the country has gradually come to embrace this model over the last century. The federal government has built public insurance programs that help Americans manage old age, unemployment, illnesses, and more. Since 2000, California, Massachusetts, New York, Oregon, and Washington State, which are home to around one-quarter of all Americans, have gone further, introducing such policies as paid parental and sick leave and a $15 minimum wage. Although the United States has not reached the level of social democratic protections that exists in countries such as Denmark and Sweden, it has been moving steadily, if slowly, in that direction.
Republican control of the presidency and Congress has put that march on hold. But the United States’ social democratic future is not over. The structure of the U.S. government and popular support for public services will be formidable obstacles to the small-government vision of the current Republican majority, as well as to the vision of future ones. The United States has weathered a number of challenges in its progress toward social democracy, and the trials of the present era will likely prove a brief detour rather than a dead end."
I agree with this strongly, as I explained at some length in my book, The Optimistic Leftist. Kenworthy goes on to say:
"The Trump administration has instituted some cutbacks on its own, without congressional action, and it may put in place more. It has weakened and delayed regulations protecting workers’ safety, ensuring access to fair pay, and securing the right to organize, and it has issued executive orders allowing states to require able-bodied low-income recipients of Medicaid, food stamps, and housing assistance to have a paying job in order to qualify for benefits. Although these changes have real effects on people’s lives, they don’t amount to a frontal assault on the U.S. welfare state, and they can be quickly reversed by a future president.
In the longer term, public support for government services will probably deepen. Many of the groups that back such programs—including professionals, minorities, immigrants, millennials, and single, secular, and highly educated people—are growing as a share of the U.S. population. The opposite is true of groups that are more skeptical of the safety net, such as rural residents, working-class whites, the religious, and the rich but not highly educated. And not everyone in the latter set opposes a bigger role for the state: Trump’s pitch for a government that would secure jobs and maintain public insurance programs helped him win over many working-class whites in 2016. (That plenty of those voters still support Trump despite his abandonment of his earlier commitments to the welfare state may be explained by the president’s positions on cultural issues and his rhetorical commitment to job creation.)
To be sure, the 2017 tax cuts will reduce annual federal revenues by around one percent of GDP, and that could pressure lawmakers to shrink government programs and limit new spending. But recent history suggests that tax cuts tend to be followed by tax increases. Tax rates fell under Reagan, rose under George H. W. Bush and Bill Clinton, fell under George W. Bush, and rose again under Obama. By 2016, tax revenues equaled 26 percent of the country’s GDP, just as they did the year before Reagan took office."
In Kenworthy's view, the biggest threat to our social democratic future is a sustained economic slowdown. I think this is an extremely important point, one I myself have made many times. It never ceases to amaze me the so many on the left do not appear to understand the centrality of economic growth to so many of the goals they hold dear.
"The real threat to the United States’ social democratic future is a sustained economic slowdown. Over the last century, the country’s GDP per capita has grown at an average rate of 1.9 percent per year. But between 2000 and 2007, the rate dipped to 1.5 percent, and from 2007 through 2017, it fell further, to an average of just 0.6 percent. The Great Recession is the chief culprit: its arrival in 2008 cut short an economic expansion, and its depth dug a big hole from which the U.S. economy has yet to emerge. Yet some analysts believe that the United States has entered not a moment but an era of slow growth. One version of this story points to weak demand, perhaps due to the rising share of income that goes to the rich, who tend to spend a smaller fraction of their earnings than do middle- and lower-income households. Others contend that the problem is a decline in competition in important sectors, such as the technology industry, or a slowdown in the formation of new businesses. The most pessimistic assessment comes from economists such as Tyler Cowen and Robert Gordon, who argue that inventions such as electricity, railroads, and the assembly line boosted productivity and growth in earlier eras to a degree that more recent innovations cannot match.
The slowdown is worrisome because economic growth facilitates the expansion of public social programs. For one thing, it makes them more affordable; as the economy grows, so do tax revenues. Economic growth also increases public support for the welfare state. Most people are risk averse and altruistic, so as they get richer, they tend to want more protections for themselves and more fairness in their society. If the United States suffers years of slow growth, Americans’ embrace of generous public insurance programs may wane."
But, Kenworthy argues:
"...{G]rowth could return to a higher rate in the coming decades. There have been previous periods, such as the 1930s, when the economy slowed down before returning to the long-term trend. And the productivity benefits of new technologies such as the Internet may take years to appear; after all, the period of strongest productivity growth stemming from electricity and other nineteenth-century innovations occurred decades later, between the mid-1940s and the mid-1970s. Moreover, economists have an array of proposals for remedying the slowdown, from improving the educational system to toughening antitrust efforts to reducing income inequality.
Even if the slowdown in the rate of economic growth persists, the United States could still become far richer in the coming decades. Over the last 70 years, per capita GDP in the United States, adjusted for inflation, has increased by about $40,000. The country is now wealthy enough that securing the same increase over the next 70 years would require a yearly growth rate of only 0.8 percent."
He concludes:
"At some point, perhaps as soon as 2021, there will again be an opportunity to move federal policy in a social democratic direction. When that happens, policymakers should push for public investments in early education, universal health insurance coverage, paid sick and parental leave, upgraded unemployment insurance, and more. There is evidence that such programs improve lives. Less clear is which measures to prioritize—and how to implement them. Should the United States move to universal health insurance coverage by expanding Medicare, Medicaid, or both? Should public preschool begin at age four or earlier? Should paid parental leave last six months or 12 months? Questions such as these, rather than whether or not to shrink the government, should be at the center of policymakers’ debates."
I look forward to the progressive 2020's! In the end, we will likely find that the welfare state--updated, modernized and, yes, expanded--is a great deal more durable than people today tend to think.
FOREIGNAFFAIRS.COM
The United States has weathered a number of challenges in its progress toward social democracy, and the trials of the present era will likely prove a brief detour rather than a dead end.

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