Creative Destruction

March 29, 2006

American vs. European Social Models

Filed under: Blog Status,Debate,Ethics,Human Rights — Brutus @ 10:23 pm

Update: This post continues to draw traffic even after five years and despite this group blog being abandoned. It is cross-posted at The Spiral Staircase, which is my personal blog and is still active. Feel free to comment either place.

Original post: The comment by Bazzer about flattened tax structures, my rejection of the idea, and Adam Gurri’s invitation to expand on the topic prompts me to describe more fully why I reject Reagan’s success in flattening the tax structure — a process that continues unabated today. Let me start by contrasting the American and European social models, albeit briefly.

I attended a lecture last month by T.R. Reid called the “European Social Model.” That term refers succinctly to the welfare state, which in Europe has none of the negative connotations it does in the U.S. High tax rates in European support a variety of human services, including socialized medicine, unemployment insurance, welfare, and free public education through university. Although the specific levels of support vary among European states, Europeans are justifiably proud of their collective accomplishment in caring for each other and creating a humane social contract. Recent uprisings in France over employment rules make a great deal of sense from within that context, though from an American perspective the agitators appear positively insane.

In the U.S., considering our history of tax revolt, we categorically flee from the idea of socialized anything. Nonetheless, we have socialized education (through high school), socialized defense (we should go back to calling it the Dept. of War, IMO), socialized roads, and socialized medicine in the form of Medicare/Medicaid. Levels of support and benefit for human services are considerably lower in the U.S. compared to Europe, and our overall tax rates are lower. It’s more of a continuum than a toggle switch.

However, I doubt anyone in the U.S. could be justifiably proud that we frankly allow our fellow citizens to literally live on the street and die of exposure and/or starvation. In that respect, we are inhumane, and Europeans think we’re insane for allowing it to persist in what is arguably the richest country in the world. Of course, the rich and powerful, who stand to gain from tax rates lower than those in Europe and lower than U.S. tax rates from the 1960s, say, have succeeded in flattening the U.S. tax structure. What used to be a fairly progressive structure (high earners paid a high percentage) has moved incrementally toward a regressive structure (low earners pay a higher percentage when various penalties are factored in, such as the inability to exploit tax loopholes for not having enough money, or Social Security taxes on all of one’s income instead of the first $84K only, or even sin taxes on alcohol and cigarettes).

The flabbergasting thing to me is that the poor have been convinced that possibility of hitting it big (winning the lottery or being a rapper, mostly), which only happens to a miniscule number of people, makes protecting immense wealth advantageous to them even when they don’t have it. Hope is kept alive — and the underclass with it. The range from top to bottom of the socioeconomic scale has been widening for 50 years in the U.S., whereas in Europe, except for a few royal and aristocratic families, it’s been narrowing.

Which model delivers better social justice? For my money, the European social model.

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30 Comments »

  1. Here’s my angle of critique:
    1. Dying of exposure? Who’s dying of exposure? We have a very vibrant tradition of private, non-profit organizations, as well as semi-public ones, that provide for our poor and homeless.

    2. If you want to talk about Unemployment, I don’t think you’re going to find anywhere in Europe to cast a positive light on. All the big boys–France, Germany, Spain–they’ve all got double-digit unemployment on average, with rates as high as 50% in the more empoverished areas.

    3. If you want an example of successful flattening of taxes, look no further than Ireland.

    I’m not about leaving anyone out in the cold. Americans, on average, beat the citizen of just about any other country in the amount of money they give to charities and medical research.

    All I’m talking about is some sense of basic economics. What you want is to build flexibility into the structure–give people a lot of choices. That doesn’t mean leaving out the government entirely–if you look at how many people in this country either have health insurance or government-paid medicare, you find that fewer people pay for medical treatment out of their own pockets than citizens in Canada, even.

    The point is to never have a “One Best Way” approach, but to provide as many options as possible. Too much government strangles out competition, and too little tends to result in ballooning monopolies which are just as inflexible in the end.

    America has had the best balance of public and private sector life of any country in decades, it is my personal belief.

    We’ve got full employment (something like 5%, for God’s sake–they used to think that 7% was as low as you could get) and your opportunities multiply with further education; unemployment rate among Americans with any form of college degree is currently at 2.1%.

    So, where’s the problem?

    Well, I guess the question is, where’s the problem in the US economy. ‘Cause I could name a few things that Europe might want to concern itself with.

    Comment by Adam Gurri — March 30, 2006 @ 12:16 am | Reply

  2. the poor have been convinced that possibility of hitting it big (winning the lottery or being a rapper, mostly), which only happens to a miniscule number of people, makes protecting immense wealth advantageous

    Leaving aside the incorrect belief about the quantitative level of class mobility, I don’t think this matters in the way you think it matters, for a simple reason:

    The “poor”, by and large, do not vote. Our entire underclass could be avowed revolutionary Marxists, for all the impact they have at the polling place. So our political systems are not dependent upon tricking the lower class into thinking they should support certain disadvantageous policies; rather, the systems are responsive to the interests and the inputs of the people who use them.

    Comment by bobhayes — March 30, 2006 @ 12:20 am | Reply

  3. The “poor”, by and large, do not vote. Our entire underclass could be avowed revolutionary Marxists, for all the impact they have at the polling place

    Where’d that come from?

    Can you link to somewhere on that one? I’ve never heard that before.

    Comment by Adam Gurri — March 30, 2006 @ 12:26 am | Reply

  4. Sure, try this HNN article. Money bit:

    Although a class bias in turnout has been a persistent feature of U.S. elections, the gap has widened to a chasm. The voting rate among those at the bottom of the income ladder is only half that of those at the top.

    And as an aside, not only is the rate of participation much lower, the group itself is relatively small. (About 13% of the population, according to this economic report.)

    Comment by bobhayes — March 30, 2006 @ 12:46 am | Reply

  5. HNN article: http://hnn.us/articles/1104.html

    Money graf: “Although a class bias in turnout has been a persistent feature of U.S. elections, the gap has widened to a chasm. The voting rate among those at the bottom of the income ladder is only half that of those at the top.”

    Comment by bobhayes — March 30, 2006 @ 12:47 am | Reply

  6. Curse you, comment-munching double-post WordPress software!

    Comment by bobhayes — March 30, 2006 @ 12:49 am | Reply

  7. sorry about that. CD randomly decided it needed my approval before you were allowed to speak, bob. If only you weren’t such a troublemaker, we wouldn’t have these problems.

    I must confess a distrust of the data presented in that article, as I’m unable to ascertain the methodology used to draw its conclusions–also, because we don’t havea class system, income isn’t fixed and so someone who has a low income one year might be doing better the next, or vice versa. Are we to believe that this will mean he’s less likely to vote during the times he’s less prosperous? And if so, what are we basing that belief on?

    Comment by Adam Gurri — March 30, 2006 @ 12:52 am | Reply

  8. There is mobility, but there are also people who have given up. Those people are always poor, and they never vote; they’re the portion of that bottom quintile that drag the numbers down for the transient members of the quintile who probably aren’t any more or less likely to vote.

    Comment by bobhayes — March 30, 2006 @ 1:08 am | Reply

  9. Yes, but that only raises more questions:

    What percentage of the overall population are we talking about here? Or even the overall voting-age population?

    How can it be demonstrated that this particular group is less likely to vote?

    Sorry, I’m something of an obsessor about method.

    Comment by Adam Gurri — March 30, 2006 @ 1:13 am | Reply

  10. “Where is the problem?” asks Adam. I see the poor in the city where I live every day. They beg for money, and many are derelicts. They literally sleep on the street, at least until the police rousts them. They’re shoved out of sight somewhere so that they’ll be out of mind. It’s shameful that people are allowed to get to that low point.

    I mentioned the poor, but I didn’t mention the middle class, which is mostly downwardly mobile. Sure, some are upwardly mobile, too; that’s the American dream. But demographics demonstrate that fewer and fewer are acheiving upward mobility.

    Look no farther than the so-called McJob. Employment opportunities in the middle and lower sectors are being squeezed: stagnant minimum wage, reduced or nonexistent benefits, longer hours, etc. It now takes a double income for most to acheive a lifestyle comparable to that of their parents. Home ownership is a far-off dream. It goes on and on.

    As to voting patterns, one might wonder why the poor don’t vote and why the rich do. Could it be the poor are disenfranchised while the rich have an interest in protecting their position? The fact of those numbers doesn’t dispel my point, which is that even the poor believe against all odds that the American dream is within their reach. It isn’t for most, and the dream has changed, anyway, from comfortable, honest living to luxury and prestige.

    Comment by Brutus — March 30, 2006 @ 3:02 am | Reply

  11. It’s shameful that people are allowed to get to that low point.

    It’s called “freedom”. A society in which it was impossible to become a derelict and wind up living under a bridge is a society where I would not care to live.

    Home ownership is a far-off dream.

    Except for the 69% of Americans who own their own home, or live in a home owned by their family. (Source: Census Bureau)

    That’s the one I bothered to go find stats on; your other economic observations suffer from a similar discontinuity. They closely reflect lefty rhetoric – according to the lefties I hear, we’ve been in an economic slide to Hell since 1949 – but they’re not all that tightly coupled to the actual economy? McJobs? Two-incomes to get to the same standard of living we had in 1965? Please, boyfriend. Which economic statistics are you reading? The ones I see talk mainly about how labor markets are so tight, even the Chinese are having to jack up wages. The trendlines all head in the good direction for 80% of Americans. To pick just one example where I happen to know numbers, the real per-cap GDP of the United States has a bit more than doubled since my parents entered adulthood. Far from both me and my wife having to work to get where our parents were, one of us could work half-time and the other be completely idle to maintain that level. What has changed is what we consider the basic decencies of life. We’d rather work and have 24″ plasma monitors for our computers, than idle and have nothing.

    I will grant you – for 20% of Americans (that’s a rough guess figure, Adam, you magnificently picky bastard), times can be tough. A bit of that results from racial discrimination. A larger chunk results from cultural pressures that have served those folk very poorly. The rest – a majority of it – is the result of directly stupid personal decisions.

    I have empathy for the guy who decided to spend his teen years chasing pussy and customizing his car instead of learning how to think or developing economically valuable skills. I really do. But damned if I’m overturning a system of free-choice outcomes so that Vinnie the Dumbshit doesn’t have to deal with any negative fallout from his stupid choices. Vinnie can stay in the gutter drinking himself out of his problems, or he can pick himself up and take advantage of the roughly $1 trillion his society is lavishing on people like him to try and give them a hand up.

    Comment by bobhayes — March 30, 2006 @ 3:22 am | Reply

  12. I don’t know specifics, Adam, and I don’t have time to go dig them up right now. There’s a big body of research; go Google it, undergrad! But the basic idea is common knowledge, and the good kind of common knowledge that comes from being well-established, rather than the yucky kind that comes from being what someone with a media platform wishes were true.

    Comment by bobhayes — March 30, 2006 @ 3:25 am | Reply

  13. Brutus: at this point, it’d be nice to see some evidence. I’ve linked you to a few to make my case–where’s your data, rather than your anecdotes?

    Bob: But I am so very lazy…in any case, it’s an interesting point I’d never heard made before.

    Seriously though, you guys. We all need our own little personal statistician on call for when we need information.

    O’course, you could always just read a book by one

    Comment by Adam Gurri — March 30, 2006 @ 3:51 am | Reply

  14. With France suffering from an unemployment rate of more than 20% (and actually approaching 50% in the underclass of the Parisian banlieues), and with violent riots in the streets at even the suggestion of modest, incremental reforms, I suggest you pick a better role model. It’s not just France, Germany and quite a few other Western European nations are not far behind.

    Secondly, how can you maintain that Reagan’s flattening of the tax structure “continues unabated?” When Reagan left office, the top marginal rate was 28%. It’s now 35%, even after Bush’s radical “tax cuts for the rich.” That doesn’t sound like “continuing unabated” to me.

    Comment by bazzer — March 30, 2006 @ 2:24 pm | Reply

    • France’s unemployment rate is between 10 and 11%, not 20%. It is approaching 30% in SOME banlieues, not 50% and not all of them, far from it.

      Comment by Jean Lhuillery — August 10, 2013 @ 6:46 am | Reply

  15. […] That last is directed more at the welfare models and unions of Europe, which I personally despise. A commenter at another blog summed it up very well: I have empathy for the guy who decided to spend his teen years chasing pussy and customizing his car instead of learning how to think or developing economically valuable skills. I really do. But damned if I’m overturning a system of free-choice outcomes so that Vinnie the Dumbshit doesn’t have to deal with any negative fallout from his stupid choices. Vinnie can stay in the gutter drinking himself out of his problems, or he can pick himself up. . . […]

    Pingback by DPRK Studies Blog » US vs. EU System, and Freedom — June 11, 2006 @ 3:52 pm | Reply

  16. […] That last is directed more at the welfare models and unions of Europe, which I personally despise. A commenter at another blog summed it up very well: I have empathy for the guy who decided to spend his teen years chasing pussy and customizing his car instead of learning how to think or developing economically valuable skills. I really do. But damned if I’m overturning a system of free-choice outcomes so that Vinnie the Dumbshit doesn’t have to deal with any negative fallout from his stupid choices. Vinnie can stay in the gutter drinking himself out of his problems, or he can pick himself up. . . […]

    Pingback by The Korea Liberator » US vs. EU Systems, and Freedom — June 11, 2006 @ 3:57 pm | Reply

  17. Sometimes, Vinnie the Dumbshit can’t get a job because of his arabic/hispanic/african roots. Or he can get a job at Wal-Mart, where he’ll receive a ridiculous salary, no benefits or the right to have his interests taken care of by unions. Yes, we have a thing called unions in Europe, and every worker (and I mean all) has the right to belong to one and he can’t be fired or reprehended for belonging to one. The American Dream only exists for the higher classes. The proof: is it possible to enroll at an university in the US if you don’t have the top grades (and I mean the best of them all) and have no financial possibilities? My parents aren’t rich (actually they’re both public teachers) and my grades are average. Still, in Europe, I had the oportunity to enroll in a university. Would I have that chance in the US?
    The year before enrolling i worked in McDonalds and I realize they want to play with American rules in Europe. Would you work for 2,30 € per hour? Well, it’s easy to criticize me when you’re the boss getting loaded at the cost of their workers misery and exploitation. That’s right, the American Dream (i’d say nightmare) is exploitation. I’m not saying Europe is perfect, but when I see countries like the US and China, I guess we’re not so bad.

    Comment by Tatoon — August 9, 2006 @ 12:58 pm | Reply

  18. I’d also like to point the fact that no European hospital closes its doors to patients unable to pay (or without insurance). In the US, poor patients die when their disease has a cure, only because they can’t afford it. That would be outrageous in Europe, where everybody that needs medical care gets it. The ones who can pay for it, but if you’re unable to pay, you get treated the same as if you were a very rich man. Stuff like that put the US at the level of third world countries. Yes, even in the poorest countries rich men live well (actually that’s were they live best). I think there’s a north-american country were the rich have no complaints (except against unions and socialism).

    Comment by Tatoon — August 9, 2006 @ 1:06 pm | Reply

  19. The American Dream only exists for the higher classes. The proof: is it possible to enroll at an university in the US if you don’t have the top grades (and I mean the best of them all) and have no financial possibilities?

    Find a better proof, because they answer is “yes, without much trouble”. The US has extensive and generous financial aid for students who don’t have financial resources.

    Here’s the counter question: in Europe, after you finish your degree, what are your odds of getting a job? Some dream system you’ve got, where your education is paid for, and where there’s nothing waiting for you when you finish except a 25% unemployment rate and the dole.

    I’d also like to point the fact that no European hospital closes its doors to patients unable to pay (or without insurance). In the US, poor patients die when their disease has a cure, only because they can’t afford it.

    This simply isn’t true. Hospitals here treat the indigent at no charge all the time, and nearly all poor people in the US have full health coverage through Medicaid. Our health system problem is in the area of the lower middle class, people who earn some money but not enough to pay their own way, but too much to be considered poor.

    Comment by Robert — August 9, 2006 @ 1:23 pm | Reply

  20. “The US has extensive and generous financial aid for students who don’t have financial resources”

    And to whom is this financial aid given? I’m sure it’s given the most poor students and not only to the top graders (sarcasm).

    “Some dream system you’ve got, where your education is paid for, and where there’s nothing waiting for you when you finish except a 25% unemployment rate and the dole”

    I live and study in Portugal one of Europe’s states with the higgest unemployment rate. Still it’s far from 25%. The only ones that get trouble getting a job after leaving university are public teachers.

    “This simply isn’t true. Hospitals here treat the indigent at no charge all the time”

    Oh really? What they give free stitches? What happens when someone without financial possibilities needs quimiotherapy or an expensive operation?

    “Our health system problem is in the area of the lower middle class, people who earn some money but not enough to pay their own way, but too much to be considered poor”

    I’m sorry, but that doesn’t make any sense. In Europe if a person doesn’t have enough to pay their own way he pays what he cans. On the other hand, if you’re rich you will pay more than it is needed to make sure that who doesn’t have money will not be left out.

    Comment by Tatoon — August 10, 2006 @ 12:40 pm | Reply

  21. Still, I’m curious where did you get that 25% unemployment rate idea. You heard that on Fox?

    Comment by Tatoon — August 10, 2006 @ 12:41 pm | Reply

  22. And to whom is this financial aid given? I’m sure it’s given the most poor students and not only to the top graders (sarcasm).

    Federal and most state financial aid is distributed on the basis of financial need, not academic merit. On top of those programs, there are also merit-based scholarship programs generally administered by private institutions or foundations. There are also generous low-interest loans available largely regardless of need or merit – if you want one, you can get one.

    I live and study in Portugal one of Europe’s states with the higgest unemployment rate. Still it’s far from 25%. The only ones that get trouble getting a job after leaving university are public teachers.

    Other than Henry the Navigator, I don’t know much of anything about Portugal, sorry. I’m not talking about the general unemployment rates (which are worse in Europe but not catastrophically so): m talking about the rate of unemployment among young college graduates. Take a look at these figures, for example. (Apologies for not having anything more recent, I’m pressed for time today – but the recent trend favors the US, not the other way around.) The rate for 20-24 years olds in the US in 1997: 8.5 percent. For France: 28.5 percent.

    Oh really? What they give free stitches? What happens when someone without financial possibilities needs quimiotherapy or an expensive operation?

    They are taken care of by our Medicaid program, as I said last time. Medicaid isn’t perfect but it’s pretty good; the health care available to a poor person in the US is on the same general plane as that available to an ordinary European. Again, the problem in our health care system is the lower-middle class person without good insurance but too rich to qualify for the welfare program.

    I’m sorry, but that doesn’t make any sense.

    But it’s true nonetheless.

    I don’t know where you’ve gotten your information concerning conditions in the United States, but you’re way off base, pretty much across the board.

    Comment by Robert — August 10, 2006 @ 2:10 pm | Reply

  23. I’m not talking about the general unemployment rates (which are worse in Europe but not catastrophically so): m talking about the rate of unemployment among young college graduates.

    How much of that is due to the difference in how college loans are structured in the US and in Europe? In the US, you have to start paying back the moment you’re not a student (give or take). In most European countries, you don’t have to pay loans back until you’ve got a decent-paying job. The result is that US college graduates feel much more pressure to find a job, any job, immediately; European college graduates are more likely to take a longer time and to have higher standards regarding what jobs they’ll accept.

    Comment by Ampersand — August 10, 2006 @ 6:02 pm | Reply

  24. That could certainly be a factor, Amp. But the reports I hear from business people trying to operate in Europe aren’t that they’re desperate to hire young bodies but can’t because the younglings are so picky.

    Comment by Robert — August 10, 2006 @ 6:24 pm | Reply

  25. What about Japan? People keep on talking about Europe and its social model. However the Japanese social model is better than Europe’s in every single respect that Europe’s is better than America’s. The Japanese have lower crime, far greater employment, greater equality, better health. Oh yeah and here is the kicker: they have a weaker social safety net than both Europe and the United States. Japan’s government has a lower rate of taxation than any European country and also than the United States.

    Comment by assman — October 13, 2006 @ 4:06 pm | Reply

  26. Yes, the European Social system is preferable, because it helps to expand, grow and educate the broad middle group, apparently until ‘everyone belongs in this group – equally.’ The situation in Australia is like the European social model evolving slightly towards the American. Education has become rather expensive, but there is a wide range of pensions and benefits.

    Comment by Geoff Dodd — February 28, 2007 @ 1:47 am | Reply

  27. This post has drawn 2,856 view to date, many of them recent. However, there hasn’t been a comment in nearly a year.

    I would be interested in reopening some discussion, but that would only be worthwhile if a new comment appeared.

    Takers?

    Comment by Brutus — February 16, 2008 @ 1:30 am | Reply

  28. go ahead and reopen it. this blog site is getting stale. do something. the greatest hazard in life is to reopen nothing.

    Comment by dascomb cuisine — February 16, 2008 @ 1:00 pm | Reply

  29. I’m impressed, I have to admit. Rarely do I come across a blog
    that’s both equally educative and interesting, and let me tell you, you’ve hit
    the nail on the head. The problem is something that too few men and
    women are speaking intelligently about. Now i’m very happy I came across this in my search for something
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    Comment by Penney — January 5, 2015 @ 10:53 am | Reply


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