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Protracted austerity measures won't solve America's problems

By Toby O'Brien - posted Friday, 30 December 2011

In light of their country's persistent debt (sovereign and private sector) crisis and recession, it should come as no surprise that contemporary Americans would like things to be better. They would like their child to have improved life chances at birth. They would also prefer it if their wife or daughter had the same odds of surviving maternity as women in other advanced countries. They would appreciate full medical coverage at lower cost, longer life expectancy, better public services, and less crime.

But when told that these things are available in Austria, Scandinavia, or the Netherlands, and come with higher taxes and an "interventionary" state, many of those same people respond: "But that is socialism! We do not want the state interfering in our affairs. And above all, we do not wish to pay more taxes."

So, why is it that the United States is having such difficulty even imagining a different sort of society from the one whose dysfunctions and inequalities is troubling its citizens so? Americans, collectively, appear to have lost the capacity to question the present, much less offer alternatives to it. Why is it so beyond people to conceive of a different set of arrangements to your common advantage?


This shortcoming is shared by most other western nations. We in the West simply do not know how to talk about these things anymore. For the last thirty years, in much of the English-speaking world (though less so in continental Europe and elsewhere), when asking ourselves whether we support a proposal or initiative, we have not asked, is it good or bad? Instead we inquire: Is it efficient? Is it productive? Would it benefit gross domestic product? Will it contribute to growth? This propensity to avoid moral considerations, to restrict ourselves to issues of profit and loss-economic questions in the narrowest sense-is not an instinctive human condition. It is an acquired taste.

In the eighteenth century, what Adam Smith called "moral sentiments" were uppermost in economic conversations.

Indeed, even back then, the thought that we might restrict public policy considerations to a mere economic calculus was already a source of concern. The Marquis de Condorcet, one of the most perceptive writers on commercial capitalism in its early years, anticipated with distaste the prospect that "liberty will be no more, in the eyes of an avid nation, than the necessary condition for the security of financial operations." The revolutions of the age risked fostering confusion between the freedom to make money…and freedom itself.

If there was a lesson to be drawn from the depression, fascism, and war that plagued the 20th century, it was this: uncertainty-elevated to the level of insecurity and collective fear- is the corrosive force that has threatened and might again threaten the liberal world. This was the reason why Keynes sought an increased role for the social security state. What many American tea party republicans blissfully ignore, or are conveniently unaware of, is that one of governments' prime functions is to bulk buy goods and services that are popularly perceived as desirable or essential. As far as German government spending goes, their government provides far greater levels of service and support to citizens. German unemployment assistance, for example is much more generous on the basis that it prevents people from descending into circumstances which will cost even more and further translate into major social ills such as crime and substance abuse. Should we care to compare Germany's poverty related problems with those experienced in America we might understand the efficacy of the former's approach and even gain a modicum of understanding of how infantile and inept the American approach, to date, has been.

The welfare state had remarkable achievements to its credit. In some countries it was social democratic, grounded in an ambitious program of socialist legislation; in others-Great Britain, for example-it amounted to a series of pragmatic policies aimed at alleviating disadvantage and reducing extremes of wealth and indigence. The common theme and universal accomplishment of the neo-Keynesian governments of the post-war era was their remarkable success in curbing inequality. If you compare the gap separating rich and poor, whether by income or assets, in all continental European countries along with Great Britain and the US, you will see that it shrinks dramatically in the generation following 1945.

With greater equality there came other benefits. Over time, the fear of a return to extremist politics-the politics of desperation, the politics of envy, and the politics of insecurity-abated. The Western industrialized world entered a halcyon era of prosperous security: a bubble, perhaps, but a comforting bubble in which most people did far better than they could ever have hoped in the past and had good reason to anticipate the future with confidence.


The paradox of the welfare state was quite simply that their success would over time undermine their appeal. The generation that remembered the 1930s was understandably the most committed to preserving institutions and systems of taxation, social service, and public provision that they saw as bulwarks against a return to the horrors of the past. But their successors began to forget why they had sought such security in the first place.

In the US today, the "Gini coefficient"-a measure of the distance separating rich and poor-is comparable to that of China. More than anything else, the welfare states of the mid-twentieth century established the profound impropriety of defining civic status as a function of economic participation.

In the contemporary United States, at a time of growing unemployment, a jobless man or woman is no longer a full member of the community. In order to receive even the exiguous welfare payments available, they must first have sought and, where applicable, accepted employment at whatever wage is on offer, however low the pay and distasteful the work. Only then are they entitled to the consideration and assistance of their fellow citizens.

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About the Author

Toby O'Brien holds a BA in Psychology & International Studies.

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