The American march toward European style socialism
Back in February of this year, Jon Meacham and Evan Thomas wrote a brilliant piece in Newsweek entitled “We Are All Socialists Now.”
In the piece, the authors point out that – like it or not- the United States is gravitating towards a European economic model that is making us more like the French with every passing day.
While I can feel my conservative friends shaking uncontrollably, the premise of the Meacham and Thomas piece remains true just the same.
Tea Party or no Tea Party we are, indeed, all Socialists now.
Disturbed? You shouldn’t be. Because if you find the notion repellant, you would do well to consider your part in bringing us to where we are. This march towards a more European model has been underway for years as Americans of all political stripes looked to the federal government to (a) increase our interests and influence in the world through military expansionism and (b) bail us out of every significant problem we encounter when it is clear that only the central government has the ‘heft’ to do so. In other words, there has been something for everyone in the growth of government, whether Republican or Democrat.
In recent years, the universe displayed its great penchant for comedy when the GOP administration of George W. Bush proposed and enacted the largest expansion of the welfare state in 30 years- prescription drugs for the elderly.
And we liked it.
While we can, on a gut level, understand that an administration like Bush’s would opt to expand our world role via military action, and thereby expand the size of government, who would have thought that the Bush Administration would have embarked on such a dramatic expansion of domestic socialism- an effort which won the vote and approval of many professed anti-socialists in the Congress.
Of course, it was that very same GOP administration that doubled down on increasing government domestically when it moved to bail out the financial system with $700 billion in government aid – an unprecedented amount of federal money to save a failing banking industry.
In an effort to remain true to an ideology that probably passed away many years ago, many a conservative voiced opposition to the G.W. Bush era, although mostly after it had ended. But who would have preferred a scenario where the banks were allowed to fail, sending the nation into another Great Depression as a result? Be honest – nobody. And while you may argue that we should have been true to our free market roots and allowed the markets to solve their own problems, in your heart, you know very well that this gamble could have turned out to be devastating to your family’s lives and that you never really wanted to run this risk.
Then came Obama’s stimulus plan, the largest government stimulus in the nation’s history. Ironically, Obama had found himself in a position where it seemed that the only way to dig out of the hole and massive debt that occurred prior to his arrival (and no, I’m not blaming this all on W) was to dig further into the hole, substantially increasing the debt in the process. Obama had to spend money he didn’t have in order to create the economy we need to pay back all the debt.
What a world.
The result is even more government control of the economy. We’ve got government bail-outs of key industries…caps on executive compensation… massive intervention by the Fed and on and on and on.
Still, while there has been lots of griping about government’s role in stimulating our failing economy, even the ‘reddest’ of red states ended up taking virtually all, if not all, of the stimulus money provided by the government as even the most ardent anti-socialists, anti-stimulus leaders ended up taking full advantage of the government’s hand-out to make themselves look good.
Georgia Congressman Phil Gingrey certainly qualifies as one such anti-socialist, anti-stimulus leader.
Rep. Phil Gingrey blasted the federal stimulus program before voting against it in February, predicting its chances of success were “slim and none” and that it would worsen the national debt. But that didn’t stop the Republican from presenting an oversized check for $625,000 in federal stimulus funds to Cedartown officials this month for new downtown sidewalks, landscaping and other streetscape improvements. A photo of him holding the check with Cedartown officials appeared on the front page of The Cedartown Standard newspaper Oct. 8. The check was signed “Uncle Sam.”
Via AJC.com
Who can blame him? While Gingrey may be a devotee of small government, he knows as well as anyone else that the only entity with the size and scope to prevent the hell Americans experienced in the 1930s is, in fact, our federal government.
Not buying the anecdotal evidence? No problem – let’s go to the numbers.
A decade ago U.S. government spending was 34.3 percent of GDP, compared with 48.2 percent in the euro zone—a roughly 14-point gap, according to the Organization for Economic Cooperation and Development. In 2010 U.S. spending is expected to be 39.9 percent of GDP, compared with 47.1 percent in the euro zone—a gap of less than 8 points.
Via Newsweek
Looking at these numbers, it’s hard to escape the inevitable question-
Parlez-vous français?
And that brings us to health care, the poster child for Americans making their final stand against socialism – despite the fact that we signed onto it a long time ago.
As I’ve said many times, you may like single-payer or you may not like single-payer – it really doesn’t matter. It’s coming because the insurance companies and the Wall Street forces that drive their behavior are inextricably taking us there. It is one of our best examples of how our American brand of capitalism, which all too often sacrifices the public interest in favor of profit, is driving us ever closer to the European system.
Now, before all you Tea Party people with a fantasy poster of Michelle Bachmann hanging on your wall sign up for the Revolution, stop and consider just how today’s America would function without our big government.
You can argue for secession all you like, but you should first take note of how much of your state’s vital services are funded by the federal government. Think you can afford to maintain these things on your own? You can’t.
You can carry all your guns to every town meeting you can find, but do you imagine that your twelve gauge shotgun is really going to defend you from enemies in an era of technological weaponry? They won’t.
You can reject Medicare and other big government social entitlements but how are you going to afford to take care of your parents when you can barely afford to take care of your own health? You can’t.
Maybe the time has arrived for us all to take a look at what ‘socialism’ actually means in the 21st century. The notion that it is the road to communism has long ago been discredited. You may not have noticed but the European system survived intact where the communist based societies have not.
I get that Americans want to retain more control over their lives. I do too. But denying the realities that have led us to where we are today is not going to make this happen. It’s time to let go of ideologies and definitions that stopped being relevant a very long time ago. When we understand where we are and how and why we got here, then we can frame a debate that is realitic and useful.
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I think we could learn plenty from the French, who, among other things, have an extraordinary health care system. When my wife and I lived in France for one winter, she came down with a persistent hacking cough. We called a doctor and she got in the same day. The doctor gave her three prescriptions to fill. We had no health insurance. The appointment cost 20 euros, then about $25. The prescriptions costs 11 euros for all three, less than $15. In this country we would have paid three times as much for the prescriptions and $5 less for the doctor’s visit. And we have full health insurance, for which I and my employer pay plenty.
I thought intuitivly this was happening a long time ago when all that free trade talk started. It seemed that we were giving up our jobs, and look now. How many people can work in the service sector, most of which is at wages that get you little. I am pretty conservative and am past blaming anyone, what good would that do anyway. Problems are meant to be solved. What matters now is that the people, especially the politicians, see that without heavy industry, we can be taken over by China. Think the rest of the world will sell us steel for a real war? Know what the lead times (how long it takes) are to build ships, planes and tanks? Wonder why they were selling us steel for less than it cost to make when we had steel plants? The Chineese will make an economic plan in 50 -100 year time lines, we need to see the relevance of that. They are patiently waiting. We need some kind of change or we will get changed. The old days look gone, the times have changed and few have noticed the likely consequences of a future with no heavy industrial capacity.
I agree with you here on both counts. We have lost 6.5 million mfg. jobs since 2000 alone and this has really taken a toll on the middle class. As you point out it leaves jobs that pay a lot less. And here I am not just talking about the $28 per hr jobs the auto industry used to pay, but we have lost a lot of jobs in the $12 to $18 per hr range (not enough to get rich on, but with some overtime work it is enough to make a living). On the military defense angle, in addition to what you said about making steel, also consider that we are cutting down on our potential pool of engineers
In response to another comment. See in context »as we cut back on heavy industry. The more engineers we have, the more likely it is that one of them will come up with the next best idea (technology-wise) that will really help us in our military defense.
I think its more accurate to say that it is a march towards “fascism” considering the government still allows private corporations to exist and reap the profits of the government’s intervention (of course, its not really what we understand as fascism).
Either way, Im all for a single payer system and I really hope youre right on that note. However, I do take issue with the idea that it would be so much worse if we wouldn’t have bailed out the banks. I do not think that is the case. I think it would have been worse at the beginning of the crisis, but the recovery would be quicker and more sustainable. This cycle will continue to repeat itself for the foreseeable future until our currency inevitably crashes
You may be right about the bail-outs but, then again, you may be wrong. Would you really have wanted to risk a depression scenario for your family while we awaited the end?
In response to another comment. See in context »And there-in lies the catch 22 that we found ourselves in.
It’s easy to criticize the Pres for the bailouts, but the question really comes down to: Would you really want to risk it?
That’s why, in my mind, the bailouts had to happen, to a degree.
However, the scenario of bank consolidation has been talked about for the past 10 years, in the financial world. It’s been a widely held belief that as the largest banks saw the medium and smaller banks go to a more “one stop financial shopping” model IE having deposit business, auto+mortgage lending, small business lending, commercial lending, investing, financial advising/planning, etc., that we would eventually see the largest banks catch on and start looking for opportunities to buy/merge. We saw that with begin with banks like Wachovia, with their acquisitions of Westcorp and Golden.. whatever that mortgage company was, and we see it continue on today with Bofa/Merril, Wells/Wachovia, etc. etc.
There is a conspiracy theorist part of me, small part mind you, that thinks a lot of this “bubble burst” was a planned event that would allow for all this consolidation to take place, as highly unlikely as that is.
And, at the end of the day, we’re left with a smaller, less focused banking landscape than before, which only helps the banks themselves.
I know, off on a tangent lol.
In response to another comment. See in context »Interesting. I don’t think you’re far off, but I would tweak the position a bit. Prior to getting rid of Glass-Steagal in 1999, commercial banks were forced to be separate from investment banks. Had that been the case today, the situation would be very different. Commercial banks were not permitted to mess around in the high-risk stuff like derivatives. While the mortgage problem may still have existed, I don’t think it would have as I don’t believe the commercial banks would have been able to package mortgages and sell them as securities. When Glass-Steagall went by the wayside, commercial banks were free to get into the Wall Street casino business allowing them to gamble bigger to earn larger profits. It worked – until it didn’t work! Had they never been permitted to do so, when things went to hell, the commercial banks would have still been fine leaving the investment banks and the ones in trouble.
In response to another comment. See in context »There is a move afoot to bring back Glass-Steagal. Paul Volker is a big supporter of this. On the face of it, it seems like a good idea however there are many who think that we’ve moved too far away from those days to unravel it backwards. The commercial banks are not far too involved in the investment banking business to turn back the clock.
I’m not sure if its possible or not.
Also keep in mind that there are many, many local and regional banks that continue to survive and did not suffer from the collapse as they were not in the investment banking business. I suspect they are all doing even better these days as we realize that our money is far safer in a non-risky commercial bank than with the big guys.
Many of these banks continued to survive because they did not have sufficient resources to give loans to anyone regardless of their credit-worthiness. The current problem they are facing is that they do not have access to the zero interest bail-out funds and must compete against larger banks that do.
In response to another comment. See in context »Good points Rick.
There are a lot of smaller community banks that made it through this purge. And as someone below pointed out, it was mainly because they never had a stake in the securities game to begin with.
Which is fantastic, except that all the banks that did have a stake, and failed, have been swallowed up by the larger players, thereby further consolidating the power.
I dunno, for me it’s a personal thing. I worked for one of those companies I mentioned, for a long time. And when we were bought, everything we were told/shown pointed to a super-conservative bank buying us in order to increase their market share and footprint.
1 year later, all the stock I was given/exchanged, and all the money I made, was essentially gone. And said company was then bought by another bank.
In my mind, there is no conceivable way that that should have/could have happened.
It just makes you wonder sometimes what’s really going on behind the scenes.
In response to another comment. See in context »Yes I would have. I think that the real problem is the moral hazard that is created by government protection of bank losses. I really think this country needs to fundamentally assess our definition of economic growth and wealth. If we didn’t bail them out, someone else would have seen an investment opportunity and taken the place of the failed institutions and redirected capital. I understand this would have resulted in a fundamental shift in our economy, but eventually it will have to happen. The rules of the business cycle clearly dictate that our inflationary monetary policy will continue to artificially create bubble economies that will eventually pop.
In response to another comment. See in context »The reason wall street was willing to make such poor investments was the implicit understanding that they would be bailed out had their investments gone bad. By bailing them out, we sent a precedent that all large institutions can be reckless because the government will never let them fail.
In response to another comment. See in context »I do see your point. If we respond to what happened with the proper regulations to insure that it is not gong to happen again – or far less likely to happen again, then I think the bail-out will have been worth it. If we don’t respond, it will be impossible to argue with you as you will clearly be right.
In response to another comment. See in context »RE:Tea Party or no Tea Party we are, indeed, all Socialists now.
Some are more socialist than others…the local city employees around here are all exempt from social security taxes, they get free health care and free pensions…never contribute a dime or have to pay for an aspirin….
All 340,000 california public school teachers are exempt from social security taxes
All 30,000 los angeles city employees are exempt from social security taxes
If we are all socialists…then these must be elite socialists
It’s hard for me to know whether you simply don’t know the whole story or just choose not to relay it.
You are correct that California teachers (as well as teachers in other states) and certain public employees don’t pay Social security taxes (FICA.) Care to hazard a guess why this is?
let me answer for you – THEY DON’T RECEIVE SOCIAL SECURITY BENEFITS!
This is the result of a constitutional issue which raised the question of whether the federal government could tax, in this manner, the state government employees.
Why would you expect these people to pay the tax if they aren’t getting the benefit?
In response to another comment. See in context »@Andy – You should have learned by now either A) Not to post comments on Mr. Unger’s articles or B) Make sure you have all the information before you post on Mr. Unger’s articles.
In response to another comment. See in context »You have it backwards Rick…..they don’t receive because they don’t pay……..because the states chose to exempt them, they don’t have to exempt them….1 in 4 public employ is exempt….somehow 3 out of 4 public employees seem have gotten around the constitutional question….
It is pure elitism…..when government employees are exempt from social security……we have government employees who are also exempt from medicare taxes
We have cities out this way, where the city pays for the public employees social security
In response to another comment. See in context »Your argument just makes no sense. If these employees were collecting Social security benefits without having to pay for them, this would make sense. But if they aren’t receiving the benefits why should they have to pay for it. Where is the ‘elitism’? You act as if they are being treated special because they don’t have to pay. They aren’t. Indeed, if you do a bit of research, you will find that many of the teacher’s unions across America have pushed to have the teachers included in S.S -and, of course, pay to be included.
In response to another comment. See in context »Socialism and communism are not supposed to have a privileged classes, but human behavior always intervenes. Eventually the politburo gets perks. Without fail, every political system evolves into a plutocracy.
So the solution is to remove or minimize the politician class. That means either direct democracy, or public financing of elections and term limits with proportional representation and ultrastrict anticorruption laws.
Authoritarianism in all forms, be it totalitarianism, oligarchy, or plutocracy, is the threat.
In response to another comment. See in context »We have 5,000,000 government employees exempt from paying any social security taxes….they pocket them instead…..would you call that a priviledge class?
Instead, according to the Census Bureau, state and local government across the USA have set up 2547 separate government run, wall straight based, retirement systems for government employees to take care of their retirememt needs
So now the government employees miss out on all the benefits of the social security system that the common folk enjoy
Many government employees miss out on the wonders of Medicare because the taxpayers buy them free real medical care in their retirement…..such as all california state employees get free medical coverage for life when they retire at age 50….
In response to another comment. See in context »This is the last time I’m going to engage with you on this and I’m only doing it because you’re so badly misinforming people. I realize now that you don’t understand what this is about.
Teacher hate the fact that they cannot participate in Soc. Security. they are denied the opportunity because it is deemed ‘double dipping’ because they have their own retirement and pension plan that THEY PAY INTO. You seem to think they get it for free or at our expense. The state government does contribute something to this, but that is because teachers perform a very public service – something you don’t seem to believe in. This is no different that the federal govt. contributing to social security.
The problem is that teachers have husbands and wifes who are not teachers and are, therefore, a part of the social security system. When these spouses die, their husbands and wives are typically entitled to social security. Not teaachers. When a teacher’s spouse dies, they do not get the spouse’s social security because they are barred from the system.
What’s more, there are many public school teachers who had earlier careers in other fields and earned their social security because they paid into it. Nevertheless, they forfeit that when they become teachers and are restricted to the teacher’s retirement.
And do you know who supports keeping this system the way it is? the Republicans. Democrats have made attempts to change this rule but repubs. have always blocked it.
I realize your world is like built around this idea that government employees are getting some sweet deal that you are not. I’m not a government employee. None of relatives are gov’t employees. I have no reason whatsoever to stand up or down for them. But, you’ve just plain got this completely wrong. Public employees pay into their retirement plan and get public service retirement. Everyone else pays into social security and gets social security retirement.
In response to another comment. See in context »Your opinions are welcome — when you facts dramatically wrong, that is misleading readers.
All you have to do is “Google” the subject and you can read all about this on your own. It’s really very simple.
Well said young man. Well said.
Rick, there’s actually a video of the United States marching toward European-style socialism:
http://www.youtube.com/watch?v=C5BMVmOWzfk
Very large
In response to another comment. See in context »