This graph comes to us from Paul Krugman, Competitiveness and Class Warfare. He uses it primarily to make the case that the idea of national competitiveness is nonsense. You can see that most starkly with France, which has a strong welfare state, and the United States, which has an extremely stingy one. (Don’t worry about the slight divergence at the very end; that is due to the catastrophic austerity policies in the EU.)
There is a long tradition of people freaking out about other countries becoming too competitive and the US falling behind. There is always some “star” country that people are afraid of. In the 1980s, it was Japan. Now it is China. And this supposed question for competitiveness is always used to make the lives of Americans worse. It is a reason why we have to destroy unions. It is the primary reason why must make public education boring and turn our children into top quality multiple choice test takers. And it is the reason why we must bow down to the “job creators.” Otherwise, China will take all our jobs and we will starve to death.
This isn’t to say that any nation can do anything it wants. There are a lot of things that can hurt the economy. But what it does mean is that the things that people in this country complain about don’t matter. The supposed big problem in France is that employees are really hard to fire. But we certainly don’t see that in terms of GDP growth. Similarly, with the Gini coefficient, which measures income inequality. Japan and France are relatively low at 63 and 69. But the United States is 85 — one of the highest in the world — even higher than Zimbabwe.
What this shows is that our economic system is the way it is because we’ve made it that way. There is nothing natural about it. And more to the point, these policies are not designed to grow our economy. Milton Friedman’s old idea is just wrong: it isn’t that the rich are pulling away but that the lives of the poor are being improved as well. In fact, there is more and more indication that all of this inequality is also bad for the rich.
To me, it is all very simple. I’ve been hammering on this for a while. If we don’t have an economic system that shares gains relatively fairly, then there is no point to continue on with it. What we have is a system that is already highly unequal. And then we add to that a system that just makes inequality worse over time. And then we add to that a system where the poor have little chance of becoming rich. And we end up with the modern equivalent of feudalism.
I know the conservative (and even more so, libertarian) response to this: we just haven’t gone far enough! The system is “free” enough to cause problems but not “free” enough to fix them all. But this is based on an idea that just doesn’t fly. There are almost no systems in any field of endeavor that just get worse and worse until you reach the solution and are then suddenly good. In general, if you follow a path and things are getting worse, it means you are going the wrong direction. See gradient descent.
But I think conservatives understand this. They are not pushing these policies because they think they are ultimately good. Instead, they think that the market (corrupt as it is) has picked the correct winners and so we should do everything we can to further help them. This is why libertarians are almost always against labor unions. It has nothing to do with freedom — much less the common good. It is just that they have decided that businesses are “good” and workers are “bad.”
The rest of us need to stop buying all this nonsense about how screwing over the poor and middle class is actually for our own good. It isn’t even for the overall economy’s own good.
I think this was the issue that really got the ball rolling on privatization in the early 90’s. In Canada, anyway. ‘We can’t afford this anymore’; ‘The party is over, time to take your chops kids’, ‘The programs slow our economy, and we’ve been overtaken’.
Thing was, it wasn’t just the right-wingers saying this. It’s just about the time the NDP stopped making socialist noises for good. More importantly though, there seemed to be an implication that cutting for ‘competitiveness’ might protect our programs in the long run. So centrists (‘Liberals’) could say that if we just improve our economy and extend the private sector appropriately, we might have other programs in the future. Keep having a mixed economy, different mix.
It’s the thin edge of the wedge. And I’m convinced that in this country, our Liberal government did not intend to cede possession of the commanding heights to private capital. They were warned this would happen, though.
The way I see it in the US is that the conservatives saw a way that they could take over the Democratic Party. Ladies and gentlemen: Bill Clinton! (Although really: Jimmy Carter!) Suddenly, “liberalism” meant social liberalism (or moderation anyway) and conservative economic competence. The shocking thing is that the Republicans have managed to maintain pretty much the same amount of power. That should tell you all you need to know about “meeting them half way.” But as I said, that’s not what the New Democrats were all about. When Obama “negotiated with himself,” he was really just setting the left side of the Overton Window where he felt comfortable: far to the right.
As for the “saving the programs in the long term” — it’s the same thing here. But it’s an obvious paradox, “We must cut Social Security today or we may have to cut by the same amount later!” You know they are lying because they are never willing to do anything on the revenue side.
Hello and thank you for your article. I too believe that the competitive mindset toward other nations aids the implementation of policies that have created an education system that is increasingly draconian Children are not allowed to discover education for themselves and naturally pursue what is interesting to them. Rather, instructional goals are targeted toward performing well on standardized tests. When goals are not met students are given the message implicitly or explicitly that they have no role to play with in this new economy. Within my own family I have seen how these scarcity based educational policies had a devastating effect on my son. As a person who went to primary and secondary school in the 70s and 80s I was permitted to pursue subject areas that I found interesting and which I excelled. Although I never progressed past intermediate algebra in mathematics I was able to take advanced placement in English and Social Studies.
My son however, was forced to take an hour and a half long developmentally inappropriate from the age of seven on. From the onset of taking this testy my son did not perform well . Eventually I made the decision to opt him out of the test . Rather than being able to track his own educational course as a teen my son has stayed in the mindset that he is simply not academic and therefore not intelligent. While this reply may seem to be an entire digression I do think that our educational policy is tied very much to economic inequality.
While I am presenting my economic and educational story as a micro one I do think that is repeated on the macro level all the time.
Enacting policies that reward only a few are harmful for society. I wonder how much our current tribalism and lack of civility is tied to the fact that competition and winning are seen as a greater achievement than harmony and social cohesiveness. This level of inequality can not last much longer. I think it is the hyper competitiveness of late capitalism that is precisely fueling the mental health crisis.
You sound like someone who might get a lot out of Alfie Kohn! Most of what I think about education is from him. I am certain that if you take care of a child’s primary needs the education will take care of itself. Because children (Humans!) love to learn.
Libertarian economic theory is like a physics problem that begins: Assume a frictionless surface. When you discuss the conservatives who think their economic policies are good, I assume you mean the ones who are not wealthy and reason from false consciousness. Actual capitalists are (mostly) sociopaths and consider us to be “useless eaters”.
That’s exactly right. That’s why libertarianism appeals so much to college educated white guys. It has a facile perfection to it. And it is almost impossible to get a libertarian to interact with the real world. If you do, you will find that they are not long for libertarianism.
I would say that the rich look on the rest of us the way a parasite looks on a host. They even know that they might be killing the host, but they just can’t stop themselves.
That’s great — and you can take it further. Some rich are like those slow viruses, the ones that kill after they’ve had time to spread. Some are like Ebola — in danger of wiping out the hosts faster than they can infect other victims. And a few are more like symbiotic parasites — they serve a function for the host organism. But none can exist without the host.
The only way rich people can pretend the poor are worthless is by counting on the poor to provide their needs every minute of every day. You remove compulsion from service to these people and nobody would serve them out of worship for their pure bad-ass-ness.
The economy is one big feedback loop. But it doesn’t seem that the rich have ever really understood that.