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December 2nd, 2009

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02:11 am - Excellent Essay on Social Democracy
It’s rare for me to find any sort of discussion of politics, society, and economics that I completely agree with, but mindstalk linked to this absolutely first-rate discussion of social democracy by British historian Tony Judt , that I can say little about other than that I completely and totally agree with it. Like Judt, I also see the society and people of a nation as having a responsibility to insure that all of its members have their basic needs humanely and adequately met and that by far the best way to accomplish this is though government programs and government regulation. Here’s the heart of Judt’s argument, both about the advantages of social democratic systems, and why prosperity makes people dismiss their utility
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 postwar 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, 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, and indeed of all the social democratic (and Christian Democratic) states of Europe, 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—even in Sweden—began to forget why they had sought such security in the first place.

It was social democracy that bound the middle classes to liberal institutions in the wake of World War II (I use "middle class" here in the European sense). They received in many cases the same welfare assistance and services as the poor: free education, cheap or free medical treatment, public pensions, and the like. In consequence, the European middle class found itself by the 1960s with far greater disposable incomes than ever before, with so many of life's necessities prepaid in tax. And thus the very class that had been so exposed to fear and insecurity in the interwar years was now tightly woven into the postwar democratic consensus.

By the late 1970s, however, such considerations were increasingly neglected. Starting with the tax and employment reforms of the Thatcher-Reagan years, and followed in short order by deregulation of the financial sector, inequality has once again become an issue in Western society. After notably diminishing from the 1910s through the 1960s, the inequality index has steadily grown over the course of the past three decades.

He follow that discussion with this rather disturbing bit of data
In the US today, the "Gini coefficient"—a measure of the distance separating rich and poor—is comparable to that of China.[1] When we consider that China is a developing country where huge gaps will inevitably open up between the wealthy few and the impoverished many, the fact that here in the US we have a similar inequality coefficient says much about how far we have fallen behind our earlier aspirations.
Perhaps the current “Great Recession” is what it will take to reverse the flagrant right-wing greed-fest of the past 35 years. Thankfully, enough laws remained in place and enough economic wisdom (barely) prevailed to keep the economy from getting nearly as bad as the great depression. However, we’re not doing that much better – using the same measures of unemployment for both periods, unemployment during the Great Depression was around 24%, while it is currently around 16%. Hopefully, this will be as bad as things need to get before there is a return to both sense and seriously increased government regulation and the introduction of new programs like the current healthcare plan. In any case, I also quite liked this bit, which in addition to agreeing with it, it also contains what I see to be one of the more important critiques of radical reform of any sort
The rise of the social service state, the century-long construction of a public sector whose goods and services illustrate and promote our collective identity and common purposes, the institution of welfare as a matter of right and its provision as a social duty: these were no mean accomplishments.

That these accomplishments were no more than partial should not trouble us. If we have learned nothing else from the twentieth century, we should at least have grasped that the more perfect the answer, the more terrifying its consequences. Imperfect improvements upon unsatisfactory circumstances are the best that we can hope for, and probably all we should seek.

Current Mood: thoughtfulthoughtful

(4 comments | Leave a comment)


[User Picture]
Date:December 2nd, 2009 02:00 pm (UTC)
...using the same measures of unemployment for both periods, unemployment during the Great Depression was around 24%, while it is currently around 16%.

That doesn't sound right to me. Can you point me to the source of this?
[User Picture]
Date:December 2nd, 2009 09:21 pm (UTC)
I've seen the 24-25% rate for the Great Depression in many places. As for current data, I turn out to be a bit incorrect, since it turns out that I was using July data, and I just found more recent data. Currently, using U6, the unemployment rate is 17.5%. I may be overestimating things by using U6, but from what I've read, it looks like either U5 or U6 is comparable to the measure of unemployment used during the Great Depression. Here's the best source I've found for current data. Knowing well more about this than me, which of these looks like the best comparative measure to you?
[User Picture]
Date:December 2nd, 2009 09:57 pm (UTC)
The numbers look OK - it's the comparison between the historical rate and U6 that seems surprising. I'm just curious about what suggests that U6 would be the comparable concept (I'd be inclined to guess U3, but that would depend on the exact source for the Depression peak number I suppose.)
[User Picture]
Date:December 3rd, 2009 04:49 pm (UTC)
OK, I think I've nailed down the source for the traditional 24.9% figure cited for the peak unemployment rate (in 1933): it's the Historical Statistics of the United States, Colonial Times to 1970, published by the Census Bureau in 1975 (two big zip files), series D 85-86 (page 135). The notes describing the unemployment series (page 124) say:
The figures for 1900-1939 represent estimates of unemployment on as comparable a basis as possible to current labor force concepts.
So I'd be inclined to compare the 24.9% rate with today's official rate (i.e. the U3 series) of about 10.2%. Of course, it's important to keep in mind that the 1933 figures are basically made up. There was nothing comparable to today's Current Population Survey before 1940; we'll never really know how high something like the modern unemployment rate was during the Depression. But we make do with the best estimates available.

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