Matt Zeitlin muses on Hayek's relevance today:
Jesse Lerner has a fantastic piece in Dissent appraising the work of Friedrich Hayek from an explicitly left wing prospective. In Lerner’s opinion, Hayek got one thing absolutely right: that planned economies are horrible, horrible ideas. He thus spends a lot of time on Hayek’s most famous work - The Road to Serfdom - but not so much on his ideas about pricing in markets and the importance of dispersing knowledge.What’s interesting about these two ideas, which are by far Hayek’s most influential intellectual contributions, is how obvious and almost redundant they seem today. The Road to Serfdom is either horribly overblown or very narrowly descriptive. His description of what inevitably happens when a state controls and plans the entirety of the economy is early prescient and perceptive, but is only applicable to situations in which the state control the entirety of the economy. Road became horribly bastardized when conservatives and libertarians would point to every instance of European social democracy or the existence of some state-owned industries and then wave around Road and say that tyranny was just around the corner(arguably, Hayek is partially to blame for this unfortunate tendency). But when we see that European social democracies are some of the most substantively and formally free nations on the face of the earth, we must grapple with the fact that either Road was wrong, or it was right about a system that has little relevance today. That’s not to say that Road wasn’t an important contribution in 1944, when many British socialists were promoting an incredibly technocratic, “enlightened totalitarian” model, but it’s hard to discern its relevance today when the most “socialist” states (Scandinavian social democracies) have the freest economies.
I wonder if this will continue to be true. It occurs to me that Scandinavia, with its homogeneous population, may have been spending down the accumulated social capital of its pre-welfare state society. Before the widespread welfare state, people who attempted to free ride by collecting benefit when they could be working faced both internal guilt and considerable external social pressure; the neighbors essentially functioned as the fraud police.
But as the generations who grew up before the kribbe-to-grav safety net die off, and are replaced by a newer generation perfectly comfortable with broad public charity, this is clearly breaking down. Sweden's rates of long term disability, sick leave, and so forth, are very high. The Scandinavians I know generally report that the once-famous work ethic is not really all that impressive any more, and there's little stigma attached to malingering on long-term sick leave.
I think we generally underestimate how much culture matters to economic success. It isn't even a matter of getting the rules just right; it's a matter of cultivating a hidden law, a sort of cultural operating system, that limits abuse of public and private trust. Hayek understood this very well; his intellectual heirs on both sides of the political spectrum, less so. We've made amazing strides in allowing people to trust perfect strangers enough to transact with them multiple times every day. But I'm not sure how well we're doing at supporting the safety net.
If you refer to the Scandinavian countries as "socialist," Matt Yglesias will be very angry with you and his commentators will call you a hack and a moron.
I think we generally underestimate how much culture matters to economic success. It isn't even a matter of getting the rules just right; it's a matter of cultivating a hidden law, a sort of cultural operating system, that limits abuse of public and private trust.
A concise defense of Burkean conservatism.
Megan,
Could you perhaps elucidate on why a homogenous population was such a salient ingredient in the success of scandanavian socialism?
Could you perhaps elucidate on why a homogenous population was such a salient ingredient in the success of scandanavian socialism?
Because taxpayers might resent their money being spent on transfers to recently arrived immigrants.
Re: Sweden's rates of long term disability, sick leave, and so forth, are very high.
To what extent is this the artifact of an aging population? Older people do tend to suffer more illness and disability after all. Indeed, even the US with its very bare bones and inadequete welfare state has seen increases in disability due to aging.
Re: Because taxpayers might resent their money being spent on transfers to recently arrived immigrants.
Or more generally, on anyone, no matter how rooted in, who doesn't look like them. America's meager welfare state has little to do with immigration and much to do with racism.
JonF,
Old people are generally retired and on pensions in the western European states, not on disability or sick leave, unless you consider under 55 old.
JonF - "America's meager welfare state has little to do with immigration and much to do with racism."
To quote a favorite movie of my college years: "Mr. JonF, what you've just said is one of the most insanely idiotic things I have ever heard. At no point in your response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul."
...this is clearly breaking down. Sweden's rates of long term disability, sick leave, and so forth, are very high.
Yes, but is the Nordic system really "breaking down" just because people take advantage of said system's opportunities for leisure?
I was under the impression that these countries were really beginning to suffer from dismal growth and its attendant problems (worsening public sector finances, declining living standards, joblessness, etc.) in the 80s and early 90s. But I also thought that, over the last ten years or so, they had pretty much gotten their acts together, tweaked the incentives their systems create, and undertaken some non-trivial structural reforms -- and that as a result they were all once again growing at a pretty decent clip. Am I wrong?
Relatedly, what I've often wondered is, wouldn't the average Scandinavian who was gainfully employed enjoy a substantially higher standard of living than what who stayed home to live life on the dole? In other words, I would imagine you could structure a generous and expensive array of social programs and still have a society where nonetheless rational actors possess a strong incentive to achieve successful careers.
I think libertarian efforts to portray the Nordic countries as grim dystopian hells (not saying that's what Megan's doing here, by the bye) are comically handhanded. It's plain to see these countries simply rock.
FWIW, one view of Sweden's socialism.
Old people are generally retired and on pensions in the western European states, not on disability or sick leave, unless you consider under 55 old.
I don't know about Sweden, but the amount of workers suffering from disabilities can mysteriously increase when it gets more difficult to retire early.
Comparing the Scandinavian countries to the US and drawing conclusions about social-economic policy is a sort of like comparing New Hampshire to Europe (including Spain, eastern Germany, Turkey, etc.) and concluding it would be better off without an income tax.
Finland's population is about half the size of New York City's and is sitting on top of a major oil field that it literally uses as a national endowment fund.
Sweden has a population about equal to NYC's, became wealthy before WWII following "classical liberal" pro-market policies, stayed out of WWII (trading with Nazi Germany throughout), emerged intact after the war as one of the world's richest nations per-capita amid Europe's ruins, then adopted its famous social market policies, and has been consuming its capital riding down through the world's GDP and income rankings ever since.
It doesn't have a homogenous population any more, has a high crime rate by European standards (higher than New York City's) has real racism problems (especially with Muslin immigrants), suffers from "youth flight" to other countries with lower taxes and more entrepreneurial opportunities, etc. A Swedish friend who's an economist visited here last year and is very concerned about how things are going there -- but that's not for a blog comment. The main thing is, the "Swedish example" that people always think of in these arguments is more a myth than reality. (Especially the imagined part about how it became wealthy following "socialist"-type policies.)
I will say this about Sweden, it has private accounts in Social Security and a universal school voucher system that is supported by everybody -- including the public school teachers union -- and that has produced the benefits that voucher supporters in the US expect. (One of the mysteries to me of US politics is why voucher supporters here never point this out.) So it's famously "socialist" social policy is too right-wing for US Democrats.
Relatedly, what I've often wondered is, wouldn't the average Scandinavian who was gainfully employed enjoy a substantially higher standard of living than what who stayed home to live life on the dole?
If the "dole" is predicated on the idea that a person needing such assistance should not have to suffer a drastic change in their quality of living, and the effective tax rate on high income earners approaches 60% in order to fund the former and many things like it...then no, it is not necessarily the case that a gainfully employed worker will see a commesurate increase in living standards for the effort.
Hence, MM's comment about the need for a 'social shame factor' (not her exact words) that polices the deadbeats.
In short, in the long term we're all dead, and broad reaching bad social policies often only affect those in the long term.
Saying no to nuke waste is easy when you cite/hype the long term risks, saying no to social programs citing/hyping the long term risks makes you sound like a cold hearted bastard.
If the "dole" is predicated on the idea that a person needing such assistance should not have to suffer a drastic change in their quality of living...
Yes, but that's precisely my point. I imagine even with highish marginal income tax rates, you're still quite a bit better off in the Nordic countries as a (insert typical middle or upper middle class occupation here) than sitting on your butt in your state-subsidized apartment in a not so nice part of Malmo. I do agree about the shame factor, and that's one bit of unpleasantness that working enables you to avoid -- and is thus a non-monetary item that needs to be added to the ledger on the side of employment (vs. the dole).
"We've made amazing strides in allowing people to trust perfect strangers enough to transact with them multiple times every day."
Yes, but what kind of shape is America's "cultural operating system" in right now?
The sub-prime mess was all about the betrayal of trust. So was the Enron debacle.
Maybe it's time to dig out the old Robert Merton books.
In short, in the long term we're all dead, and broad reaching bad social policies often only affect those in the long term.
Saying no to nuke waste is easy when you cite/hype the long term risks, saying no to social programs citing/hyping the long term risks makes you sound like a cold hearted bastard.
Posted by sam | June 2, 2008 7:23 PM
Yeah but in both cases whoever is uttering it is brain-dead.
Dear Jim Glass, Finland has no oil. You're confusing it with Norway.
What Finland does have is 1) a superlative educational system, 2) an excellent health system, and 3) a very high degree of social solidarity. I dearly love the US, but I have to say we lack all three.
Stan, a lower degree of social cohesion pretty much comes with the turf when a nation mixes ethnicities as much as the US has. Social fault lines always exist between different self-identified groups (even Yankees/Red Sox fans); even minor frictions then open up an "us/them" divide that magnifies the lack of cohesion.
OTOH, a more pluralistic society is less susceptible to "master race" type demogoguery.
Jasper represents an almost simon-pure example of the kind of displaced pro-patria that has become normative in media, academe and the ruling echelons of the Democratic Party - very patriotic, but about their favorite piece of Western European welfare-statist ground, not the U.S. Attitudinal/Aspirational Europeans, I call them.
It's plain to see these countries simply rock.
As the late Poul Anderson observed, decaying societies in their early decadent periods can be great fun - for awhile. Eventually, however, the waiter brings the check around.
In addition to the neo-normative culture of moocherism already addressed in the post, Scandinavia shares a number of structural problems with the rest of Western Europe that are going to get nothing but worse over the next few decades.
1. Shrinking/aging populations. The entirety of Scandinavia reproduces at roughly 60% of the replacement rate. All of the "free" daycare on offer doesn't seem to encourage much baby-making. Figuring five generations per century, native Europeans will be nearly-extinct zoo animals by 2108.
2. Large, and growing, populations of immigrant Muslims. These recent arrivals are increasingly disinclined to adopt the good tolerant liberal ways of their clueless and cowardly hosts and dream, instead, of imposing their own tribal barbarisms on their barely adopted homelands. The Swedish Bikini Team may all be in burkhas and forbidden to step outside by 2025.
I would imagine you could structure a generous and expensive array of social programs and still have a society where nonetheless rational actors possess a strong incentive to achieve successful careers.
3. Emigration/Brain Drain. The best and the brightest Europeans - Scandanavians not excepted - still choose to bail out with some frequency and head for the U.S., Australia - even Canada. Perhaps they lack sufficient "imagination." Jasper and his drinking buddies may not have much use for the Land of the Free, but their opinion is not shared by anyone with ambitions to make their own way in the world as something other than a convenient source of cash for ones' slacker cousins. Meanwhile, trash talk by Alec Baldwin and Susan Sarandon notwithstanding, the number of Americans who actually shoose to go live in their favorite left-wing paradises, as opposed to just admiring them from afar, is still miniscule - worse luck. I'm sure Gore Vidal and Johnny Depp would apreciate a bit of expat company now and again. Still, there are Europeans - even Scandinavians - who manage to get rich. Most of them promptly leave their native climes for the sunny shores of Monaco.
4. Dependence on an export-heavy economy. Small countries can stretch things out a bit further by concentrating on high-tech exports or, as in Norway's case, oil and gas, as a way of bringing in valuta that the sclerotic domestic economy cannot organically produce on its own. This, of course, requires that there be significant external markets for such. The Scandinavians are fortunate to have the U.S. and, at least for now, the larger countries of Western Europe as sources for such sales. Said larger countries are less able to do this trick because of problems of scale. When Germany and France implode, they will spray a certain amount of economic shrapnel in Scandinavia's direction. Perhaps the U.S. will have grown enough larger by then to take up the slack.
In sum, the Western European welfare states are in the position of someone who has taken a swan dive off the Empire state building and is just passing the 75th floor. The rush of air is exhiliratiing, but the feeling won't last and the landing's going to be a real bitch.
An odd thing about Sweden is that the Wallenberg's practically own the country. They own ~ 65% of the common stock or corporations in the country. Did Gunnar Myrdal ever turn his attention to this?
Or more generally [taxpayers might resent their money being spent on transfers to] anyone, no matter how rooted in, who doesn't look like them. America's meager welfare state has little to do with immigration and much to do with racism.
Or rather, they resent the NET transfer of their money, the money of their family, the money of their extended family, and the money of people of the same ethnicity, to people of another ethnicity. That is, they resent that the transfer is so one-sided.
They also resent the their money being transferred to people who respond by going on the dole for a living, not bothering to get married, and proceeding to start an out-of-wedlock family with their money; and they resent the high crime rates that follow that sort of behavior in the ensuing years.
Dear Jim Glass, Finland has no oil. You're confusing it with Norway.
You are entirely correct. I am punishing my typing fingers as we speak.
"They also resent their money being transferred to people who respond by going on the dole for a living, not bothering to get married, and proceeding to start an out-of-wedlock family with their money; and they resent the high crime rates that follow that sort of behavior in the ensuing years."
I'm overcome with nostalgia. This is the Republican party of my youth, alive and well in the 21st century.
Stan, which part is wrong?
It makes me nostalgic too, for the days when liberals thought that handing out money would make people prosperous and self-sufficient. Forty years on, I thought we could write that idea's obituary, but apparently not.
I wonder if this will continue to be true. It occurs to me that Scandinavia, with its homogeneous population, may have been spending down the accumulated social capital of its pre-welfare state society.
Arguments of this form are highly suspect. "Country X's system appears on the surface to be working better than ours, but I wonder whether this does not conceal a hidden weakness which will gradually destroy it, thus conforming to my ideological predispositions?" Maybe Sweden is "spending down its accumulated social capital". Or maybe the US is "spending down its accumulated social capital" by refusing for 30 years to govern itself properly -- to invest in infrastructure, to tax more or less as much as it spends, to educate its poorer citizens, etc.
This is similar to the argument that China may be doing okay now but will surely fall apart any day now because non-multi-party-democratic states cannot possibly sustain modern economies. It's evidence-free nationalist wish-fulfillment.
I dispute the premise, certainly in the case of Sweden, which has a population less than that of greater Los Angeles.
Furthermore, arguments of the form "Country X's system appears to be better, because they have fewer strikeouts." Any system entails tradeoffs; focusing on the upside of a given tradeoff, and ignoring the downside, is meretricious. Arguably the only true measure is net immigration/ emigration, i.e., people voting with their feet, who have a direct and ever so personal interest in making an accurate calculation.
Sorry, that should have been "arguments of the form...are suspect."
(Although this is completely word of mouth info) One of my former development economics professors was a grad student under Hayek at Chicago. When I asked my prof. what he thought of a particular Sachs/Easterly debate that centered on the meaning of The Road to Serfdom, his response was interesting. He claims that following The Road to Serfdom’s release, Hayek was already uneasy over the seemingly formal public interpretations. The book was not written as piece of academic scholarship; Hayek intended to set benchmark for matters of social thought, not produce an analyzable theory. Many academics and journalists fall into the trap of trying to apply strict meaning to casually connected principles.
The same thing commonly occurs when authors justify self-serving economic policies by dropping a Wealth of Nations quote without any appropriate consideration for The Theory of Moral Sentiments.
European social democracies are some of the most substantively and formally free nations on the face of the earth I've lived in two of them and can attest that neither approaches the "substantive and formally free" status of the USA.
Socialism is a rich man's luxury. No socialist country ever got rich, but rich countries have gotten socialism.
That doesn't really bother me; if democratic countries want to vote themselves into relative poverty and future irrelevance (and a number of them have done just that), that's their choice. I think it's stupid, but democracy is what it is.
One of the worst things the West gave the rest of the world was the idea that you could become rich without market economics. No Western country ever did, but we convinced everyone else that they could.
China and India finally realized that they'd been duped, but the damage is still done. China is becoming a world power out of rejecting socialism, not embracing it.
I think that brooksfoe is entirely correct when he says "Arguments of this form are highly suspect."
OTOH, I suspect that some arguments of this form turn out to be correct. If people take brooksfoe-ian skepticism as spur to dig for real data and figure out what is really going on and why, then that is a spur for real progress and understanding. If people blow-off brooksfoe-ian skepticism as just "he's a partisan on the other side, of course he would have some blind argument like this" then they really are just relying on the "hidden weakness" argument to convince themselves that reality is "conforming to [their] ideological predispositions."
In the meantime, brooksfoe is right to be skeptical, but people who believe him would be wrong to assumes that "Arguments of this form are always wrong" or "Arguments of this form are necessarily making erroneous predictions." brooksfoe was careful in his phrasing, and clearly is not making that mistake.
As an aside, I suspect that a lot more of these arguments turn out to be half-correct. By "half-correct" I mean "correct" in conveying a sense of what's going on, but "incorrect" in ignoring some other things going on that will alter the course, rather than "bad trend just getting worse forever." If we assume for illustrative purposes that Megan's "Scandanavian social capital" hypothesis is "half-correct," then she is correct that they have accumulated social capital they are spending down. But, incipient signs of the problem will be detected, and they will change somehow in response, probably in a way that starts building up social capital again.
brooksfoe,
Apparently you missed the part about Sweden "consuming its capital [and] riding down through the world's GDP and income rankings ever since."
And Tom, when you see signs of corrections in Sweden, please alert us. What I read sounds all bleak, all the time.
"consuming its capital [and] riding down through the world's GDP and income rankings ever since."
I did indeed miss any evidence that Sweden has been falling in the world GDP and income rankings over the past 20 years. My understanding is that the country had a bad period in the early '90s and has been doing quite nicely for the past 10+ years.
Having lived for a couple of years in the Netherlands, I tend to divide the social-welfare programs of northern European countries into two kinds. There are some programs which run a very high risk of simply becoming handouts and discouraging work. These include easy and generous disability benefits (hugely abused), and automatic welfare benefits for immigrant communities who have not yet become part of the polity and whose income prospects are naturally not as attractive as those of natives.
On the other hand, there are social benefits which actually smooth certain kinds of social disincentives to work or perverse incentives towards corporations. These include well structured and generous parental leave programs, which eliminate screwed-up disincentives to employing talented women in their late '20s and which allow workers to make career decisions based on their talents and their earning potential, rather than on extraneous issues that mostly have to do with practical difficulties around raising families. They also prevent people from making trade-offs between family and earning power that hurt society in the long run. Along the same lines, coherent national health-insurance systems take health insurance costs out of the price of whatever a firm is selling, meaning competitiveness doesn't get caught up in the irrelevant issue of whether a firm gives its employees good health care benefits or the health riskiness of its employees.
These are social benefits which enhance capitalism, enhance labor mobility, and make people's lives more logical and happier, while maintaining -- in fact, even enhancing -- the work ethic.
Having lived for a couple of years in the Netherlands, I tend to divide the social-welfare programs of northern European countries into two kinds.
Which countries do you think do it well and which do you think screw it up?
Food is more important to your health than anything a doctor can do for you. Why don't we have a food insurance program?
Answer: because it would obviously be stupid. Now ... defend the health insurance system.
I didn't think you could. The reason we have employer-paid health insurance can be traced back to WWII wage and price controls. Desirable workers could not be paid more, but you could give them free health care. Employers did, and didn't stop when the wage controls went away.
Now we're stuck in the ridiculous situation of treating people like cars, doctors like car mechanics, and insurance companies like car owners. The car has no say in how much maintenance it gets, nor how much that maintenance costs. Consequently, it demands the best maintenance, price be damned. Any wonder that lots of people can't afford health care unless it's paid for by someone else?
"Apparently you missed the part about Sweden "consuming its capital [and] riding down through the world's GDP and income rankings ever since."
And Tom, when you see signs of corrections in Sweden, please alert us. What I read sounds all bleak, all the time."
This is the same sweden whose economy has been growing faster than the US over most of the last 10 years? The same sweden whose per capita gdp is higher than that of the US ?
The swedes had problems around 90-92 due both to the recession and the collapse of the Soviet Union which caused a lot of economic dislocation in the baltic area but since 94 the swedish economy has managed an average growth rate of 3.2%.
Hardly the sign of an economy languishing in the doldrums of a socialist nightmare.
"Stan, which part is wrong?" I was asked this by Occam's Beard after I objected to a post by Glaivester. I objected to it because I thought it was racist. Here in the US we ignore the problem of inherited poverty and welfare dependency in black ghettos (and the rural white South, Glaivester) because doing something about it would cost money. I think it's stupid and I think even the sainted Hayek would agree.
Forgot to add that when it comes to public debt, ours is 65% of GDP, the Netherlands is 48.7%, and Finland's is 32.9%, according to Wikipedia, quoting a CIA report. Megan asked if the welfare state is sustainable, with the implication that it isn't. She'd have a better argument if she asked the same question about the warfare state.
I think that Brooksfoe has a valid point, and I tried to make the point in my post (not very well, I think) that this is not something limited to liberalism and social democracy. I think libertarians have repeatedly vastly underestimated the amount of cultural capital required to make markets work in places that don't have them, and have thus wreaked much destruction in development theory (though again to be fair, not nearly as much destruction as their central planning foes). How to develop that cultural operating system where it doesn't exist is a severely understudied question; instead we focus on setting the right rules for macro institutions that won't work without a micro cultural shift.
These include well structured and generous parental leave programs, which eliminate screwed-up disincentives to employing talented women in their late '20s and which allow workers to make career decisions based on their talents and their earning potential, rather than on extraneous issues that mostly have to do with practical difficulties around raising families.
But it doesn't work out that way. Mostly the reverse. The 'parental leaves' are nearly always 'maternal leaves'. Women in Sweden are much more likely to work part time than women in the U.S. and occupations there are more gender-segregated than here.
In contrast, the gender equality in the U.S. is promoted by economic necessity. There are no guaranteed, long-term paid-leave parental leave programs in the U.S. And in an increasing number of families the wife out-earns the husband by a enough of a margin that the husband may stay home as the primary care-giver. This is obviously not the typical pattern, but it is common enough not to be remarkable or odd. And, given the increasing female-to-male imbalance in university degrees (and the decline of male-dominated manufacturing and now building trades occupations) this trend is likely to continue. Already women out-earn men in some places:
http://www.nj.com/news/index.ssf/2007/08/young_women_out_earn_men_in_ny.html
In contrast, the paid-leaves, availability of part-time work, and gender-segregated occupations enable Swedish women to pursue 'mommy track' careers, and that's what they do.
The law of unintended consequences strikes again.
Slocum, that's a mix of correct and incorrect claims:
The 'parental leaves' are nearly always 'maternal leaves'.
Incorrect. "In Sweden, for instance, fathers now assume responsibility for 45 per cent of childcare responsibilities, thanks in large part to the growing popularity of paternal leave." -- UNICEF. http://www.unicef.org/sowc07/profiles/empowerment_household.php
This matches my anecdotal experience. Norwegian and Swedish fathers are more likely to have taken paternal leave and spent time as primary caregivers than American or Dutch fathers, who lack such generous paternal leave policies.
Women in Sweden are much more likely to work part time than women in the U.S. and occupations there are more gender-segregated than here.
I haven't been able to find data on this but wouldn't be surprised if it were true; it's true in the Netherlands. Generous social safety nets and egalitarian wages have muted the economic necessity that's forced American women into the labor market since the '70s. However, women's wages are far closer to men's wages in northern Europe than in the US -- in Sweden women make 90 cents for every dollar men earn, close to the highest equality in the world, while in the US it's less than 80 cents.
Let's stipulate that Swedish women, though they're in the workforce far more than they were 30 years ago, still work less than American women, though I don't know the figures, because they're staying home to raise the kids. Yet we also know that Swedish men are staying home to raise the kids much more than American men are. What we're looking at here is one country in which labor force egalitarianism is increasing more slowly while men shift to help with childrearing, and another country in which labor force egalitarianism rose very fast due to economic necessity, taking women out of childrearing, while men did not shift much to help with childrearing. So...who's doing the childrearing in the US?
I don't know the answer, but I wonder whether it has to do with the fact that the average American household has the TV on over 8 hours per day and kids in the US watch about 4 hours of TV a day,, while kids in Sweden watch about 2.
Food is more important to your health than anything a doctor can do for you. Why don't we have a food insurance program?
Dunno. Could it be because your food costs are (1) quite constant and predictable and (2) above a certain basic level, entirely under your control? Whereas neither of these is true of your health care costs?
In regards to the culture that makes for 'economic success', I would guess that this is on the ebb in the United States. The cultural machinery in this case is one of 'fairness'. Not 'fairness' in the sense that those who have been hard done by deserve a bit of help, not 'fairness' in the sense that to those who have been given much, much is demanded.
No, I'm talking about the fairness of outcomes. There was a time in my parents generation where the thought was that as long as you worked hard, were thrifty, and practiced a little self-control, you would end up, well, not well-off, exactly, but comfortable at least. There are a lot of people who emphatically disagree that this is the case, these days. The received wisdom is that working hard is for suckers - you won't be rewarded for it, and that the way to get ahead is determined by who you know, whose palm you grease.
That, I think we would all agree is corrosive and contrary to the fundamental notions that lie behind 'economic success'.
Let's run with this analogy, shall we? One day you are diagnosed with a malignant tumor. Your doctor informs you of a certain pomegranate for sale at your grocery store which should cure it. You find it in the produce department . . . priced at $200,000.
Would there be a food insurance program if this were the case in real life? You betcha. I'd have to say that this little side excursion is obviously stupid.
ScentOfViolets,
Ah yes, the days of the WASP aristocracy, those halcion days of elite private school and restricited country clubs, of White Shoe Law Firms and regulated brokerage commissions.
Yes, those were the days, when any boy or girl, black and white, gay and strait, jew or gentile, could rise as far as their dreams and ambition could take them.
Really, Scent, did your parents dream world ever exist? Or if it ever did, did it last for more than 5 or 10 years?
jmo:
[D]id [that] dream world ever exist? Or if it ever did, did it last for more than 5 or 10 years?
Whether or not it actually existed is less important that if people believed it existed. I suspect that, before the Baby Boomers, people did believe in it.
Other than the 1950's, what time period are you thinking of? 40's, 30's, 20's, teens? When?
Well, no, jmo, I happen to think this sort of thing used to be true - or more true, at any rate. Yes, back in 1962, the received wisdom was that if you showed up on time, worked hard, kept your nose clean, and was willing to do that little bit extra, the company would notice, and you would raises and promotions. And, ironically for this blog, it is still true in places like academia, at least in some fields.
But the majority of my fellow Americans tend these days to believe that if you work hard, the boss explains to you why you really don't deserve the fruits of your own labor, and then proceeds to pocket the gains. And after ten years of this, or twenty, you'll either be fired as a potential drain on the pension plan or as costing too much money, or the whole business will be off-shored anyway. Again, along with self-serving and elaborate explanations as to why management and those they favor deserve to be rewarded for this behavior, while you're just a parasite who demanded too much, forcing the relocation to climes where employees really appreciated how fortunate it was to be working for such a great company.
Re: Old people are generally retired and on pensions in the western European states, not on disability or sick leave, unless you consider under 55 old.
Yes, that's true in the US as well. But I am speaking about oldER people: the older you are, the more likely you are to suffer chronic illness and other troubles. I am 41 and I am seeing this in my contemporaries already: my asthma is more a problem than it was 20 years ago, my sister is in chronic pain from her back, a friend (at 50) has prostate cancer, another friend is dealing with chronic colitis, a woman friend two years my junior has heart troubles, etc.
Re: To quote a favorite movie of my college years: "Mr. JonF, what you've just said is one of the most insanely idiotic things I have ever heard.
And the River Denial flows smoothly on to the sea...
Come on, does anyone in their right mind really think race has nothing to do with American attitudes on welfare? Ronald Reagan's iconic Welfare Queen on her cadillac throne was not a white lady, you know.
Re: Food is more important to your health than anything a doctor can do for you. Why don't we have a food insurance program?
Answer: because it would obviously be stupid. Now ... defend the health insurance system.
1. Food costs are almost wholly predictable (at the individual level) and can be adequetely budgeted for by most people. (Health costs however are only predictable in the large aggregate)
2. Food admits of numerous "inferior goods" meaning there are cheaper substitutes, often much cheaper substitutes: one can survive off ramen noodles and chicken soup as well as off filet mignon and cavier. By contrast, with very few exceptions, there are no cheap substitutes in healthcare (yes, generic drugs, OK?), and if you need a broken bone set, chemo for cancer or an appendectomy that's exactly what you need, and there is no "ramen noodles" substitiute that will do just as well.
3. Untreated illnesses threaten everyone and unpaid healthcare bills are ultimately paid by everyone.
For these three reasons alone (there are also lesser ones) it makes extraordinarily good sense to treat healthcare as a social good, just as we do defense and justice, which would suffer from similar problems if we tried to treat them as private concerns.
That's how it's been for me and all the people I know.
Seriously though, is that how it has been for you?
Gene,
Do you still use "Thou" and "Thee" and "You" and "Yee"? If not why not?
We have a food insurance program. It's called Food Stamps.
It's racist, so, end of discussion.
I repeat: which part of Glaivester's post was incorrect (i.e., non-factual), as opposed to uncharitable?
Stripped of its bigotry, Glaivester's post was a cri de coeur about how awful it is that good hard-working people have to support people too lazy and improvident to support themselves. I can't discuss the factual basis of his post because it isn't about facts, it's about ethics.
I'm curious, jmo: where do you work, as what, and for how long at that place? Because, really, I'm going on statistics:
So, while your personal situation doubtless holds for many people; for many more it does not. Further:
It seems to me that one natural way to interpret these findings is that the perceived relationship between performance and reward is breaking down for a large proportion of the population, i.e., it's that culture thing again. One guess as to who's destroying this cultural resource for their own immediate benefit.
So...you don't think it's awful for hard-working people to support the lazy and improvident?
Leaving out as a separate issue the ethnicity aspect that preceded the following quote, which part of the quote is wrong?
Who doesn't resent paying for people living off the dole, having, shall we say, "casual" families (that we also pay for), and engaging in crime? Are those three phenomena entirely divorced from each other, and randomly distributed? Who wants to go to work every morning to subsidize the Jerry Springer set?
The issue is behavior, as I see it.
Who wants to go to work every morning to subsidize the Jerry Springer set?
That is a completely unjustified slur. Anyone who appears on Jerry Springer is providing a highly valuable entertainment product to the television audience, and hence to the advertisers who subsidize the broadcast. They are hard-working sideshow freaks who deserve to be handsomely remunerated for their efforts.
"Comparing the Scandinavian countries to the US and drawing conclusions about social-economic policy is a sort of like comparing New Hampshire to Europe (including Spain, eastern Germany, Turkey, etc.) and concluding it would be better off without an income tax."
I totally agree, can we please stop comparing the 300MM person United States to countries the same size as New Jersey (Sweden), Maryland (Finland), and Alabama (Norway).
And that applies to the idea of a flat tax in Estonia and Zero Corporate Income taxes in Bermuda as well as your favorite social democratic program.
Good one, Brooks! About time someone stood up for Springer-Americans! /g
It seems to me that the cultural "glue" that "Scent"
rightly claims is dissolving, along with the resultant dysfunctional behavior that disturbs the Beard is an inevitable result of the inexorable workings of the second law of thermodynamics, i.e., the fact that entropy cannot be reversed. This decline is inevitable from the birth of any given society--time, place and circumstance dictating the rapidity of the process--some in a straight-line arithmetic progression, others logarithmically. If the latter, it makes it extremely hard to see disaster looming before the point of no return is reached.
The supposed saving grace of America is the view held by those who see America as a society in constant "revolution" which reinvents itself every day, thus forever staving off decline. Any takers?
It seems to me that the cultural "glue" that "Scent"
rightly claims is dissolving, along with the resultant dysfunctional behavior that disturbs the Beard is an inevitable result of the inexorable workings of the second law of thermodynamics, i.e., the fact that entropy cannot be reversed. This decline is inevitable from the birth of any given society--time, place and circumstance dictating the rapidity of the process--some in a straight-line arithmetic progression, others logarithmically. If the latter, it makes it extremely hard to see disaster looming before the point of no return is reached.
The supposed saving grace of America is the view held by those who see America as a society in constant "revolution" which reinvents itself every day, thus forever staving off decline. Any takers?
And you of course have the stats that show these recipients are behaving just as you describe. Or is this an instance where if even one person behaves as you describe, it invalidates the whole system?
Personally, I think the current system could be greatly improved. I also happen to think that it has been systematically sabotaged by people opposed to it and who then go on to indignantly denounce it for not working. For example, the requirement that fathers could not be residing with mothers who receive AFDC was a conservative addition. The 'liberals' of the day pointed out, rightly it seems, that an absentee father creates another set of problems. Imagine my shock upon hearing 'conservatives' bemoaning these problems that they were instrumental in creating as proof that these sorts of transfers don't work.
That's not to say that so-called liberals haven't made some bad policy decisions wrt to these sorts of programs, of course. But let's be honest about who created them as well.
In my pessimistic moments I fear that this is correct. In my optimistic moments, I realize that every society (after the initial novelty of a new political situation wore off) probably felt exactly the same way: that their society was about to disintegrate.
Of course, some of the latter were in fact correct...
I think the analogy to thermodynamics is pretty much meaningless.
Where would you date the "birth" of a society - any society - from, anyway?
Well yes, roac, on one analytical level, especially the cultural one, you make a fair point--the process is more evolutional than revolutional (most of the time) and any sort of decline(as opposed to change) is often so gradual as to be meaningless for most practical purposes. However, here in America, we began pretty much from a tabula rasa (granted with many philosophical and cultural precursors) and the exact political form of government which presently governs our lives does indeed have a start date. The same may be said of post-war Japan and Germany. Other societies "start-dates" in terms of form of government(which in turn often heavily influences cultural development)are to be sure often so seamlessly blended with their historical evolution that it makes such deliniations harder but not impossible--much as geologists examine superimposed rock strata to date various periods of the earth's development. Somewhat a blend of subjective line drawing and factual real fossil/rock record true enough, but for purposes of meaningful knowledge/analysis better than nothing.
Of course one man's cultural disintegration is another's exciting change for the better(think pre
Brown v. Board for blacks) but those who would deny than society has become much coarser in the
interstices of human interaction have a tough brief to argue.
Stripped of its bigotry, Glaivester's post was a cri de coeur about how awful it is that good hard-working people have to support people too lazy and improvident to support themselves.
No, my point is that the welfare system encourages people who would otherwise be hardworking to become lazy and improvident. More specifically, my point is that if you consider how badly the black community appears to have responded to welfare, it is not unreasonable that many whites would view welfare in a negative light; and it is unreasonable to blame "white bigotry" for this reaction, seeing as it is based on the observable reality.
I do not have statistics right with me that definitively link this behavior to welfare, but is it entirely a coincidence that black illegitimacy skyrocketed shortly after the creation of the Great Society?
Personally, I think the current system could be greatly improved. I also happen to think that it has been systematically sabotaged by people opposed to it and who then go on to indignantly denounce it for not working. For example, the requirement that fathers could not be residing with mothers who receive AFDC was a conservative addition.
I was not aware of this. I will have to check this out.
The 'liberals' of the day pointed out, rightly it seems, that an absentee father creates another set of problems.
I remember Daniel Patrick Moynihan being concerned about this sort of thing.
I remember Daniel Patrick Moynihan being concerned about this sort of thing.
I should say that when I say "I remember," I mean that I remember the fact of his being concerned, having read about it and seen it on TV. I do not remember his actual initial foray into this issue as it happened, I believe, before I was born (which was in 1978).
Re: I tend to divide the social-welfare programs of northern European countries into two kinds. There are some programs which run a very high risk of simply becoming handouts and discouraging work ... On the other hand, there are social benefits which actually smooth certain kinds of social disincentives to work or perverse incentives ...", and "social capital" and mentions of Moynihan...
I once heard Moynihan put it very simply this way:
Social Security and welfare were both cash transfer programs.
Social Security worked very well because it made its cash transfers to recipients after they had worked for 35 years and in doing so had learned how to spend responsibly, save, balance a checkbook, and constructively manage their social affairs.
Welfare was highly troubled because it made its cash transfers to recipients before they had learned to how work, and so before they had learned to spend responsibly, save, balance a checkbook, and constructively manage their social affairs. And to the extent that welfare payments substituted for available earned income, it delayed its recipients from learning these things.
So spoke Pat.
The reason Sweden is comfortable is simple. It is full of Swedes. Sweden could adopt capitalist economics, barter economics, or Underpants Gnomes economics, and still be comfortable, because it would still be full of Swedes.
Once upon a time I went to a very small engineering school. It had an honor code that worked. People left their doors unlocked, students were issued master keys that would open most buildings (and professor's offices!) and exams were timed, and take-home. You drew a line across the page when you reached the time limit, and kept going. Student stores were just a fridge and a whiteboard.
This system worked because of the students. This system would obviously not work in Lagos.
So the question is not "is Sweden comfortable due socialism?" - by any measure it's a reasonably successful place, but there are many reasons why.
Mike Wilks, who is 5'10", has an NBA championship ring. Does that mean that he is successful because of his height, or in spite of it?
The question is:
1: Given societies that were divided in half, one side socialist and one side capitalist, what were the results?
2: How many poor societies that adopted capitalism managed to become middle-income or rich? And for socialism?
Then answers are quite obvious.
You are aware, are you not, that there about twice as many whites as blacks on welfare, right? And if you have an 'observable reality' rather than a media creation, you should be able to document it, right?
If you do not have the statistics, how do you know this? Further, as I have already explained, yes, welfare as it was structured definitely encourages males to live outside the home of the family receiving AFDC. For starters, fathers are explicitly forbidden from living with the mother. Further, there is the punitive 100% taxation on benefits should one find work while on welfare. And since black males are much more likely to be unemployed than their white counterparts . . . this is a simple and rational calculation.
I'll also add, based upon personal observation, that violations by blacks are much more closely monitored than violations by whites. That is, a white father living with his wife and children who are on welfare is much more likely to get away with it. I don't blame overt racism for this, btw. It's that the urban impoverished are much more likely to be black, while the rural impoverished are much more likely to be white.
And the fact that if one scrupulously follows the programs guidelines, one must endure a 100% taxation rate on a job that may or may not be there in six months has absolutely nothing to do with it at all? That seems counterintuitive, to put it mildly.
the once-famous work ethic is not really all that impressive any more, and there's little stigma attached to malingering on long-term sick leave....I think we generally underestimate how much culture matters to economic success.
First of all, this is a BS bait and switch, since the question was about freedom and not about maximizing total economic output. Not working so hard could be seen as conducive to freedom, and a social system that forces everybody who isn't rich to work their tail off all the time might not be seen as all that free. This is a standard libertarian / conservative blind spot.
Second, if Megan could be bothered to google up some actual stats rather than pulling her assertions directly out of her butt, she would see that Swedish GDP growth has run higher than U.S. GDP growth for the last decade. Maybe Swedish "social capital" will eventually run out, but shouldn't someone making this claim be required to present some evidence.
Finally, another libertarian blind spot is overlooking politics, since they don't really believe in the possibilities of politics or government. When the Swedish system broke down in the early 90s, people kicked out the government and there were economic reforms. If they run into trouble again, the same thing will likely happen. Being a democracy allows you to experiment with alternative social systems, since if people don't like them they will vote to change them. Just like markets, politics can be a self-correcting system.
Am I the only one that gets a strong sense of "deja vue" whenever I read an article about the "Socialist Republic of Sweden."
Basically there are two flavours:
1) The SRoS is screwed because of X, Y, and Z - just you wait, it'll crah and burn anytime now.
2) How can the SRoS be so successful despite being a Socialist Republic and doing EVERYTHING so wrong?!?
I dunno about the rest of you but I've been yawning through these ill-informed articles for at least 25 years now. I wonder how old they actually are, and who and when first wrote about it? Little did they know they were establishing a right wing journalism genre that would run and run for decades.
ALL economies, global & household alike, are "planned" or they fail - the use of "planned economies" refers to state-run planning. Japan had a vibrant economy for decades on end, with ones of the most stringently planned economies ever. So no, Hayek did not get it right.
No amount of Protestant Work Ethic mumbo-jumbo will make the current level of corporate corruption evaporate. That corruption destroys lives & devastates economies - do names like Bear Stearnes or Nugan Hand ring a bell? Corporate venality engenders at least as much economic apathy as does a decent social safety-net. Not much point in pulling on one's own bootstraps to get up, if somebody with an eight-figure income is waiting to kick you back down by absconding to the Turks & Caicos with your pension money, or exporting your job to Sri Lanka.
Rather than blind faith in nebulous "cultural laws" to act as economic energizers, maybe the US could try enforcing & strengthening the real ones already on the books. That way, you increase confidence in your stock market (which right now is a vital necessity if you're going to have any kind of recovery worth the name) - nobody wants to invest in a company if it's going to take the money & run, without any consequences.
More & more, America's been forced to sell off its resources to overseas investors, just to pay the interest on what it already owes them for its massive debts - it's gotten bad enough that even things like bridges & power-plants are going on the auction block now. Foreign ownership was once a major cultural faux-pas in America - now it's the rule of thumb. America is playing a very dangerous game of economic poker, & it's rapidly running out of chips to put on the table.
In another decade or two, you're going to be living in a 100% foreign-owned country; how do you even justify having your own flag or currency when you literally have nothing left to call your own?
C’mon, SoV, use some of that much vaunted but to date unapparent mathematical expertise to realize that the relevant comparison is not absolute numbers, but incidence relative to population. By your reckoning Lamborghinis are the cars least likely to be stolen.
Sheesh.
"ALL economies, global & household alike, are "planned" or they fail"
Bullshit. Economies are not planned. If you think they are please produce the plan.
Also households are not planned and they don't fail. In fact no one does planning. Even the USSR didn't do planning. By planning I mean coming up with a plan and then (and this part is extremely important) IMPLEMENTING IT. Anybody can plan. I can come up with a plan to rule the world. Planning is garbage unless you actually follow the plan. And no one does. Why. Because shit happens. This is something Hayek understood. But nobody else does.