Social Democracy in America?

Social Democracy in America?

Lane Kenworthy delivers a crisp manifesto for an “American” version of social democracy. But can his vision transcend Republican extremism, union decline, and our country’s racial heterogeneity?

California rally for single-payer health care, 2007 (HSeverson / Flickr)

Social Democratic America
by Lane Kenworthy
Oxford University Press, 2014, 248 pp.

Recently, a group of conservative policy intellectuals and writers captured the attention of the media and even of a few Republican politicians. These “reformocons,” including Ross Douthat of the New York Times, Ramesh Ponnuru of the National Review, and Michael Strain of the American Enterprise Institute, believe it is time for the Republican Party to propose public policy solutions to domestic issues like health care and education, rather than provoke the cultural resentments of the party base, what Douthat has called the politics of “white identity.”

The reformocons chief policy entrepreneur Yuval Levin, editor of its flagship publication National Affairs, challenged the left in the National Review in June:

They [liberals] imagine that there is some kind of coherent liberal agenda that speaks to middle-class concerns…. But where is that agenda? What does it consist of? What did President Obama run on in 2012? What is the next Democratic candidate supposed to run on? Doubling down on head start and the minimum wage plus a carbon tax? To me, one of the most extraordinary features of this moment in our politics is that many serious liberals seem genuinely not to grasp the intellectual exhaustion of the left.

Levin has a point. Likely 2016 Democratic presidential nominee Hillary Clinton—presumably an exponent of gender equality and family-friendly policy—can’t even be moved to endorse paid family leave: “I don’t think, politically, we could get it now,” she said to an interviewer recently. Not exactly a rousing call to arms. Minimum wage increases are a good idea as far as they go, but how far do they go, really? Is this the future of liberal domestic economic and fiscal policy in the United States?

In Social Democratic America, Lane Kenworthy says it doesn’t have to be this way. Kenworthy, a political scientist at the University of Arizona, writes with an almost eerily calm clarity. You want policies? He’s got them—a comprehensive expansion of the social insurance state combined with fewer regulations on businesses, what the Scandinavians call “flexicurity.” You’ve got questions about whether these policies can work in a U.S. context, or whether they can ever become law? He anticipates and answers them, marshalling the latest studies on each question. This is not a book of hortatory uplift—romantic, enraged radicals will not get their fix of romance and rage. It contains practically nothing about foreign policy, gender and sexuality, or racism; while this sharpens the book’s focus, it limits its consideration of how these factors affect fiscal and economic policy. It is a crisp, clean manifesto: a call to expand American social insurance in the most straightforward way possible—via enormously increased government transfer payments and programs, not mandates on businesses or means-tested entitlements.

Kenworthy scrupulously considers the arguments against his ideas from the left and the right. For example, Kenworthy asks: could the United States model Australia—that is, have a lower level of taxing and spending as a percent of GDP because it targets social welfare to the poor—but still enhance economic growth and mitigate poverty? The answer is maybe, but according to Kenworthy, Australia’s egalitarian national culture makes it more likely to sustain these programs. Moreover, he adds, Australia’s “rate of material deprivation” is higher than in peer countries.

Kenworthy, noting correctly that the United States is at the low end for advanced nations in revenue as a percent of GDP (around 37 percent, including federal, state, and local sources) proposes that we spend a more Germany-like 47 percent, or $1.6 trillion more per year. He proposes a combination of increased marginal taxes on high earners (including several new tax rates for those above the top 1 percent), a transaction tax on financial trades, a 12 percent consumption tax, a carbon tax, and a 1 percent increase in the payroll tax, in addition to ending the mortgage income tax deduction. Kenworthy is not worried about the use of regressive taxes. He argues correctly that a broader revenue base will still overwhelmingly benefit the middle and working classes as well as the poor, via the more comprehensive benefits of government programs. He also destroys the idea that the United States “can’t afford” to raise sufficient revenue to increase government programs that provide social insurance and enhance economic opportunity.

With this money, Kenworthy suggests we buy ourselves universal programs, which sustain political support and are thus better run than those targeting the poor. Those programs would include comprehensive universal health insurance, a year of paid parental leave, universal early education, sickness and wage insurance, and increased infrastructure. Universal programs would mean increasing the Earned Income Tax Credit (EITC) and, to a lesser extent, the minimum wage (indexing, however, the latter to inflation), making affirmative action based on class, not race (an idea he glosses over without taking on the controversy around it). The programs would also require improving defined contribution pension plans and making enrollment automatic.

Kenworthy demonstrates that there is no correlation between lower growth and increased government spending until, perhaps, 65 percent of GDP is devoted to government revenue, a figure that Sweden briefly reached in the nineties before pulling back.

At this point, however, Kenworthy veers away from a variety of hopes that many on the left have. Kenworthy will fight for that extra 10 percent of GDP in revenue and social programs, but he’s given up on a lot of other shibboleths. He isn’t hopeful about increased wages. He accepts that most new jobs will be “low end” service ones. But thinks we should “embrace” this—because “most of us,” as he puts it, want to outsource tasks such as cooking, cleaning, mowing the lawn, and changing the oil in our cars. Most of us may want that, but what about the growing low-wage working class? Kenworthy proposes wage insurance and a new, larger EITC that would be based upon individuals rather than on households and be indexed to average compensation.

So a lot of workers won’t make much (although they will be protected in other ways), but maybe unions could boost their economic and political power. Doubtful, says Kenworthy. In less than a page, he dismisses the possibilities for a revival of the labor movement. Sure, strong unions might reduce the need for government intervention, but Kenworthy points out that unions have been declining in all the rich democracies for many decades, and in four of the five countries where union density remains over 40 percent, it is in part because unemployment insurance is linked with union membership. In short, Kenworthy concludes that “there is little reason to expect that their decline can be reversed.”

Kenworthy parallels the decline of unions to an analogous decline of traditional community organizations and two-parent families (precisely the agencies that Yuval Levin and his conservative colleagues believe are the essential mediating institutions between the individual and the state). Kenworthy dispassionately presents the numbers—the increase in out-of-wedlock births, the increase in the marriage age, the decline in civic clubs, sports leagues, and YMCAs. As with unions, Kenworthy gives traditional families and civil society a gold watch before whisking them off the stage of history. He is not unmindful of the benefits of these institutions, but he doesn’t believe that what has gone can be restored. So why not provide single parents with higher wages, paid parental leave, and preschool for their kids? Against sentimentalists of the left and the right, Kenworthy adopts Brecht’s injunction: “Always prefer the bad new days to the good old ones.”

Kenworthy prefers social insurance programs—a mild paternalism—to a basic income program recently championed by some on the left and the right. He thinks a basic income program would discourage work and thus limit the tax base needed to redistribute broadly. But Kenworthy is too quick to dismiss their possibilities—there is evidence from other countries (such as Brazil, for instance) that these programs mitigate poverty. He also prefers what he calls “service users”—the general public—over “providers,” that is, often unionized public sector workers. He believes that a mix of public and privately provided services provides the best bang for the taxpayer’s buck (the German postal service, for example, is privatized). Kenworthy alleges that “stable, decent paying jobs” are a “side benefit,” not the goal of public service provision. If the goal is social cohesion, Kenworthy argues that public-sector services, like schools, aim to be good enough to attract higher-income voters.

This is an odd fight for Kenworthy to pick on two grounds: most liberals and leftists share his support for well-funded and efficient public services. And Kenworthy himself advocates making the state the “employer of last resort.” The public sector is completely unionized in the countries he extols, while public-sector unionism in the United States is just another front in the larger war against unionism. And who is against customer-friendly service?

Kenworthy wants more insurance and less regulation. He joins an interesting group of thinkers—economist Dean Baker, political scientist Steve Teles, and writers Matt Yglesias and Mike Konczal—who want to confine regulation to the environment, worker safety and health, consumer protections, and the financial sector (you might call them Über-friendly). Kenworthy wants a lot of tax money to be redistributed and for economic actors to generate wealth and innovative services. According to Kenworthy, “a nation can tax quite heavily while still giving economic actors considerable freedom to start and operate a business, allocate capital, hire and fire employees and engage in all manner of economic activities.” (In other words, he wants Denmark, not France.) Kenworthy adds that the American love of “economic freedom and flexibility” makes this an ideal approach for the United States. This vision is, in fact, pretty close to the current Scandinavian model without what he calls “the full Nordic gestalt.” Kenworthy disputes the argument that these countries are too small or homogeneous to be viable models for the United States. The evidence, he contends, shows no correlation between the size of a nation or economic growth. Nor does it show any correlation between the size of government and insider corruption.

Kenworthy thinks that capitalism working at its best—an Americanized version of the Nordic model—would be worth fighting for. I agree.

Those who believe that European social democracy is itself in the final lap of its historical run will be disappointed. So will those, like the Canadian academic and labor activist Sam Gindin, who argued in Jacobin that “If we think that capitalism is a system that blocks human progress then the challenge is to convince people that capitalism is the problem even when it is working at its best” (emphasis in original). Kenworthy thinks that capitalism working at its best—an Americanized version of the Nordic model—would be worth fighting for. I agree.

There are, however, three problems that I see with Kenworthy’s argument. First, he is too blithe about the effects of declining unionism and other organizations of civil society. Yuval Levin, while caricaturing the left’s view of civil society, argues smartly that:

The premise of conservatism has always been … that what matters most about society happens in the space between the individual and the state—the space occupied by families, communities, civic and religious institutions, and the private economy—and that creating, sustaining, and protecting that space and helping all Americans take part in what happens there are among the foremost purposes of government.

Kenworthy acknowledges that social cohesion might be weakened with the decline of unions and other civic organizations. He cites Robert Putnam to the effect that such organizations correlate with government quality and economic success. But he ends up saying that what’s gone is gone and, besides, government has expanded precisely to fill the service gaps that even the best volunteer organizations can’t. The latter is surely correct, but there has to be some kind of organizational cohesion to imbue a social imagination in millions of Americans who lack a politicized empathy that extends beyond their immediate family and friends. Kenworthy doesn’t grapple with the fact that the growth of European social democracies depended upon the political and economic power of large militant labor movements. Kenworthy insists that policy-makers “can overcome ambivalence among the citizenry.” But proposing large tax increases coincident with untested programs, in the face of determined corporate and conservative opposition, without corresponding institutional forms of advocacy and militancy, will be an extremely tough proposition. Maybe Kenworthy is right—unions are dead. But if so, we’d better construct something new in their place if we’re going to come even close to realizing his blueprint.

The union role is not merely a matter of solidarity—it is a matter of quotidian power. Unions in the Scandinavian countries that are Kenworthy’s beau ideal have influence in the workplace that U.S. unions can’t even fathom. The safety and health regulations that Kenworthy wishes to maintain in an otherwise generally deregulated marketplace are enforced by workers on the shop floor. Having power keeps people focused and attentive and elites accountable to ordinary citizens—strong unions enable that kind of focus and attention. Without that intensive citizen scrutiny, could a quasi-Scandinavian America survive?

But he is proposing that the United States do something that has never been done before: creating a comprehensive social democratic political economy in a nation with pervasive ethnic and racial heterogeneity.

Second, Kenworthy is sanguine in noting that the United States today is closer to, say, Norway and Sweden, than it is to the America of a hundred years ago. And he’s right: all of these countries are mixed capitalist economies with automatic stabilizers and social insurance programs in place. But he is proposing that the United States do something that has never been done before: creating a comprehensive social democratic political economy in a nation with pervasive ethnic and racial heterogeneity. The British created the NHS when the national demographic was almost entirely white. The Scandinavians and the Dutch completed their welfare state long before migrants—mostly Muslim and from Africa—arrived. In the face of increasing tensions with new ethnic and religious immigrant minorities, would these countries be able to implement their welfare states today? Kenworthy realizes the importance of “soft” metrics like social solidarity when he talks about Australia’s “exceptionally egalitarian culture,” the country’s “deep seated commitment to a ‘fair go.’” Yet even in this case, he fails to note that there are wide disparities in wealth between Anglos and indigenous peoples. If, nevertheless, Australia remains more egalitarian in ethos and economics than the United States, Kenworthy may well underestimate the need for something of an equivalent ethic of social solidarity in the United States.

The United States has an incomplete welfare state perched precariously upon a multiracial society, which will become predominantly non-white around 2050. As Ronald Brownstein has noted, there is an enormous racial divergence over who supports programs like the Affordable Care Act or food stamps: only a minority of whites support them, compared to majority support for them among people of color. Kenworthy doesn’t really engage with this problem, and it’s surprising that his bibliography contains no reference to Donald Kinder and Cindy Kam’s much discussed Us Against Them: Ethnocentric Foundations of American Opinion. Kinder and Kam demonstrate that white Americans oppose programs they view as benefiting primarily the poor and racial minorities, while supporting universal programs like Social Security and Medicare.

The latter might appear to buttress Kenworthy’s preferences for universal programs over both employer mandates and programs more narrowly tailored to the poor. But, in fact, the opposite is true. Social Security and Medicare are long established programs for the elderly—who are majority white—only. They are universal, yet also limited by age—a kind of welfare gerontocracy. Any new national programs, along the lines that Kenworthy proposes, will be seen as benefiting the poor, racial minorities, and the young. This, for example, is largely true of white voters’ reactions to the Affordable Care Act, even those who themselves might obtain health insurance via the law.

A recent article in the Washington Post, for example, interviewed working class whites in impoverished Southwest Virginia who desperately needed the health insurance the ACA might provide—yet most of them were deeply hostile to law, even believing the canard about it requiring “death panels.” Earlier this year, Pew Research, in findings similar to those from other major polling organizations, noted a 44 percent gap between black people who supported the ACA (77 percent) and white people (33 percent). In short, white Americans (especially the elderly) have theirs, and they’re not prone to extending support to those who do not look like them or belong to their “tribe.” And we don’t have any examples where social democracies have been dramatically extended in cosmopolitan, multi-ethnic nations. Can it really happen here?

Finally, Kenworthy understands that partisan polarization combines with the multiple veto points of our political system (its federalism and separation of powers) to make social change difficult. He tries to turn this into an asset by claiming that the same obstacles make it less likely that a program, once implemented, will be repealed. But even in parliamentary systems, the major advances in social insurance have been retained—so who needs the veto points? Kenworthy addresses Thomas Mann and Norman Ornstein’s argument that the Republican Party has become uniquely obstructionist through a combination of hyper-partisanship, the extremist anti-government rhetoric of its base, and party discipline. Today’s GOP has the culturally resentful affect of a European reactionary splinter party, like the French National Front, but, unlike the FN, because it is a major party in a two-party system, the GOP has the potential to govern. Nevertheless, Kenworthy thinks that the Tea Party–driven GOP of today will eventually “be similar to that of the [major] center-right parties in Western Europe, most of which accept a generous welfare state and relatively high taxes.”

Kenworthy believes that another presidential defeat might force Republicans to adopt a more moderate stance. Perhaps—but GOP members of Congress, particularly in the House, represent overwhelmingly white, conservative districts; they have no incentive to soften their opposition to immigration reform, or to consider a new paid family leave program. He also believes that the conservative reformers to whom I referred at the beginning of this essay will find the idea of increased taxes and social programs combined with less business regulation sufficiently appealing to cut deals with Democrats. But Yuval Levin and his colleagues are not interested in higher taxes or bigger programs. Levin is an intellectual historian who sees the “left” engaged in a long portentous war against the “right” to claim modernity’s mantle. He writes in sympathy with, not opposition to, the Tea Party. In his words:

[T]he key point to understand about what people are calling “reform conservatism” is that it is an effort to move the Republican party to the right. And in particular, it is an effort to move from arguing about how much we should be willing to spend on the liberal welfare state to arguing about how to replace it with a conservative approach to government that advances our vision of a free society. [emphasis added]

He continues:

It seems to me that’s very much in line with what a lot of tea-party activists want too, and it’s not a coincidence that it is a response to the same frustration with Republicans that brought on the Tea Party. And in fact, various people and organizations associated with Tea Party Republicanism have been at the forefront of advancing the kind of approach.

In short, there is little evidence that the new conservative reformers want to meet Lane Kenworthy halfway.

So I hope Social Democratic America has a large readership. I love most of Kenworthy’s proposed policies, his intellectual generosity and honesty, and his expansive hope for a better America. I worry, however, that he badly underestimates both the revanchist extremism of the Republican Party today and the collapse of the communitarian underpinnings that made prior advances in social justice possible. Perhaps, at the expense of Kenworthy’s royalties, we might pass Social Democratic America around in an effort to build the social solidarity that the next great struggle will require.

Rich Yeselson is a writer who lives in Washington, D.C. His articles have appeared in the American ProspectPoliticoDemocracy, and the New Republic.