[p2p-research] US/European post-WWII experiences and social safety nets

[Michel Bauwens]

Hi Paul,

I finally find an area to disagree with you ....

First the timing ... the high growth era of Europe coincides with the U.S.
and it the opposite of what you say ...  The fifties and sixties were the
fast growth periods, and it started slowing down in the mid-seventies, just
as in the U.S. ... where working class incomes have stagnated since that
time, only compensated by dual working .. (same in Europe)

Regarding unions and such, they were much stronger in Europe, before and
after the war, and the welfare state was a recognition of that strength ...
Yes, Dutch houses and cars were smaller, but Europe at that time also liked
the serious social problems that were evident in the U.S. at that time, such
as ghetto-ized cities, high crime rates etc... These elements started
growing in Europe mostly after the neoliberal period and the unravelling of
the welfare state. That distribution is not the result of lack of growth,
but the condition of growth, and a social choice, it's just a different
choice of lifestyles.

I want to give you an another example. If you go to Japan today, it has the
highest wages in the world, yet everything is still small ... It does not
mean 'less wealth' but different choices, for example regarding distribution
...

I think the immigration in the U.S. is largely the effect of the devastation
of WWII, despite high growth, it took time to affect everybody, and so you
have a window of european emigration to the U.S. which rapidly trickled
down.

Where I think you also wrong on is the role of the military .. Far from
being a handicap, the no-military was a boon to Europe, which was export
oriented from the mid-fifties onwards, there again, no difference with the
U.S., in fact, we are much more export oriented than the U.S. (70% of the
economy of Belgium for example)

So that the welfare system is the result of desperation from the 'wide gulf'
with the U.S. ... really Paul, that is really very U.S. centric,
understandable given where you live and the propaganda about America being
the greatest and all, but seriously, it is totally offbase ... The higher
average of GDP in the U.S. hides many realities, look at all the indicators
in terms of health, happiness etc.. and look where the U.S. stand in the
rankings .. usually way below the European countries ... (of course,
Scandinavia always on top .. and people in Scandinavia have neither big cars
nor big villas as recent visits to norway, denmark and sweden confirmed)

Europe since the fifties was growing incredibly fast, based on a solid
social-democratic social contract, that increased productivity would be
rewarded by higher wages. My parents, both orphans and 'not even working
class', are testimony to that rapid ascension, from stealing coal between
the railway beds and looking for money on the street, they were able to buy
a house (with government subsidies) from the early sixties on, sending me to
the uni etc.. None of them had more than primary school diplomas ...

If that social contract had been followed, the minimum wage in the U.S.
would now be $30, as has recently been calculated ...

You see, here's a biased european perspective .. I went to the U.S, New
Jersey in 1977 .. and what I saw was a overall much poorer U.S.A than what I
was accustomed too in Belgium ... what I saw in nearby Camden and
Philadelphia was nearly unbelievable to me .. what a decay ... it was barely
compensated by the suburbs of New Jersey where I lived. I took my my wife,
who dreamed about the U.S., there in 2002, visting the Washington- New  York
corridor ...

Her first shock came from being bitten by betbugs in a hotel on 42nd street
... bad luck ... it took her 3 years to get rid of the marks ... As we went
down to new jersey, I wanted to visit Mount Holly where I went to school ...
a shocker, the main street was boarded, a real wasteland ... then we got
lost in Philly suburbs ... she was so stressed by what she saw she drove her
nails into my hand ... (until blood came out <g>) ... then on to Lancaster
county ... dirt in the streets, drunken people everywhere ... thank God for
the Amish ..  that was the saving grace ..

Need I tell you the story of her discovery of the DC suburbs, where infant
mortality is greater than in Mali (and of course, Cuba) ... We went on to
the Virginia suburbs .. nice indeed, but also very socially isolated lives
..

A little remark about unemployment figures ...  According to experts like
Dean Baker, they are undercounted by half in the U.S. ... (and so they are
now in Europe as well, they started massively cheating on those numbers
starting in the mid-eighties). There might be somewhat more unemployment in
Europe, but I don't really think it's that big a difference ...

Here's the work I got in 1977 at Wendy's ... clocking in at 7 work to 9:30,
clocking out; clocking at 11, clocking out at 3; clocking in  at 5 ...
clocking out at 10 .. So, a working day of  14 hours, for which I got paid
half at the minimum wage level ... there's ton of those jobs out there ...
it's not much better than putting people in elevators in the soviet union,

Michel



On Wed, Jul 29, 2009 at 10:43 PM, Paul D. Fernhout <
pdfernhout at kurtz-fernhout.com> wrote:

> I'd always believed (given two Dutch parents, and having visited the
> Netherlands several times) that Western Europe overall having a better
> social safety net than the USA (more health benefits, more social payments,
> more free education, more public institutions, etc. in general) was somehow
> due to Western Europeans being smarter, more compassionate, more
> enlightened, wiser, better educated, having more democratic politics, or
> something like that. :-) That feeling has always been a bit at odds with
> the
> idea a lot of poor but ambitious (or desperate) Western Europeans moved to
> the USA in the past to get a better life (including my parents) --
> especially given historically stricter social hierarchies and less
> changeable class definitions in Western Europe. How can they both be true?
>
> Here is an alternative perspective to reconcile that conflict. Perhaps it
> is
> too simplistic, but I'll put it down in electron patterns and see what
> people think about it. (Maybe I still have the taste of Brink Lindsey's
> "The
> Age of Abundance" of the Cato Institute in my mind, which I am indirectly
> trying to get rebut. :-)
>
> After WWII, around 1945, with the rest of the world's industrial
> manufacturing infrastructure in ruins, the mostly-untouched USA was the
> dominant economic producer in the globe, with huge export market potential.
> Also, no other country able in a position to produce for US internal
> markets
> (beyond supplying raw materials). That was an extremely advantageous
> situation for many US workers compared to most other workers in the rest of
> the world (then or now). It was a situation that lasted at least into the
> 1970s in a big way, and aspects of that advantage still remain today (even
> with parts of the USA in crisis currently).
>
> So, the USA had a lot of internal demand for workers for market production,
> relative to other industrial economies without such advantages. With so
> much
> competition for workers, US companies gave generous benefits and salaries
> to
> many workers due to supply and demand issues. The demand for workers was so
> large that it seemed to even make sense for all parents to work and put
> their kids in institutionalized daycare and for women to joint the
> workforce
> in huge numbers and leave all other social functions like caring for the
> elderly to business concerns. Even deciding how to vote could be given over
> to business interests, like newspapers, with workers so busy making good
> money. It also made sense to import a lot of workers into the USA
> (illegally, if needed). It made sense to let private fortunes build public
> resources (whether universities or libraries or copyrights or patents on
> new
> ideas). Despite earlier labor union sentiments from earlier unionization
> victories, this increasing jobs-based prosperity resulted in a growing
> widespread propertarian-libertarian sentiment across the USA that the free
> market provides for most people (if they are able-bodied and not "lazy"),
> and private charity would help the rest. And, within the USA, that
> sentiment
> really did made sense for a couple of decades in many ways. That economic
> prosperity from 1950-1970 has been the basis for lots of conservative media
> and economics ever since as a dominant sentiment in the USA, not just among
> the wealthy, but among people who materially benefited from these trends
> historically.
>
> Obvious to a modern reader, that conservative sentiment ignores long term
> issue now obvious like the social effects of child-rearing being
> institutionalized, the external costs of an unregulated free market like
> pollution, the hidden suffering of the poor, the effects of a neglected and
> decaying public infrastructure like railways, the socially corrosive
> effects
> of a military-industrial-schooling-prison complex and a huge rich-poor
> divide, the effects on the rest of the world of US industrial-imperial
> policies, the implications of advertising persuading voters, and so on.
> These are all non-obvious long term problems the USA is now having to
> wrestle with, but which were not so obvious in the 1950s.
>
> In contrast with the prosperous post-war USA my parents move to, Western
> Europe for decades after WWII had less ability to create good jobs. This
> was
> due to a damaged physical infrastructure in part. But it was also due to
> the
> comparative advantage the USA had to sell stuff cheaper (more paid-for
> infrastructure, economies of scale, more military might to keep markets
> open
> and keep supply regions supplying stuff cheaply). Western Europe might have
> created jobs, but they did not pay as well, and in general Western European
> workers were materially poorer as individuals. (I saw that first hand in a
> trip to the Netherlands in the 1970s with smaller cars, smaller houses, and
> so on, even as socially people there seemed to have more fun.)
>
> So, within the USA, there appeared to be not much need for most people to
> think about unions or social equity, because until at least the 1970s, the
> link between having a job and the right to consume worked well enough for
> most people in the USA. But, in Western Europe it was a different
> situation.
> Western Europeans were confronted with high quality cheap exports flooding
> in from the USA; they were confronted with an inability to create new
> markets abroad easily due to a reduced military; they were confronted with
> an inability to keep supply colonies by lack of military might; they were
> confronted by an obvious wealth disparity with people in the USA; they were
> confronted with lingering uncertainty about war and destruction, they were
> confronted with new technologies like automation and better design spewing
> out of US American private laboratories that were responding to a US labor
> shortage. So, out of desperation, Western Europeans demanded of their
> governments that what little wealth that there was in Western European
> society should be shared more equally, and that some of the wealth should
> go
> into building shared public institutions that would be good communal
> investments (getting the most public value for the least dollars compared
> to
> redundant private ownership of books or art or music). And Western
> Europeans
> got it -- whether limits on working hours in France, or socialized medicine
> in the UK, or government controls on land speculation in the Netherlands.
>
> Since Western Europe was rebuilding after a terrible war, these ideas got
> built into the very infrastructure, both socially (laws, customs, norms)
> and
> physically (museums, libraries, public roadways and railways, affordable
> urban housing, parks, and so on). After the 1970s, Western Europe had
> started to grow again significantly, and so produced more locally, and so
> could once again defend internal markets against US imports, and so could
> start dominating external markets and supply regions again, But, oven then,
> aspects of this communal social sentiment remained that wealth should be
> shared to some degree and invested in public endeavors for broad benefits.
>
> So, while Western Europe has continued to enjoy some more equitable wealth
> distribution since the 1970s as well as a social safety net, in the USA
> real
> wages for most workers have remained about the same while the rich get
> richer and the social safety net frayed from lack of attention (prison in
> the USA becoming the main social safety net). And the US citizens find the
> whole thing totally confusing, of course, since nothing inside the USA
> seemed to change much economically. Globalization (offshoring US jobs in
> manufacturing and services, seen from a purely US worker perspective :-) in
> that sense has been happening to the USA for forty years, even as the trend
> has accelerated in the last ten with the internet. This may be a great idea
> for the rest of the world, but it is tough on US workers who built much of
> their prosperity on relative global advantage. So, the US sees stagnant
> (now
> falling) real wages as well as increasing unemployment.
>
> Today, with improved design, increasing automation including robotics and
> AI, these trends towards less employment or lower wages will affect the
> entire world eventually. It may still takes a decade or two for the rest of
> the world to produce locally for pent-up demand though. But unemployment
> issues are already leading to riots in places like Greece by educated
> people
> in the 20s, given  people in Western Europe may have higher expectations
> about social equity, whereas more US Americans will just sit around
> bewildered, since everything worked so well for so long, and workers were
> promised a service economy to make up for all the jobs lost in agriculture
> and manufacturing. But the world only needs so many local nail salons.
>
> And in the rest of the world, the poor see some local growth, so they
> expect
> that trend to continue, unaware of this equation:
> "Paid_Jobs = (Demand - (Stockpiled_Supply - War)) / (Automation *
> Good_Design)"
>
> But even *China* is spending a lot of money working towards artificial
> brains:
>  "The China-Brain Project Building China’s Artificial Brain Using an
> Evolved Neural Net Module Approach "
>  http://www.citeulike.org/user/hukkinen/article/4621176
>  http://en.wikipedia.org/wiki/Hugo_de_Garis
>
> From that (oversimplified?) history, it would seem Western Europe may
> respond very differently than the USA to the crisis of increasing
> abundance.
> I saw that when I had a French roommate in graduate school at Princeton in
> the 1980s. We were talking technology and economics, and I asked, what
> would
> happen if one person made a big machine that could produce anything for
> really cheap. (I had read an RA Lafferty story "In Our Block" about a
> related theme, of a block of a city with visitors who essentially had
> nanotech and could print huge metal pipes or cardboard boxes in tiny sheds
> as they were being loaded onto the truck, with very cheap prices for
> anything you wanted.)
>  http://www.mulle-kybernetik.com/RAL/MT/arcanum.html
>
> My French roommate said essentially that the owner of such a machine would
> just be taxed, so everyone could buy what was produced. I disagreed from a
> US perspective, suggesting the owner letting everyone starve as the economy
> crashed seemed more likely to me than. I see now, he was coming at this
> from
> a Western European perspective of recent history he had grown up in -- in
> practice, that is what he saw, the huge machinery of a market coming to
> life
> as it rebooted after WWII, and taxes and other social regulations made that
> market work for everybody, even given difficulties from US competition.
>
> Ultimately, as long as we have markets and centralized wealth, some sort of
> tax (on income or wealth or both) and other social controls is needed to
> make such a system producing cheap abundance work for most people. As one
> person pointed out recently on Slashdot, why is it that the USA in many
> ways
> had the most general abundance (and hope) when the marginal tax rate on the
> highest incomes was 94%?
>  http://www.truthandpolitics.org/top-rates.php
>
> But, higher taxes are the opposite of current US sentiment as reflected in
> US politics. This is in part a conflict between aspirational millionaire
> wannabees versus people's actual interests (as brought up on the p2p list
> by
> me recently, using terminology from Michel's reply).
>
> Still, even if the USA gets a better social safety net or a basic income,
> the more abundance people have, the more they can use that abundance to do
> local manufacturing outside the market with 3D printers, local gardens, and
> so on. So in the long term, we will see even more upheavals even with high
> taxes and a basic income or health-care-for-all in the USA (which seems to
> be going down in flames again).
>
> Naturally, politics, economics, demographics, and history are more complex
> than this. I'm just seeing how much explanatory power and predictive power
> I
> can get from this one theme of different responses to post-WWII situations
> of the USA vs. Western Europe. :-)
>
> Is this the kind of thing that is obvious to a Western European but has
> taken decades for a US American to see? :-)
>
> Still, this may well not fit all the facts, so people can feel free to
> disagree with citing unemployment figures and so on (although it is hard to
> judge just from unemployment figures aspects about wages or the nature of
> the workplace). There were certainly other compounding issues -- a lot of
> young men dead, especially in Europe, which meant more jobs per capita for
> everyone else, lower expectations for jobs and living conditions in Europe
> after the war, and so on. There are historical issues too, like in the
> Netherlands about religion and capitalism going back centuries that I am
> ignoring. Those facts and many others would complicate thinking about
> European unemployment figures (which are surprisingly low at some times).
> After a burst of rebuilding, Europeans struggled more with unemployment at
> various times, but got it under control, even if it is going up again.
> Clearly, European unemployment generally was brought down in the 1960s.
> Still, I'd suggest that, had European women moved into the full-time
> workforce in huge numbers like in the USA (most Dutch women don't work
> full-time when they have young kids), and had there been lots of
> immigration
> like in the USA, and had working hours not been limited like in France,
> then
> European unemployment would have soared much higher. European unemployment
> was contained, but only by social controls (or norms, like parents taking
> care of their own kids) that were different than in the USA. So, different
> economies can be hard to compare, especially, when, as in the case of
> Western Europe, there has been social pushback to the worst aspects of
> them.
>
> Maybe my essay here should be extended to be more about social forces
> affecting unemployment (even when unemployment number are low)? For
> example,
> in the USA, everyone being expected to go to college has helped keep
> unemployment lower (creating jobs for professors and keeping people out of
> the labor pool). In theory, cradle-to-grave schooling could absorb any
> amount of excess workers (a trend we see all too much of in the USA
> already). So, at some point, we need to talk more about living conditions
> than about unemployment figures. Or, to quote John Taylor Gatto who often
> talks about how schooling is interwoven with economic assumptions:
>  http://www.johntaylorgatto.com/chapters/16a.htm
> "Under all its disguises, that is what institutional schooling is, an
> abstraction which has escaped its handlers. Nobody can reform it. First you
> have to realize that human values are the stuff of madness to a system; in
> systems-logic the schools we have are already the schools the system needs;
> the only way they could be much improved is to have kids eat, sleep, live,
> and die there."
>
> Even the collapse of the Soviet Union, in the face of pressure by a USA
> with
> all those relative advantages in the global market, takes on a new twist,
> leading to questions like, if the USA lasted a bit longer than the USSR,
> does that really prove anything about economics or the sustainability of a
> market approach that relies on captive markets and captive supply regions?
>
> In general, what I am suggesting is that most of mainstream economics one
> hears about in the papers is about a very special case, the situation of
> the
> first few decades of a global economy rebooting after a huge war, as seen
> from the perspective of the main untouched industrialized survivor of a
> global conflict. And so, when the rest of the world looks to mainstream
> economists for advice (as opposed to, say, looking to advocates of peer
> economies or gift economies or a basic income in a market-economy), the
> mainstream economic advice is going to be a very rough fit. EF Schumacher
> saw an aspect of this in the 1970s with Small is Beautiful. Aspects of
> mainstream economics will be true (since the market can produce wealth,
> ignoring external costs and long term erosion of natural capital) but other
> aspects of the market, like how the wealth gets distributed, are likely to
> be very wrong (even if they worked OK sometimes like in post-WWII USA).
> Essentially, pointing to strong growth in 1950-1970 in the USA as an
> example
> of mainstream markets working well (as Brink Lindsey does), and suggesting
> how everything before or since then anywhere else in the world is a special
> case, or the consequence of bad policy interfering with markets, is a weak
> theoretical position. :-)
>
> One might call that last statement a strawman argument, of course, given
> mainstream economics has more nuance than that (and Brink Lindsey does not
> talk much about the rest of history or the globe, he just ignores that).
> I'm
> sure that statement is too broad.
>
> But, I'd still suggest, that small historical window of the USA 1950-1970
> is
> at the core of celebrating markets in the modern age, especially as other
> countries have tried to emulate the USA's success in that period by those
> same methods and failed (given much of the reason the USA succeeded was
> relative advantage). They have found it difficult to make much economic
> progress at all without all the sorts of social controls. These are the
> social controls that many people in the USA decry because, based on
> historical experience in the USA, such controls appeared to be not needed
> for a time and can have specific negative effects on the functioning of
> markets (limiting productivity sometimes, even as most people might be
> better off because they get a bigger share of a smaller pie). That time
> period is, I'd suggest, an experience at the heart of the US Conservative
> movement -- that if only we could get the USA socially back to the 1950s,
> everything would be good again (for white males with jobs). But I'd
> suggest,
> with increasing automation and better design, with the internet making more
> effective peer production and a gift economy, things will never be the same
> as the 1950s again (short of another global war, which would likely be much
> worse than WWII given the power of post-scarcity weapons these days).
>
> So, while all countries can learn from each other, the USA may do better to
> look at other countries for models of dealing with abundance and
> unemployment than other countries may do looking to duplicate the USA's
> recent history. And in any case, advancing technology changes the landscape
> for everyone.
>
> --Paul Fernhout
> http://www.pdfernhout.net/
>
>
>
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