Will Americans Change?

David Sedaris, a commentator on the (American) human condition, noted that if your next door neighbor came home with a Rolls Royce, you would be envious and want one too. In Britain, if your neighbor came home with a Rolls, you would be envious and want one too, but you would also want him to be driving it when he died in a fiery crash.

There is a real difference between the way Americans and Europeans view wealth. Here, we aspire to wealth. It is almost a religion. As the matter of fact there are a number of churches who preach that God wants you to be rich and there is nothing wrong with praying to God for wealth. To be sure, the more conventional voices for Christianity do not condone this behavior, but the screwballs have an uncomfortably large following.

I recall a radio interview where a recently transplanted Scot observed that America is a better country to succeed in and Britain/Europe are better countries to be in if you need help. America does indeed make it easier to succeed and we collect considerably less tax. It's easier to succeed here because it's very easy to set up your small business. You just hang your sign out, pay your $150 license fee, and do it. If you work hard, or at least work long hours, you can really do quite well. Until recently, you could get a small business loan from a local bank, or the Government, and use that money to buy what you need to set up your business. However, if you fail, you will need to have your own safety net because no one will bail you out. My friend Jeff thinks that this is not only correct, but an essentially American trait. Your own success or failure based on what you can do for yourself is, in his words, "in our DNA". He thinks that the founding fathers (Thomas Paine in particular) literally meant it when they said "that government is best which governs least." We do have some social programs which are designed to keep the very poor from starving to death and sleeping in the streets, but they are very limited as compared to what you have in Europe. We have private charities and foundations for just about everything, including medical research, and many people do support these. But for the most part our actual behavior seems to be that after you have done everything thing you ever wanted to do and have provided for your children's futures, then you can and should begin your personal philanthropic activities.

With that as background, how do we as Americans feel about the role of Government in economic development and regulating economic activity? And the second question is, how do we feel about the role of Government in economic development and regulating economic activity for the benefit of society? These are two remarkably different questions.

What is the role of Government? We seem to go in cycles on this question. Of course until the industrial revolution the question was moot, since there wasn't enough real business to regulate. After the industrial revolution, the robber barons took over both the banks and industry. The government did not get serous about regulation until the disadvantages of outright monopoly became obvious, so the Sherman anti-trust Act was passed in 1890. The nature of this legislation can be viewed as government protecting the consumer or it can also be viewed as government protecting business, albeit not-quite-as-large businesses. But in general during that cycle, to quote Coolidge, "The business of America is business." Then came the next cycle, which was the golden age of government regulation for the good of the majority. It was brought into being by the Roosevelt administration after the Great depression and it served the country well until the rise of Reagan conservatism.

We are now either in the last throes of this Reagan conservative cycle, or in a significant lull. Reagan believed that there was nothing wrong with America that could not be remedied by "getting Government off our backs." He sold us the idea that "Government isn't the answer, it's the problem." In that spirit, he allowed mining and drilling in public trust lands, allowed massive clear cutting in National forests, spearheaded the move to allow private companies to run concessions and hotels in the national parks, and in the end made it morally acceptable for business owners to feel entitled to maximize profits by opposing taxes. Reagan's views which have fueled the contemporary conservative movement to this day are really quite radical when compared even to Coolidge. Historian Cyndy Bittinger who wants to set the record straight on Coolidge. She points out:

The quote is really: "After all, the chief business of the American people is business."
However, Coolidge goes on to say that, "Of course the accumulation of wealth cannot be justified as the chief end of existence."
He discusses journalism and the thought that the business interests of newspaper owners should not taint reporting. He continues, "American newspapers have seemed to me to be particularly representative of this practical idealism of our people."

His last paragraph in the speech shows what he really believes motivate Americans:

We make no concealment of the fact that we want wealth, but there are many other things that we want very much more. We want peace and honor, and that charity which is so strong an element of all civilization. The chief ideal of the American people is idealism. I cannot repeat too often that America is a nation of idealists. That is the only motive to which they ever give any strong and lasting reaction.

The problem is we as a country don't seem to get it that unbridled capitalism has not only gotten us into this current mess, but that it has destroyed our soul as a society. For example, until very recently, we haven't viewed health care reform as moral battle. And we still haven't made the leap of viewing health care as a service, as opposed to being a for-profit industry.

In the same spirit, we don't view this round of economic problems as being a systemic problem, only a series of tactical blunders in an otherwise solid framework. It appears that even the current administration's goals are no more grandiose than to put things back together pretty much the way they were. They will push for more regulation so that the Wall Street guys can't drive themselves off another cliff, but there is no serious thought of any kind of redistribution of wealth, even though the social scientists point out that the middle class continues to shrink. A vibrant middle class is what distinguishes advanced countries from everything else.

The message here is that Americans really don't like Government, especially Big Government and it's not where they are looking to sort things out, despite the recognition that the problems we face are huge, and that moneyed interests are generally conceded to not really care about anyone except themselves. The current administration was a great hope for the liberals who were expecting that some of the stimulus money would actually get in the hands of real people, but it's turned out that only tiny fraction of the those real people have gotten anything. If there had been some successful examples of government actually helping, then public opinion might have swung in support of government being a good thing. The rather remarkable failure of the Obama administration to deliver something useful to the ones who are really in trouble tends to strengthen the Reaganesque arguments that government can't do anything right. This is a terrible disappointment for those who hold the New Deal as the proper ideal, and it could nail the coffin shut on any hope for a resurgence of popular support for an expanded role of government in everyday life.

The question as to whether the government even should concern itself with making a better society has a convoluted answer. It seems that things have drifted toward the notion that government should provide a framework so that society can thrive. We think government should make it easy for businesses to thrive and keep taxes low, so that people get to keep more of what they earn. We have (had) a solid banking system, and the government has had a overriding interest in protecting the value of the currency. We like to keep a significant portion of the population in jail, so that they can't detract from our ability to conduct business. In these ways, the government makes a better society possible. We seem to believe that if enough people thrive, they will help the less fortunate.

The other model for doing things comes from Scandinavia. Research shows that the Nordic countries and some others like the Netherlands have found ways of developing and enacting social and economic policy in countries that have active financial and consumer markets. Government however, has a very active role in regulating and developing the economy and in social welfare matters. But instead of doing this to other stakeholders, it does it with them. So, for example in Sweden the government formulates national policy in collaboration with industry representatives, trades unions (about 80% of Swedes belong to a union because they want to participate in policy as well as have their interests represented) and local or regional government. When it comes to enacting policy, much of this is devolved by central government to the other participants. This seems to avoid the 'socialist' evil of big government controlling everything, whilst enabling many institutions and people to participate in getting important decisions made and things done. Will Americans ever embrace this way of doing things?

Not on your life. Less than 20% of Americans hold passports, and so the vast majority of us have no idea what really goes on in Scandinavia. And 80% of college students can't find Iraq on a world map, even if they are given one with the names of the countries printed on it. So we as a people don't have a lot of international sophistication. But we do know this: socialism is bad. Scandinavian countries are socialist. We don't need to know the details. Socialist countries take most of the money away from people who have it and redistribute it to those who have less. Government runs everyone's life. If you liked being in the Army, you will love living in a socialist country. Germany tried socialism in the 30's and 40's. They had the National Socialist Party, 'Nazi' for short. It was a bad idea. Trade unions are a bad idea. They take away a worker's right to negotiate individually with his employer for a higher wage. Socialized medicine is a terrible idea. It's just another name for high taxes and denial of service.

We believe these things. So in the end, not much is going to really change. We'll just make the old financial system work a little bit better than it's working now, but that's it. End of story. Let's all move to New Zealand.