European Welfare States and Immigration

Christopher Caldwell's 2009 book, Reflections on the Revolution in Europe, is the best book on the European experience with Muslim immigration out there. It avoids the hysterical doom-mongering that plagues North American neo-conservatives and geriatric European reactionaries on this issue. But because Caldwell is an American and is therefore not bound by European taboos, he makes a lot of points which are rarely addressed in Europe.

His 2009 interview in Der Spiegel remains as relevant as ever, since the problems remain basically the same, even as their scale increases: 

SPIEGEL ONLINE: Are you suggesting there is no open discussion about Islam in Europe?

Caldwell: I think these things are getting much more openly debated than a few years ago. In the Netherlands and Denmark you do have a contentious debate. I think a lot of Danes and Dutch aren't really proud of the way their populist parties are discussing the issue of immigration, but it's generally much better if things are discussed openly….

SPIEGEL ONLINE: In your book, "Reflections on the Revolution in Europe," you cast a skeptical light on Europe's relationship with its Muslim immigrants. In your view, do Muslim immigrants pose a threat to the Continent?

Caldwell: I don't speak of a threat, exactly. This is a very important distinction. The debate up until now has been marked by two extremes. On the one side you have the doomsayer extreme, the people who say Islam is "taking over" Europe. On the other, you have people with the point of view that there's no problem at all, except racism. I think both positions are wrong, and I have tried to set a new tone.

SPIEGEL ONLINE: Nevertheless, when reading your book, one leaves it with the impression that you think Europe will have real trouble integrating its Muslim immigrants.

Caldwell: Islam poses difficulties that other immigrant groups do not. Part of it is the growth of political Islam in the world in the last half-century. A large minority of European Muslims feel solidarity with the Muslim community abroad, and they feel at the same time that the West is at war with this world. That makes the transition into a European identity more difficult. But I think the problems at the cultural level are more important.

SPIEGEL ONLINE: Such as?

Caldwell: A lot of overly optimistic people expect Muslims to give up, or to modify, their religion over time. They're going to change in some way, but we don't really know how. And attitudes around religion provide a lot of potential for conflict — the attitudes towards women, towards family relations, sexual freedom or gay rights.

SPIEGEL ONLINE: The percentage of Muslims in the European population is very low. The total is about 5 percent.

Caldwell: Right. The population of Western Europe is about 400 million, and there are about 20 million Muslims. Nevertheless, the population (of Muslims) continues to grow.

SPIEGEL ONLINE: But to what extent is it really growing? You base this argument on a higher birth rate, but a number of studies suggest that in the second or third generations, immigrants have birthrates closer to the national average.

Caldwell: That is true. There are two things that will cause the immigrant descended population in Europe to grow in the coming years. One is that immigrants are still coming and the other is that birth rates, although they are falling, are still higher. But the real issue is not the size of the immigrant population. It is that their culture needs to be accommodated within Europe in a way that requires Europe to change its structures….

SPIEGEL ONLINE: To what extent are your views shaped by the fact that you're an American?

Caldwell: As an outsider, one has the advantage of seeing parallels between European countries as well as differences. I come from a country that has experience with a multiethnic society, and America's history has some lessons for Europe. Just because the European Muslim community is a small one does not mean it is uninfluential or that it can be ignored or that the problems surrounding it are trivial and will go away. Blacks have traditionally made up about only about 10 percent of the US population. But we have a horrible history of race conflict that has shaken our country for centuries.

SPIEGEL ONLINE: Is America more successful when it comes to integrating immigrants?

Caldwell: For now, yes. I think the first reason is the ruthlessness of the American economy. You either become a part of it or you go home. There are more foreigners in the workplace, and that's where a lot of integration happens. And because most immigrants are in the workplace, you never hear, as you do in Europe, that immigrants don't want to work. No American would dream of saying that.

SPIEGEL ONLINE: Why do you think that's the case?

Caldwell: There is no welfare state on the scale of that in Europe, and I think welfare states are a bad fit for large-scale immigration. In an ethnically diverse society, people are less familiar with each other, and they are correspondingly less willing to pay taxes for social benefits. Two-thirds of the imams in France are on welfare. There is nothing wrong with being an imam. But I don't think the French are very happy about paying what is effectively a state subsidy for religion in that way.

The welfare state is a key distinction. I can't count the number of times people have asked me: "But you come from America, the nation of immigrants! How can you be so skeptical about Europe doing what America's been doing for centuries?"

The first answer is, of course, that European countries aren't nations of immigrants. Historians will often try to disprove this by pointing to ancient population flows, but they never convince anyone (not least because those population flows were usually accompanied by massive bloodshed). The fact is that European countries have established, centuries-old traditions and attitudes that are odd and opaque to outsiders, but which mean something to people born there.

More importantly, the European welfare state is an obstacle to integrating low-skilled foreigners, because it means they never have to work. Of course, most of them do eventually find jobs, but at rates lower than the native population. The U.S. gives immigrants nothing. They are expected to find jobs by themselves, without hand-holding by the state. Sink or swim.

Of course, immigrant Americans do end up on welfare more frequently than the native population, but America has an Anglo-Saxon welfare state that provides temporary assistance during down times. It is telling that the former U.S. welfare program called "Aid to Families with Dependent Children" was renamed in 1996 to "Temporary Assistance for Needy Families".

Temporary. You will get help for some time, but then it will stop, and you'll need to find another solution: Move in with family members, sell your possessions, beg on the streets. But preferably, you'll find a job. Will there be a welfare case-worker there to help you find it? No, you'll have to find one yourself. Same thing if you're an immigrant. 

Northern European welfare systems, by contrast, provide a permanent, unconditional lifelong cushion of support. (Southern European welfare systems aspire to this but don't have the money or organizational competence to genuinely deliver it). If you simply choose never to even try to find a job, you will continue receiving health insurance, rent support for a small individual apartment, and a basic income, no matter what. It will be anything but luxurious, but it can never be terminated, because the state must guarantee every person in its borders a basic level of existence required by human dignity.

Thus, Americans tend to look at unskilled immigrants as thrifty, God-fearing, hard-working types willing to do nasty jobs. Europeans tend to look at unskilled immigrants as yet another potential addition to the welfare rolls. They're not wrong: in 2006 every fourth welfare recipient (g) in Germany was a foreigner. And that number has skyrocketed: a recent government report leaked to the press showed that as refugees leave the program of temporary refugee assistance and enter the official government welfare rolls, the number only of non-European foreign welfare recipients shot up 132% from 2015 to 2016 — an increase of about 400,000, to a total of 698,872 (g).

That's a whole lot of people to support, potentially for life, with free government-financed education, housing, healthcare, and welfare. Of course, some of these people will seek and find jobs. But they'll be in direct competition with low-skilled native workers. Low-skilled workers have noticed that their wages have stagnated with decades. They are also going to notice fresh competition from hundreds of thousands of foreigners willing to work for a fraction of their wages.

But hundreds of thousands of these newcomers with either never look for a job, or never find one. And plenty of Germans will ask a simple question:

"How does it benefit Germany — or me — for politicians to import hundreds of thousands of foreigners who will simply live here on welfare until they die?"

Of course, many members of the urban haute bourgeoisie, and probably all church officials, will react with outrage to this question. But that's not going to stop people from asking it, and demanding answers.

Christopher Caldwell on Christophe Guilluy on French Elites

If you want to understand what's wrong with European immigration policy, Christopher Caldwell's 2009 book Reflections on the Revolution in Europe is the best start:

In his provocative and unflinching book Reflections on the Revolution in Europe, he reveals the anger of natives and newcomers alike. He describes asylum policies that have served illegal immigrants better than refugees. He exposes the strange interaction of welfare states and Third World traditions, the anti-Americanism that brings natives and newcomers together, and the arguments over women and sex that drive them apart. And he examines the dangerous tendency of politicians to defuse tensions surrounding Islam by curtailing the rights of all.

He has a long new piece on the French real estate consultant Christophe Guilluy, who was become an improbable analyst of French society. Actually, not so improbable: Choosing where to live strips away the bullshit and lays peoples' actual preferences (as opposed to their public pieties) about multiculturalism, diversity, etc. bare. Guilluy uses urban geography to create an analysis of the divisions plaguing French society:

In our day, the urban real-estate market is a pitiless sorting machine. Rich people and up-and-comers buy the private housing stock in desirable cities and thereby bid up its cost. Guilluy notes that one real-estate agent on the Île Saint-Louis in Paris now sells “lofts” of three square meters, or about 30 square feet, for €50,000. The situation resembles that in London, where, according to Le Monde, the average monthly rent (£2,580) now exceeds the average monthly salary (£2,300).

The laid-off, the less educated, the mistrained—all must rebuild their lives in what Guilluy calls (in the title of his second book) La France périphérique. This is the key term in Guilluy’s sociological vocabulary, and much misunderstood in France, so it is worth clarifying: it is neither a synonym for the boondocks nor a measure of distance from the city center. (Most of France’s small cities, in fact, are in la France périphérique.) Rather, the term measures distance from the functioning parts of the global economy. France’s best-performing urban nodes have arguably never been richer or better-stocked with cultural and retail amenities. But too few such places exist to carry a national economy. When France’s was a national economy, its median workers were well compensated and well protected from illness, age, and other vicissitudes. In a knowledge economy, these workers have largely been exiled from the places where the economy still functions. They have been replaced by immigrants.

After the mid-twentieth century, the French state built a vast stock—about 5 million units—of public housing, which now accounts for a sixth of the country’s households. Much of it is hideous-looking, but it’s all more or less affordable. Its purpose has changed, however. It is now used primarily for billeting not native French workers, as once was the case, but immigrants and their descendants, millions of whom arrived from North Africa starting in the 1960s, with yet another wave of newcomers from sub-Saharan Africa and the Middle East arriving today. In the rough northern suburb of Aubervilliers, for instance, three-quarters of the young people are of immigrant background. Again, Paris’s future seems visible in contemporary London. Between 2001 and 2011, the population of white Londoners fell by 600,000, even as the city grew by 1 million people: from 58 percent white British at the turn of the century, London is currently 45 percent white.

While rich Parisians may not miss the presence of the middle class, they do need people to bus tables, trim shrubbery, watch babies, and change bedpans. Immigrants—not native French workers—do most of these jobs. Why this should be so is an economic controversy. Perhaps migrants will do certain tasks that French people will not—at least not at the prevailing wage. Perhaps employers don’t relish paying €10 an hour to a native Frenchman who, ten years earlier, was making €20 in his old position and has resentments to match. Perhaps the current situation is an example of the economic law named after the eighteenth-century French economist Jean-Baptiste Say: a huge supply of menial labor from the developing world has created its own demand.

This is not Guilluy’s subject, though. He aims only to show that, even if French people were willing to do the work that gets offered in these prosperous urban centers, there’d be no way for them to do it, because there is no longer any place for them to live. As a new bourgeoisie has taken over the private housing stock, poor foreigners have taken over the public—which thus serves the metropolitan rich as a kind of taxpayer-subsidized servants’ quarters. Public-housing inhabitants are almost never ethnically French; the prevailing culture there nowadays is often heavily, intimidatingly Muslim.

 At the opening of his new book, Guilluy describes twenty-first-century France as “an ‘American’ society like any other, unequal and multicultural.” It’s a controversial premise—that inequality and racial diversity are linked as part of the same (American-type) system and that they progress or decline together. Though this premise has been confirmed in much of the West for half a century, the assertion will shock many Americans, conditioned to place “inequality” (bad) and “diversity” (good) at opposite poles of a Manichean moral order. This disconnect is a key reason American political discussions have turned so illogical and rancorous. Certain arguments—for instance, that raising the incomes of American workers requires limiting immigration—can be cast as either sensible or superstitious, legitimate or illegitimate, good or evil, depending on whether the person making them is deemed to be doing so on the grounds of economics or identity….

France’s most dangerous political battles play out against this backdrop. The central fact is the 70 percent that we just spoke of: they oppose immigration and are worried, we can safely assume, about the prospects for a multiethnic society. Their wishes are consistent, their passions high; and a democracy is supposed to translate the wishes and passions of the people into government action. Yet that hasn’t happened in France.

Guilluy breaks down public opinion on immigration by class. Top executives (at 54 percent) are content with the current number of migrants in France. But only 38 percent of mid-level professionals, 27 percent of laborers, and 23 percent of clerical workers feel similarly….

As Paris has become not just the richest city in France but the richest city in the history of France, its residents have come to describe their politics as “on the left”—a judgment that tomorrow’s historians might dispute. Most often, Parisians mean what Guilluy calls la gauche hashtag, or what we might call the “glass-ceiling Left,” preoccupied with redistribution among, not from, elites: we may have done nothing for the poor, but we did appoint the first disabled lesbian parking commissioner….

Never have conditions been more favorable for deluding a class of fortunate people into thinking that they owe their privilege to being nicer, or smarter, or more honest, than everyone else. Why would they think otherwise? They never meet anyone who disagrees with them. The immigrants with whom the creatives share the city are dazzlingly different, exotic, even frightening, but on the central question of our time—whether the global economic system is working or failing—they see eye to eye….

Those outside the city gates in la France périphérique are invisible, their wishes incomprehensible. It’s as if they don’t exist. But they do.

The two traditional French parties—the Republicans, who once followed a conservative program elaborated by Charles de Gaulle; and the Socialists, who once followed socialism—still compete for votes, but along an ever-narrowing spectrum of issues. The real divide is no longer between the “Right” and the “Left” but between the metropoles and the peripheries. The traditional parties thrive in the former. The National Front (FN) is the party of the outside.

French elites have convinced themselves that their social supremacy rests not on their economic might but on their common decency. Doing so allows them to “present the losers of globalization as embittered people who have problems with diversity,” says Guilluy. It’s not our privilege that the French deplorables resent, the elites claim; it’s the color of some of our employees’ skin. French elites have a thesaurus full of colorful vocabulary for those who resist the open society: repli (“reaction”), crispation identitaire (“ethnic tension”), and populisme (an accusation equivalent to fascism, which somehow does not require an equivalent level of proof). One need not say anything racist or hateful to be denounced as a member of “white, xenophobic France,” or even as a “fascist.” To express mere discontent with the political system is dangerous enough. It is to faire le jeu de (“play the game of”) the National Front….

In France, political correctness is more than a ridiculous set of opinions; it’s also—and primarily—a tool of government coercion. Not only does it tilt any political discussion in favor of one set of arguments; it also gives the ruling class a doubt-expelling myth that provides a constant boost to morale and esprit de corps, much as class systems did in the days before democracy. People tend to snicker when the question of political correctness is raised: its practitioners because no one wants to be thought politically correct; and its targets because no one wants to admit to being coerced. But it determines the current polarity in French politics. Where you stand depends largely on whether you believe that antiracism is a sincere response to a genuine upsurge of public hatred or an opportunistic posture for elites seeking to justify their rule….

Like much in French intellectual life, Guilluy’s newest book is intelligent, original, and rather slapdash. Its maps, while brilliantly conceived, are poorly explained. Its forays into social science are mis-designed—Guilluy’s “indices of fragility” are based on redundant, highly correlated factors that exaggerate the points he means to make. The book has been assembled sloppily and, it seems, hastily. Long prose passages turn up twice on the same page, as if the editor spilled a cup of coffee while cutting and pasting….

But as the prospect of rising in the world is hampered or extinguished, the inducements to ideological conformism weaken. Dissent appears. Political correctness grows more draconian. Finally the ruling class reaches a dangerous stage, in which it begins to lose not only its legitimacy but also a sense of what its legitimacy rested on in the first place.

Mark Blyth on The Origins of Neo-Nationalism

It's not often you stumble across some professor who says he's going to explain the world, and then watch him actually do it.

I stumbled across Mark Blyth via MetaFilter. Mark Blyth is political science professor at Brown University — Wait! I know, you're thinking Brown University, the tiny, ultra-expensive US liberal arts college which is a hotbed of the most demented form of political correctness? Can any professor there be capable more than soft-focus P.C. pieties?

Well, Mark Blyth can. Perhaps because he's Scottish. Very Scottish, if you listen to him. In 2016, Blyth accomplished a pretty impressive trifecta in 2016: he accurately predicted Brexit, the Italian constitutional referendum, and Trump. His big idea is Global Trumpism, which involves defections both to the right and the left from the globalist neoliberal consensus. Whether it's Podemos in Spain or Trump in the U.S., middle-class voters in the West are reacting to 30 years of tectonic changes in the global political and economic landscape which have seen their quality of life being gradually eroded.

The end result is a sense of seething frustration in the middle and lower classes of Western countries. Unions have been crushed, more and more risk shifted onto the shoulders of individuals, job security is a thing of the past, international competition and automation are destroying millions of jobs which will never come back, the small luxuries of middle-class life are drifting out of reach, and each generation is seeing a decline in its standard of living compared to the last one.

All the while, the rich are getting almost exponentially richer, and mainstream politicians — whether center-right or center-left, there is no meaningful difference — seem at best helpless or disinterested at worst actively corrupt.

Here's some remarks he published in Foreign Policy (previous link), which are a bit heavy on the economics but still get the point across:

Back in 1943, [Michal Kalecki] he argued that once you target and sustain full employment over time, it basically becomes costless for labor to move from job to job. Wages in such a world will have to continually rise to hold onto labor, and the only way business can accommodate that is to push up prices. This mechanism, cost-push inflation, where wages and prices chase each other up, emerged in the 1970s and coincided with the end of the Bretton Woods regime and the subsequent oil shocks to produce high inflation in the rich countries of the West in the 1970s. In short, the system undermined itself, as both Goodhart and Kalecki predicted. As countries tried harder and harder to target full employment, the more inflation shot up while profits fell. The 1970s became a kind of “debtor’s paradise.” As inflation rose, debts fell in real terms, and labor’s share of national income rose to an all-time high, while corporate profits remained low and were pummeled by inflation. Unions were powerful and inequality plummeted….

But if it was a great time to be a debtor, it was a lousy time to be a creditor. Inflation acts as a tax on the returns on investment and lending. Unsurprisingly in response, employers and creditors mobilized and funded a market-friendly revolution where the goal of full employment was jettisoned for a new target—price stability, aka inflation—to restore the value of debt and discipline labor through unemployment. And it worked. The new order was called neoliberalism.

Over the next thirty years the world was transformed from a debtor’s paradise into a creditor’s paradise where capital’s share of national income rose to an all-time high as labor’s share fell as wages stagnated. Productivity rose, but the returns all went to capital. Unions were crushed while labor’s ability to push up wages collapsed due to the twin shocks of restrictive legislation and the globalization of production. Parliaments in turn were reduced to tweet-generating talking shops as central banks and policy technocrats wrested control of the economy away from those elected to govern.

Seen this way, what we see is a reversal of power between creditors and debtors as the anti-inflationary regime of the past 30 years undermines itself—what we might call “Goodhart’s revenge.” In this world, yields compress and creditors fret about their earnings, demanding repayment of debt at all costs. Macro-economically, this makes the situation worse: the debtors can’t pay—but politically, and this is crucial—it empowers debtors since they can’t pay, won’t pay, and still have the right to vote….

The traditional parties of the center-left and center-right, the builders of this anti-inflationary order, get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that are ripe for the picking by insurgents of the left and the right, which is exactly what has happened.

In short, to understand the election of Donald Trump we need to listen to the trumpets blowing everywhere in the highly indebted developed countries and the people who vote for them. 

The global revolt against elites is not just driven by revulsion and loss and racism. It’s also driven by the global economy itself. This is a global phenomenon that marks one thing above all. The era of neoliberalism is over. The era of neonationalism has just begun.

Blyth actually shines in videos; he's an outstanding and engaging speaker. I switched this video on to run in the background while I did some housework, but found myself repeatedly rushing to the computer to replay something I didn't quite get. This video is the best exposition of his theory as a whole. You'll have to get used to his Scottish burr:

Although his main critique is aimed at the technocratic managers of national and international economic policy, he also directs withering critiques at center-left politicians, who hurl accusations of politically-incorrect thoughtcrime to appear "left" while simultaneously suckling at the teat of the financial and technological elite and doing nothing to improve the lot of the middle class.

Blyth thinks the U.S. will stumble through, but Blyth believes that the outlook for Europe is much bleaker (this discussion starts at about 41:00). The Euro is a disaster which cannot be fixed, but European technocrats still refused to understand this, and continue to inflict crippling austerity on the European South in a doomed attempt to save it.

How to Save the SPD: Universal Basic Income

Here's the problem:

1.     Anyone who's paying attention can see that 95% of the migrants who came to Germany in 2015 are going to integrate into the German social welfare system, and probably 50% will never leave it.

2.    This is going to piss off working- and lower-middle class Germans, who will still have to work 40 hours a week to make a wage only 20% higher than welfare. Uwe says: 'Why do I have to I bust my ass working in some shitty supermarket for an asshole boss while Firduz hangs out on the street corner getting free money from the government for doing nothing?'

The answer: Universal Basic Income. Abolish Germany's ludicrously complex welfare system, and just give everyone, say, € 900 per month. Enough to subsist on, but not much more. 

This plan will have some side-effects, of course, but it won't be such a huge change, since everyone in Germany is already entitled to a basic income — they just have to prove they're unemployed and have no more assets. Under the new plan, everyone gets it. 95% of the useless welfare bureaucracy will vanish, providing huge savings to the German state.

Most importantly, UBI will remove, or at least greatly reduce the envy factor. Uwe will probably continue to work, since the UBI won't pay enough for any luxuries, such as a private washing machine, cars, or vacations. But since he is also getting what Firduz is getting, he will feel much less resentment.

If the SPD had any sense at all, it would stop futzing around with idiotic nanny-state schemes nobody cares about (sexist advertising) and come out loud and defiant in favor of UBI. 

The Unstoppable Decline of the SPD

Tombstone

Politico watches the German Social Democratic Party circle the drain (from 38% of the vote in 2002 to 22% today, with no end in sight):

“Questions of fair distribution of money and resources are no longer at the forefront of social democratic politics,” said Matthias Micus, a political scientist at the University of Göttingen.

“Being ‘left’ the way the SPD understands it today is no longer primarily about economic questions, but much more about cultural issues like gender politics, the protection of minorities, or when it comes to cultural diversity or immigration,” Micus said.

However, he added, the traditional SPD electorate — the working class — does not really care about those topics.

“This has led to an estrangement of the SPD from its traditional electorate,” Micus said.

You don't say.

Nordic Social Democracy Is The Only Desirable Future

Anu Partanen, a Finn, explains why Nordic social-democratic policies enhance individual freedom and flourishing, don't inhibit innovation, and are the only way forward in a world in which full-time jobs with benefits are vanishing: 

But this vision of homogeneous, altruistic Nordic lands is mostly a fantasy. The choices Nordic countries have made have little to do with altruism or kinship. Rather, Nordic people have made their decisions out of self-interest. Nordic nations offer their citizens—all of their citizens, but especially the middle class—high-quality services that save people a lot of money, time, and trouble. This is what Americans fail to understand: My taxes in Finland were used to pay for top-notch services for me.

When I lived in Finland, as a middle-class citizen I paid income tax at a rate not much higher than what I now pay in New York City. True, Nordic countries have somewhat higher taxes on consumption than America, and overall they collect more tax revenue than the U.S. currently does—partly from the wealthy. But, as an example, here are some of the things I personally got in return for my taxes: nearly a full year of paid parental leave for each child (plus a smaller monthly payment for an additional two years, were I or the father of my child to choose to stay at home with our child longer), affordable high-quality day care for my kids, one of the world’s best public K-12 education systems, free college, free graduate school, nearly free world-class health care delivered through a pretty decent universal network, and a full year of partially paid disability leave.

As far as I was concerned, it was a great deal. And it was equally beneficial for others. From a Nordic perspective, nothing Bernie Sanders is proposing is the least bit crazy—pretty much all Nordic countries have had policies like these in place for years.

But wait, most Americans would say: Those policies work well because all Nordics share a sense of kinship and have fond feelings for each other. That might be nice if it were true, but it’s not, as anyone who has followed recent political debates about immigration or economic policy in Nordic countries understands….

Nordic countries are well-ranked when it comes to helping facilitate starting a business. At the most basic level, what the Nordic approach does is reduce the risk of starting a company, since basic services such as education and health care are covered for regardless of the fledgling company’s fate. In addition, companies themselves are freed from the burdens of having to offer such services for their employees at the scale American companies do. And if the entrepreneur succeeds, they are rewarded by tax rates on capital gains that are lower than the rate on wages.

Nordic economies go through cycles like all countries, and they make mistakes like everyone else—Finland is in the midst of a recession right now, whereas the Swedish economy is doing phenomenally well. As in any region, some Nordic companies eventually crash and burn, and others never get off the ground….

In an age when more and more people are working as entrepreneurs or on short-term projects, and when global competition is requiring all citizens to be better prepared to handle economic turbulence, every nation needs to ensure that its people have the education, health care, and other support structures they need to take risks, start businesses, and build a better future for themselves and for their country. It’s simply a matter of keeping up with the times.

Americans are not wrong to abhor the specters of socialism and big government. In fact, as a proud Finn, I often like to remind my American friends that my countrymen in Finland fought two brutal wars against the Soviet Union to preserve Finland’s freedom and independence against socialism. No one wants to live in a society that doesn’t support individual liberty, entrepreneurship, and open markets.

But the truth is that free-market capitalism and universal social policies go well together—this isn’t about big government, it’s about smart government. I suspect that despite Hillary Clinton’s efforts to distance herself from Sanders, she probably knows this. After all, Clinton is also endorsing policies that sound an awful lot like what the Nordics have done: paid family leave, better public schools, and affordable day care, health care and college for all.

The United States is its own country, and no one expects it to become a Nordic utopia. But Nordic countries aren’t utopias either. What they’ve done has little to do with culture, size, or homogeneity, and everything to do with figuring out how to flourish and compete in the 21st century.

In the U.S., supporters of not only Bernie Sanders and Hillary Clinton, but also of Donald Trump, are worried about exactly the kinds of problems that universal social policies can help solve: worsening income inequality, shrinking opportunity, the decline of the middle class, and the survival of the ordinary family in the face of globalization. What America needs right now, desperately, isn’t to keep fighting the socialist bogeymen of the past, but to see the future—at least one presidential candidate should show them that.

The Part-Time Economy

The Economist reports:

The Netherlands consistently ranks as one of the best places in the world to live. Dutch kids are among the happiest in the world, according to Unicef. Some attribute their high quality of life and general good nature to a rather laid-back approach to work: more than half of the Dutch working population works part time, a far greater share than in any other rich-world country. On average only a fifth of the working-age population in EU member states holds a part-time job (8.7% of men and 32.2% of women); in the Netherlands 26.8% of men and 76.6% of women work less than 36 hours a week (see chart).

…and Dutch politics was dominated by Christian values until the 1980s: the focus was mainly on providing state aid (implicit subsidies in the fiscal system) so that women could stay at home with children. 

This changed in the late 1980s, when the state realised that it would be a good idea to mobilise women into the job market. But the cultural conviction that families still needed mothers home for tea-time prevailed, and thus the state worked closely with employers to ensure that the new part-time jobs would enjoy similar legal positions to their full-time equivalents. This has, to an extent, been continued: in 2000 the right for women and men to ask for a job to be part-time was written into law. But Ronald Dekker, a labour economist at Tilburg University, thinks this law is a confirmation of existing practice and therefore largely symbolic, only necessary for certain “archaic industries”. Instead, he reckons the high prevalence of part-time jobs is largely down to the wide availability of good quality, well-paid “first tier” part-time jobs in the Netherlands: jobs often considered inferior in many other countries.

One of the many benefits of welfare states: the system makes it easy for people to adjust the amount of work they do according to their individual wishes and needs.

Inequality on the Rise in Germany and the U.S.

As I anticipated, I got a lot of 'Facebook will steal your soul!!' reactions to the announcement of less blogging and more Facebooking, so I plan to keep blogging as time permits. However, Facebook and Twitter are better for spontaneous link-sharing and discussion, so you're invited to follow me there if you wish as well.

Here's a post I've been meaning to work on for a while, another installment in the series of 'Germany's social problems are more similar to America's than many Germans would like to acknowledge'. First, a short excerpt from an essay (g) by Hans-Ulrich Wehler in Die Zeit, on the government's most recent (and controversial (g)) report on 'Wealth and Poverty in Germany'. Here are a few of his conclusions (my translation):

Even more severe than the inequality in incomes is the inequality in wealth. They show class barriers on the bases of an unprecedented amount of wealth in Germany. In 1970, the top ten percent of Germany already controlled 44 percent of total cash wealth. In 2011, the richest decile controlled 66 percent. In a dramatic process of concentration, the top 10% has acquired control over an astonishing 2/3 of total private wealth in Germany. One hundred billionaires stood at the top of 345,000 millionaires, as measured by wealth. Rich Germany have never been so wealthy as they are now.

The situation is made more drastic by the fact that, for the first time since the 'golden years' before 1914, a generation of heirs will inherit a massive amount of wealth. In the late 1990s, the first billions created during the 'economic miracle' years was passed on to the next generation. Afterwards, however, the process started in earnest: between 2000 and 2010, two trillion Euros were inherited in Germany. Germany's 37 million households have collected total wealth of 7.7 trillion Euro. Of that, 2 trillion were in the hands of households dissolved by death during this decade. For the heirs of the next generation, the next decade will be even more beneficial: the German Institute for Old-Age Care estimates that since 2010, 260 billion dollars have been passed on as inheritance in each year. That means 3 trillion dollars will be inherited during this decade.

Meanwhile in the United States:

WASHINGTON — Incomes rose more than 11 percent for the top 1 percent of
earners during the economic recovery, but not at all for everybody else,
according to new data.

The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley,
show overall income growing by just 1.7 percent over the period. But
there was a wide gap between the top 1 percent, whose earnings rose by
11.2 percent, and the other 99 percent, whose earnings declined by 0.4
percent.

Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel
considered second only to the Nobel, concluded that “the Great Recession
has only depressed top income shares temporarily and will not undo any
of the dramatic increase in top income shares that has taken place since
the 1970s.”

There are still meaningful differences between American and German social-welfare policies, and Germany remains a somewhat more equal society than the United States. But the gap between Germany and the U.S. is certainly not the yawning chasm that some Germans like to imagine — and it's steadily narrowing, thanks in no small part to the policies of the current German government.

A Trip to the German Welfare Office

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A friend of mine is between jobs now, so I thought I'd accompany him to the welfare office as he applies for benefits. The office in Düsseldorf is called the Jobcenter (in English, of course), which is supposed to show you it's all about getting people back to work, not subsidizing layabouts.

German documentaries had led me to expect a crowded, loud, chaotic maelstrom of frustrated citizens and exasperated bureaucrats, something like Wiseman's Welfare. No soap: the Job Center is housed in a massive, clean, modern building, with freshly-renovated endless white corridors and comfortable blue fabric seats. I was expecting some urban social flair in the form of quaint posters about child abuse, alcoholism, and workplace safety, but the walls were nearly clean. The employees were quite friendly by German standards. You're issued a small paper ticket with a number on it. A Sachbearbeiter (SB) (specialist) comes and announces the next number, crossing it off a laminated display of 0-100. This seemed rather labor-intensive — what about those infamous red 'Now Serving' signs you expect in every government office? The clients, as they're called, didn't look particularly down-and-out; they would fit in at any middle-class shopping center. About half of them seemed to be foreign, half looked German. They didn't look angry or despairing, just mildly bored. The wait to sign up for 'new customers', as they were called was about 30 minutes.

My friend got the standard package of benefits: a housing subsidy sufficient to keep you in a small apartment (you get to choose which one, as long as it's not too big), a couple of hundred euros as a (very modest) base benefit, and €5 for every job application you send out — the expectation is that you should send out at least 10 per month. If you want something extra — a new suit, vacation — you have to fill out a special form asking for it. You also sign what's called an 'integration contract' in which you promise to try to find work and they promise to help you. You can just waltz right in there and they sign you up — only later do they check to see whether you really need benefits. After you sign up for the bennies, you're then transferred to another SB who sizes up your potential on the job market and asks what sort of work you'd be willing to take. Depending on your needs, you might be sent on to other SB's who will sign you up for health insurance or co-ordinate schools.

A few caveats: (1) this was an office in Düsseldorf, one of the most prosperous places in Germany; (2) German unemployment is low right now; and (3) lots of 'ordinary' people (students, musicians between gigs, political party leaders) get some form of benefit temporarily throughout their lives. In all, the procedure was professional and the atmosphere much the same as you might expect at any German government office (and noticeably cleaner and quieter than most American government offices). I left thinking that although I'd rather not have to sign up for welfare in Germany, there are certainly worse fates.

Merkel’s End Game

Eurozone Unemployment Rates
The New York Times on growing resistance to austerity:

A German-inspired austerity regimen agreed to just last month as the long-term solution to Europe’s sovereign debt crisis has come under increasing strain from the growing pressures of slowing economies, gyrating financial markets and a series of electoral setbacks.

Spain officially slipped back into recession for the second time in three years on Monday, after following the German remedy of deep retrenchment in public outlays, joining Italy, Belgium, the Netherlands and the Czech Republic. In the Netherlands, Prime Minister Mark Rutte handed his resignation to Queen Beatrix on Monday after his government failed to pass new austerity measures over the weekend.

It was only in March that leaders from 25 of the 27 European Union countries gathered to sign the fiscal compact championed by Ms. Merkel. Her plan, combined with $1.3 trillion in cheap loans injected into the banking system by the European Central Bank in December and March, raised hopes that the worst of the crisis had passed.

But those hopes have been dashed as growth has faltered and interest rates on the debt of struggling countries like Spain and Italy have shot up to dangerous levels again.

Another possibility, which Germany will be under renewed pressure to accept, is some form of common European debt, generally referred to as Eurobonds, which any member of the currency zone could tap. It is a step that Ms. Merkel’s conservative bloc has opposed forcefully, but with more than 17 million people in the euro zone out of work and the unemployment rate at 10.8 percent, the need for urgent steps is growing.

Marie Diron, an economic adviser to the consulting firm Ernst & Young, said Germany could slow down its own drive to balance its budget and do more to encourage domestic consumption. Other European states would benefit if Germany bought more of their goods.

“Austerity has to fit into a wider policy context,” Ms. Diron said.

Ms. Merkel has proved herself a masterful tactician time and again. She was adept at working with the Social Democrats as her partner in the previous German government, and Mr. Hollande might be even more amenable than Mr. Sarkozy to ceding French sovereignty in economic policy in exchange for help on growth, Mr. Vaquer from the Barcelona Center for International Affairs said.

“She will have to backtrack on austerity anyway,” Mr. Vaquer said. “Germany can now extract a much more unified Europe in terms of economic governance than it ever could have before.”

I've thought for a while that Germany was eventually going to have to back down on austerity. Vaquer's comments point to the end game: after holding out for years, bringing Europe as a whole to the brink of recession (and shoving many periphery countries over that brink), Germany will finally relent, but not without extracting major sovereignty concessions from the rest of Europe and transferring much more power over economic policy to Brussels.

So perhaps Merkel has known all along that austerity was never going to stick, and that the EU was going to have to become more of a transfer union in to survive. But she held out for years, pretending not to grasp this, in order to put the fear of Yahweh into Germany's European partners. Mildly cunning, ruthless, Machiavellian! Not words that many Germans like seeing applied to their relations with the rest of Europe, but when it comes to protecting its economic interests, Germany behaves like any other country. This episode can, of course, be added to the tu quoque list I recently threw together, when a German criticizes the United States of ruthlessly pushing its economic agenda on weaker countries.