ALEC MACGILLIS MAY 4, 2012
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I first saw Mitt Romney playing the dread Europe card on the campaign trail in Iowa. “I think President Obama wants to make us a European-style welfare state,” went the standard refrain. “What I know is that, if they do that, they’ll substitute envy for ambition. And they’ll poison the very spirit of America and keep us from being one nation under God.” At another stop, Romney warned that Obama’s policies were already “making us more and more like Europe. I don’t think Europe is working in Europe. I don’t want Europe here.” More recently, appearing in Charlotte, North Carolina, Romney quipped that, at this year’s Democratic convention, “You’re not going to see President Obama standing alongside Greek columns. He’s not going to want to remind anyone of Greece, because he’s put us on a road to become more like Greece.”
It’s an obvious attack: How better to undermine Obama’s attempt to tip the scales away from unchecked capitalism than to point to social democracies under fiscal duress across the pond? Never mind that the connection is highly dubious—that Europe’s debt troubles are rooted primarily in an ill-designed monetary union and the collapse of a real estate and credit bubble that originated in this country; or that the European social welfare state takes many forms, from the profligate Greek model, where too few pay taxes and too many retire young, to the reformed German model, where universal health care, stellar public transit, and widespread collective bargaining are not at all incompatible with a thriving economy. No, such complicating factors will not keep Romney from using Europe to denounce Obama. “On one level, it could work,” Jared Bernstein, Vice President Biden’s former economic adviser, told me. “On another level, it’s substantively quite wrong.”
Yet American liberals have done little to counter Romney’s attack on European-style social democracy. Instead, they’ve been busy taking their own shots at Europe for its austerity-minded approach to resolving the monetary crisis, which Democrats believe is not only hurting Europe but imperiling Obama’s reelection. Leading the way is Paul Krugman, who has dubbed the austerity medicine “economic suicide” and “a stunning failure of policy.” Chiming in recently was Larry Summers, Obama’s former chief economic adviser, who lamented that Europe had “misdiagnosed its problems and set the wrong strategic course.” Although Krugman and Summers are correct to point out the hazards of slashing budgets during a recession, this makes for a convoluted and incomplete debate: While Republicans attack Democrats by blaming European troubles on the region’s age-old social-welfare tradition, liberals are blaming those same troubles on the European leadership’s more recent embrace of austerity policies not dissimilar to those being pushed by Romney and Paul Ryan.
Complicating matters further is that Germany has weathered the recession relatively well, with its unemployment rate never rising above 8 percent. This success was not the result of doctrinaire austerity, as American conservatives like to claim—often overlooked is the extent to which the country pursued its own form of Keynesianism, at odds with its demands for its neighbors. When the recession hit, Germany’s automatic safety net kicked in, not least its program of kurzarbeit, wherein the government subsidizes private employers to keep workers on the job, at reduced hours but only slightly reduced pay, thereby keeping people earning paychecks until things pick back up. (In late 2009, I asked Summers, then still at the White House, why the administration had not invested in kurzarbeit—called “work-share” in the handful of U.S. states that have limited programs of this type—and was told: “It may be desirable to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.” This past February, Congress finally tweaked unemployment insurance rules to facilitate work-share—three years after it could have been of use.)
And so, we are left with Republicans attacking Europe, with Democrats decrying German austerity—and with nobody, really, speaking up for the underlying social-democratic model that has delivered broadly shared prosperity to Europe for six decades. For American liberals, this is not a good situation. At some point in the months ahead, a forceful case will need to be made that this country’s attempt to expand health insurance to most of the people who lack it—by relying on the private sector, no less—will not lead to Greek-style despair and that, in fact, we could stand to learn quite a bit from Germany, even as it remains tiresomely obstinate about austerity for its southern neighbors. Obama’s reelection prospects, after all, are threatened not only by fallout from Germany’s handling of the euro crisis, but also by Republican attacks on a European model that remains arguably the most humane iteration of democratic capitalism the world has yet known. It is in both the short-term and long-term interest of American liberals to confront those attacks head on.
Alec MacGillis is a senior editor at The New Republic. This article appeared in the May 24, 2012 issue of the magazine.
20 comments
Obama’s attempt to tip the scales away from unchecked capitalism Unchecked? 40-odd percent of GDP is government spending; nearly half of medical expenditures are by government... Europe’s debt troubles are rooted primarily in an ill-designed monetary union and the collapse of a real estate and credit bubble that originated in this country Psst, hey Juan, the US is having a housing bubble, therefore we must too! the reformed German model, where universal health care, stellar public transit, and widespread collective bargaining are not at all incompatible with a thriving economy Not a bad point, but I wonder if Germany's manufacturing muscle might have been pumped up by unsustainable debt levels in the rest of the Euro-zone?
- karlwk
May 7, 2012 at 11:28pm
I think "unchecked" refers to either the absence of sensible regulation or the accrual of national income to the upper percentages that already get a lot of it, not to the nature of expenditure. But the phrase is a bit woolly, I agree. And perhaps Germany has "manufacturing muscle" because they didn't, you know, casually ship it all overseas?
- ironyroad
May 9, 2012 at 12:15am
The point, irony, if I may sharpen up your point, might be that the German manufacturing muscle ships its products, not its manufacturing abroad. Not all of the smaller EU nations have that powerful option, trading greatly with each other, relying on tourism etc.
- kras
May 9, 2012 at 3:22am
Germany's trade surplus is almost exactly mirrored by its neighbors' trade deficits, largely financed by credit from German banks. Spain's housing bubble has nothing to do with ours, and almost everything to do with Germans and Brits over-investing in vacation homes with easy credit. Europe's "underlying social democratic model" (which is now about to go over the demographic cliff) was in large part financed by outsourcing their national defense to the US. Analogies are weak. I spent much of the previous decade trying to explain to Europhiles who said the euro would work like the dollar that my skepticism about the euro, and the European project in general, stemmed not from jealousy but from the fact that we have one Treasury, one IRS, and seamless money transfer from rich states to poor ones.
- Robert Powell
May 9, 2012 at 5:38am
What MacGillis's post and these comments reflect is that there really isn't one European model to emulate or criticize. It's true that Germany runs surpluses as others in the union run deficits, and with one currency, the latter cannot make the normal adjustments to correct the trade imbalance (or the internal public spending imbalance). And, of course, Britain isn't even part of the union. All of which makes Europe's economy a complex story to tell, and Americans don't do complexity. A more sobering point would be that if Americans don't care for the Europeans, imagine how they must feel about each other, especially those in the countries in the southern rim that are experiencing an economic calamity not experienced since the 1930s. And we all know what happened in the 1930s. It's difficult for Americans to appreciate, but imagine how those in, say, Michigan, would feel about Texans if Texas were an independent country with a different language.
- rayward
May 9, 2012 at 7:16am
"Yet American liberals have done little to counter Romney’s attack on European-style social democracy. Instead, they’ve been busy taking their own shots at Europe for its austerity-minded approach to resolving the monetary crisis, which Democrats believe is not only hurting Europe but imperiling Obama’s reelection. Leading the way is Paul Krugman, who has dubbed the austerity medicine “economic suicide” and “a stunning failure of policy.” What a pile of... or talk about straw men. Most liberals I know both approve of European-style social programs AND disapprove of the current austerity arguments. That's all independent of BHO who proposes weak stimulus for the US while advocating strong stimulus for the EU. And Krugman gets the EU combination of approval/disapprovaljust right... MacGillis doesn't understand what Krugman has repeatedly posted, or is deliberately misrepresenting.
- drofnats1
May 9, 2012 at 10:38am
A quick reply to Drofnats1: my point here was not to chide Krugman or anyone else from the American left who has been making the necessary argument against European austerity. Rather, it was to note that so much of the American left's energy has gone into making that argument that there is little overall defense being made of the social democratic model that Republicans are bashing at every turn to discredit the Obama agenda, even though that social democratic model has served much, if not most, of Europe very well for years. -Alec
- Alec MacGillis
May 9, 2012 at 11:02am
Robert, your point is well taken but curiously I think that it relieves France of precisely the accusation you make more generally of free riding on the U.S. The perfidious French withdrew from NATO in the '60s, remember, and still worked to maintain a "full-service" military outside of the alliance, spending a large slice of GDP on defense (bigger than ours, proportionally). In the Cold War days, as someone once remarked back than, on the first day of a Soviet invasion of western Europe, around 75-90% of the fighting would have been in the hands of European land, sea, and air forces. Another country that spends a lot of money maintaining a credible defense posture is Sweden, also outside NATO and also, of course, a country with a significant social safety net. And those Ingmar Bergmann movies too, of course, they scared off potential invaders.
- ironyroad
May 9, 2012 at 11:08am
Oh I forgot -- I think we were talking about Germany's manufacturing success over several decades, not just the last few years. And something else: a lot of people don't know that, but "free riding" is also unfair in the sense that the countries in which U.S. forces were based, like Germany, paid into maintaining that presence in different ways (they did well out of it too, of course, as a certain amount of money went into the economy from the American side). Germany also maintained a large military during the Cold War based on a two-year draft for males 18-32.
- ironyroad
May 9, 2012 at 11:16am
"the reformed German model, where universal health care, stellar public transit, and widespread collective bargaining are not at all incompatible with a thriving economy" Oh you mean that critical third-leg of the economic engine that ensures productivity and quality of life can be maintained while people work their way towards economic security? That third leg conservatives over here like to ignore when talking about "resolve" and "balancing the budget" and then march merrily on their way to cut everything but military spending. My favorite refrain from the GOP and TPers lately is how Obama, in the span of three short years turned America in to the "Social States of AmeriKa". I was wondering how on Earth, Obama has managed to keep the gulags and collective farms, investment banks and factories hidden all this time. Why his jailing of Faux News journalists for criticizing his inner circle and anti-Capitalist policies have managed to crush the birthplace of plutocratic capitalism under the very heel of despotism with his European talk of expanded healthcare insurance, expanded natural gas exploration on Federal lands, low tax rates, new technology investment credits, fair wage acts, heightened deportation of those filthy immigrants so much so that Jamey Diamond has had to stoop so low as to have to dress himself. Did we see a workers' revolt in the heartland of Indiana (the birthplace of Public schools no less in that tiny town of New Harmony (how Bolshevik can you get with a name like that?)) just last night with the rhetorical freedom-loving fetishists Tea Partiers throwing off their chains of subjugation by excommunicating Lugar to the hinterlands of Gary Indiana? The last three years have been unbearable for me. I've had to wait in lines at the movies, concerts, heck even the grocery store for chrissakes! Why under a Romney regime there would be no lines! We'd have plenty of food, free gas and cheap underwear for those deemed productive enough by the Tea Party/Romneian 'Arbeiter Produktionseffizienz Polizei'. Those who make less than the top 10% of income earners in the newly christened country of "America, Fuck YEAH!" will be subjected to watching films promoting clean living, oral hygiene, re-runs of Leave It To Beaver, and receive 12 hours of continuous prostheltizing from preachers of the AynRandian church of Superior Innovators of wealth in the hopes of these unemployed leaches of society to go out and conjure massive amounts of wealth for themselves from the polluted air they've been lucky enough to breath thanks to Romneians rolling back 100 years of progress so he can enjoy the fruits of our labor in the new golden age of "America, Fuck YEAH!"
- singlspeed
May 9, 2012 at 12:27pm
Alec: You're right that liberals have put vastly more energy into attacking European (should that be Franco-German and British) austerity than into defending European style social welfare. However, it is a bit of an overstatement that they have not been defending social welfare. For instance, in response to the right-wing meme that the PIIGS' woes are due to excessive social welfare spending, Krugman, and possibly others, has pointed out that Germany spends more, as measured by share of GDP, on social welfare than Greece and that Sweden, which near the highest in social welfare spending in Europe, has among the best performing economies in Europe.
- sighthnd
May 9, 2012 at 12:30pm
Alec. I gree with your comments.. My reply would be that neither BHO-- nor most any Democrat in a leadership position (e.g. Reed, most Senators, Pelosi is a partial exception) is making the case at all strongly or effectively for Liberal values or Keynesian economic policies. There IS no effective counter being made to far ideological positions. Until that happens, Progressives can only "suck it up". In real-world terms, it is not clear to me whether that day comes quicker-or at all-- for the US if BHO wins in November. A BHO loss (almost certainly due to a US economic crisis event between now and November) combined with Republican control of House and Senate would sure concentrate a lot of Dem minds into considering what ineffective/unnecessarily conservative economic and political positions they have been supporting for over a decade. A BHO win may put that off that day for a generation.
- drofnats1
May 9, 2012 at 12:30pm
So the Germans could sink Obama. Go Angela!
- Spengler47
May 9, 2012 at 1:55pm
No question Spengler. Angie is the single most important person for the Obama re-election campaign. He should take another trip to Berlin. Irony--with all due respect, French withdrawal from NATO did nothing to remove the nuclear umbrella under which they prospered. They spent a lot of money on their army, but arguably most of it went to graft and corruption. As noted by then SACEUR James Jones in 2003, "...continental forces are less than 10% usefully deployable". The Belgian army has more hair dressers than special ops troops. European military forces are, with a few exceptions, basically jobs programs financed in large measure by the US.
- Robert Powell
May 9, 2012 at 3:20pm
Robert, I think the question of the nuclear umbrella is a somewhat complicated one, that also includes the issue of countries who were not NATO members, but in any case your remarks about financing are a bit superficial: http://www.nato.int/cps/en/natolive/topics_67655.htm The current U.S. contribution is substantial and strategically key, but then we have a lot of forces. It's not as simple as Belgian barbers.
- ironyroad
May 9, 2012 at 3:33pm
Thanks for the link irony. Best metric IMHO is percent of GDP spent on defense. In this, most euro states have always lagged significantly. In operational terms its even worse given the increasingly pervasive lack of interoperationability, not in terms of equipment but of doctrine.
- Robert Powell
May 9, 2012 at 4:38pm
Good article Alex. Your question to Summers was well put and your plea for an American defense of the European social model is welcome. Neo-Social Democrats, like myself, want a larger role for the state in natural monopolies like Infrastructure/Health/Education with a concurrent smaller role for price gouging public sector unions in these state enterprises. Howeinever, I think you're being a bit niave to expect American politician's in an election year to run to the rhetorical aid of the Franco-German-heaven forbid even-Scandinavian social model. "American Liberal" = Moderate Tory, always was always will be.
- IggyPop
May 9, 2012 at 7:06pm
Robert, how is interoperability doctrine calculable in percent of GDP? And how does that chart show it, if I've missed it?
- ironyroad
May 9, 2012 at 8:14pm
Sorry for the lack of clarity ironyroad. Problems are two: insufficient investment as % of GDP; AND lack of interoperability, especially in terms of doctrine. The second is somewhat related to the first in, for example, lack of heavy airlift capacity, but the larger problem in my view is that even those relatively well-equipped forces like Germany's are so limited in terms of rules of engagement as to be practically useless.
- Robert Powell
May 10, 2012 at 4:13am
That's what I thought you meant. I think the first issue, that of defense spending, is a legitimate one in that sense that one can muster good arguments for not letting a basic military capability slide off the table completely, no matter how small the country is; and no doubt there are many governments in Europe who'll lay out the opposing position that there are very few votes to be found in defense spending. There, the question of whether NATO demands a reasonable commitment from member states can in theory be at least broached at the inter-governmental level, with input from the U.S. The second issue you raise, about interoperability on the more strategic and doctrinal levels, is a very knotty one. Many people have complained about the constricting rules of engagement of course, and the example of the Germans in Afghanistan has come up several times. I think the broader context, put very superficially, is this: during the Cold War most Western European nations bought into the need for collective resistance to Soviet pressure and the potential Soviet military threat -- some joined NATO for that and also for related reasons (remember the old joke: NATO is for keeps: keep the Americans here, keep the Russians out, and keep the Germans down). Some countries such as Sweden, Ireland, and Austria had special circumstances (in the case of Austria a quite specific ban) that led them to stay out even if they were broadly in the anti-communist camp. Loyalty to NATO got you e.g. the American nuclear umbrella and access to a bigger club. After 1990, however, the simple fact of an aggressive Soviet Union disappeared, and with it the primary motive for NATO's creation in the first place. Flanking that was a clear distaste in most European countries for deploying troops overseas other than in UN missions, mainly because -- this is my guess here -- the taste of a rerun of European imperialism was a bitter one even if the accusation was weak. Many Europeans just can't come up with a justification for their soldiers fighting a war on the other side of the globe, something that was never part of the NATO concept before, as most people understood it -- 9/11 worked for a while for the early days of Afghanistan but Iraq killed that one stone dead. There is the oddity Switzerland, of course, that operates something like a universal militia-type defense system which means on the one hand a more militarized society than in other European countries but on the other a kind structural non-aggression (Swiss forces would be hard put to invade anywhere else).
- ironyroad
May 10, 2012 at 3:39pm