Centrists, Progressives and Europhobia

Europe is touted as an example of how bad things happen when social justice is enthusiastically pursued.

Will the Democratic presidential candidate be a centrist or a progressive? Which of them would give the party a better chance in next year’s election? Honestly, I have no idea. What I can say, however, is that neither centrism nor progressivism is what it used to be. There was a time when discussions between centrists and progressives were framed as debates between realism and idealism. Today, however, we get the impression that it is the centrists, and not the progressives, who are disconnected from reality. In fact, sometimes it seems that the centrists are Rip Van Winkles who have spent the last 20 years in a cave and forgotten everything that has happened to the United States and the world since the 1990s.

This can be seen in politics, where Joe Biden has stated that Republicans will have an “epiphany” when Donald Trump leaves and that they will become reasonable people that Democrats can deal with once again. Given the scorched earth policy of the Republican Party during the Barack Obama era, the statement is strange. It can also be seen in the economy. One can make many reasonable objections to Elizabeth Warren’s economic proposals, but what I hear over and over again is that Warren would turn the United States (cue scary movie music) into Europe and perhaps even (cue even scarier music) into France. And one has to wonder if the people who say these things have paid attention to Europe or the United States in recent decades. Let’s be clear, Europe has big economic problems, but it is not what these people seem to imagine.

When people say these things, the feeling is that they are imagining the comparison between the United States and Europe that seemed to have some validity in the 1990s. In that image, countries with large social expenditure and a wide government regulation of markets suffered from “Eurosclerosis,” that is, a persistent lack of employment.

It was said that employers were reluctant to expand their businesses because taxes were high and because they feared they could not fire workers once they were hired. And at the same time, workers had little incentive to accept jobs because they could live off generous social programs. There was also the impression that Europe was lagging behind in the adoption of new technologies: for a time, the United States took the lead in the use of the internet and information technology in general, which led to discussions on whether high taxes and European regulation were discouraging innovation.

But all that was a long time ago. The lag in employment has largely disappeared. Adults between the ages of 25 and 54 are more likely to have work in Europe, even in France, than in the United States. Any difference in the adoption of information technology has long since disappeared. Households in much of Europe have the same opportunity or more for broadband as their American counterparts, partly because the failure of the United States to limit the monopoly power of providers has made internet access prices much higher.

It is true that European countries have a per capita gross domestic product that is lower than that of the United States, but that is largely due to the fact that, unlike most Americans, most Europeans actually have considerable vacation time, and that is why they work fewer hours a year. This seems like a choice in terms of the balance between life and work, not an economic problem. And with respect to the most essential indicator, that of life expectancy, the United States is falling far behind. Those who live in France can, on average, expect to live four years longer than Americans. Why? The most likely explanations are universal health care and policies that mitigate extreme inequality.

Now, I don’t want this to seem like a compliment of everything European. The euro countries remain terribly vulnerable to economic crises, because they have adopted a common currency without a common banking security network; the only thing that prevented a disastrous decline in the euro in 2012 was the heroic leadership of Mario Draghi, the former president of the European Central Bank.

Europe also suffers from a persistent weakness in demand because key countries, Germany in particular, have an obsessive fear of deficits, even when the European economy desperately needs stimuli. These are important problems, so serious that I would not be surprised if Europe was at the center of the next world crisis. But Europe’s problem is not that its social programs are too generous and that its governments are too intrusive. If anything, it is almost the opposite: the European economy is vulnerable because a combination of political fragmentation and ideological rigidity has made its politicians unwilling to be Keynesian enough.

The point is that centrists who point to Europe as an example of all the bad things that happen when social justice is pursued with too much enthusiasm are anchored in the past. In reality, the modern European experience justifies the progressive claim that we can do many things to make the United States more fair without destroying incentives. Even the problems of Europe justify greater government intervention, not less. Of course, let’s talk about whether “Medicare for all,” estate taxes and other progressive proposals are really good ideas. But trying to break them down by talking about how terrible things are in France is an unequivocal sign that you have no idea what is being said.