The United States Sets a Course

The November elections are a referendum on the role of the state in 21st Century society. The result could have global effects in a time of anxiety about the future.

The U.S. ambassador for Spain, Alan Solomont, said recently in Washington that all American presidential elections were “a dialogue about the kind of country we want.” In 2004 the elections were about security, in 2008 they were about change, and in 2012 they will be about the role the state should play in 21st century society.

It is a debate the world has known since the first steps towards the modern-day welfare state were taken in the United Kingdom at the beginning of the last century. That debate has been revived intermittently, with two fundamental points of reference: the Scandinavian countries’, particularly Sweden’s, social democratic version where the state reserves the right to establish distributive justice, with sky-high taxes and highly-developed powers of intervention; and the liberal version, predominantly in English-speaking countries, under which the government acts more as a referee than a protagonist.

This controversy, somewhat marginalized during several decades of economic bonanza that allowed enormous generalized progress across the five continents, has gained new intensity and validity as a result of the 2008 crisis. Some social movements, like Occupy Wall Street or Spain’s “indignados,” have placed focus on the social inequality that has been the price of that progress. The poor have improved their living conditions, but the rich have prospered much more, and the gap between the two social groups has widened extraordinarily.

Both groups have coexisted harmoniously with that problem for 30 years during which, despite the continual deregulation, privatization and concessions to the private sector, resources have been sufficient to satisfy the growing needs of a majority. But today, when the world’s great economies declare themselves unable to maintain their former status, anxiety for the future has gotten the better of all the developed societies. In Europe, the president of the European Central Bank, Mario Draghi, recognized in an interview with The Wall Street Journal in February that the European social model “has already gone.” The size of the United States’ national debt, more than $15 trillion, is mortgaging its role as a world superpower. Even in China, where economic growth is beginning to slow, the new leaders that will assume power at the end of this year will be the first to have to not only create wealth, but also respond to outbreaks of popular discontent caused by social inequality. It is only a matter of time before emerging powers like India, Brazil or Argentina become concerned about their own inequalities, something that, in some form, is already happening in Russia.

What should be done? What measures are needed in order to create societies that are more just – and therefore happier and better adjusted to the dynamics of democracy – without endangering progress? Should the state act more vigorously in the distribution of available resources or should market economics be allowed to run their course and transport us once again to an era of prosperity? Should we hang on to the welfare state in order to guarantee the benefits we enjoy today or give up a good number of them in order not to lose them all? It’s a highly complex debate with gigantic consequences. Probably, as some intellectuals are already anticipating, it is the question that, throughout the greater part of the 21st century, will occupy the space taken up in the 20th century by the struggle between communism and capitalism. One way to tackle it is at local level. Every country should ask itself what extraordinary changes it has experienced in the last 30 years and what effect these could have on the future. If we must confront a new era, it is better to know exactly from where we are starting. In Spain, for example, the last three decades have seen not only spectacular modernization and economic development, but phenomena such as the arrival of hundreds of thousands of immigrants for the first time in history, the religious disaffection of millions of people raised in families that professed Catholicism, terrorism, corruption, decentralization of the education system and the assimilation into society of marginalized minorities, like homosexuals. All these phenomena have had far-reaching effects and invite reflection.

That is the kind of reflection that this electoral campaign may encourage in the United States. In purely political terms, Americans will have to choose between two options: one offered by Barack Obama, that defends state responsibility for the fortunes of the least favored, and the other offered by whoever is the Republican candidate, that will gamble on reducing the government’s sphere of influence even more. But this dilemma, which we will return to further on, is conditioned here, as everywhere, by certain historical and cultural peculiarities that make it more complicated than just the choice of one political force over another. What’s at stake is how American society prepares itself to continue being a world leader, what innovations need to be included, which values need to be rescued from the past and who should take the initiative. “We have to decide what kind of capitalism will be this century’s American capitalism,”* warns analyst Thomas Friedman. It is clear, political extremism aside, that the state can neither be permitted to plan future destiny nor can every individual be allowed to act out of individual interest with no other law than to guarantee the success of the strongest.

Politics and social conduct may be connected in the analysis that’s needed. An indication of this is the controversy being stirred over the last few weeks by a book that somewhat provocatively condemns the degeneration of values in general, but particularly among the working class.

The book, Coming Apart, by Charles Murray, who is a professor of political science at the conservative American Enterprise Institute, presents the thesis that rich and poor – he calls them “new upper class” and “new lower class” – are divided by a greater gap than ever before, living in completely separate and, the author fears, irreconcilable worlds. The rich have Ivy League degrees, live in safe neighborhoods far from the city center, have stable relationships, belong to a church, eat sushi, go to art exhibitions and cutting-edge shows, and take their vacations in out-of-the-way places close to nature. Apart from all that, their jobs and their friendships allow them frequent contact with Europe, making them cosmopolitan and bilingual or trilingual. The poor either don’t graduate from high school or get their degrees at public universities, live in areas overrun with delinquents, eat junk food, don’t achieve stable relationships and frequently have children out of marriage, take their vacations in Orlando or Las Vegas, and their only source of entertainment is the TV.

According to Murray, 40 years ago, even 20, these two classes had common spaces and values. Today both have a distinct notion of their role in society. The new upper class has become ambitious and elitist; the new lower class has become lazy and victimist. The result is the beginnings of a class struggle that, supposedly had never before existed in the U.S. The conclusion of this work is that if the mechanisms are not created to bring the two bands closer together, class struggle will use up all of this nation’s creative energy.

The book has given rise to heated exchanges among the country’s leading analysts and columnists. Dozens of articles have been published in the last few days in the major media channels, defending or, more frequently, refuting Murray ‘s thesis. To quote one of the most representative examples, David Brooks, a moderate conservative, upholds the idea from the right that the book is the perfect argument to contradict the materialist theory that attributes all of society’s ills to economic conditions. “However many jobs have been lost, it doesn’t explain why a boy drops out of school,”* he argues. On the left, economist Paul Krugman affirms that “the social changes being experienced by the working class are the result of economic inequality, not its cause.”*

Naturally, both sides present statistics and good arguments in order to defend their points of view. “The Democrats,” says Brooks, “condemn the fact that the United States is at the mercy of the financial elite, which holds all society’s resources.”* But that is a distraction. The real social breach exists between the top 20 percent of society (the new upper class) and the bottom 30 percent (the working class). The upper class progressives raise the argument of the 1 percent against the 99 percent (Occupy Wall Street ‘s slogan) because it excuses their own responsibility for the increase in inequality. “The salaries of men with a high school diploma,” answers Krugman, “have fallen 23 percent since 1973. In 1980, 65 percent of private sector workers received health benefits; in 2009 the figure had dropped to 29 percent: these are the causes of the deterioration of the working class, not its values.”*

To sum up, what this debate suggests is that on one hand, incentives need to be created in order for individuals to change – “the changes that matter are those that touch the heart of the American people,”* says Murray – and through them social change will come about. On the other hand is the insistence that the state must act in order to change the rules of the game, trusting that those new rules, supposedly more just, will make individuals improve.

And here is where the politicians come in. Obviously, citizens aren’t going to turn out to vote thinking about the controversy over a book, and it’s not certain how much of that controversy, however healthy and well advised, will end up permeating the social fabric. Ultimately, the reasons why people vote for one candidate over another are very often trivial or loaded with irrational passions. But when an influential sector of society, albeit a minority, attempts to profoundly analyze its evils, the effect is contagious and has ramifications in the political class. It is simple: politicians don’t invent arguments; they just gather and synthesize those they hear, so the better the arguments they hear, the better arguments they’ll present.

The fact is that the candidates aiming to take office as president in January 2013 have incorporated into the debate the role of the state and the concern for social inequality. Obama did so solemnly in a long address last December, in which he laid out the key arguments of what will be his electoral campaign. “Inequality distorts our democracy,” he said. “Business, and not government, will always be the principal generator of employment. But, as a nation, we’ve always come together, through our government, to help create the conditions where both workers and businesses can succeed. Our success has never just been about the survival of the fittest. It’s about building a nation where we ‘re all better off.”

The Republican candidates, still immersed in the battle of the primaries, have not yet presented a vision of the future aimed at the whole country. Mitt Romney, the most likely nominee, came closest when he declared: “I’m not concerned about the very poor. We have a safety net there that protects them. If it needs repair, I’ll fix it. I’m not concerned about the very rich. They’re doing just fine. I’m concerned about the very heart of America, the 90, 95 percent of Americans who right now are struggling.”

None of their proposals are very original. Obama is proposing more taxes for the rich and a gradual reduction of the deficit, without fundamental cutbacks in social services. Romney, still without getting too specific, aims to drastically reduce taxes and the deficit at the same time, a clearly impossible feat.

None of them addresses the heart of the problem: the unsustainability of current expenditure and the enormous difficulties faced by the U.S. in response to competition from emerging economies. The American welfare state is considerably inferior to the European one, but it isn’t any cheaper. According to the Organization for Economic Cooperation and Development, U.S. social expenditure, if tax exemptions to companies are included, is the second highest in the world after Sweden. In net investment by the government on the gross national product, the US occupies eleventh place in the world, after the Scandinavian countries and the most developed European countries.

Although the pension, health care and unemployment systems award fewer benefits than the European systems, this country’s great social programs (Medicare, Medicaid and Social Security) account for more than half of the national budget. The U.S. is sacrificing its position of supremacy as a superpower in order to finance it. Its military budget is still more than eight times greater than China’s, but while China has increased its own by 11 percent this year, passing the 100 billion mark for the first time, the U.S. has reduced it by 2 percent.

The elections are probably not the best sphere in which to find solutions to the more important problems. Great transformations usually require great sacrifices, generally incompatible with the falsely optimistic tone of an election program. They can, however, be the moment to decide which course to follow. This year ‘s elections in the U.S. are in great measure a referendum on the degree of intervention the state is allowed in order to place the country on the road to its own revitalization. There is no doubt that if Obama wins the election, his relatively egalitarian policies will have been endorsed, with all the limitations inherent in a country where individual freedom is a sacred good. Equally, his defeat would be the failure of a model of statehood, including healthcare reform, its flagship.

Ronald Reagan ‘s victory in 1980 gave the green light to his philosophy that “the state is the problem, not the solution.”* With the help of Margaret Thatcher, both commanded an era that has continued until today, during which the whole world embraced, as an unquestionable model, the values of the free market in its purest form.

Today things have changed somewhat. Today, pressure for financial stability comes more from Brussels than from Washington. Obama’s ratification in November would be a boost to those who favor state intervention in order to create equality, and a moral victory for those who believe in prioritizing the welfare state. There is no guarantee that the direction followed by the United States will be the same as that taken elsewhere. The world today is more autonomous and independent than it was in the eighties. Nonetheless, the U.S. still possesses powerful instruments of economic influence as well as an extraordinary magnetism as a point of reference.

As the Republican candidates say every day, these are the most important elections in history because they will decide the fate of several generations to come. However interconnected the world may be today, it is each country’s responsibility to do the best they can and tackle these uncertain times under the best possible conditions. At least the U.S. has begun to debate delicate subjects that affect the roots of this society. We should watch closely.

*While accurately translated, this quotation could not be independently verified.