Age of Anxiety – New York Times: Paul Krugman writes:
We like to think of ourselves as rugged individualists, not like those coddled Europeans with their oversized welfare states. But as Jacob Hacker of Yale points out in his book “The Divided Welfare State,” if you add in corporate spending on health care and pensions – spending that is both regulated by the government and subsidized by tax breaks – we actually have a welfare state that’s about as large relative to our economy as those of other advanced countries.
The resulting system is imperfect: those who don’t work for companies with good benefits are, in effect, second-class citizens. Still, the system more or less worked for several decades after World War II.
Now, however, deals are being broken and the system is failing. Remember, Delphi was once part of General Motors, and its workers thought they were totally secure.
What went wrong? An important part of the answer is that America’s semi-privatized welfare state worked in the first place only because we had a stable corporate order. And that stability – along with any semblance of economic security for many workers – is now gone.
Here’s why we should all be liberal: The conservative system assumes change is good only if it preserves the old order, with certain people at the top. The lack of social mobility—don’t quit your job, because you’ll lose your benefits!—engineered into the economy is profound. When, instead, the nation invests in social mobility by spending on education, health care and the preservation of resources that can’t be replaced with consumer goods (nature, for instance), people have the opportunity to overthrow the economic order while preserving the social agreements that make change and liberty coexist peacefully.
Krugman points out earlier in the column that we already have, with the built-in spending on private health care and pensions, a welfare state as large as those in other advanced economies. But ours is designed and ample money is spent to prevent those who occupy the highest rungs of the economic ladder from giving up anything to new competitors. The deep links between staying in our economic places to preserve the private relationships with sources of health care and retirement funding are not accidental, they are the product of the dismantling of liberal programs that made the 20th century an American century.
As I and others pointed out last week, there are new rules for workers. We also need to recreate—modified for the times, of course—the system that enabled so much innovation and social mobility. Krugman points to the late Peter Drucker’s 1969 book, The Age of Discontinuity, calling out how antiquated the current system built for a stable corporate elite really is. We all need to wake up to the fact that the system is choking this country and this world, holding it back, conserving only the wealth of a very few, at the expense of individual opportunity and progress itself.