The Perils of America's Hard-Charging Capitalism
by Robert B. Reich
For years Americans have assumed that our hard-charging capitalism is better than the soft-hearted version found in
It was a questionable assumption to begin with, relying to some extent on our collective amnesia about the first three decades after World War II, when tax rates on top incomes in the U.S. never fell below 70 percent, a larger portion of our economy was invested in education than ever before or since, over a third of our private-sector workers were unionized, we came up with
But then came America's big U-turn, when we deregulated, de-unionized, lowered taxes on the top earners, ended welfare, and stopped investing as much of the economy in education and infrastructure.
That's why recent data from the Luxembourg Income Study Database is so shocking.
The fact is, we're falling behind. While median per capita income in
It's difficult to make exact comparisons of income across national borders because real purchasing power is hard to measure. But even if we assume Canadians and the citizens of several European nations have simply drawn even with the American middle class, they're doing better in many other ways.
Most of them get free health care and subsidized child care. And if they lose their jobs, they get far more generous unemployment benefits than we do. (In fact, right now, 75 percent of jobless Americans lack any unemployment benefits.)
If you think we make up for it by working less and getting paid more on an hourly basis, think again. There, at least three weeks paid vacation is the norm, along with paid sick leave and paid parental leave.
We're working an average of 4.6 percent more hours more than the typical Canadian worker, 21 percent more than the typical French worker, and a whopping 28 percent more than your typical German worker, as
But at least Americans are more satisfied, aren't we? Not really. According to opinion surveys and interviews, Canadians and Northern Europeans are. They also live longer, their rate of infant mortality is lower, and women in those countries are far less likely to die as result of complications in pregnancy or childbirth.
But at least we're the land of more equal opportunity, right? Wrong. Their poor kids have a better chance of getting ahead. While 42 percent of American kids born into poor families remain poor through their adult lives, only 30 percent of
Yes, the American economy continues to grow faster than the economies of
Almost all of our economic gains have been going to the top -- into corporate profits and the stock market (more than a third of whose value is owned by the richest 1 percent). And into executive pay (European CEOs take home far less than their American counterparts).
America's rich also pay much lower taxes than do the rich in
That depends on what's meant by "welfare state." If high-quality education is included, we'd do well to emulate them. Americans between the ages of 16 and 24 rank near the bottom among rich countries in literacy and numeracy. That spells trouble for the U.S. economy in the future.
They're also doing more workforce training, and doing it better, than we are. The result is more skilled workers.
Universal health care is another part of their "welfare state" that saves them money because healthier workers are more productive.
So let's put ideology aside. The practical choice isn't between capitalism and "welfare-state socialism." It's between a system that's working for a few at the top and one that's working for just about everyone. Which would you prefer?
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Economy: "The Perils of America's Hard-Charging Capitalism"