Friday, August 11. 2006
Using the United States to Scare Germans
Posted by Joerg Wolf in International Economics, Transatlantic Relations on Friday, August 11. 2006
Liberale Stimme has written a Review in German. Synopisis from the publisher:
Europeans and many American pundits believe that while the U.S. economy may create more growth, Europeans have it better when it come to job security and other factors. Olaf Gersemann, a German reporter who came to America, found the reality quite different. He checked facts and found the market freedoms in America create a more flexible, adaptable and prosperous system then the declining welfare states of old Europe.Just last week (August 4, 2006) the semi-tabloid Berliner Zeitung chose "Amerikanische Verhältnisse" for the headline of an editorial about the growing gap between the rich and the poor in Germany and the increasing unfairness (income, wealth, education, health care). The editorial did not analyse the economic conditions in the United States, but only dealt with the socio-economic trends in Germany and concluded that American conditions are now reality in Germany as well. A closer look at the socio-economic situation in the United States (just like in Germany) would reveal good and bad aspects, but only the bad aspects are featured in the phrase "Amerikanische Verhältnisse." Some German papers write about the good aspects of the US economic system, many papers and politicians recommend more U.S. type reforms, and the term "American Dream" is still popular and still has a good ring to it, but whenever the phrase Amerikanische Verhältnisse is used, it sounds really bad, because it excludes what is good in America.
Bret Stephens wrote in The Wall Street Journal in January:
Amerikanische Verhaltnisse--"American Conditions"--is a term of disdain in German politics, meant to suggest the inhumanity of American capitalism. Press reports repeatedly portray the U.S. as a place in which the have-nots are savagely exploited by the haves, where civil liberties are in rapid decline, and in which a government that is by turns buffoonish and cunning schemes to gain control of world oil supplies.(Mr Stephens' interesting editorial covered Chancellor Merkel's visit, her criticism of Guantanamo, and the German public's views of the US. Unfortunately, he misunderstood a poll and wrote "One-third of young Germans reportedly believe the Bush Administration instigated the attacks of September 11." More about this in the Atlantic Review in about two weeks.)
Amazon Germany sells Olaf Gersemann's book in German (1) and the cheaper English translation (2). Amazon USA has the English translation (3):
(1) (2) (3)
In May 2006 the conservative Die Welt used the phrase Amerikanische Verhältnisse in the headline to express the concern that companies could be confronted with a flood of law suits due to the new anti-discrimination law in Germany. The United States is popular for references or comparisions. The Netherlands or Denmark, which had pretty successful reforms, are sometimes mentioned as role models, but do not get as much coverage as the US.
The Economist wrote about successful tough welfare reform two weeks ago:
Welfare reform was once regarded as a harsh, right-wing, America-only idea. But an unexpected lesson of the past ten years is that it enjoys much wider political appeal. Within America, its success has silenced the former fierce opposition of left-wing Democrats, which Mr Clinton had overruled. For the Labour government in Britain and for social democrats in Europe, reform offers a way to reintegrate people who would otherwise live in a welfare apartheid. Furthermore, it is a way to defend generous support for the poor—as long as they find work.Hat tip for the Economist article to Don, who also summarized another Economist article.
A related post in Atlantic Review: Germany in danger of "Americanization" without the good points.
A related post in Medienkritik's Unemployment: Kannapolis Instead of Chemnitz.
I believe we need to see social justice in terms of several needs of society - and individuals living in that society. Social Justice is not merely something to be bestowed upon clients of the government; it is owed to the working poor and even to those higher up the ladder. The classic criteria for a welfare system is how well it supports the poor. How many die, how many starve, how many children get poor nutrition or poor education and therefore fail to achieve their potential. The roots of the social welfare system in the US lay during in Great Depression. What is often lost on modern observers is the enormous magnitude of efforts to support work and create jobs - and the insignificance by comparison of programs which could be described as a dole - an unearned check financed from the brow of other's labor. Franklin Roosevelt (good New York upper-class brahmin that he was) did not like European-style doles and in the end the US ended up with a small widows pension for women and children without visible support from a man, the program which eventually mushroomed into 'welfare as we know it' in Bill Clinton's phrase. My mother was on AFDC when I was born. The conditions were fairly onerous. A woman had to have minor children cnd could not have a man in her life. If you had such he was expected to support the woman, not the state. The welfare agency sent out a home visitor every couple of weeks to help - and also to check the house for signs of aman; shoes, clothing, extra toothbrush, etc. In 1960 the US poverty rate was more than 30%. During the 60's a paradox occured; the poverty rate fell by more than half while the welfare roles almost doubled. I have read that in 1960 only about 30% of the people nominally eligible for welfare actually participated - no doubt because of the conditions attached to it and because it was discouraged. By 1970 the poverty rate was below 15% but the welfare roles almost double. This was accomplished by raising the participation rate to around 90%. Welfare programs had been made more financially generous and the onerous conditions had been completely relaxed. We were a wealthy country. We could afford it and we owed to the poor; particularly to the blacks who had been repressed. The laws of unintended consequences hit with a vengeance. Welfare payments could and did a much better job of supporting a poor women and her children than a permanent poor father could; all the man's presence did was lower family income. Exit the husband, enter the temporary boyfriend. The second unintended consequence was that dole income raised the standard of living of the welfare households versus those of the working poor. Not infrequently to above the levels achieved by the working. It was easier to drop out and take the check. It was what economised call a 'market-clearing solution', at least in some places. For the first time in US history entire neighborhoods and even cities appeared with very small proportions of workers. The next generation had few working role models and few working relatives and friends to give kids their first chance at employment. That first job is a critical ladder into work and (eventually) out of poverty, and it wasn't happening nearly as often as it once did. Clinton-era 'welfare reform' made a serious effort to reverse the problems with the modern welfare state, but not by trying to return to the conditions in 1960. No, what was done was to limit the theoretical eligibility to 2 years total for a lifetime, that being reckoned as a decent time to recover ones feet from a bad break. States were allowed to make 20% exceptions to this (20% of cases could go longer than 2 years. And in any case states could continue benefits for longer than 2 years. Many did so. The main practical effect of the 2 year limit seems to have been a cultural message rather than a practical limit because states often finance the first two years from federal funding and reserve their own funds for after that. I remember conservatives steaming over that; it wasn't definate enough - it wouldn't work. Except - it DID work. The message was recieved that welfare wasn't for a lifetime - only two years worth, and many made different choices based upon that perception. At the same time efforts were made to improve work as an alternative. A tas rebate was creted (or perhaps expanded) to make low-paid work pay off better. Health insurance was extended for several years to people leaving welfare, and child care funding was strengthened. One perverse effect was that welfare reform hasn't saved a dime from what the old programs cost - the money is merely going into other things. I suspect we're fiscally better off even so with slightly expanded tax collections. Particularly in the longer term as ex welfare clients accumulate job skills and move up the income ladder, as many but not all do. The downside is that the old programs were dead easy to get into and very very very secure. Sometimes even death wasn't enough to end benefits. The new world is less secure; if you can work but won't you may not be able to talk your way onto the public dole. Some who do have significant problems may not be succored as they would have been 15 years ago. Welfare in the US today is a much worse hammock and a much better ladder in my opinion. There are gains and losses both ways. What I like best about welfare reform is that it values work and workers much more. It improves the relative position of the working poor in the status ladder - this is what I like best about it.
Don, your post #1 is an excellent review of the history of the welfare system in the US. It is accurate, for the most part, and to the point :). However, I do have a quibble with this: ... what was done was to limit the theoretical eligibility to 2 years total for a lifetime,... ...I remember conservatives steaming over that; it wasn't definate enough - it wouldn't work. Except - it DID work. ... I find this a bit strange, since I distinctly recall that the Welfare Reform was a Republican act, that Clinton vetoed it twice before Gingrich managed to get a veto-proof majority. Clinton signed it because Congress had the votes to override the veto, but later at the Democratic National Convention for the 1996 election, complained loudly about the Welfare Reform Act. Hillary made a long speech about it, promising to "fix" the problem. The "problem" she wanted to fix was the 2-year limit. The Democrats wanted to get rid of that limit. The 2-year limit is precisely what made the Reform work, and that, my friend, was Newt Gingrich's idea. It was the 2-year limit that he pushed for and expounded upon in speech after speech after speech until he had that veto-proof majority, and dragged Clinton, kicking and screaming, into signing it. So, no... the Conservatives were NOT complaining about the Welfare Reform Act except in a few tiny details that turned out to not matter. The 2-year limit, the thing that made it work, was a Republican maxim.
Mamapyjamas, what the conservatives were steaming over were the exceptions to the 2 years and out limit, not the limit itself. The fact that a 20% exception was built-in and also that states could use their own money to extend the limit. The reason why it worked is that the message of a two years limit was delivered to able-bodied welfare clients - and they acted on it. 2 years is not a long time, not a career. So get up and get a job, or maybe - never sign up for welfare at all!
Don, "...The reason why it worked is that the message of a two years limit was delivered to able-bodied welfare clients..." So you're agreeing with me that Gingrich's 2-year limit was what made the Reform work. I understand where you're coming from. Your message, however, made it look as if Clinton were responsible for the Reforms when it was mostly Gingrich's baby. Clinton was dragged into it kicking and screaming, and claimed "ownership" of Welfare Reform AFTER it started working, about 2 years into Clinton's second term. That was what I thought you were missing.
MP, I would agree that it was mostly Gingrich's baby - but Clinton could definately spiked it. And the second term reforms were Clinton's baby. Contrast Clinton's behavior concerning welfare reform with what Democrats are doing today vis Leiberman. Machine gunning their own and shooting the survivors.
Don, re: "I would agree that it was mostly Gingrich's baby - but Clinton could definately spiked it"... Gingrich had a veto-proof majority, so Clinton could not have vetoed it. There were enough votes to override a presidential veto. That was what I meant when I said Clinton was dragged into Welfare Reform kicking and screaming. He complained about the Welfare Reform Act at the 1996 Democratic National Convention, and Hillary made the statement, "You want welfare reform? Just turn me and Al (Gore) loose on it!" to wild cheers. It was only after the Welfare Reform Act proved successful that Clinton claimed it as his.
Perhaps the journalists using the term "American Conditions" have traveled recently through Newark, Hartford, Jackson(Miss.) ....or 100 other cities I could name. Just because you suspect these journalists of Anti-American bias doesn't mean that "American Conditions" don't exist.
These conditions may very well exist in the US, but they are by no means exclusively "American". A simple week-long trip through East Germany should be enough to drive home this point. Besides, in Germany you don't go straight into the cities to see the poverty, you have to go a couple of miles outside to the suburbs, where only the buses go. They hide it a little better.
One point which I think is often missed is that the US wasn't where 'globalisation' was invented - we probably were the first victims of globalisation. During the late 70's several major industrial plant complexes were closed, the first time this had happened since the Great Depression in the US. Better, more efficient German and Japanense plants which had been built during the 50's and 60's were the major culprits. I can still remember all the books bashing Japan in particular - they didn't play fair on trade issues, etc, etc! They were a major impetus to the Perot for President races in 1992 and 1996, but the prob;em was petering out by 1996 as US industries and workers learned how to catch with and even outdo the Japanese and Germans. Now we're seeing something similar in Germany. People complaining about 'American conditions' are really complaining about unfair advantage. Just try to remember all those steel workers in Youngstown in 1977 and in Bethlehem and Allentown during the early 1980's - put out of work by German competition in many cases. It's a similar thing.
I have a comment on this phrase: "an editorial about the growing gap between the rich and the poor in Germany and the increasing unfairness (income, wealth, education, health care)." Do you mean to say that the existence of a gap is "unfairness?" You may not have meant that, but I ask because I've heard this from Europeans: their idea of equality is a matter of dollars and cents, as if equality is equal income. Sounds like communism to me. And it is a distortion of the meaning of fairness. Fairness is holding all to the same standards. It has nothing to do with income. And I say this as a Democrat, who would have said you were crazy in 2000 if you had predicted that I'd ever vote for George W Bush, whose father was a union worker, who was raised on strike food in the 60's and 70's. I know very well that wealth enables one to stack the deck in his favor and that therefore government must manage an economy to keep the big kid from stacking up all the toys in his corner so the other kids can't have any. BUT I do not see how people get the idea that equality is a matter of equal income. So that the government must play Robin Hood. If that's the case, why should I work for a living when I know that my hard-working neighbor will just be taxed to support me if I decide to be a freeloader instead? That's "FAIR?" To the contrary. That's unfair. That's expecting more of my neighbor than of me. What's more, it is the INequality of income in an economy that envigorates it! Yes. When I was a teacher, to stimulate greater effort, I'd post the list of total scores to date. The range was huge. Those kids started competeing to beat the kids just above them on that curve. It's the same with wealth. If your neighbor has something you don't, you work harder to get it. What's wrong with that? It works. Socialism eventually collapses under its own weight. If you need health care in this country, you get it. For free if necessary. (Just ask all the Mexicans invading the US for it.) Of course, those who cannot afford insurance, delay longer than others. But generally all are supposed to get the same quality of care. Our problem in this area is mainly a problem due to the skyrocketing cost of health care, which leaves many uninsured. If you need a home in this country, you get it. Most of our poor OWN their homes. Most have air conditioning and own an automobile. The story told in Europe about America bears no resemblance to reality. The Left wants to scare Europeans away from voting for more rightward-leaning politicians, so it foists this propaganda on Europeans. It's pure politics. The message is: "Oh no! We don't dare save our failing economy by becoming more capitalist. That would be terrible! We would have homeless people (as in Paris?) and people freezing to death in winter (as in Europe?), and "savage" capitalism would make us as degenerate and stupid and brutish as it has made those Americans." And so, at bottom, European anti-Americanism is a political device of the Left to win votes. Even in America where the wellfare state predominates, as in New Orleans, you see people becoming like children. Helpless. Waiting for Mother Government to come and fix things for them. Not lifting a finger to help themselves, let alone their neighbor. Elsewhere, the American way is to charge in with helping hands. Like the man who stole a boat and saved a hundred people from their rooftops after Hurrcane Katrina. He didn't wait for the government to arrive: he took responsibility for the wellfare of his neighbors upon himself. Consider also the thousands of Texans who immediately into their cars and rushed PRIVATE aid to Louisiana. We have a safety net. It should not be so generous it discourages work. The Democrats buy votes with promises of government handouts if you elect them. (They promise other special interest groups other things). NO END OF HANDOUTS. When they ruled Congress, they even had the law fixed to prevent the poor from getting a job. Yes, I kid you not: the poor would have lost government health insurance for their children if they took a job. This kept millions of poor from working. They themselves understood this effort to make them dependent and called for wellfare reform. Republicans are not evil. They are right about some things. And the United States is NOT a purely capitalist country. We have socialistic programs too, like Social Security and wellfare. We are just not as far left as Europe = we are just capitalist COMPARED to Europe.
[i]Do you mean to say that the existence of a gap is "unfairness?"[/i] No, I don't. My understanding is: Fairness means equal opportunities rather than equal income. And I think: Not all citizens in the US and Germany have equal opportunities. It seems, the general trend is negative. Some have much better opportunities than others. Extremely hard work will not overcome/override very bad opportunities. My "unfairness" reference in the above post was meant to describe the editorial which considered it unfair that employees get the same or a smaller income than they got ten years ago, while the companies they work for make bigger profits every year. I guess, the concept behind that thinking is that employees are not just employees, but should be seen as shareholder... You wrote on health care in the US: [i]But generally all are supposed to get the same quality of care.[/i] Only "supposed"? [i]Our problem in this area is mainly a problem due to the skyrocketing cost of health care, which leaves many uninsured.[/i] Money is always a problem. Therefore you can't use it as an excuse like: "Everything would be fine, if it would not be so expensive..." In general: Do you think Americans have equal opportunities? How are the trends in the US? I think, if one looks at the last hundred years, the trend is positive in the US and in Europe, but if we look at the last twenty years the trend might be negative on both sides of the ocean, i.e. more unfairnesss... We need to find a way to change that. We need to figure out, which policies in which fields are more successful than others. Perhaps we could learn abc from Denmark, and def from the Netherlands and ghi from Oregon and jkl from New Jersey...?
"My understanding is: Fairness means equal opportunities rather than equal income. And I think: Not all citizens in the US and Germany have equal opportunities." Good point, Joerg. I spent three months working at a German-French firm (Alcatel) and I saw a class structure based upon race and sex. Alcatel had a fairly diverse workforce with a lot of Eastern Europeans, Irish, and even a few Russians. The management structure in the group I consulted with was purely German men, with a few German women in good staff jobs (but none in line management). I saw some quite untalented German men without experience giving orders to talented Irish and Eastern Europeans. I didn't see any Turks at all, which is a curious lacunae given the racial structure of German society, don't you think? In the US things are different but I also see a yawning class structure developing. Partly in the workforce but perhaps not as pronounced as in the small part of Germany I saw. Income gaps are widening, and I do see a widening gap in opportunity. There is a 'missing' group in the US - negro men. To a much lesser extent Negro women, who do join the orkforce but don't seem to go to the top jobs. The class split goes further than that - there are major opportunity differences among groups of whites. Those who go to the best colleges tend to get the best opportunities - and poor and lower middle class whites tend not to get into the best colleges. Everything else equal the better prepared son of the college professor take the slots in the Ivy League and at the best state universities while the cop's son goes to the lesser school and gets pigeonholed out of the most lucrative jobs. Unfortunately this part of income inequality doesn't seem at all visible to the high-domed 'thinkers' who intone about inequality - but it has a major impact all the same. Globalism hurts the people on the bottom of course. Mani of them are in wage competition with a billion Chinese in a sense. It is hard to see a comprehensive solution to this until Chinese wages begin rising more than they have. One can improve the skillset of portions of the the lower-paid woirkers and convert them into skilled craftsmen - but even then the gains can be fleeting as more higholy skilled work moves to China and India. This leaves us a residue of low-skilled workers at the bottom of the labor force who are underemployed at market-clearing rates because they cannot compete with the Chinese on wage rates and don't have the skills necessary to operate complex machinery. The choices thus far are to to lower and subsidize wages at the bottom, as the US does, or to put the displaced workers on the dole and pay them to sit home and rot, as Germany currently does. I prefer the US solution because it keeps people working and perhaps offers the seeds of future improvement - but it is hard and takes time to work.
I am saddened that you would link to the right-wing smear job of Alexander Osang's articla on the unemployed in Kannapolis as an example of anti-American bias. Alexander and his wife - the journalist Anya Jung - are friends. He is a very talented journalist, and an accomplished writer. (I urge German readers to read his novel "Die Nachrichten") Alexander Osang grew up in East Germany under Stalinist oppression. No one appreciates the freedoms of life in the US more than Alexander; but as a journalist, he is compelled to report what he sees. He was assigned to write an article about the effects of globalization on a small city in the South - it could have easily been Flint, Michigan, or Gelsenkirchen, or Brimingham, England. I urge people to read the original article. Osang does not write that this is representative for the US as a whole. He reports on his subject with compassion and integrity. You should have picked a better example if you want to show some sort of "Anti-AMerican bias" in the German media.
David, [i]I am saddened that you would link to the right-wing smear job[/i] Why is it a smear job? Medienkritik does not criticize Osang's character, but his article. And questions why Spiegel chose this topic for a lengthy essay. [i]Osang does not write that this is representative for the US as a whole.[/i] Well, the subheadline of the essay is: "The example of workers from a textile mill in North Carolina tells how it is to be an unemployed American." The reader does get the impression that what he is about to read, is representative...
You said, Osang is compelled to write, what he sees. But shouldn't a journalist also explain things? And put them in perspective? Here are two quotes from Ray D.'s post in Medienkritik: [url=http://medienkritik.typepad.com/blog/2005/10/spiegel_online_.html]"And despite its length, Osang's work makes no real attempt to explain the true nature and complexity of the role played by the state in American society. It makes no real attempt to explain the multi-faceted, cross-jurisdictional aspects of social welfare systems on local, state and federal levels nor does it explore how they interact to provide services to citizens. It makes but a feeble attempt to describe the wide variations in benefits from state to state, only briefly glossing-over differences in unemployment benefits. It also largely fails to discuss the enormous role that private charities, institutions and organizations play in providing social services in America and how they cooperate with the state to provide programs, services and benefits. (...) So let's not kid ourselves: Once again, SPIEGEL ONLINE has chosen the easy way out. Instead of running a large, four-part documentary on unemployment in a German city like Chemnitz, the magazine is running an emotionally-pleasing collection of stereotypes on Kannapolis, North Carolina. After all, why upset German readers with the reality that surrounds them when it is so much more enjoyable to wallow in the perceived misery of others...? UPDATE: The unemployment rate in Cabarrus County, North Carolina (in which Kannapolis is located), is currently less than 5% and has dropped dramatically over the past two years. Today's Germany can only dream about unemployment levels that low. Looks like the people in Kannapolis are doing a little bit better than Mr. Osang and the cronies at SPIEGEL ONLINE would have us believe..."[/url] David, please, let me know, if there are any errors or smearing of Alexander Osang in [url=http://medienkritik.typepad.com/blog/2005/10/spiegel_online_.html]Medienkritik's entire post[/url].
I have cross-posted this article on Anglofritz and there have been some interesting comments about Americans being able to change their careers. In Germany there is a term for this "Quereinsteiger." http://www.anglofritz.com/2006/08/using_the_united_states_to_sca.html
Thanks Joerg! America has plenty of problems but doesn't need the imaginary ones.
This book is really is worth of reading. Because the big three continental European economies - Germany, France and Italy - often look at the US free-market economic system with scorn. They see it as brutal and inhumane and refer to it derisively as "Cowboy Capitalism." Olaf Gerssemann is a German reporter who decided to look into the facts and truly compare the old-line economies of Europe to the United States' economy.
Fuck europe!!!
Ts, ts, Mario. Are you really the stereotypical Yankee redneck, with your usual inferior general education? Who can only use two word expletives to express himself? Who can't stand our moral and intellectual superiority? Or was it just a typo and you meant: "Fuck Europe"? In this case you're ok :-)
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