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NRO’s domestic-policy blog, by Reihan Salam.

Mitt Romney and Matt Yglesias on This Place Called ‘Europe’



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Last night, Mitt Romney referenced Europe three times in his New Hampshire remarks:

 

President Obama wants to “fundamentally transform” America. We want to restore America to the founding principles that made this country great.  

He wants to turn America into a European-style entitlement society. [As delivered, Romney actually said, "He wants to turn America into a European-style social welfare state.] We want to ensure that we remain a free and prosperous land of opportunity.

This President takes his inspiration from the capitals of Europe; we look to the cities and small towns of America.

This President puts his faith in government.  We put our faith in the American people.   

He is making the federal government bigger, burdensome, and bloated.  I will make it simpler, smaller, and smarter.

 

He raised the national debt.  I will cut, cap, and balance the budget.

He enacted job-killing regulations; I’ll eliminate them.

He lost our AAA credit rating; I’ll restore it.

He passed Obamacare; I’ll repeal it.

When it comes to the economy, my highest priority as President will be worrying about your job, not saving my own.

And at the end of Romney’s address, he added the following:

I want you to remember when our White House reflected the best of who we are, not the worst of what Europe has become. 

There were four mentions of Europe in the speech, and at the end Romney explicitly warns against “the worst of what Europe has become,” presumably because he has no quarrel with the best of what Europe has become. Switzerland and Norway are faring quite well as it happens. 

Matt Yglesias writes in reply:

Mitt Romney chose to wrap up his primary win last night with an extensive discourse on the evils of Europe, and of Barack Obama’s plans to turn the United States into a European-style socialist dystopia. Since American liberals are generally more cosmpolitan and less nationalistic than American conservatives, the tendency is for liberals to explicitly point to Europe as an example of some things they want to do and for conservatives to explicitly point to Europe as a cautionary tale, but it’s worth noting that Europe is quite conservative in many ways. For example, the American right has lately fallen out of love with both J.M. Keynes’ fiscal stimulus ideas and Milton Friedman’s monetary stimulus ideas. Tussle between these two has dominated practical policymaking for decades in the United States, but if conservatives were to cast their eyes toward Europe they’ll find a continent where these ideas about demand-side management get short shrift. The kind of “internal devaluation” that European officials have been touting in Estonia and Ireland, and pushing on Italy and Spain, is very much in keeping with state of the art thinking on the American right. [Emphasis added]

It is worth noting that Romney explicitly referred to “European-style social welfare states” in his remarks as delivered, which is actually milder than “European-style entitlement society” as written. This hardly struck me as an extensive discourse, and I’d suggested that “social welfare state” and “socialist dystopia” are notably different concepts.

Romney then offers a series of comparisons and contrasts, which may or may not be in reference to some notional continental European model. Perhaps this is part of the extensive discourse:

 

He is making the federal government bigger, burdensome, and bloated.  I will make it simpler, smaller, and smarter.

He raised the national debt.  I will cut, cap, and balance the budget.

He enacted job-killing regulations; I’ll eliminate them.

He lost our AAA credit rating; I’ll restore it.

He passed Obamacare; I’ll repeal it.

One assumes that President Obama doesn’t intend to make the federal government more burdensome or bloated, but of course Romney is arguing that the president is doing so, which is a contested claim. It is also reasonable to suggest that many European governments are big, burdensome, and bloated, though of course some European governments enjoy high levels of public sector productivity. 

Debt levels are high in a number of European countries, and the U.S. debt level has increased considerably, particularly if we factor in the explicit guarantee of GSE debt. 

The president has been entirely forthright about seeking to change the regulatory climate. In February of 2010, John Judis wrote of President Obama’s “quiet revolution” in regulatory affairs:

 

 

These days, liberals don’t know whether to feel betrayed by or merely disappointed with Barack Obama. They have gone from decrying his willingness to remove the public option from his health care plan to worrying that, in the wake of Democrat Martha Coakley’s defeat in Massachusetts, he won’t get any plan through Congress. On other subjects, too, from Afghanistan to Wall Street, Obama has thoroughly let down his party’s left flank.

Yet there is one extremely consequential area where Obama has done just about everything a liberal could ask for–but done it so quietly that almost no one, including most liberals, has noticed. Obama’s three Republican predecessors were all committed to weakening or even destroying the country’s regulatory apparatus: the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), the Securities and Exchange Commission (SEC), and the other agencies that are supposed to protect workers and consumers by regulating business practices. Now Obama is seeking to rebuild these battered institutions. In doing so, he isn’t simply improving the effectiveness of various government offices or making scattered progress on a few issues; he is resuscitating an entire philosophy of government with roots in the Progressive era of the early twentieth century. Taken as a whole, Obama’s revival of these agencies is arguably the most significant accomplishment of his first year in office.

There is, of course, considerable disagreement regarding the merit of the president’s approach. I tend to think that regulatory agencies should be well-staffed — but that we should have far fewer of them, and far fewer regulations. Romney seems inclined to agree. Some European countries are ahead of the U.S. on the regulation front, but of course many are not. The following is drawn from the World Economic Forum’s Global Competitiveness Report 2011-12:

The United States continues the decline that began three years ago, falling one more position to 5th place. While many structural features continue to make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive. On the other hand, there are some weaknesses in particular areas that have deepened since past assessments. The business community continues to be critical toward public and private institutions (39th). In particular, its trust in politicians is not strong (50th), it remains concerned about the government’s ability to maintain arms-length relationships with the private sector (50th), and it considers that the government spends its resources relatively wastefully (66th). In comparison with last year, policymaking is assessed as less transparent (50th) and regulation as more burdensome (58th). A lack of macroeconomic stability continues to be the United States’ greatest area of weakness (90th). Over the past decade, the country has been running repeated fiscal deficits, leading to burgeoning levels of public indebtedness that are likely to weigh heavily on the country’s future growth. On a more positive note, after having declined for two years in a row, measures of financial market development are showing a hesitant recovery, improving from 31st last year to 22nd overall this year in that pillar. 

This is obviously not dispositive, as the GCR’s methodology is far from flawless. It is, however, suggestive.

Perhaps the most obvious way that President Obama has tried to move the U.S. in a “European” direction is to embrace universal coverage, which is perhaps the main way the U.S. social welfare state has differed from the European norm. Many were quite pleased that the president followed the European lead in this regard, and I hardly think the fact that Europeans are for universal coverage means that Americans should be against it. One could just as easily say that the president sought to move the U.S. in a “Canadian” direction. But there is such a thing as European social democracy, which varies in important ways from the dominant political strands in the U.S. Walter Reuther, leader of the left-leaning Congress of Industrial Organizations in midcentury, was a leading American social democrats, and many other labor-aligned liberals embraced European, and in particular German, social models as preferable to their U.S. counterparts. We could go further back to the Progressive era, as covered by the intellectual historian Daniel T. Rodgers in Atlantic Crossings: Social Politics in a Progressive Age. Americans have, Rodgers reminds us, been borrowing from Europe for a very long time:

 

“The most belated of nations,” Theodore Roosevelt called his country during the workmen’s compensation fight in 1907. Earlier reformers, progressives of his day, and later New Dealers lamented the nation’s resistance to models abroad for correctives to the backwardness of American social politics. Atlantic Crossings is the first major account of the vibrant international network that they constructed–so often obscured by notions of American exceptionalism–and of its profound impact on the United States from the 1870s through 1945.

On a narrative canvas that sweeps across Europe and the United States, Daniel Rodgers retells the story of the classic era of efforts to repair the damages of unbridled capitalism. He reveals the forgotten international roots of such innovations as city planning, rural cooperatives, modernist architecture for public housing, and social insurance, among other reforms. From small beginnings to reconstructions of the new great cities and rural life, and to the wide-ranging mechanics of social security for working people, Rodgers finds the interconnections, adaptations, exchanges, and even rivalries in the Atlantic region’s social planning. He uncovers the immense diffusion of talent, ideas, and action that were breathtaking in their range and impact.

Is it fair to suggest that some Americans are more inclined to embrace European models than others? I think the answer is yes. Are there reasonable objections to certain aspects of continental social democracy? One of the arguments I’ve made in this space is that European efforts to mitigate market income inequality are poorly understood: they occur in a context in which older cohorts are far less educated than younger cohorts, whereas the U.S. faces the opposite scenario, i.e., our 65-year-olds are among the best-educated in the rich world while our 25-year-olds are middling among market democracies. This is problematic because within-group inequality tends to be higher for educated groups. So instead of borrowing from Europe, we might be better served by building a new, distinctive social model that accounts for technological and demographic change. 

Matt goes on to make the reasonable point that there is a great deal of policy and cultural heterogeneity in Europe:

Conservatives will also find that Europe is much less open to immigration than the United States, that Europe generally has much lighter taxation of investment income, that few European countries uphold American-style strong separation of church and state, that European countries generally afford accused criminals fewer procedural rights, and that Europe has much less in the way of product liability and class action lawsuits. What’s more, though there are a few exceptions (Sweden comes to mind), Europe as a whole is more conservative in its gender norms in many ways. Women’s workforce participation rates are lower, fewer children are born to single parents, and there are many more legal restrictions on abortion.

Yet Romney’s brand of conservatism seems to be more about protecting a dynamic market economy and expanding participation in it to currently excluded groups, not to shift workers from market production to non-leisure household production, as we see in much of continental Europe. While Romney is guilty of using shorthand, I don’t get the impression that he has accused Europe of being an evil socialist dystopia. Rather, he is implicitly suggesting that (much of) Europe suffers from economic sclerosis.

I am one of those people who look to Europe for social policy innovations, but also for cautionary examples. I see both, though perhaps more of the latter than the former. That is why I’m inclined to think that Romney’s characterization was pretty sound, and actually far more measured than what many critics actually heard through their own ideological filters.



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