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The Great U-Turn

by James C. Bennett

How demographic shifts and regulatory arbitrage turned the United States away from European socialism

Admirers and detractors of the United States agree on one point: This country is unusually resistant to the social consensus and set of structures broadly known as “social democracy” or “progressivism.” (Social democracy leans more toward state ownership, progressivism toward state regulation.) Various versions of such schemes have prevailed in Western Europe and Japan, and to a lesser degree in Britain, Canada, and Australia. The characteristics include a wider scope and role for the state, centralization of decision-making in a national bureaucracy, monopolization of power by a set of large institutions, including state-champion corporations and labor unions, and a wide variety of social entitlements for all citizens. This was the classic progressive economic program; since the 1960s, it has also included certain social characteristics, such as official multiculturalism.

Most of these measures were characteristic of some parts of Continental Western Europe from the late 19th century onward, and became generally prevalent there after the Second World War. The English-speaking countries lagged well behind; Britain began to adopt welfarist policies and admit labor unions to the domestic power system before the First World War, but moved to full entitlement systems and substantial state control of the economy only after 1945. Australia and New Zealand adopted entitlement systems early, using their agricultural and mineral export earnings as petro-states now use oil wealth, but remained socially conservative in many other ways. Canada was essentially similar to the U.S. in its domestic systems (despite some greater public ownership, mostly in transportation) until the 1960s. But by the end of the 1970s, America stood virtually alone in a world of seemingly universal consensus for a strong managerial state.

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