Social Democratic America

SOCIAL DEMOCRATIC AMERICA

Lane Kenworthy

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Library of Congress Cataloging-in-Publication Data
Kenworthy, Lane.
Social democratic America / Lane Kenworthy.
     pages cm
Includes bibliographical references and index.
ISBN 978–0–19–932251–0 (hardback : alk. paper) 1. United States—Social
policy—1993– 2. Public welfare—United States.
3. Democracy—United States. 4. Developed countries—Social policy. I. Title.
HV95.K38 2014
335.50973—dc23
2013016057

9 8 7 6 5 4 3 2 1
Printed in the United States of America
on acid-free paper

“The moral arc of the universe is long, but it bends toward justice.”

—Martin Luther King, Jr.

1 Toward the Good Society: An American Path

2 What's the Problem?

3 How Can We Fix It?

4 Objections and Alternatives

5 Can It Happen?

6 America's Social Democratic Future

Acknowledgments

Notes

Bibliography

Index

AMERICA IS A
very rich nation. And in coming decades we will become richer still. Despite our affluence, however, too few ordinary Americans have adequate economic security, too few who grow up in disadvantaged circumstances are able to reach the middle class, and too few have seen their boat lifted when the economic tide rises.

This book is about how we can do better. The problems we confront are big ones, but they are not intractable. The key to a solution? Government social programs. Social programs function as a safety net, a springboard, and an escalator: they provide economic security, enhance opportunity, and ensure rising living standards. Over the past century, we have gradually expanded the size and scope of such programs. Given recent economic and social shifts, we need to do more. Our history and the experiences of some other affluent nations point us in useful directions, and they suggest we can expand government without destroying liberty, breaking the bank, or wrecking the economy.

Can it happen? The notion that we are likely to further increase the size and scope of our social policy may seem blind to the reality of contemporary American politics. After all, some on the left of the political spectrum feel America's safety net is complete,
¹
many in the center favor cutting public spending to reduce our government debt, and many on the right demand lower spending and taxes full stop. But step back and consider the long run. The lesson of the past 100 years is that as the country gets richer, we are willing to spend more in order to safeguard against risk and enhance fairness. Advances in social policy come only intermittently, but they do come. And when they come, they usually last.

From the 1940s to the 1970s, Americans up and down the income ladder enjoyed improved economic security, expanding opportunity, and steadily rising incomes. But since the 1970s, the story has been quite different. Progress has stalled, or even reversed.

Too many Americans have incomes so low that making ends meet is a struggle. Too many experience a sizable income drop at some point during their working career. And too many have no health insurance or inadequate health insurance. This isn't just a function of the 2008–9 economic crisis and its aftermath. It was true before the economy fell apart, and it will still be true once we return to our long-run growth path (and after the 2010 healthcare reform is fully implemented).

In the past half century the United States has made considerable progress in boosting opportunity: most women and many African Americans now have a much better chance to obtain an advanced education and to thrive in the labor market than did their counterparts a generation ago. Yet the story for Americans who grow up poor is much less encouraging. Their odds of climbing into the middle class, already low, have been shrinking.

Since the 1970s, the incomes of households in the middle and below have risen slowly, despite sustained growth in the economy. Income growth has been decoupled from economic growth.

For society as a whole, competition is a force for immense good, stimulating economic progress and improving living standards. But competition can wreak havoc on the lives of particular individuals. Since the 1970s, competition has become a much more pervasive feature of America's economy. Firms selling goods or services in international markets confront intense foreign rivals. Domestic industries, such as restaurants and hotels, face more competitors too, as technological advances, falling construction and transportation costs, and deregulation have reduced barriers to entry. In addition, shareholders now want rapid appreciation in stock values. Whereas a generation ago they were happy with a consistent dividend payment and some long-term increase in the stock price, they now demand buoyant quarterly profits and constant growth. Robert Reich has an apt label for this new economy: “supercapitalism.” American firms, he notes, “now have little choice but to relentlessly pursue profits.”
²

This shift benefits investors, consumers, and some employees. But it encourages companies to resist pay increases, drop health-insurance plans, cut contributions to employee pensions, move abroad, downsize, replace regular employees with temporary ones, and pursue a variety of other cost-cutting strategies that weaken economic security, limit opportunity for the less skilled, and reduce income growth for many ordinary Americans.
³

For better or worse, the new hypercompetitive, risk-filled economy is here to stay. In coming decades more of us will lose a job or work part-time or irregular hours, fewer of us will get a good healthcare or pension plan from our employer, and more of us will go long stretches without getting a pay increase.

Families, civic organizations, and labor unions play important roles in a capitalist society. They help give us a good start in
life, provide job security and a bigger paycheck, and ensure that if we fall through the cracks, there is someone to help us get back on our feet. But over the past half century, these institutions have been unraveling. Americans marry later and divorce more frequently. Fewer children grow up in a home with both biological parents. Participation in local civic associations has declined. And barely one in ten employed Americans is a union member. Even more problematic, these changes have a class tilt: families, community organizations, and unions have weakened most among those with less education and income.
⁴

Some believe the best way to address the stresses and strains of the new economy is to strengthen these institutions. It's a laudable aim. It would be good if more American children grew up in intact families, if unions ensured stable jobs and rising wages for a significant share of workers, and if community organizations provided guidance and support to more people in difficult circumstances. But that's not likely to happen.
⁵
Advocates of revitalizing these institutions tend to offer lots of hope but little evidence that it can be done. Nor do we find cause for optimism abroad; similar trends are evident in most rich nations.