September 2007
The Good($) Life
What’s the economy for, anyway?
By John de Graaf
Not long ago, I talked with one of the world’s richest people. One day, one transaction alone earned him hundreds of millions of dollars. A compassionate man, he was troubled. “Since the Bush tax cuts I pay a smaller percentage of my income in taxes than my secretary does,” he said. “I think that’s wrong.”
I think he’s right.
I first met Selena Allen last year. She had a sad story to tell. A mother of two from Kent, Washington, Selena and her husband work tag-team shifts because they can’t afford full-time childcare. They earn barely enough to pay the bills for a modest house and lifestyle, even though both work forty-hour weeks and Selena is a college graduate.
But the worst part of the story was that when Selena’s second son was born premature, she had to leave him in the hospital and return to work three days after giving birth. With no paid maternity leave, she could only afford to take one month off with him and wanted to do that when he came home.
She was choked up, her brown eyes watering, when she told me about it. I was too. Working on my most recent film, The Motherhood Manifesto, I found that Selena’s story wasn’t exceptional.
In the August 2007 issue of National Geographic, there’s a map of the world. It shows who gets paid childbirth leave and who doesn’t. We don’t. What’s most shocking is that all but five countries in the world guarantee paid childbirth leave, at least for mothers. And the United States, the richest of all, doesn’t.
Short Americans
Recently, another article caught my eye. It seems a Princeton University study has discovered that Americans are getting shorter. Shorter? Well, not in absolute terms, but compared to Europeans. Half a century ago, we Americans were the world’s tallest people. Now we’re shorter than most Europeans, more than two inches shorter than the Dutch or the Danes. In every European country, people have been growing faster than we are, and the study controls for the effects of immigration or racial diversity.
So who cares? After all, I’m short myself. Napoleon was short. But the article explains that average height is a powerful indicator of the social health of a society. It tells you how well infants are provided for. So it figures that the Dutch and the Danes also rank on top in a study of child welfare in industrial countries released last February by UNICEF. The U.S., by contrast, ranks 20th of 21 nations studied. Whoa!
America the Short? Next to last in child welfare? Are we talking trends here? What’s going on?
Remember that big sign that James Carville posted in Bill Clinton’s 1992 campaign war room: “It’s the economy, stupid!?”
He should have said, “It’s a stupid economy.”
Constrasting Economic Policies
For most of the past 35 years, the United States has pursued an ideologically-driven economic strategy markedly different from that of nearly all western European nations.
From 1932 until 1972, the United States used government policies to increase economic opportunities for the poor, the middle-class, women and minorities. Wages kept pace with increases in productivity.
But since then, and especially since Ronald Reagan declared that “government cannot be the solution because government is the problem,” we’ve followed a different path, toward what has sometimes been described as “market fundamentalism.” Increasingly, in the name of “personal responsibility,” our policies require more and more Americans to provide privately for their own economic security. For most of us, the “ownership society,” emphasizing privatization, de-regulation and massive tax cuts for the wealthy, is really a you’re on your ownership society. We’ve cut taxes dramatically for wealthier Americans, privatized and de-regulated large sections of the economy.
But to make America better, President Bush tells us, we must do even more of these things, making tax cuts for the wealthy permanent and abolishing the estate tax, for example.
By contrast, most northern and western European countries have followed a different path they call “the social contract.” To work well, they argue, markets need strong rules, an activist government and powerful protections for the rights of workers and consumers. For the most part, the Europeans have continued to strengthen their social safety nets, offering increasingly generous unemployment compensation, old age pensions, paid family leave, long vacations and other benefits such as universal health care.
Who Comes Out On Top?
Two different approaches. It seems fair to ask which one has worked better.
And that question leads to another, more fundamental one: What’s the economy for, anyway? How much stock can we take in the Dow Jones? Is the Gross Domestic Product the measure of happiness? Is the good life the goods life?
If so, then our way seems a winner. U.S. per capita GDP (the value of all goods and services sold on the market each year) is still 30 percent higher than the average in Western Europe, just as it was a generation ago. We’ve got bigger homes (and more storage lockers for what doesn’t fit into them), bigger cars and more high-definition televisions.
But what if we measure success by the happiness, health, fairness and security economies provide for their people?
Lately, I’ve been comparing statistical data, trying to see how countries are doing when it comes to health, quality of life, justice and sustainability (see sidebar).
They show that since conservative policies like tax cuts for the rich have triumphed, Americans’ quality of life, economic security and environmental sustainability have all declined in comparison to Europe.
Wealthy, But Not Healthy
We used to be among the more egalitarian and healthy nations, for example. But now, our rich-poor gap has become the widest chasm in the industrial world, with the majority of economic gains over the past generation going to the top 10 percent of the population. The Republican economic revolution has produced a gush-up instead of the promised “trickle-down.” A new study, supported in part by the conservative American Enterprise Institute and Heritage Foundation, finds that Americans actually have only about one-half to one-third as much chance as Europeans of escaping low-income lives and rising to the top.
As Michael Moore makes clear in his powerful new film, Sicko, Americans are now far less healthy than Europeans, despite spending twice as much for healthcare per person. In fact, we spend nearly half the world’s total health care budget, an amount that will reach 20 percent of our GDP by 2010 — with worse outcomes than anywhere in Western Europe.
Amazingly, all of that spending counts as a plus when it comes to GDP. But the healthy leisure that Europeans enjoy — lingering meals and café conversations, long walks and bike rides — count only as wasted time, adding not a single point to the GDP. La dolce vita, by that measure, is for losers.
Which countries come out on top in quality of life measures? It’s the Nordic and northern continental European nations, those that combine a strong social safety net with shorter working hours, high but progressive tax rates and strong environmental regulations.
But those high-tax European economies are bad for business, right? Actually, it turns out that the Economist magazine ranks Denmark, Finland and the Netherlands as having a better business environment than the U.S., even though all three pay higher wages and have far stronger social safety nets. American business leaders know you can make money in Europe. They invest four times as much each year in Germany than they do in China and more in Belgium than in India.
The conservative revolution is a proven failure and the working definition of insanity is to keep doing the same things hoping for a different result.
If we want to build societies that really work, we need to ask, “What’s the economy for, anyway?” And then we need to separate the real results from the myths, shed a little of our American hubris and start looking at how other countries are actually edging us out by providing policies that succeed. That way lies a happier, healthier, more just and sustainable world.
John de Graaf is the co-producer of the popular PBS special Affluenza and co-author of Affluenza: The All-Consuming Epidemic. He is President of the Take Back Your Time campaign (timeday.org) and organizer of the upcoming What’s The Economy For Anyway? conference in Washington DC., October 5-7.
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