Brad DeLong gets it
Quote of note:
Now things are very different. The typical American employer is no longer General Motors. It is Wal-Mart. Private businesses are providing their workers with less and less in the form of defined-benefit pensions, health insurance, and other forms of insurance against life’s economic risks.
Social Democracy, Anyone?
J. Bradford DeLong
December 10, 2004
…The post-WWII period stands as a reference point in America’s collective memory, but it was in all likelihood an aberration. In the early postwar decades, foreign competition exerted virtually no pressure on the economy, owing to the isolation of America’s continental market from the devastation of WWII. At the same time, the war left enormous pent-up demand for the products of mass production: cars, washing machines, refrigerators, lawn mowers, television sets and more.
Government policy back then began with a permanent military program of spending and R&D and continued through massive public works program and suburbanization, underpinned by the Federal Highway Program and subsidized home ownership loans from the Federal Housing Administration. The regulatory institutions and behavioral norms that originated in the New Deal and developed during WWII came into full force: Social Security, a system of unionized labor relations, market regulation.
Favorable macroeconomic circumstances, the absence of foreign competition, a system of government support and regulation, and large-scale private provision of what in Europe would have been public social insurance all combined to give post-WWII America many of social democracy’s benefits without the costs. The economy did not stagger under the weight of ample benefits or high taxes. Americans—at least white, male Americans—did not have to worry about tradeoffs between security and opportunity, because the United States offered the advantages of both. Corporate welfare capitalism substituted for what in Europe would have been government provided social democracy.
