This comment at The Health Care Blog appeared among many appended to a post about healthcare reform, but the general nature of the comment makes it worth passing on to anyone interested in the condition of "social safety nets" -- you know, the kind that Mr. Romney is not too worried about.
Pat S says:August 18, 2012 at 1:15 pm“Unemployment rates are persistently higher than ours in most of the other developed countries because their labor markets are much more rigid and their tax burdens are significantly higher. Economists will tell you that Europeans make a conscious tradeoff of more economic security (broad safety net) and less inequality at the cost of lower long term economic growth and less opportunity. The U.S. makes the opposite tradeoff which reflects, I think, our different history and culture.”
Back in the 80′s that was pretty much true, but recently the trend has reversed.
Of the established developed countries — including the old EU and Northern Europe, Canada, Australia, and Japan — unemployment is now lower than the US in all except France (and perhaps Britain, as their current economic program crushes the economy,) and actually has been for the best part of a decade. Economic growth has equalled or exceeded ours in all but Japan — in a permanent recession for two decades now.
Even in the past, while our rate of growth exceeded theirs in the second half of the 20th century, unemployment is more difficult to compare since unemployment in the US is far different from unemployment in those countries with far better safety nets of all sorts, including unemployment pay. Many economists suggest that the U6 measure of unemployment in the US, which includes discouraged workers who have withdrawn from the labor market, people working part time who desire full time work, and significantly underemployed people — i.e. IT people working as WalMart greeters. Unemployment benefits in those countries require reporting as “ready to work” for much longer periods of time — indefinitely in some cases — and discourage people from seeking part time or low wage work that does not provide income above the level of unemployment and associated benefits. U6 right now is near 15% in the US, nearly twice U3, the official rate, and has been in double digits or very near double digits since the fourth quarter of 2001.
It is especially interesting to note that countries like Canada, Sweden, Germany, Denmark, the Netherlands, Norway, etc. have been able to weather the current recession much better than us, with higher or much higher rates of growth despite their high rates of safety net spending. It is also interesting to note that Greece, the usual example for the nightmare of overspending on social support, actually spends and has spent a lower portion of their GDP on social support than any of the major old EU countries except Britain — the problem with Greece has been a combination of wholesale corruption leading to much lower tax receipts and very high government employment in what are essentially make work — or no work — jobs, and government borrowing to support those habits. These two things have been features of the Greek economy since the dictatorship period of the second half of the 20th century, and actually may date back to the Ottoman era, when the combination of making being a tax official an entrepreneurial venture and rulers using government employment as a tool to suppress unrest became a way of life.
Unfortunately, the steady drumbeat of propaganda from some sources has given most Americans as poor an image of how the economies of other countries work as of how their health care systems work. The fog surrounding both is a significant impediment to arriving at health care and economic decisions that really work.
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