June 24, 2015
READ THIS by Paul Krugman first:
It’s Not Race But Population Size That Explains America’s Welfare State
by Tim Worstall
Paul Krugman has a piece today looking at the influence of America’s racial make up on the existence and size of the US welfare state. Given that I’m an extremely whitebread European this specific aspect of it all isn’t something I can discuss very well. So, entirely willing to agree that race could be a factor here: how much of one something that I’ll leave to others with more direct knowledge. However, I would add that there’s another factor at play here: and that’s the sheer size of the country itself. There’s 320 million people in the United States, around and about, and absolutely no one runs a large and substantial welfare state over that number of people, not anywhere.
The standard analysis is that it is going to be easier and more effective to run a decent sized welfare state in a small and homogenous population. The argument is simple enough to understand: we’re humans and we think of self first, then family, then tribe, and only later of nation. Families are pretty much run on the communist idea of from according to ability and to according to need. We start to become more selfish as the grouping rises, from tribe through to nation. And yes, it is part of our development as a species that tribe would be people we were largely related to and we’d be able to see that simply by looking at someone’s features. So, homogeneity is, in this instance, similar to the point that Krugman is making about race:
Yet racial hatred is still a potent force in our society, as we’ve just been reminded to our horror. And I’m sorry to say this, but the racial divide is still a defining feature of our political economy, the reason America is unique among advanced nations in its harsh treatment of the less fortunate and its willingness to tolerate unnecessary suffering among its citizens.
Of course, saying this brings angry denials from many conservatives, so let me try to be cool and careful here, and cite some of the overwhelming evidence for the continuing centrality of race in our national politics.
This particular observation strikes me as not being quite right:
Mr. Frank argued that working-class whites were being induced to vote against their own interests by the right’s exploitation of cultural issues. But Mr. Bartels showed that the working-class turn against Democrats wasn’t a national phenomenon — it was entirely restricted to the South, where whites turned overwhelmingly Republican after the passage of the Civil Rights Act and Richard Nixon’s adoption of the so-called Southern strategy.
And this party-switching, in turn, was what drove the rightward swing of American politics after 1980. Race made Reaganism possible. And to this day Southern whites overwhelmingly vote Republican, to the tune of 85 or even 90 percent in the deep South.
That is, I think, to fall into the rather Marxian (i.e, informed by Marx, but not actually Marxist) idea that it is the means of production that determine social relations. Or, as we might put it, that the working class should be voting for liberals. But theSouthern working class has always been fairly conservative socially: attitudes to religion and military service show that quite clearly. So why it should be a surprise that they vote for cultural conservatives is a bit mystifying.
And it’s not just health reform: a history of slavery is a strong predictor of everything from gun control (or rather its absence), to low minimum wages and hostility to unions, to tax policy.
So will it always be thus? Is America doomed to live forever politically in the shadow of slavery?
I’d like to think not. For one thing, our country is growing more ethnically diverse, and the old black-white polarity is slowly becoming outdated. For another, as I said, we really have become much less racist, and in general a much more tolerant society on many fronts. Over time, we should expect to see the influence of dog-whistle politics decline.
As I say above I’m entirely willing to believe that race is a part of it, how much I don’t know. But my point is about the other part of that phrase, “small homogenous”. That small part is important I think.
Denmark is pretty much the poster child for the sort of society American liberals at least say they desire. But it’s important to understand how it actually ticks. For a start, it is small. 5.6 million people small, about Wisconsin or Minnesota small. I maintain that it’s going to be a lot easier to get such a small group to think of themselves as all being part of the one polity, within which there should be substantial redistribution, than it’s going to be in a country of 320 million people.
But it goes much further than that. The national income tax rate is 3.76% (yes, really, 3.76) and the top national income tax rate is only 15%. That’s the amount that is collected from the citizenry and sent into the centre. Denmark does have astonishingly high tax rates overall, yes, but the bulk of that is paid to the commune. A commune being a unit of as small as 10,000 people. And that’s where all that redistribution and social caring is done. In those much smaller units, not at the national level. My suggestion is that precisely because it is being done in these small units that people are willing to cough up so much money to have so much of it.
The policy implication here being that if US liberals desire that sort of social democracy (which many do) then they’re going to need abandon their insistence that it be done at the Federal level. Because our examples (and Sweden is much the same as Denmark, perhaps not quite so fine grained) of societies where social democracy does work are places that are doing it not at the level of the Federal government, not even at the level of a US State, but at something much more like the level of a US county or even township.
320 million people simply won’t send 45% of their income off to Washington DC for a faceless bureaucracy to then dispense. But they might well (and Americans’ famed willingness to get involved in local charitable activities bears this out) be willing to spend some equal or nearly so amount if they knew that it was to be spent in the actual community that they themselves consider they are part of. I’ve described this before as Bjorn’s Beer Effect:
Instead they have what I call the Bjorn’s Beer Effect. You’re in a society of 10,000 people. You know the guy who raises the local tax money and allocates that local tax money. You also know where he has a beer on a Friday night. More importantly Bjorn knows that everyone knows he collects and spends the money: and also where he has a beer on a Friday. That money is going to be rather better spent than if it travels off possibly 3,000 miles into some faceless bureaucracy. I give you as an example Danish social housing or the vertical slums that HUD has built in the past. And if people think their money is being well spent then they’re likely to support more of it being spent.
In the end, local collection and spending of taxes is likely to lead to people being willing to pay higher taxes.
To recap: I’ve no doubt that race, as Krugman says, has a part in this I’m only uncertain as to how much. And the standard analysis says that redistribution is going to work best in small homogenous societies. All I’m arguing is that the small is also an important factor, along with the homogeneity that Krugman is pointing to. The end result of which is that the United States is simply too large to be a highly redistributive society. If that’s what you want, more redistribution, then you’re going to have to organise it around much smaller units of population.