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The End Of The American Exception? The End Of The American Exception?

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WEALTH OF NATIONS

The End Of The American Exception?

The transformation that some liberals seek could threaten America's unique cultural traits.

During PBS's NewsHour With Jim Lehrer last Friday, the program's resident pundits, David Brooks and Mark Shields, had an interesting exchange about President Obama's first budget. They agreed that the administration aimed to be "transformative" -- and Brooks conceded, "I think we all want that." The real question, he said, is how transformative.

Brooks: "The debate will be over the nature of it. If it's a transformative relationship that basically keeps the American model with repair, you'll get a lot of people in the center for it. If it's a transformative relationship that turns us into France, with a consumption tax and a much bigger federal government, you will not."

 

Shields: "That's a straw man, turning it into France. That's not the case."

Is it really a straw man? I was hoping that Brooks would press Shields to say what exactly it is about France he objects to, what makes him recoil at the parallel. Where has France gone too far, in the view of an American liberal?

The policies that Obama is proposing have all been tried elsewhere. And we know something about how well they work.

 

Presumably, liberals approve of the universal health care, the generous and extensive welfare state, the comprehensive worker protections, the stricter regulation, the vastly more-generous subsidies for higher education, the stronger unions, the higher taxes, and especially the higher taxes on the rich. At least I assume they do, since they advocate all of those policies for the United States. Have I left something out?

As far as social and economic policies are concerned, Democrats really ought to be holding up France (or maybe Italy or Germany) as the model to which they aspire. The fact that they do not -- that they even deny the validity of the comparison -- seems revealing. No doubt it is partly a matter of tactical calculation. The idea that the United States should model itself on any other country, rather than offer itself as the model for the world, would be new to most American voters and would take some getting used to. But I do not think it is just that.

Perhaps some liberals privately long to make the United States over in the image of France, but the great majority, I imagine, are more interested in taking the things they regard as best in the European economic model -- all the things I just listed -- and combining those "socially enlightened" policies with the traditional economic virtues of the United States. Take French social policies and welfare-state institutions and add them to the American work ethic, spirit of self-reliance, and appetite for change. Et voila, the best of both worlds.

Color me skeptical. Culture shapes institutions and vice versa. Culture -- that bundle of traits of self-reliance, self-determination, innovation, and striving for success -- underpins the American exception. To state the obvious, it helps explain why this country has a markedly different form of capitalism than Europe, based on smaller government and lower taxes.

 

In ordinary times, this culture makes it hard for a government to push the United States in a European direction: Voters push back against bigger government and higher taxes. But now, maybe, the time is ripe. This unusually severe economic crisis has called American capitalism into question, highlighting its weaknesses and making it easier to forget its strengths. Liberalism has a rare opportunity. And just as this opportunity has arisen, American liberals also have, in Barack Obama, a remarkably popular and appealing leader to press the advantage.

But the interaction between culture and institutions works both ways. Change the system and, with time, you will change the culture. How much you will change it is debatable, and so is whether change of that kind would be good, bad, or indifferent for the country's economic and political prospects. But it would be an error to assume that the policy transformation that some liberals long for -- and which Obama, if his budget is any guide, appears to be aiming for -- would leave America's unusual cultural traits unaffected.

I had better declare an interest on this question of good, bad, or indifferent. As you may recall, I am a Brit who lives in the U.S. Politically speaking, I think of myself as an old-fashioned English liberal, a comically outmoded orientation that has little or no voice in modern European or American politics. In U.S. terms, you get a sense of where I stand if you think "liberal on social issues, conservative on economic issues" (but with exceptions, so do not hold me to that).

To put it mildly, I admire this country's instinctive suspicion of concentrated state power, its anti-collectivism, its veneration of the individual spirit and individual enterprise. At different times and in different ways, Democrats and Republicans alike have been at war with aspects of that mind-set, but as an admiring foreigner, I am here to tell you that this culture survives, that the American exception is alive and well, and that it is more than likely the secret of this country's awesome success.

If I were a citizen with a vote -- as one day, immigration authorities permitting, I hope to be -- I would need to think long and hard before casting it for "transformation." Repairs here and improvements there, of course, but transformation? It would be a shame to see America revert to the Western European norm. It would mean I had wasted a trip, for one thing, and I am not sure where I would go next.

Brooks's invoking France as a possible destination for Obama's social experiment does seem far-fetched. But the staggering breadth of Obama's ambition makes it reasonable to ask where all this is heading. Thoroughgoing health care reform would have been a bold undertaking by itself, one for which there is broad centrist support. But the budget and the fiscal stimulus also call for wide and ongoing commitments to public investment.

Obama is fond of saying that the question is not big government or small government, but what works. The fact is, whether his programs work or not, taken together they represent the biggest and fastest expansion of government since the New Deal. Moreover, the tax increases to pay for this expansion, he says, are to fall entirely on high-earning households. So his plan to enlarge government is married to an uncompromising assault on economic inequality.

And if all of this is not enough to remind you of Europe, Obama has also expressed strong support for the Employee Free Choice Act, arguing that bigger and stronger unions are a vital part of sharing prosperity more widely. To somebody who watched unions cripple the British economy, until voters elected Margaret Thatcher to sweep them away, this is the part of Obama's program that seems most in need of an international reality check.

This promised transformation is not a move into unexplored territory, after all. The policies that Obama is proposing have all been tried elsewhere. Ideas that look bold and new in this country are old hat across the Atlantic. And we know something about how well they work.

A strong case can be made for many of Obama's proposals, taken one at a time. I admire his ambition to mend the country's failing, unjust, and needlessly expensive health care system. I also applaud his focus on raising the incomes of the working poor, through tax cuts and wage subsidies (such as his "make work pay" tax credits). But trade-offs need to be faced. A good hard look at Europe makes this plain.

Bigger government requires higher taxes -- in the end, for most taxpayers and not just the rich. Europe shows that tax systems tilted too far against high earners stifle the incentives that spur economic growth. Welfare systems that are more generous and have fewer strings tend to raise unemployment. Stricter regulation can and does retard innovation. Stronger unions can raise unemployment and, in the aggregate, lower incomes.

The president cannot be accused of misleading voters. For the most part, he is planning to push through the policies he advocated during the election -- policies that the country voted for. His apparent determination to keep his word is unusual, and a little startling, but this is more a criticism of other politicians than of him. Although he cannot be accused, not yet, of breaking promises, I think it is fair to ask whether he has thought through the implications of his agenda taken as a whole. His style of explanation, or salesmanship if you prefer, is heavy on pragmatism and on mending one thing at a time. But the breadth of his program, and the connectedness of his ideas, belie that modest stance.

As the president said during his Inaugural Address, "It has been the risk takers, the doers, the makers of things ... who have carried us up the long, rugged path toward prosperity and freedom." That is a very American sentiment. It is fair to ask what the full scope of Obama's transformative agenda implies for the risk takers, the doers, and the makers of things. Aside from higher taxes if they succeed, obviously.

This article appears in the March 7, 2009 edition of National Journal Magazine.

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