Racism masquerading as critiques of social democracy

Image: In popular imagination, Finland was always a harmonious, prosperous society. This painting by Eero Jarnefelt (Under the Yoke, 1893) captures some of the poverty and oppression of Finnish society in recent history (source; click on image for larger view).



In reading a silly article about the Finnish education system giving their students 15 minute breaks to run around outside for every 45 minutes of teaching--and how Finland's education system is the best in the world in part because of this practice, not in spite of it--it became obvious how outright racism is the typical explanation of the success of social democratic programs:

The cultural, genetic, or racial superiority of the Finns, apparently, decides their fate as the world's best primary and secondary students. Another commenter makes more of an effort to veil his racism:

This commenter at least tries to cloak his racism in the cultural legacy of slavery and Jim Crow era policies, a fundamentally racist argument utterly demolished by Ta-Nehisi Coates.

It's important to note that this point of view is usually limited to ignorant Internet comments, since it becomes quite obviously untenable with even cursory research. The PISA tests compare student achievement in different countries. Finland tops the PISA rankings, with Sweden close behind. Norway, another Scandinavian social democracy, ranks surprisingly low. Clearly, there is something special about Finnish educational policies, not their society.

Additionally, if homogeneity at a national level is so important, then it's as though the black children in Chicago's south side are so evil that they are able to negatively influence the performance of white students in West Virginia. West Virginia has a population over 90% non-Hispanic white; their education system is the envy of no one.

Nevertheless, unsupported arguments that the success of the social democracies are owed in part to their ethnic homogeneity go unchallenged in respectable publications. I wrote previously about an otherwise insightful essay on the problems of the Brazilian health care system, which begins:

In other words, universal healthcare looks very different in Brazil than it does in, say, Scandinavia. Finland, for example, provides free healthcare to all its citizens, but the country is smaller and more homogeneous than the state of Minnesota.

But the article is about issues of underfunding and physicians not wanting to practice in the jungle. Not a shred of evidence is marshaled to defend the idea that ethnic homogeneity is necessary for social democratic programs succeed. I wrote:

If cultural and ethnic homogeneity are necessary for universal social welfare programs, how are Social Security and Medicare so successful in the United States? Social Security taxes get deducted from my paychecks even though my coworkers are black, white, Asian, and Latino. My grandmother's Social Security benefits get deposited in her bank account each month even though she doesn't share the same religion as her neighbors.

Such arguments show--at best--stunning ignorance; at worst, thinly veiled racism. These views conveniently ignore Scandinavian history as well as the resounding success of social democracy in Kerala, a state in India with large minority groups.

This issue is too much to cover in a single post, so I'll break it into four parts. Here, part 1 will examine the case that social democracy can only exist in a country that is already wealthy, cohesive, egalitarian, and/or harmonious. As we shall see below, Finland is a perfect example of an oppressed, divided nation that nevertheless succeeded as a social democracy. Part 2 will take on the contention that social democracy can only succeed in a place that is culturally, ethnically, religiously, or otherwise homogeneous. Part 3 will make the case that social democracies succeed because of the strength of their social welfare policies, and for no other reason. Part 4 will tie these ideas together by comparing the quality of life indicators in the American city with the highest poverty rate--Detroit--versus those of Finland on the eve of its transition to social democracy. Conditions in present-day Detroit are indeed appalling, but 1920's Finland was a far more impoverished and divided society. If backwards Finland can transform itself into a country with the lowest infant mortality rate in the entire world, Detroit can obviously undergo a similar transition.

Obama and undocumented immigration, ctd

This article basically confirms everything I previously wrote about Obama and undocumented immigration--that he could act, but was choosing not to, and that only adversarial political pressure would make him change his mind.

Patrick L. Smith provides much-needed context on Obama's stunning ignorance and paternalism surrounding this issue:

“Do not send your children to the borders,” President Obama said in a television interview the other Sunday. “If they do make it, they’ll get sent back. More important, they may not make it.” 

I find this remark not short of disgusting for its several subtexts. Central American parents are so stupid and loveless that they must be instructed to care for their offspring. Their decisions are calculated — suspect, that is. These mothers and fathers are ignorant of the dangers facing their emigrating kids. The best place for them to be is in the environment — to which no reference — they are escaping on orders from the calculating parents.

And:

Links worth reading

Dylan Matthews article on how prisons can be phased out raises (obvious) questions about the goals of our criminal justice system

David Bernstein and Noah Isackson on how the Chicago Police Department, under pressure from the mayor's office, doctors crime statistics (part 1, part 2) (alternate title: Hey hey, ho ho, Rahm Emanuel's got to go)

Matthew Yglesias on how it's three times cheaper to simply give homeless people housing than it is to keep them on the streets--raising (obvious) questions about the goals of our antipoverty policies.

Universal Basic Income: a thoroughly researched, evidence-based policy

Image: President Richard Nixon bowling (source)


Poverty--by definition--is a person or family with not enough money. If poverty is simply not having enough money, what if we just gave people free money? Wouldn't that solve the problem of poverty?

Today, this proposition sounds completely absurd. No politician or commentator in the mainstream could even mention it and be taken seriously. This is the kind of proposal that could end a career. Yet, decades ago, this idea was so mainstream that the likes of Richard Nixon and Milton Freeman were in support of it (this is a useful reminder of just how conservative our country has become). Yes, as Nixon was escalating in Vietnam, he represented the political center by advocating a universal basic income.

The idea has many names, among them Universal Basic Income (UBI), Guaranteed Annual Income (GAI), or (as Nixon would have known it) the negative income tax. It also takes several different forms: some proposals would pay everyone the difference between their earnings and a poverty line--for example, if the poverty line was $20,000 in a year and your family only made $16,000, the federal government would write your family a check for $4,000. Others aim to keep things administratively very simple and would direct deposit a set amount of money in the bank accounts of every single citizen* (for most people, these benefits would be offset by increased Social Security taxes to pay for the program). In whatever form, a UBI is a guarantee that you and your family will never be impoverished.

A hallmark of all UBI proposals is unconditional cash transfers--that is, recipients are not expected to do anything in order to receive cash benefits. Again, this makes the program administratively very simple, but it also grants people security. That security has its own rewards (which I will elaborate on in a future post). (Even conditional cash transfers in developing countries are often considered utopian nonsense--yet they work).

It's crazy to think that a UBI would improve health or educational outcomes. And it's equally crazy to think that a UBI would not cause people to stop working. Yet that is exactly what research on UBI's has found. Decades ago, when UBI was a serious policy proposal, extensive research was done. Very well designed studies (randomized controlled trials) found downright incredible results. From a review:

The first experiment was conducted on an urban population in New Jersey and Pennsylvania between 1968 and 1972. A second experiment was conducted in Gary, Indiana to examine the effect of a GAI on single parents. A third experiment was conducted in North Carolina and Iowa to look at the effects on rural populations. The final experiment was the Seattle-Denver Income Maintenance Experiment (SIME-DIME) which had access to a much larger experimental population...

In North Carolina, children in experimental families showed positive results on elementary school test scores. In New Jersey, data on test scores was not collected, but a positive effect on school continuation rates was found. In SIME-DIME there were positive effects on adult continuing education (Levine et al. 2005: 100). These results are all the more remarkable when juxtaposed to the academic literature that shows it is very difficult to affect test scores, dropout rates or educational decisions by direct intervention.

Inconsistent attempts were made to collect health data, specifically on issues such as low birth weight which can be associated with significant deficits in later life. The Gary, Indiana study found positive effects on birth weight in the most at-risk groups (Levine et al. 2005: 100).

Kerala, India, and the moral bankruptcy of the neoliberal development project

Image: Bangladeshi sweatshop workers (image from The Institute for Global Labor and Human Rights must-read report on Bangladesh's sweatshops)


The neoliberal theory of development is that sweatshops are good. Poor countries have to leverage their only comparative advantage--cheap labor--in order to bring foreign investments into their country. Bangladesh is certainly not going to beat the first world at software or aerospace engineering, so they should focus on what they can beat the first world at: providing low skill manufacturing at third world prices. Sweat shops are evil, but they're a necessary evil. Only when enough foreign investment enters a country can countries like Bangladesh lift themselves out of poverty. This generation may not have access to an education, but maybe their children will for their sacrifices. This is the path of industrialization the United States, England, Germany, etc took and it is--regrettably--the only way. The real world doesn't care about morality; it's time for Bangladeshis to roll up their sleeves and do what needs to be done.

The problem with the neoliberal development narrative is that it's entirely wrong. A Worker Rights Consortium report found that most countries pursuing this exact policy have seen their workers get poorer, not richer. If the neoliberal development strategy actually worked, the purchasing power of workers should rise slowly, not fall. But it doesn't work. It never did.

The intentional oversights of the neoliberal model are incredible. Child labor doesn't end by workers allowing themselves to be exploited; it ends when a country's political system is motivated by voters to enact--and enforce--a ban. Occupational health and safety regulations aren't gifts of the free market; they're the result of collective bargaining and direct government intervention. Universal primary public education doesn't happen because of an influx of foreign investment; it's the result of mass movements forcing changes in government policy. What, exactly, is the mechanism by which foreign money, flowing directly into the hands of the factory owners who pay their workers 20% of a living wage, results in widespread improvements in education, utilities, or workplace safety? It's certainly not going to help the next generation get an education--not when 9-year-olds are among massive ranks of child laborers.

Neoliberal development theory conveniently overlooks stories that don't fit the model. The monetary gains of Japan's rapid industrialization was shared equitably among the entire population; they now lead the world in health and quality of life indicators. Japan's rapid industrialization didn't occur by allowing their workers to be exploited by foreign capitalists. Rather--even though rural, backwater Japan had no comparative advantage in technology or manufacturing--they realized the potential and used direct government intervention to target these industries for growth. They didn't wait for the market to take it's "natural" course; they used industrial and trade policy to benefit their high tech industries, rank-and-file workers, and to educate the next generation of engineers and scientists. Japan succeeded because of their flight from the neoliberal model, not in spite of it.

It's difficult to--as Nicholas Kristof of the New York Times does--take the neoliberal model seriously:

But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don’t exploit enough.

Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children...

Seriously? An "escalator out of poverty"? From the Worker Rights Consortium report cited above:

On average, prevailing straight-time wages—pay before tax deductions and excluding extra pay for overtime work—in the export-apparel sectors of these countries provided barely more than a third—36.8 percent—of the income necessary to provide a living wage...prevailing wages in 2011 for garment workers in China, Vietnam, and Indonesia provided 36 percent, 22 percent, and 29 percent of a living wage, respectively. But in Bangladesh, home to the world’s fastest-growing export-apparel industry, prevailing wages gave workers only 14 percent of a living wage.

The one graph that proves that welfare (AFDC / TANF) is not a work disincentive

Image: Bill Clinton, masquerading as a liberal, signs TANF into law. (source)


TANF--also known as "welfare"--was designed with one thing in mind: laziness. Republicans and Democrats alike couldn't stand the idea of someone capable of working choosing not to work, so they established complicated rules about "work activities" (a polite euphemism for unproductive busywork) to ensure that no one on TANF was idle. They obviously assumed that the majority of people on AFDC, the program TANF replaced in 1996, did not actually need government assistance, as they created time limits: families cannot collect TANF benefits for more than 24 consecutive and 60 total months. And, no childless adult can receive any type of welfare benefit.

TANF rests on the assumption that people who don't work are idle because they want to be; the key challenge of welfare is to motivate unmotivated people into finding gainful employment. After all, anyone can get a job. (not)

But let's look at this another way. The American safety net is designed to keep people in paid employment and off welfare. The work activity requirement means you can't be idle and on welfare (and is designed to frustrate people into leaving welfare to get a job); the time limits mean you can't make a career out of your welfare benefits. This stands in stark contrast to other countries, whose safety nets are more like safety hammocks--so generous they encourage people to avoid work and live high off the government dole.

Stated differently, we must have a stingy safety net or people will become dependent on welfare and choose not to work.

But if this is true, then the United States should have more people working than countries with more generous safety nets. What if we compare the United States' employment-to-population ratio (the number of people ages 15 to 64 who have jobs divided by the total population of people ages 15 to 64) to that of the social democracies? If a stingy safety net really does encourage people to work, then the United States should have a far higher employment-to-population ratio. It does not:

The United States' welfare system is so inefficient that we could become a social democracy without spending another penny

Image: The Ford Pinto was such a poorly designed car that it was literally a death trap. Imagine if you had to choose between a Ford Pinto and a higher quality, safer car, for the same price. (source)


My previous post on the incredible inefficiency of the American welfare state showed how a median income American household must pay about 50% of their income in taxes and private spending for social welfare, while a household with that income in a social democracy would only spend about 40%--and get far more for the money. See the full piece for caveats, but it's clear that social democracy is a better deal; even though the typical citizen pays less, every single citizen gets many benefits--like paid parental leave, a month of paid vacation, a month of sick days, paid extended sick leave, child care, etc--that very few Americans get. Americans love to cry foul at 40% tax rates in Scandinavia, while remaining curiously silent about paying 25% of their income for private employer-sponsored health insurance.

But there is another way to measure the incredible inefficiency of the American social welfare system. It's not just a bad deal at an individual level--it's a bad deal at a national level as well.

The OECD collects data on how much money is spent on social welfare in member countries--both private and public spending. The verdict? The United States is comparable to the social democracies, spending 30% of GDP on social welfare. The social democracies spend 30-33% of GDP on social welfare; Norway only spends 25%. Here is the OECD's graph of their data (which I modified for clarity, underlining the USA and the social democracies (Norway, Finland, Austria, Denmark, and Sweden) in red):

(click to see graph unobscured by side bar)

Yes, we spend just as large a portion of our GDP on social welfare as Finland, more than Norway, and slightly less than Austria, Sweden, and Denmark. This may be difficult to believe, because--as I explained in the previous post--social democracies offer higher service quality and universal coverage. That they provide better services to more people with the same investment is testament to the utter folly of the American welfare system.

[Update 07/07/2014: In case you think that these numbers are some fluke* based on the unprecedentedly high cost of health care in the United States, and that--somehow--the fragmented public-private model we rely upon for health care might somehow work for child care, long term care, or some other social welfare service--a recent study found that the government-run, universal, social democratic long term care systems of Germany and Japan--despite achieving universal coverage--are far less expensive than the long term care system in the United States:

In Germany and Japan, social insurance programs are universal, support family caregivers, and allow individuals considerable flexibility in securing the services they require...when we compared public spending on long-term care, we found that spending in the United States is actually higher than in Germany even now, prior to enactment of the CLASS Act, and is only slightly lower than in Japan.

(The CLASS Act was ultimately repealed). Obviously, once private spending is counted, the American long term care system as a whole is far more expensive than either Germany or Japan's system, despite enormous gaps in the American system. Universal, social democratic systems are very efficient, no matter what the benefit.

*As if the design of the American health care system is somehow not responsible for its own cost inflation.]

Here is a chart I modified from my first post on this issue to show this incredible inefficiency more clearly. Percentages indicate the percentage of citizens covered by each benefit; "universal" indicates 100% coverage.