Paul Krugman: Now it is the centerists who are out of touch with reality
In this June 23, 2018 photo, Sen. Elizabeth Warren, D-Mass., delivers the keynote address to the Nevada Democratic Convention in Reno, Nev. Warren’s plan to pay for Medicare for All without raising middle-class taxes departs from the shared responsibility the U.S. has traditionally required for bedrock programs. (AP Photo/Scott Sonner)
Will the Democratic presidential nomination go to a centrist or a progressive? Which choice would give the party the best chance in next year’s election? Honestly, I have no idea.
One thing I can say, however, is that neither centrism nor progressivism is what it used to be.
There was a time when arguments between centrists and progressives were framed as debates between realism and idealism. These days, however, it often seems as if the centrists, not the progressives, are out of touch with reality. Indeed, sometimes it feels as if centrists are Rip Van Winkles who spent the last 20 years in a cave and missed everything that has happened to America and the world since the 1990s.
You can see this in politics, where Joe Biden has repeatedly declared that Republicans will have an “epiphany” once Donald Trump is gone, and once again become reasonable people Democrats can deal with. Given the GOP’s scorched-earth politics during the Obama years, that’s a bizarre claim.
You can also see it in economics. There are many reasonable criticisms you could offer of Elizabeth Warren’s economic proposals. But the one I keep seeing is that Warren would turn America into (cue scary music) Europe, maybe even (cue even scarier music) France. And you have to wonder whether people who say such things have paid any attention to either Europe or America over the past few decades.
Just to be clear, Europe does have big economic problems. But they’re not the ones such people seem to imagine.
When people say such things, they seem to have in mind a picture of the U.S.-Europe comparison that did seem to have some validity in the 1990s. In that picture, nations with large social spending and extensive government regulation of markets suffered from “Eurosclerosis,” persistent lack of jobs.
Employers, the story went, were reluctant to expand both because of high taxes and because they feared not being able to fire workers once hired. At the same time, workers had little incentive to accept jobs because they could live off generous social programs.
Europe also seemed to be lagging in the adoption of new technology: For a while, the U.S. surged ahead in making use of the internet and information technology in general, leading to arguments that Europe’s high taxes and regulation were discouraging innovation.
But all of that was a long time ago. The jobs gap has largely vanished; adults in their prime working years are actually more likely to be employed in Europe, France included, than they are in America.
Any gap in the adoption of information technology has also long since vanished; households in much of Europe are as or more likely to have broadband than their U.S. counterparts, partly because the U.S. failure to limit providers’ monopoly power has led to much higher prices for internet access.
It’s true that European nations have lower GDP per capita than we do, but that’s largely because, unlike most Americans, most Europeans actually have significant vacation time and hence work fewer hours per year. This sounds like a choice about work-life balance, not an economic problem.
And on that most fundamental of indicators, life expectancy, the U.S. has fallen far behind: French residents can expect, on average, to live more than four years longer than Americans. Why? Universal health care and policies that mitigate extreme inequality are the most likely explanations.
Now, I don’t want this to sound like praise of all things European. The nations on the euro remain terribly vulnerable to financial crises, because they’ve adopted a shared currency without a shared banking safety net; only the heroic leadership of Mario Draghi, the former president of the European Central Bank, avoided a catastrophic collapse of the euro in 2012.
Europe also suffers from persistent weakness in demand because key players, Germany in particular, have an obsessive fear of deficits, even when the European economy desperately needs stimulus.
These are big problems, severe enough that I wouldn’t be surprised if Europe is the epicenter of the next global crisis. But the problem with Europe is not that its social programs are too generous and its governments too intrusive. If anything, it’s almost the opposite: Europe’s economy is vulnerable because a combination of political fragmentation and ideological rigidity has left its politicians unwilling to be Keynesian enough.
The point is that centrists who point to Europe as an illustration of the bad things that happen when you’re too enthusiastic about pursuing social justice are stuck decades in the past. Modern European experience actually vindicates progressive claims that we can do a lot to make America fairer without destroying incentives. And even Europe’s problems make the case for more government intervention, not less.
By all means, let’s talk about whether “Medicare for all,” wealth taxes and other progressive proposals are actually good ideas. But trying to shoot them down by going on about how terrible things are in France is a sure sign that you have no idea what you’re talking about.
Paul Krugman | The New York Times
(CREDIT: Fred R. Conrad)
Paul Krugman, Ph.D., recipient of the 2008 Nobel Memorial Prize in Economic Sciences, is an Op-Ed columnist for The New York Times.