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Democracy, Economics, Immigration

Welfare States Depended on Minorities Being Excluded From Benefiting From Them

It’s not entirely new concept, but in a piece by Jamelle Bouie, Is There a Case for Liberal Optimism?, he asks:

This isn’t an original thought, but the current environment makes the question much more salient—is it possible to have a multicultural society and a robust welfare state? Or will racial resentment always create a barrier to political solidarity?

The question reminded me of a two-part theory that I had been thinking about with respect to the creation and destruction of the welfare states in both the US and Europe:

  1. During prosperous times, these differences made less difference and welfare states were more willing to split a growing pie
  2. More importantly, the welfare states as originally constructed, excluded minorities.  As minorities have been included in the benefits of the social safety net, the pressure to dismantle it has increased considerably and consistently

Starting with the US, in the 1940s through the 1960s (give or take a decade) the US quickly put together and expanded the New Deal which created the most robust social safety net the country has ever seen.  Growth was also high during that time as you can see by the graph below, with GDP growth averaging about 4.4% and GDP per capita growth averaging about 2.9%. Contrast that with the period of 1970 – 2010, where GDP growth averaged 2.8% and per capita growth was 1.8%.

And not only has growth slowed, but the safety net has been expanded to serve broader swaths of the population.  To put that more bluntly, minorities were not provided the full benefits of the welfare state in the US before 1970.  Therefore, beginning in 1970, a double blow was administered to the viability of the safety net.  Not only did GDP growth begin to slow (and therefore, less was comparatively available to devote to the safety net), but the amount of people that benefitted from the safety net grew substantially at the same time, ultimately meaning that the programs as originally designed became a lot more expensive, almost overnight.

This has led to the exploitation of the politics of division, and what Kevin Drum calls, a trench warfare style of politics, “with everyone fighting over scraps because the pie isn’t growing as fast as it used to.”  Hence, in this zero sum game, it is considerably easier for conservatives to use race and difference in order to undermine and dismantle the New Deal piece by piece.  Welfare queens driving Cadillacs is the easiest example of race being used as a wedge between people in order to undermine a safety net program.  But really, this is a piece of many attacks and skepticism against the government in general…namely, that you aka hardworking white person, will have your taxes go to programs that benefit “others” aka lazy minorities.

You can clearly see the consequences that have resulted here in the US as safety net programs are becoming increasingly targeted for “reform” and endangered.  What’s really daunting is that the rest of the world is following suit.

For years, as liberalism lost ground in the US, progressives in this country looked longingly across the Atlantic and waxed poetic about the social democratic models that they wanted to try to replicate here. I used to think the same way for a long time and in my dreams of moving to Paris or Berlin, discounted the effect race and difference had on the ways that the US governed itself compared to the way Europe did.  I’m increasingly thinking that I was wrong.

What I’m starting to realize is that it will not be long before Europe becomes Americanized.  It’s rapidly moving in that direction in a similar fashion and following a somewhat similar path as the US has.  Growth peaked post war and is slowing in much the same way, both in terms of GDP and GDP per capita.  This puts strain on safety net programs.

Additionally, similar to how the US safety net did not include minorities until 1960, Europe had it’s colonial empires where welfare state benefits did not apply.  Further, it was not until 1980 that poorer immigrants from the former colonies began to increase their immigration rates to Europe.  Predictably, as growth has slowed and the numbers of people being provided benefits has become broader, Europe has seen an increase in anti-immigrant sentiment and racism and has also experienced increased challenges from conservative leaders to the viability of the welfare state.  Also not surprisingly, it is the countries with the highest levels of immigration which have led the “Americanization” of Europe.

Bouie concludes with another question: Was the 20th century’s period of middle-class prosperity a historical fluke?

The optimist in me wants to say no, but the realist in me sees looks at the data and concludes that limited resources and safety nets being broadened to include minorities and immigrants have resulted in those safety nets being placed in jeopardy from both a financial and ideological perspective.  The US is already well down that road.  I would predict that Europe is essentially 20 -30 years behind our schedule unless a new path is forged.

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