Opposing Obama's Social Democracy

Some of President Obama’s supporters are now worried that they’ve inadvertently elected a class warrior. Big surprise. Meanwhile, others want even more in the way of social democracy: 

Wealthy Wall Street financiers and other business figures provided crucial support for Mr Obama during the election, backing him over the Republican candidate John McCain as the right leader to rescue the collapsing US economy.
But it is now dawning on many among them that Mr Obama was serious about his campaign trail promises to bring root and branch reform to corporate America - and that they were more than just election rhetoric. ...
A senior Wall Street executive who remains an admirer of Mr Obama, told The Sunday Telegraph that the reforms were necessary after years of excess. "I think its refreshing that he has the chutzpah to deal with the previously untouchable abuses of the system like tax dodging and excessive executive pay," he said.
"We badly need some European style social democracy, and Obama might as well start with health care reform."

A number of years ago, the WSJ reported on a Swedish study that calls into serious question the quality of life consequences of social democracy:

It found that if Europe were part of the U.S., only tiny Luxembourg could rival the richest of the 50 American states in gross domestic product per capita. Most European countries would rank below the U.S. average....

Higher GDP per capita allows the average American to spend about $9,700 more on consumption every year than the average European. So Yanks have by far more cars, TVs, computers and other modern goods. "Most Americans have a standard of living which the majority of Europeans will never come anywhere near," the Swedish study says.

But what about equality? Well, the percentage of Americans living below the poverty line has dropped to 12% from 22% since 1959. In 1999, 25% of American households were considered "low income," meaning they had an annual income of less than $25,000. If Sweden -- the very model of a modern welfare state -- were judged by the same standard, about 40% of its households would be considered low income.

In other words poverty is relative, and in the U.S. a large 45.9% of the "poor" own their homes, 72.8% have a car and almost 77% have air conditioning, which remains a luxury in most of Western Europe. The average living space for poor American households is 1,200 square feet. In Europe, the average space for all households, not just the poor, is 1,000 square feet.

Here's a thought. The next time somebody tells you the US should be more like European social democracies, ask them how many square feet their household occupies.

Update: A reader asked whether pecuniary measures are the appropriate metric for assessing social policy and welfare. Admittedly, this is a controversial issue, but there's a well-established school of thought that argues that the most obvious alternative for the use of utility is money, as is preferred by both Coase and Posner, and this use has clearly some advantages.

Comments

[Hui]

...but, take it as you will, yet we rate lower than many of the "less stuff" countries in scores of subjective well-being. The smaller homes and incomes must be driving them nuts.

[tim maguire]

Money, ability to buy stuff, is the most useful measurement because it is objective. But I agree with the hinting done by your "Update" reader that the subjective "quality of life" and personal sense of well-being tests would are more important than who has more TVs anfd the U.S. would not come out so well. Problem is, you can't effectively measure that. Either you buy it or you don't.

[Hui]

Ability to buy stuff is surely more "objective" in the sense that it can be quantified from a third-person perspective, and people tend to like those sorts of measurements. Heck you don't even have to ask the people whose happiness you are measuring how they feel. You just look at their shopping receipts.

Of course, this presumes yet again that buying things is _an_ objective measure _of_ happiness. And that's a pretty monumental assumption, one that seems to underlie the entire ideology behind the kinds of things, viewpoints and policies that the professor is peddling.

So it seems odd to prove use the assumption that buying power = happiness to support the presupposition that buying power = happiness, so that one can push programs/criticize programs that are inconsistent with buying power = happiness.