The case for American social democracy–2: objections and alternatives

(See previous post.)

After discussing the problems he’s concerned with and his proposed solutions, Kenworthy considers a number of objections to his program, both from the “right” and the “left” (broadly speaking).

For instance, one of the most obvious objections is: how are we going to pay for all this? Kenworthy estimates that the policies he’s outlined would require an additional 10 percent of GDP in expenditures. He thinks this can be accomplished through a combination of tax measures–most significantly a national consumption tax, or value-added tax, similar to those of many European countries, along with modest increases in the income tax rate for high earners, an end to the mortgage interest deduction, a carbon tax, and a few other measures.

He argues that American liberals have been overly focused on making the income tax more progressive, whereas what should really matter to the left is that the post-tax-and-transfer distribution is progressive. This requires a tax base broad enough to finance the programs he’s identified.

He goes on to rebut claims that big government is bad for economic growth, innovation, and employment, marshaling data showing that these are all compatible with the kind of robust social-welfare state he’s advocating. He also argues that such a state is consistent with economic freedom, as conservatives often define it, noting that some social democratic countries have relatively light regulation (including of the labor market). He calls this “competition with cushions”–in essence, you want a dynamic market economy to generate wealth and jobs, but one whose rough edges are smoothed by redistribution and the provision of public goods. The Nordic model shows that this is possible in the real world.

These are mostly objections from the right. Alternative proposals from the left that Kenworthy considers include putting the brakes on globalization, re-industrializing the economy, and revitalizing unions. As I’ve already mentioned, Kenworthy doesn’t think these are, for the most part, either plausible or desirable goals. For instance, globalization (which means both liberalized trade and increased immigration) has arguably helped lift hundreds of millions of the world’s poorest people out of poverty. It would be ironic, to say the least, if the American left made policies that would prevent this the centerpiece of its domestic social justice platform. Regarding industrialism and unions, given recent trends, Kenworthy sees little prospect for returning to the mid-20th-century model of high levels of industrial employment and strong private-sector unions.

He goes on to consider other “left” alternatives to his proposals, such as ensuring a high wage floor (vs. a lower wage floor with after-the-fact redistribution) and a basic universal income grant. As far as wages go, as noted earlier, he thinks the minimum wage should certainly be higher, but increasing it enough to make it a primary means of increasing incomes at the lower end would likely reduce employment. He goes on to emphasize that public goods and services can be a means of increasing people’s standard of living, even with relatively low wages. Similarly, he worries that a UBI would reduce employment and weaken support for other social programs.

To summarize, Kenworthy thinks that the Nordic model shows that we can have the dynamic, high-growth economy favored by the right and still ensure economic fairness via the redistributionist policies favored by the left. This puts him at odds, at least to some extent, with both sides of the spectrum. Though I suspect he’d find much more opposition from the right than the left to most of his proposals.

Next post: How do we get there?