For the last ten years here at The Glittering Eye I’ve been making the point that societies are machines, tools which have been created by trial and error and found to be working (more or less), and arise out of the fabric of the societies themselves. What is considered desireable and acceptable here in the United States would be intolerable in, say, the Kingdom of Saudi Arabia, and vice versa. This point comes up most frequently when somebody points out how well a strategy works in the Netherlands, Denmark, or Luxembourg and why don’t we do that here? The Scandinavian model is darned hard to transplant out of Scandinavia. Political consensus is really much easier when so many of the people in the society belong to the same ethnic group, are members of the same social class, and belong to the same religion. In the instance, for example, of Sweden that would be Lutheranism. 90% of Swedes are Lutherans, at least historically.
Every year these rankings come out, and the same cycle repeats. American columnists rend their garments about how life is better in Scandinavia, and the United States needs to do better. Chinese commentators say nothing and silently fume at Norwegian thriving. Expatriates carp that things aren’t that great in Scandinavia.
[Actual Scandinavians are way too polite to brag about any of this, but you know that, in the comfort of their own homes, they nibble on their lutefisk and chuckle at how the Scandinavian film version of “The Girl with the Dragon Tattoo” is so superior to the Hollywood version.]
Enough. Here’s a crazy thought: What if life is better in these small countries because of the United States?
That sounds jingoistic of me, I know. But I’m not the one making this argument. Daron Acemoglu, James Robinson, and Thierry Verdier are the ones making this argument. You can read the full paper (pdf), or read their precis in VoxEU.
In essence, they argue that everyone benefits from technological innovation, and that technological innovation is more likely to thrive in an economy where “incentives for workers and entrepreneurs results in greater inequality and greater poverty.” This is the cut-throat capitalist model. The other option is to create an economy with generous social protections and safety nets. They dub this the “cuddly capitalist” model.
I think the question the rest of the world should be thinking right now is what if they’re killing the goose that laid the golden eggs? What if the United States actually becomes more like Sweden? And along with that transformation comes slower growth, slower job creation, fewer imports, and less ability or willingness to allow other countries to be free riders on our defense spending, healthcare spending, and consumer spending?
The prospect that should concern us is that we’re not likely to become more like Sweden, France, or Singapore. It’s a lot more likely we’ll become more like Mexico or Brazil.