The Rise of Big Government

How Egalitarianism Conquered America

Sven Larson, Sven R Larson

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138296985
• eBook ISBN: 9781351583503
• Edition: 1
• Topic: Economics
• Subtopic: Business General
• Index: Economics

Americans tend to believe that their country is very different from Europe. Yet over the past half century they have imported and embraced the most transformative social idea of modern Scandinavia: egalitarianism. Today, the United States is more like Sweden than it is different, dedicated to economic redistribution and to vigorously defending its big government. What price, morally and economically, are today's Americans willing to pay to preserve their egalitarian welfare state? Are they willing to turn life into a fiscal cost item? Will they sacrifice their children's future prosperity to defend their entitlements?

The Rise of Big Government: How Egalitarianism Conquered America pursues the answer to these questions by going back to the ideological origins of the modern, egalitarian welfare state. Specifically, the book asks why this unity has been able to set such deep roots in the United States, a country that is often perceived as fundamentally different when it comes to the role of government in the economy. It is shown that there are more similarities than differences between the welfare state in the United States and its Swedish "template."

This book is essential reading for anyone interested in understanding how the egalitarian ideology conquered the United States, and who seeks to gain a deeper understanding of its strength, its resiliency, and the problems it faces in the future.

1

THE PROBLEM

In 2014, when I published Industrial Poverty, my ambition was to explain that the European economic crisis was more complex, and more systemic in nature, than conventional economic wisdom would suggest. I pointed to several macro-economic factors that seemed to conspire in bringing the European economy to a halt. My thesis was that this systemic stagnation had systemic causes, and that the welfare state was the main origin of those causes.

In the three years that have passed since then, Europe’s macroeconomic ailment has continued, with the perennial Greek crisis as its masthead. My conclusions from then, namely that a large welfare state has negative systemic effects on the economy, have again been verified by a couple more years of suppressed private consumption, anemic GDP growth and the redundancy of up to one fifth of the young workforce.

As much as it is important to understand the economics of the stagnation in the European economy, it cannot explain why politicians would choose to continue policies that, from a dispassionate economic viewpoint, either do not work as intended or have outright destructive consequences. Since it can be demonstrated that the welfare state plays a big role in creating Europe’s economic quagmire, the inescapable question is: why would elected officials in so many countries not take the appropriate measures to roll back the welfare state?

This book is an attempt to answer that question, but not as a documentalist endeavor. The purpose is not to present evidence of the actual line of thinking of individual politicians. The scope of this book is instead to show how the ideology behind the welfare state was turned into political practice, how it can conquer an economy – and how its inherent flaws, which brought about Europe’s economic stagnation, represent a genuine threat to the future of every nation that chooses to cling to the welfare state.

These problems do not only apply to Europe, but are highly relevant to the United States as well. In fact, there is a prevailing opinion among Americans in general, and to a large degree among scholars, policy experts and politicians, that Europe’s problems are irrelevant to the United States. After all, the argument often goes, we do not have a European welfare state.

Yes, we do. The American welfare state has much more in common with its European peers than what sets them apart. In fact, the welfare state that emerged in the United States as a result of President Johnson’s War on Poverty can trace its ideological roots with direct lineage back to the Swedish welfare state, which is often – and rightly so – held up as the most radical of them all. In both ideological architecture, economic execution and macroeconomic effect, the American welfare state has more in common with the Swedish welfare state than it has with, e.g., the British one.

The similarities between the Swedish and American welfare states also mean that the ailments that characterize the former are highly relevant to – and to some degree already present in – the latter. Without a thorough understanding of the common ideological roots between the two, it is extremely difficult to fully grasp the nature, and the consequences of, those similarities.

It is easy to dismiss the shared egalitarian roots of the Swedish and American welfare states as simple rhetoric. After all, in January 2017 President Trump took office and immediately began working on a rollback of many policies from his predecessor. Understandably, a consensus emerged across political dividing lines that America was no longer heading down the welfare state downslope. Quite the contrary: conservatism was now back in charge. In the dust of Hillary Clinton’s loss, Democrats were shocked at how voters continued to abandon them, adding a pivotal presidential election loss to the party’s decline in the states and Republican majorities in Congress.

On the other side of the aisle, joyous Always-Trumpers overcame their differences with Never-Trumpers and shook hands. They quickly agreed that with Congress behind him, the Donald is going to make America great again – whatever that means – and that the Trump presidency is going to be a conservative victory lap.

Superficially, both sides were right. Secretary Clinton, openly committed to new entitlement programs and higher taxes, was no doubt a representative for a traditional progressive political agenda. From an equally superficial viewpoint, Mr. Trump comes across as a traditional conservative, suggesting that the cheers and jeers from the November election were correct.

However, when Trump is put in his proper context, his victory is no longer the defeat of egalitarianism, and it is certainly not the beginning of the end of the American welfare state. To the chagrin of Trump voters, and to the reassurance of distraught Clinton and Sanders backers, conservatism is not back in charge. Donald Trump will not challenge the political victories that egalitarians have scored since the War on Poverty.

The left, whether they call themselves liberals, progressives or social democrats, can rest assure that their ideological common ground, also known as egalitarianism, will continue to define the American future, just as it has dominated the past several decades.

In short: egalitarianism, the ideology that was imported to America from Sweden to create a platform for the War on Poverty, will not go away any time soon. On the contrary, it will prevail; its political practice, the welfare state, will survive both the Trump presidency and the Republican Congressional majority.

Neither President Trump nor any influential member of the GOP in Congress has the ambition to substantially reform the entitlement programs that consume more than two thirds of the federal budget. Social Security, Medicare, Medicaid, TANF, SNAP, WIC, housing subsidies, and many more programs will continue to exist, dispense benefits and require tax dollars to pay for them.

If anything, Republicans in Congress will work with President Trump to try to make the welfare state more fiscally sustainable.

Simply put: there is no ideological challenge to the welfare state in American politics today, nor is there any challenge in the foreseeable future.

For this reason, it is fundamentally important that Americans of all ideological backgrounds put aside their false notions that this country is too different from Sweden, and Europe in general, to be immunized against the systemic ailments of the welfare state.

Recognition of the cross-Atlantic similarities comes with an assignment: to understand in detail that if the welfare state is going to survive for the foreseeable future, its proponents must address its serious moral and macroeconomic challenges.

The problems of the federal debt and the long-term drift toward macro-economic stagnation are serious enough to jeopardize the welfare state’s future. In addition, it faces a sharp moral challenge from within itself, a challenge that has increasingly put the welfare state at odds with core values of our civilization.

There is limited understanding of these problems among conservatives, primarily the economic problems. So far, though, the left appears unwilling to even recognize the existence of these problems, which begs two questions:

•    If left unsolved, will the problems inherent to the welfare state grow serious enough to be the henchman of egalitarianism itself? In other words: will the left pull the carpet out from underneath its own historic political victory by simply looking the other way?

•    If America’s egalitarians are unwilling to step up to the plate and save the welfare state, is it not logical to bring the entire egalitarian project to an end, roll back entitlements and return responsibilities for welfare, education, health care and income security back to the private sector?

This book will not – and cannot – answer the first question. Only those who belong to the egalitarian camp can do so. What this book can do, though, is provide a detailed analysis of the systemic problems that are built into the welfare state. In response, conservatives and egalitarians can choose to either apply sustainable solutions to these problems, or they can organize a peaceful transition from the welfare state to a genuinely free-market economy with a state strictly limited to its core functions.

Either of these two solutions is better than the alternative: a period of disorderly collapse of the welfare state, hurling us into social and economic turmoil where the future will, at best, be fundamentally uncertain.

2

WHERE IT ALL STARTED

The welfare state was not built overnight. It is the brainchild of a decades-long advance of egalitarian ideas in Europe, from where it was imported to the United States. The welfare state has fundamentally redesigned society and the economy, changed cultural and social values and affected the daily lives of almost every one of us.

Politically, the welfare state is the biggest victory ever for the American left. It redistributes trillions of dollars from the rich to the poor, from the wealthy to the middle class. On a daily basis, it turns the ideology and the values of egalitarianism into economic reality. In the shape of entitlements, taxes and regulations, it has fundamentally redrawn the architecture of America.

Its presence in our society and our economy is so overwhelming, and so entrenched, that no Republican – not even a devout libertarian like Senator Rand Paul – utters a word about doing away with the welfare state. No conservative in Congress has proposed that the United States returns to a pre-egalitarian era.

Part of the reason is, undoubtedly, that up to half of all Americans get some sort of benefit from government. The benefits are often generous: in 35 states, tax-paid programs such as SNAP, WIC, TANF, Medicaid and housing subsidies make life so comfortable that it does not pay to take a minimum-wage job.¹

Another reason for the lack of challenge to the welfare state is its sheer size. Almost three quarters of federal expenditures are directly or indirectly used for entitlements. In 2015, that meant $2.6 trillion to health care, income security, education, social services, housing and other items for people who, government said, were entitled to a higher standard of living than they could afford on their own. Any reforms to such an enormous amount of government spending would require a very hefty investment by members of Congress and others in crafting legislation and enduring the political battle that could certainly be expected.

There is also a third reason why conservatives plead no contest on the welfare state. The ideological purpose of the welfare state is economic redistribution. Its goal, in turn, is to reduce and eventually eliminate differences in standard of living between Americans. This egalitarian end goal has defined the welfare state since President Lyndon Johnson’s State of the Union speech declared the War on Poverty. At the time, conservatives were unprepared for – and under-educated on – the ideological, economic and political force of egalitarianism. Frankly, they never saw what was coming and have never really caught up to a point where they have been able to forcefully, comprehensively and successfully produce a counter-alternative to egalitarianism.

The welfare state’s entrenched presence, sheer size and ideological fervor explain why President Johnson became the first truly egalitarian president, but also why others who have followed him in the Oval Office have allowed his egalitarian project to continue. A case in point is conservative icon Ronald Reagan, who as president was a bigger friend of the welfare state than most others: on his watch, spending on economic redistribution increased by 6.7 percent per year.

President Bush Jr. spearheaded the most radical expansion of Medicare in the history of the program. He did so with passionate support from a Republican Congressional majority.

Over the decades, Republicans have successfully competed with Democrats over being the best stewards of the American welfare state. Like Democrats, Republicans defend Social Security and Medicare; if they bring up any criticism, it is concentrated in fiscal sustainability concerns. They take the same attitude to all the programs that were created under President Johnson’s War on Poverty; tax cuts, a Republican staple, are never coupled with structural reductions in government spending. The only purpose of those cuts, therefore, is to increase economic growth and thereby expand the tax base for the welfare state. A stronger economy helps perpetuate entitlement funding.

Nothing will change with Donald Trump’s presidency. He and Congressional Republicans may twist and tweak programs, but overall they will keep and continue to fund the welfare state just like Congress and the executive branch have done uninterruptedly since Lyndon Johnson’s Economic Opportunity Act became law in 1964.

Redefining the purpose of government

That year was a watershed mark in American political history. Up until then, the share of federal spending that was focused on helping the poor had been guided by the economic, social and cultural heritage from the founding of the Republic. Social policies were guided by, for lack of a better term, social conservatism. That all changed with the 1964 Economic Opportunity Act, which marked the beginning of a new era. From that point on, social policies were guided not by principles of limited government, but by egalitarianism. The political spotlight turned from alleviation of poverty to economic redistribution.

The effects of this ideological shift did not materialize abruptly, but became gradually visible as the War on Poverty expanded entitlement programs and reached broader layers of the American people. To the left, it was a victory of political gradualism that slowly but relentlessly gained universal acceptance.

There was opposition to the ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Acknowledgments
• 1 The problem
• 2 Where it all started
• 3 The Swedish roots of the American welfare state
• 4 Exporting egalitarianism to America
• 5 Problem 1: Fiscal Eugenics
• 6 Problem 2: Slow Growth
• 7 Problem 3: Government Debt
• 8 Conclusion
• References
• Index