The New York Times editorial page gives in to its inner progressive today:
You would think that we were living in the lap of the Nanny State. One of the most puzzling facts of the political debate is how much traction Republicans still get from their calls to cut taxes and public spending, and how timorous Democrats are in arguing against them.
The United States has long had one of the most meager tax takes in the industrial world. America's social spending — on programs ranging from Medicare and Social Security to food stamps — is almost the stingiest among industrial nations. Among the 30 industrialized countries grouped in the Organization for Economic Cooperation and Development, only four — Turkey, Mexico, South Korea and Ireland — spend less on social programs as a share of their economy.
Long a moral outrage, this tightfisted approach to public needs is becoming an economic handicap. Shortchanging public health impairs America's competitiveness. If the United States is to reap the rewards of globalization, the government must provide a much more robust safety net — to ensure public support for an open economy and protect vulnerable workers.
This is sort of the point my Richardson article hinges on: More social spending can actually be a growth-accelerant. There are certain things the market can't provide efficiently, and many things the government can't provide efficiently. Only a few of those are in the overlapping part of the venn diagram. And you improve your economy -- not to mention the lives of your citizenry -- when you move goods that could be better provided by the government out of the market's grasp. In the Joseph Stiglitz talk I reference in the Richardson piece, Stiglitz said:
Yesterday, I was talking to the former Finance Minister of Sweden. And Sweden has been one of the countries that has been most successful in facing the challenges of globalization. It's a small economy, very open, with a significant manufacturing sector. In terms of some of the rhetoric that you hear in Washington and elsewhere, it should have been a disaster case. They have one of the highest tax rates. And it's not only true in Sweden: Finland and all the other Scandinavian also have very high tax rates. If you only looked at tax rates, you would say these countries would be a disaster. And we had a discussion in which the view was that their success was in spite of. No, it's not only in spite of, it was because of the high tax rates.
Why is that? It sounds counterintuitive. Well, the answer is it's how the money is spent. Again, looking at both sides of the balance sheet. It was spent in ways that led to a stronger economy, enabling the economy to face some of the challenges of globalization. The net result of this is that, for instance, Sweden and the other Scandinavian countries do much better than the United States on broader measures of success like human development indicators that look at not just GDP per capita, but also look at health and longevity in terms of labor force participation. They're doing very well.
The government can complement and enhance the market. The Right's desire to set the two in constant opposition actually holds us back.
