Social Democratic America (?)

Lane Kenworthy has just published two interesting documents on "Social Democratic America", with his ideas further summarized in a Foreign Affairs article.

In this one, he tackles the subject of income inequality, explains why it matters (including its impact on fairness, on equality of opportunity, on health,...) and should be reduced, but also why it should not be first priority of the US government. Among other things, he lists all the claims made against income inequality (including claims made by Joseph Stiglitz, that inequality is bad for growth and creates bubbles) and loks at the (lack of) empirical evidence. His approach is definitely not very sophisticated from an econometric viewpoint, but I like the way he sweeps the data/literature and summarizes it (keeping in mind he is no economist but a sociologist...)

In this second document (the first chapter of his recently published book), he takes a larger view and advocates the enlargement of social insurance programs in the US. His description of most public services as social insurance programs is very convincing and reminds me of Paul Krugman's quip that the US federal government is a gigantic insurance company with an army on the side.

I don't agree with all of the very extensive list of new social programs he recommends ("government as employer of last resort" ???), but I am very sympathetic to his argument that the larger economic risks the US population is facing (due to globalization, etc.) should call for a wider and better social safety net. On the political side, his argument is that the increased riskiness of economic life will translate into a demand by the population for more social protection, which will in turn generate the adoption in Congress of more social insurance programs. I am doubtful about the two steps in his arguments, mainly because they don't take (voters and parties) ideology into account, including the fact that very rich individuals have both the incentives and the means to try and influence voters against introducing new social programs (more on this in the next blog).

Anyway, I like his analysis, his long term perspective and a viewpoint stressing, in his words, that "Government Social Programs Have Economic costs, but Also Benefits"!