Thursday, September 08, 2005
Land of the free?
It's funny how fashions in economic dogma change.
Not long ago, we were taught to look up to the German economic system as a model. Now, to read some commentators, you'd think that this very same system is a basket case (despite the fact that, last year, Germany overtook the USA as the world's largest exporter).
Next, it was the so-called 'tiger economies' of the Far East that we were expected to worship. Then a big recession hit Japan, from which it has still not recovered, and no-one talks about the 'tiger economies' any more.
The current economic mode du jour is the USA. Behind the impressive growth rates, however, lurk some less impressive statistics.
Paychecks that rose with productivity gains through the middle decades of the 20th century no longer do so. Since the early 1970's, national product per person has grown more than 75 percent, but the median wage of male workers has risen barely two cents, adjusted for inflation, from $15.24 in 1973 to just $15.26 last year. Family incomes are up only because wives have gone into paid work and everyone's putting in more hours. Job loss often means loss of health insurance and a tax-advantaged pension.(Robert B Reich, New York Times, 3 September 2005).
The U.S. Census Bureau reported a few days ago that the poverty rate rose again last year, with 1.1 million more Americans living in poverty in 2004 than a year earlier. After declining sharply under Bill Clinton, the number of poor people has now risen 17 percent under Mr. Bush.(Nicholas D Kristof, New York Times, 6 September 2005).
If it's shameful that we have bloated corpses on New Orleans streets, it's even more disgraceful that the infant mortality rate in America's capital is twice as high as in China's capital. That's right - the number of babies who died before their first birthdays amounted to 11.5 per thousand live births in 2002 in Washington, compared with 4.6 in Beijing.
Indeed, according to the United Nations Development Program, an African-American baby in Washington has less chance of surviving its first year than a baby born in urban parts of the state of Kerala in India.
Under Mr. Bush, the national infant mortality rate has risen for the first time since 1958. The U.S. ranks 43rd in the world in infant mortality, according to the C.I.A.'s World Factbook; if we could reach the level of Singapore, ranked No. 1, we would save 18,900 children's lives each year.
So in some ways the poor children evacuated from New Orleans are the lucky ones because they may now get checkups and vaccinations. Nationally, 29 percent of children had no health insurance at some point in the last 12 months, and many get neither checkups nor vaccinations. On immunizations, the U.S. ranks 84th for measles and 89th for polio.
Well at least President Bush says he "feels their pain". I wonder, do the people in Britain who advocate copying his neo-liberal economic policies feel anything at all?
The article points rather to a problem with social policy, doesn´t it?
We are due to change our minds about germany (and therefore to some extent about the eurozone). My impression is that the US and UK have tried to ward of recession by continuing to encourage consumer spending. The Germans have failed to maintain consumer spending and have had a recession. Individuals have repaired their balance sheets (saved more, paid off debt) and industry is coming out looking in good shape.
In economic terms, I'm not sure which looks more neo-liberal to be honest.
Bush has presided over a significant increase in spending across the board. He has expanded Clinton-era medical benefits, increased education funding and also approved countless other minor spending increases (many of which are essentially job-creation schemes). In addition, he has attempted to stimulate the economy by cutting taxes and increasing the deficit.
Which of these policies do you disagree with?
I'm by no means a supporter of Bush, but I think that (within the limited role of the President - the US is a federal state after all) he has spent more than most Republicans would have expected. He has his flaws, but an overly tight grip on the purse-strings is not one of them.
It might be better to question just what the US govt. spends its existing budget on (clue: Iraq). But that would have nothing to do with questions of economic policy.
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