Date: Fri, 23 Feb 1996 15:14:59 -0800
From: D Shniad <shniad@sfu.ca>
Reply-To: pen-l@anthrax.ecst.csuchico.edu To: Multiple recipients of list <pen-l@anthrax.ecst.csuchico.edu> Subject: [PEN-L:3127] Lester Thurow on American individualism

Los Angeles Times January 26, 1996

PERSPECTIVE ON CAPITALISM:

AMERICA REVERTS TO THE 19TH CENTURY

        The creed of individualism meekly accepts the cruel new economic 
        Darwinism where other people -- the French -- fight back.

By Lester C. Thurow

Everywhere in the wealthy industrial world, governments are facing enormous economic pressures. Global competition from equally skilled but lower-waged workers in the Second and Third worlds pushes wages down. A skill-intensive shift in technology is creating a group of low-skilled First World citizens who cannot earn First World wages. Expenditures explode as governments try to finance the generous pensions and health care that the elderly have come to expect. Tax revenue lags far behind because of the slow growth that central banks impose to fight inflation. While the economic pressures are identical, different social and cultural institutions and different political attitudes are producing very different effects within the wealthy industrial world. In the United States, real wages have fallen for 80% of the work force and the corporate sector has massively downsized. In the public sector, both President Clinton and the Republican majority in Congress are proposing large cuts in the social welfare system with only minor disagreements about how large these cuts will be for the elderly.
In contrast, look at what happened in France in the past few months. A new conservative government with a large parliamentary majority proposed what were very minor cuts in pensions and health care provisions for public workers and very minor downsizings in some of the state industries, such as railroads, to reduce France's budget deficit. Those affected took to the streets, struck, snarled traffic and did everything they could to disrupt the French economy. The public was deeply inconvenienced, but opinion polls showed popular support for the protesters. The angry public employees were not the political supporters of the parties in power, yet the pressures they were able to generate became so intense that the government eventually withdrew all of its proposed cutbacks.
A year or two earlier, the same thing happened at Air France, when it proposed a downsizing plan very similar to those implemented in America. The workers actively rebelled and the downsizing plan was withdrawn.
Compare that with what happened when President Reagan fired the air traffic controllers: Nothing.
Today, big, profitable companies that could easily pay employees their current wages and fringe benefits announce huge downsizings (AT&T, with a 40,000 person reduction, being only the most recent). What happens? Nothing.
The French exhibit social solidarity and fight back while Americans meekly accept their individual fates.
Reading about the successes of French workers, Americans comfort themselves with the idea that the French are being unreasonable and will eventually have to face the facts of global competition, technologies that no longer need unskilled workers and slow growth, and accept it as Americans have already. Even if that belief is true, every year that the demanded cutbacks can be delayed is one more year of good living for the French work force. Being the first to accept austerity is not smart unless it leads to something better later, and no one is promising Americans anything better.
The other American response is to point out that the United States has created a lot more jobs in the past quarter of a century than has Europe. That is certainly true, but countries with negative population growth like France do not have to create the almost 40 million new jobs that the United States has created. Official unemployment in Europe is almost double America's rate, but much of that difference is due to the way that Americans keep their unemployment numbers. Part-time workers who want full-time jobs (there are 4.5 million of them), for example, are counted as employed.
Unemployment benefits in much of Europe, certainly in France, are also higher than what one would earn in a minimum-wage job in the United States. As a result, France's unemployed enjoy a higher standard of living than many of those who got one of America's new jobs. A new job is a good thing only if it raises the worker's standard of living. The bottom line is simple. If you are one of those American workers who has suffered from downsizing or reduced real wages, you clearly would be better off if you lived in France. If one asks why the American and French reactions are so different, there is a simple answer. The two have very different beliefs about the roles played by the individual and the society in determining individual success or failure. Americans take individualism seriously. They are personally responsible for their own failures. They have no right to expect help from others. Anything given by others is an act of charity, not required, and ultimately demeaning to those who get it. The French believe that much of the success or failure of life is caused by social organization. If something goes wrong in their lives, they are not necessarily to blame. Society hasn't done what it should have done -- acted to create the condition and structures to improve their chances to succeed. Put bluntly, the French simply don't believe in laissez-faire. Economic conditions are not weather conditions that must be accepted. They are man-made and can be altered. Because of American beliefs in individual responsibility to the exclusion of all else, America leads in rolling back the advances of the social welfare state even though social welfare is far less advanced in America than elsewhere. Since the Great Depression, Americans, like those in the rest of the wealthy industrial world, have come to expect that government should use educational programs to narrow earnings gaps and provide a social safety net for those the private economy does not want_the sick, the old, the unemployed. But under the proposals now being debated in Washington, all of that is to change. America seems poised to go back to a l9th century variant of capitalism. Then, the English philosopher Herbert Spencer formulated a concept he called "survival of the fittest" capitalism (a phrase that Darwin eventually borrowed to use in his explanations of evolution). Spencer believed that it was the duty of the economically strong to drive the economically weak into distinction. That drive was in fact the secret of capitalism's strength. It eliminated the weak. Spencer created the eugenics movement to stop the unfit from reproducing because he believed that this was simply the most humane way to do what the economy would do in a more brutal way if left to itself. In Spencer's view, all remedial social welfare measures simply prolonged and expanded human agony by increasing the population who would eventually die of starvation.
The GOP's "contract with America", is very Spencerian in tone and offers a return to "survival of the fittest" capitalism. Many of its advocates are, of course, less honest than Spencer, denying that anyone will starve to death. In their view, no social safety net is necessary, because if the social welfare system is taken away, no one will fall off the economic trapeze. If individuals are forced to face the reality of starvation, everyone will knuckle down to work. Fear will make them work so hard, hold on so tight, that they won't fall off.
Spencer's views that individual defects lead to economic inadequacies that cannot be corrected by social actions are mirrored today in books such as "The Bell Curve," which suggests racial inferiority. They preach that those at the bottom of the economic system both deserve to be there and cannot be helped because of their personal inadequacies.
No one has ever tried survival-of-the-fittest capitalism for any extended period of time in the modern era. For social scientists, it will be an interesting experiment. For those being experimented upon, it will be painful. For those interested in social stability, the risks are high.

Lester C. Thurow, professor of management and economics at MIT, is the author of "The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World," to be published in March.