2011-04-13

I don't want you to have what I don't have

People in Europe have been known to protest when they feel that the government is taking something away from them. They might storm the streets and burn cars, as in the case of the French government raising the retirement age from 60 to 62 in October 2010. I'll admit I've had a laugh at Europe's expense on several occasions, for this type of behavior. We Americans might roll our eyes at Europe even as we are just as extreme, but in the opposite direction. We strip public workers of their benefits and collective bargaining rights, and we defend the deed by saying they get paid way too much, using typical salary estimates of $50,000-$80,000, including benefits.

Europe says, "You're giving something to that guy that you're not giving to me; give it to me, too," while the U.S. says, "You're giving something to that guy that you're not giving to me; take it away from him." Which statement, in all its generality, is more selfish or naïve?

The result of the European view is social uprising, while the result of the American view is the widening of the gap between the upper and lower/middle classes. An article from MSNBC gives much more detail from an OECD study, including such statistics as: America's top 10% earners are #1 in the rankings while the bottom 10% are well below average, the U.S. is ranked ahead of only Mexico and Turkey for economic equality, and France is one of the few countries whose equality has improved over the past 20 years.

John Stewart and The Daily Show have demonstrated the selfish hypocrisy of related conservative politics in the U.S., whose most vocal members and media are dominated by people with a considerable amount of money (one says that an income of $250,000 is almost poverty):

2011-04-11

More on regressive labor politics in the U.S.

I'd like to expand [even] further on my [nearly-epic] last blog post that attempted to explain the huge differences between the level of job and social benefits in most of Europe and in the U.S.A. My thesis was that the differences arose because of varying fundamental perceptions of what is "normal", perceptions that are aided in large part by major media. The U.S. spent 40 years opposed to every aspect of communism, whereas Europe---living next to communism itself---could tell the good parts from the bad. Even this seemingly small difference in political sentiment, coupled with the deregulation of media in the 80s left the U.S. with lingering anti-socialist feelings and very few unbiased media to give the facts. The whole chain of events is very circumstantial---I know---but I think it played a part, if not a large one, in creating our current level of benefits and expectations of benefits.

I find it sad and scary that, as I mentioned in the last post, we in the U.S. not only have far fewer benefits for citizens than the EU---whose economy has trailed the U.S. in size, and whose per-capita GDP still trails the U.S.---but we also are going in the opposite direction. The strongest recent examples of this are in Wisconsin and Ohio, as well as other states where the governors are working hard to cut benefits for public employees and even to take away their collective bargaining rights. It seems to me that the right to negotiate---also as a group---is a basic right that should not be able to be removed, and I haven't yet found any good arguments for taking the rights away except (1) saving money and (2) giving more power to employers, possibly to create jobs.

Creating more jobs is almost always good. More people get paid and more people have money to spend, and so forth. But, it's as if Governors Walker (WI) and Kasich (OH), along with many other political conservatives, think that the cure for every personal economic ailment from poverty to lack of affordable health care is, "Get a job and call me in the morning." But, especially in a time when jobs are hard to find, and a good public job is even harder to find thanks to these two, it benefits us to take care of those people who are left out of the market. The vast majority of Americans have jobs; the vast majority of Americans have insurance, and a little bank account and a car and a computer, but what about those who don't? What if you didn't? What if your employer chose to cut costs and you along with it? I have the feeling that few employed people seriously consider this question before they vote.

I'm having trouble finding a good statistic for the percentage of people who are unemployed at some point in their lifetime, so I'll look at a hypothetical case here. Right now, the unemployment rate is close to 9%; historically it's been a bit lower, maybe 5-6%. That means that, on average, an American has a 1 in 10 to 1 in 20 chance of being unemployed at any given time. Right, you might think, most of these people are lazy and uneducated; I'm educated, so my chances are much lower. That's probably true, but how about this: assuming that the unemployment rate among educated, non-lazy people like you is only 1% for any given year, during a 40-year career you have a [1-0.99^40 = ] 33% chance of being unemployed during at least one of those years. If that theoretical rate rises to 2%, the chance is 55%. Wouldn't you like to know that you could survive that year (or longer) even if you're young and have very little savings, or if you're one of the usually older crowd who is "uninsurable" unless you are part of an employer health plan?

The chance is high that you---even as an intelligent, hard-working individual---at some point in your life will be stuck in a bad employment situation, be lacking adequate insurance, or be out of work with very little help from the economy that you helped for many years. These are problems that social benefits ease, whether through direct help or through regulation. To vote against an adequate safety net for unfortunate people is to be selfish, and not only selfish in the sense of not helping other people but now-selfish in the sense that you are not helping yourself (in a different time and place) if you are ever in need of help.

The point is that, in a country as developed as the U.S., a person's quality of life should not depend on them having a job every single month of the year. Even if some people cheat the system and take more benefits than they deserve, the rest of us can sleep easier knowing that if we get fired, or if we are in a horrible job situation and need to quit, we can survive the next few months without having to sell a house or make drastic changes to our lifestyle. Also, women should be allowed to have babies without fear of negative discrimination before or after the birth. Two weeks or less of vacation per year is just ridiculous (see my last post). Lastly and most relevant right now, a person who has done everything right---worked hard, saved money, etc---should not have to make major life decisions---employment, relocation, marriage, etc---based on available insurance or lack thereof. A job should not be the only affordable insurance policy for anyone who works hard or who is in retirement. The only natural connection a job has with insurance is that employees, when lumped together, simplify the actuarial calculations. It is sad---and to me unacceptable---that hard-working, self-employed people or small business owners have few affordable insurance options.

This is where the government is supposed to step in. The government should ensure that people are not being mistreated by corporations or held hostage by cheaper insurance plans. Women should be able to have babies and then return to their jobs without fear of being fired or demoted. Employees should have more than 4% of their weeks at their own leisure. Why are we heading back towards Industrial Age labor practices?

We all know the role of government is to help its people in one way or another. Government is not selfish; in fact, it is the opposite of selfish. It does for the people what the people could not do for themselves if acting individually. Therefore, as George Soros said in a lecture in October 2009 (see The Soros Lectures, 2009)

...people should separate their role as market participants from their role as political participants. As market participants we ought to pursue our self interest; as participants in the political process we ought to be guided by the public interest. The justification for this rule is also rather simple. In conditions close to perfect competition no single competitor can affect the outcome; therefore individual market decisions have no effect on social conditions, whether or not one cares about the common good. But political decisions do affect social conditions; therefore it makes all the difference whether or not they serve the public interest.

Of course, as Soros goes on to say, there is no objective "best" political decision, so the issue is not cut and dry. However, if everyone attempted to follow Soros' above rule, regardless of their political views, we would be doing much better than we are now. No more "pork-barrel", no more "earmarks", and no more rich people dominating campaign contributions, lobbying, and media broadcasting. That's something to think about the next time you're in the voting booth. If I might shamelessly twist the words of John F. Kennedy: vote not for something your country can do for you---voting unselfishly is something you can do for your country.

2011-04-04

Five weeks vacation: The European standard vs. The American Dream

I recently came across an interesting question on Twitter. I know: who'd have thought that there was something interesting to read on Twitter? But, a tweeter and blogger by the nickname of Hipstercrite asked why the U.S. doesn't generally have the same level of employee benefits---such as vacation time and maternity leave---as most European countries. Sure, this is an old question, but an interesting one nonetheless. And, now that I've spent over four years living in the heart of middle Europe, Vienna, and now that I'm paying a lot more attention to politics and economics on both sides of the Atlantic, I feel that I am more qualified than ever (if not actually qualified) to answer her question. Here goes:

First of all, just to make it clear that benefits are indeed different between Europe and the U.S.A., let me say that all EU countries have a minimum of four weeks (20 days) vacation per year, as mandated by the governments. A survey from a few years ago showed that Americans with 25 years of service didn't even have that much vacation, on average, and entry-level people have less than half of that (see [1]). Most Americans I know were impressed with the 13 days of vacation I got with my old government job. Here in Austria, everybody gets 25 days. Everybody. There are also pregnant-women-friendly laws for maternity leave, but I'm not as familiar with those. Suffice it to say that your employer has to let you stay at home for a period of a few months, has to take you back once that period is over, and can't fire you for any of these reasons. Unemployment benefits are also better "here in Europe" as far as I know.

In searching for the main causes of these differences, we could conclude that Europeans and Americans have different dispositions, but I think there are reasons for that, too, if that is indeed the case. The U.S.A. was, of course, settled and founded on the premise that every person should be able to determine his or her future---though this premise was refuted by the squashing of attempted secessions of the South and Texas, though to the U.S.A.'s defense, larger powers were at work. Thus, libertarianism seems to be a natural form of government for a people that rejoice in freedom of speech, freedom of religion, and the right to bear arms. In a sense, this is the path that the U.S.A. has chosen. However, if I had a dime (better make it a dollar) for every time someone said to me, "Wow... five weeks of vacation. That must be nice," I'd have a lot more time to write blog posts. I have to ask myself this: why is it that everyone seems to want five weeks of vacation, etc., but in the U.S. no one has it? I know as if it were fact, that if we could somehow orchestrate a nationwide strike across all jobs, we could get five weeks of vacation for everyone within a week. That is, of course, impossible, and if we do ever so much vacation, it will be through slow and steady legislative advances. So, why aren't we headed in the right direction?

With regard to this issue, we live in an interesting time, as in the past few months we have seen not only that the American workplace is different from the European workplace, but that it is in fact going in the opposite direction altogether. The current (and new) governors of Wisconsin and Ohio---Scott Walker and John Kasich, respectively---among others have recently been stripping public workers of more basic rights and privileges, the foremost being the right to collectively bargain with employers. Disbanding public unions as they have done (though Walker hasn't been completely successful yet) takes away much of the powers workers could use to negotiate for such benefits as more vacation time and better maternity leave provisions. With collective bargaining rights gone, many other benefits will likely disappear also.

So, Wisconsin and Ohio show that, at least in some parts, the U.S.A. is increasingly unfriendly to workers when compared to similarly "developed" countries in Europe. That, I believe, is due to the heavy emphasis that American politics places on money. Both Walker and Kasich ran their 2010 campaigns nearly completely on a platform of budget reform and fear of budgetary problems as well as a promise to create jobs within their respective states. Basically, they were elected because they said they would (1) take better care of the state's money and (2) encourage employers to give money to more people. Perhaps they can achieve both of these goals; only time will tell. But, from the actions of both of these new governors, it's obvious that the money matters more than the people. It's obvious because they are hurting many people directly---by taking away a basic right to negotiate---while promising to help only indirectly---by coaxing businesses to create more jobs. Many people will argue that state budgets require such dramatic changes to avoid bankruptcy; if so, then why are tax increases completely out of the question?

But people voted for this, right? People voted for fiscal conservatism, even if many of them regret it now, and they will vote for it again in the future. So, we could conclude that money matters more to Americans than Europeans, even if it comes at the expense of social benefits such as job security, collective bargaining rights, vacation time, and whatnot. That is one possible explanation, but I've lived in Vienna long enough to believe that there's no fundamental difference between the ideals of Austrians and the ideals of Americans. It's hard to prove, and I'm relying more on subjective judgments than objective ones, but my view is supported by the Viennese people's renowned willingness to complain, something that happens quite often about money. I'll assume based on personal experience that Austrians (likewise Europeans in general) think and talk about money as often as and in the same manner as Americans.

The big difference, then, between Europeans and Americans, is not in how we think or what we believe is good, but in what we expect or what we believe to be normal. Americans, in general, believe that we are the most powerful country and have the largest economy, and that last century we beat communism, and socialism along with it (the beasts!), and Americans believe that democracy and freedom are the only righteous path into the future and that it is our duty to help those who can't help themselves. All of these may be true and good to some extent, but a lot of Americans---if not a majority---also believe that financial markets don't need regulatory or oversight changes despite the 2007-2008 worldwide problems, and that a public or semi-public health care system wouldn't benefit a large number of Americans, despite its success in almost all other developed countries [2]. Europeans believe neither of these things.

No matter what your political orientation, it is obvious that where you are born or where you live has a huge influence on what you perceive to be normal. The next question is: what causes these differences between countries or continents? Also regardless of political orientation, clearly American laws are in general much friendlier to [big] businesses than European laws. This is not to say they are less friendly to non-business entities, though that might be the case. (Also, note that "outsourcing" due to lower labor costs elsewhere doesn't contradict this.)

So, to summarize (this post is a lot longer than I expected it to be, but there's still a bit left): the main difference in this case is that American politics favors money and [big] business more than European politics, each side believes that this is normal, and this belief comes from the environment. There must be differences between the two environments.

Let's imagine two countries, one is "normal" and the other is different in the following ways: money and [big] businesses have a larger influence on the media, and thus on voters; money could buy more political power through lobbyists and indirect or even illegal bribes. Would these differences be enough to skew the law unfairly in favor of [big] business and people with money in that second country? Well, the U.S.A. is that second country.

In the case of bribes, lobbying, and illegal legislative practices, Americans need look no further than the cases of Jack Abramoff and Charlie Rangel, among others, though I admit there are also European politicians that are dishonest and selfish. But media is a different issue. The two major media conglomerates in Germany (ARD and ZDF) account for over 25% of viewers (see [3] below) and are public broadcasters. Government-sponsored media are popular all across Europe, but not in the U.S., where not even the Public Broadcasting Service is funded by public money. A timeline of regulation and subsequent de-regulation (starting in 1981) of media can be found in [4] below. Media in the U.S. is effectively unregulated, private, and controlled by people and businesses with lots of money. A significant proportion of the media in Europe, on the other hand, are partially controlled by the government, and are thus---when they are disjoint from the current administration---designed to serve the public interest for relatively unbiased reporting of information. When all news outlets are controlled entirely and directly by rich people and businesses, those media outlets are bound to promote the interests of rich people and businesses.

That's my explanation. That's why vacation time and maternity leave benefits aren't as good in the U.S. Our major media outlets are completely private and unregulated, and thus their owners, who are businesses with quite a bit of money, promote and lobby for laws that favor businesses over the misled average voter, who is likely voting against his own long-term interests because he is being misled.

It doesn't help that our foreign relations and media in the not-so-distant past were dominated by Cold-War-era sentiment such that capitalism such the victor, and communism and socialism became not only losers but also bad words. What's somewhat ironic and sad is that Americans are often the biggest fans of capitalism and market fundamentalism, mechanisms that, along with deregulation, guarantee that media will promote their own interests and gradually manipulate and mislead large portions of the public. (And, yes, portions of the public are easily misled. See [5] below.)

So, if the reason why work-related benefits are different between the U.S. and Europe are the different leanings of the voters, which are heavily influenced by the biased media, who fault is it that the media are biased? Well, to answer my own question for the last time, I believe that the reason the media are biased is either pure chance (events and administrations just happened to go that direction), because of the free-wheeling, self-determining ideals that Americans have held from the very beginning, or most likely because of the Cold War. I think we, as a country, did anything and everything not to be communist between the years of 1945 and 1990, and that meant free markets in nearly every sense of the term, including privatization of media.

It's hard to say what the solution to this problem---if this is indeed a problem---might be. Media regulation might be a good idea, at least a crackdown on the lying, intentional misleading, and exaggeration (see [6] and [7]) in the mainstream media. It's not that opinions shouldn't be allowed, but some of these "reporters"present it as if it were fact when it's obviously not. Another, more immediate solution is to consider all available information when making decisions, and to help others to do so. We have to acknowledge that our media are biased and try to separate the facts from the lies. It's sometimes difficult, but all that is required is a little effort and independent thinking. Reading some entries in [7] is a good start in learning to recognize bad journalism.


Sources:
[4] Timeline of major media regulation in the U.S.


Futher reading: