Bulletproofing kit for cars woos middle class in Brazil – BBC News 

Guy Trebay had a story in the NYT on 4 August 2022.  “Seeking Flair At the Gate: A touch of fashion stands out inside airports, where dressing down is so rampant.  Some miss travel’s luster before the onslaught of athleisure.”  How about before the onslaught of flight cancellations, shoving in more rows of seats per plane, endless security lines, and baggage fees?  Thing is, aspiring passengers need to start treating air travel like what it has become.  Think about the news-value of lines of thousands of people all dressed this way.   

https://collections.museumsvictoria.com.au/items/1718481

            Riffing on Edward Gibbon, Walter Russell Mead judges that “At the beginning of the 21^st Century, the world seemed more peaceful and American power more solidly entrenched than ever before.”[1]  With the Soviet Union defeated and its empire dissolved, with the whole laughable idea of Communism discredited even in the eyes of leftist academics, the Western leaders tried to understand the new world.  Mead argues persuasively that American leaders believed that “traditional forms of great-power competition and balance-of-power diplomacy” had done their duty, had their day, and now could take up the rocker at some Old Soldiers’ Home,[2] to be wheeled-out only for July 4^th celebrations.  America appeared the unchallenged and unchallengeable leader of the world, the “last man standing.”  So it would always remain. 

In place of the “long twilight struggle”[3] against aggressive tyrannies, other issues had to be addressed.  The nation-state, it was argued, served well for the solution of national problems.  New problems, however, were trans-national.  The climate know no borders.  If global warming continues unchecked, we may all fry like eggs.  Population and wealth imbalances between the Global North and the Global South spur large-scale migration that can test, even overwhelm, traditional national boundaries.  Western liberal ideals have always been universal in their claims.[4]  Now the duty of American foreign policy lay in seeing these rights extended to all peoples.[5]  Finally, the means to all these ends lay in the creation of ever more powerful international institutions and ever-more comprehensive international law. 

Then things blew up in the Middle East with the 9/11 attacks, the invasions of Afghanistan and Iraq, and Iranian assertiveness. In Afghanistan and Iraq, the invasions morphed into attempts at nation-building that merely set off gory civil wars between American clients and American opponents.  Then American leaders failed to act in any effective way against Vladimir Putin’s effort to resurrect Russian power in the former Soviet Empire.  On top of this, the same leaders grossly misjudged the future development of China.  They appear to have believed that China, could be integrated into an American-designed global economy as a willing partner.   

Mead sees in all of this a “disastrous mix of mission creep and strategic incompetence.”  He wants foreign policy elites to have a “road to Damascus” experience.  He wants them to turn back to great-power politics.  There is a lot of good sense in this analysis.  However, the Afghan and Iraq wars have been wound up with Americans now (hopefully) vaccinated against more nation-building.  Putin is one man, not a global movement, and nuclear weapons alone make Russia a serious power.  The truth is that both China and climate change are grave problems that demand global solutions.  Those solutions can be both great-power politics and international action. 

[1] Walter Russell Mead, “A Feckless Foreign Policy’s Legacy,” WSJ, 19 July 2022.  See Gibbon, The Decline and Fall of the Roman Empire, Vol. I, Chapter One, “The Extent of the Empire in the Age of the Antonines,” Introduction. 

[2] Said home to be located in coastal South Carolina, close to excellent golf courses. 

[3] I know, at this point your cliché-o-meter is running wild.  Sorry.   

[4] “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights,…”. 

[5] One very real blessing of our liberty has been the continual extension of rights to marginalized groups and in the expansion of the list of rights.  So I’m OK with flying the gay flag outside city hall.  Whether we should fly it over the US embassy in a conservative foreign country is another issue. 

            Different national cultures extend beyond welfare provision.  Historically, the American government paid unemployment benefits directly to displaced workers, rather than to companies experiencing a down-turn in business.  Europe, in contrast, tended to pay companies to retain their workers during a down-turn.  From some sort of bird’s-eye view, the very dynamic American economy tended to shift assets from dying industries to growing industries, while the European economy labored under the burden of assets trapped in old industries.[1] 

            The Covid pandemic imposed an odd sort of shock on the world economy.  The disruption did not spring from serious economic problems.[2]  Serious economic problems sprang from the virus and from government responses to the emergency.  The economies could rebound once adequate responses had developed (vaccines, testing).  In the meantime, governments pumped in money.  In Europe, this took the form of governments paying companies which “furloughed” their workers.  In the US it mostly took the form of expanded and extended unemployment benefits, along with Economic Impact Payments. 

The American stock markets soared.[3]  Since, just over half of Americans own stock (mostly through their retirement plans), net worth and market income increased for many people.  For a bunch of older, but still working-age Americans, an early retirement beckoned.  Many others built up their savings to the point where they could ride out extended unemployment.  On top of this, the United States suffered a much worse hit per capita from Covid than did Europe, Japan, or Canada.[4]  This may have made many Americans skittish about going back to work if they don’t absolutely have to.  Many others got sick and had to call in sick to work. 

In any event, America’s labor participation rate has not recovered as well as have either other economic indicators or the participation rates in other countries.  With a booming economy, American employers are not able to find enough workers to fill the jobs that need doing. 

What to do?  First, work the people you do have longer and harder.  The number of hours worked actually increased from late 2019 to mid-2021.  Second, they have raised the pay for those who do work in hopes of pulling more workers back into paid work.  Labor costs have risen more in the United States than in other countries.  Third, one would expect employers to pursue mechanization as much as possible.  Will this close off the possibility of return to work for many of the now-unemployed?  Or will economic growth and innovation provide new jobs for those who want them? 

In the meantime, while excess money creation provides the basic force driving the inflation,[5] the supply-chain disruptions, the war in Ukraine, and labor shortages are making worse that basic inflation.  In turn, the inflation is providing ammo for those who oppose plans for a further expansion of the social safety net to more closely resemble that of Europe. 

[1] Greg Ip, “The Mystery of Low U.S. Labor Participation,” WSJ, 5-6 February2022. 

[2] Like, say, the collapse of a housing bubble with a devastating impact on financial systems. 

[3] I realize that I’m supposed to refer only to the S&P, but the Dow went from 26,000 in July 2020 to 36,000 in January 2022. 

[4] The death rate per 100,000 people: US, 311; Italy, 281; UK, 269; France, 233; Germany, 172; Canada, 114; and Japan, 25.  See: Mortality Analyses – Johns Hopkins Coronavirus Resource Center (jhu.edu) 

[5] The basic money supply, the M2, rose from about $15 trillion in 2020 to about $22 trillion in 2022. 

In arguing for his Social Security program, Franklin D. Roosevelt asserted that taxes paid by all beneficiaries would “give contributors a legal, moral, and political right to collect their pensions.”  Americans once accepted that rationale.  Does that rationale still command assent?[1] 

            The welfare state grew by stages in response to new developments in society.  It can be said to have begun in the later 19^th Century when European industrial societies responded to a combination of new needs and political conditions.[2]  The crises of the Great Depression and the Second World War generally led to an expansion of services provided to citizens and a more aggressive management of the economy to achieve high employment.  A third great expansion began in the 1960s and 1970s to both share out increased prosperity and to respond to new issues.[3]  In the course of the second and third waves of the welfare state, significant differences emerged between the United States and other “advanced” nations. 

            Many “advanced” countries had a problem with child poverty.  They addressed the problem with direct government payments to families with children.  Many “advanced” countries had a problem with what to do when pregnant women left the work force.  They addressed it by paying for a median of sixteen weeks of maternity leave.  Many “advanced” countries accepted the need to provide day-care (so that women could return to work) and early childhood education.  On average, they pay about $5,200 per child per year. 

            In contrast, among “advanced” countries, the United States spends the third lowest share of Gross Domestic Product (GDP) on direct benefits to families with children; the US doesn’t offer paid maternity leave; the temporary Covid emergency was the first time the US offered paid sick leave; and US public spending on child-care and early education is about half of the median in “advanced” countries.  It’s probably not a coincidence that the US has a high child-poverty rate and a lower rate of female participation in the economy. 

            How do other “advanced” countries pay for this generous social provision?  Ordinary people pay far higher taxes than is the case in the United States.  In Germany, Italy, and France, it is 47-49 percent of total compensation.  Other countries tax consumption through a Value Added Tax (V.A.T.).  On top of this, most “advanced” countries impose carbon taxes.[4]   In the United States, people pay 30 percent of total compensation in taxes.  At the national level, the US doesn’t tax consumption.  The US doesn’t tax carbon emissions.   

            Perhaps one explanation lies in the different economic histories of the US and Western Europe.  In Western European countries, much of the welfare state came into being after the Second World War.  Shared hardships and the general discrediting of conservative political parties allowed the European left and center to forge new institutions.  In contrast, the US enjoyed widely shared prosperity until the 1980s.  So the US is only now trying to figure out the issues.  It is doing after decades of a high-consumption, low-responsibility, weak solidarity mind-set. 

[1] Greg Ip, “Echo of Europe’s Benefits, Not Taxes,” WSJ, 30 November 2021. 

[2] The historian John McKay called this the “responsive national state.”  Its common features included public schools, urban reconstruction, and social insurance for the industrial working class. 

[3] For example, medicine made dramatic advances, but the fruits of those advances could be too expensive for the individual to pay.  So, Medicare and Medicaid. 

[4] Ip describes carbon taxes as “the most efficient way to curb fuel use and spur increased investment in renewables.”