Are We All Europeans Now?

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Could it be that the United States is turning into another Europe in the 21st century? Not physically, of course, but culturally and ideologically. How would we know?

If anything defines Europe from Lisbon to Lodz, from Naples to Narvik, whether ruled by the Right or by the Left, it is the social democratic state. It provides and protects, taxes and distributes. And for all those lavish services, it takes in about half of the continent’s GDP — less in Germany, a bit more in France. Transfer payments in the advanced European Union economies — what the state takes from Peter to give to Paul — amount to about one-third of GDP. The transfers come in the form of pensions and unemployment benefits, housing allowances and child support, health insurance and long-term care, and subsidies to businesses big and small, as well as to filmmakers, theaters, and operas. That’s social democracy.

The United States has always stood apart from this model (Hollywood doesn’t get dollars from a “U.S. Film Board”). But the U.S. is standing firm no more. Take the period from 1996 to 2006 as a benchmark. Total government spending held steady in the low 30 percent range of GDP. Now consider 2010. Government outlays (at all levels) are nudging toward 45 percent of GDP for as far as the eye can see, which is 2014. Over at the White House, they could almost exult: “We are all Europeans now.”

Not quite, for the U.S. spends around 5 percent of GDP on defense (including Iraq and Afghanistan), and Europeans spend closer to 1 percent, so bombs and bullets cut into American social spending. But the trend is unmistakable, and it cannot be fully explained by the recent surge of stimulus spending. Look at the federal budget alone. Since the 1960s, it has usually registered in the range of 15 to 20 percent of GDP; it is slated almost to double over the next 40 years. The key driver is health care, a trend that long preceded Barack Obama and will now be accelerated by his reform.

How will this growth in the public sector change America, the “land of the free”? Karl Marx famously lectured: “Sein bestimmt das Bewusstsein” — that is, economic being determines cultural consciousness. In Europe’s munificent welfare states, it certainly has, with electorates living by the precept: “If the state gives, take; if it takes, scream.” That is not shameful but rational. Once benefits are “priced in,” they won’t be relinquished like a mess of potage. For the state, it is easier to raise taxes than to cut emoluments.

Why should Americans be different when offered the brimming chalice of new entitlements? Never mind that the sugary brew is addictive, with each entitlement, like an opiate, whetting the appetite for more. Best of all, it is “drink now, pay later.” America has had its tax revolts, but that was then. Today, taxes in California — federal, state, local, charges for health and retirement — can easily reach 50 percent at the margin. That is Paris-on-the-Pacific.

Onerous regulation is another feature of the social democratic state, and the U.S. has moved far enough in this direction to prompt an increasing number of European companies to delist from the New York Stock Exchange. Compliance costs in the U.S. are generally higher than in Europe. The number of federally appointed “czars,” who supervise and control economic activity, has risen precipitously under the Obama administration, and Washington has taken large stakes in the banking and automotive sectors. Luckily, it still takes less paperwork and time to start a new business in the U.S. than it does in the EU. On the other hand, the U.S. is far ahead in using regulation to dictate desired social outcomes, like gender and group equality, sexual behavior, and appropriate speech.

What might halt this trend? Government spending, including the servicing of an exploding public debt (this year, the deficit will reach $1.5 trillion), will hardly be reduced in this decade. Entitlements, once extended, are more difficult to pull than teeth without an anesthetic.

The issue, then, is whether Marx is right. That is, does the material “substructure” matter more than culture and history? In 1906, the German sociologist Werner Sombart published a seminal book, Why Is There No Socialism in the United States? Then as now, the U.S. was the world’s most advanced capitalist society, so it should have been, by the lights of Marxist theory, a prime candidate for the revolution. This anomaly has exercised the academic mind for a century, and the best answer remains The Liberal Tradition in America (1955) by Louis Hartz.

There is no socialism in the U.S., Hartz argued, because there was no feudalism, with its hierarchies and fealties. America is the only true child of the (Scottish-English) Enlightenment, as defined by Adam Smith, John Locke, David Hume, and Francis Hutcheson. Classical liberalism, with its belief in individualism, markets, and limited government, is the only political tradition that the United States has. A statist like Alexander Hamilton made it onto the $10 bill, but he did not prevail.

Geography made a difference, too. If you failed in one place, you moved and made your fortune a few states or territories over, no public help required. Nor could counts and kings exercise the kind of power they had in Europe as a result of tightly limited land-ownership rights. In a country where there was more land than people, rulers could not chain their subjects to the soil (with the exception of the slave-owning South). Nor did those young Americans have to look to Washington for sustenance and protection — not amid the vastness and bounty that was America. Free-holding is the best bulwark against state power — and a good substitute for support by the state.

Can American exceptionalism last? The frontier is closed, and compared to Thomas Jefferson’s swampy capital, today’s Washington is a towering behemoth. The Tea Party movement tells us, as did the “Contract with America” in 1994, that lots of Americans don’t like this colossus. They didn’t like FDR either, but they were ready to acquiesce when Lyndon B. Johnson gave them the “Great Society,” and Richard Nixon presided over yet another burst of social spending. America’s tale is a history of expansion — first of the country, then of the state.

So Werner Sombart and Louis Hartz may yet be proved wrong. When will we know? When Barack Obama or one of his successors in the White House abolishes ounces and inches in favor of grams and centimeters. Do you remember Britain’s 20-shilling pound, with 12 pence to the shilling? It’s all metric now.

Josef Joffe is the editor of Die Zeit in Hamburg and senior fellow of the Freeman Spogli Institute for International Studies and Abramowitz Fellow of the Hoover Institution, both at Stanford University.