American Dream vs European Welfare State

By Piera Sciama et Tanguy Séné | 6 November 2012

To quote this document: Piera Sciama et Tanguy Séné, “American Dream vs European Welfare State”, Nouvelle Europe [en ligne], Tuesday 6 November 2012, http://www.nouvelle-europe.eu/node/1576, displayed on 14 December 2017

“The European welfare is dead”: this catastrophic declaration can be read in some European media, mostly in American media, and is being repeated by some American scholars since the nineties. This strong criticism seems also to reveal and even justify a certain rejection of the welfare state in the United States. Despite some evolution since the Clinton era and a revitalisation during the Obama administration, the forces pushing against its development seem to remain strong, using the media as its main support.

 

A revitalization of the welfare debate, the influence of Barack Obama

During the presidential debate, the welfare state became a hot topic with true and contestable facts put on the table. Mitt Romney for example affirmed that 47% of Americans were assisted people dependent on welfare and would consequently vote for Obama.Despite the fact that it is controversial, this affirmation indirectly reveals president Obama’s particular view on the welfare state, which is challenged by some sectors of the American society. Indeed, the president tends to recall its utility and push for its development. Interestingly, although some argue the contrary, Obama’s view of the welfare is compatible with the American dream.

The president has affirmed several times (check ontheissues.org) that although each one should make its efforts to achieve a higher living standard, some are unfairly not given all the tools and all the skills needed to achieve. The welfare state is thus meant to improve the equality of citizens without challenging the American dream, on the contrary, giving all citizens the opportunity to pursue it. Against the fear that the welfare state will trigger the debt, the president reminds the benefits are attached to a work obligation. More than giving alms, it is a question of supporting the most fragile, which is in complete accordance with the values of responsibility and opportunity defended by Americans.

Moreover, it is important to remember that the most disadvantaged come from “ethnic minorities” and that the American dream is incompatible with ethnic determinism: all Americans are equal and should have equal opportunities independently of their religious or ethnic background. Finally, investing in the welfare state is investing in the future and fostering intergenerational solidarity. Despite this coherent discourse, it seems difficult to change Americans' suspicions towards the welfare state and especially towards one that is based on the European model, violently criticized in the media.

The challenges of reinforcing the welfare state in the United States

According to Gornick and Meyers (2001) some historical and political factors prevent the institution of an extensive system of welfare state in the United States: the reliance on local and private service, the absence of a labour/social democratic party, the weakness of labour unions in bargaining, the rejection of state intervention and the preference for market based mechanisms

Nonetheless, some evolution was perceivable in the American welfare system and received even the support of some conservatives. Findings by Michael J New (2002) from the Cato Institute demonstrate that the welfare reform launched by Clinton with the Personal Responsibility and Work Opportunity Act in 1996 has been effective in reducing poverty as well as the dependence of individuals on the welfare state. Furthermore, the author found that what influenced such an outcome wasn’t that much the economic growth during the nineties, but mainly the sanctioning policies applied to welfare recipients: “The number of people who are receiving welfare has been cut by nearly 60 percent and both poverty and hunger have declined” (p.9).

Nevertheless, such reasoning seems invalid nowadays, as the level of poverty has risen considerably. According to the US Census, in 2011 15.9% of the population (46.2 million Americans) lived in poverty. In comparison, the rate in 2000 was of 12.2%. For some, this represents a great danger for social justice, and this tendency has to be urgently reversed. For others, this development is purely the responsibility or the “fault” of the poor. This debate clearly influences people’s view on the welfare state.

The argument of the American dream used against the welfare state

The ‘American dream’, a controversial argument about social justice, can also come into play, against a European-like society. Paul Ryan, the running mate of Republican candidate Romney, puts it bluntly: ‘70% of Americans want the American dream… only 30% want the welfare state… They want the American idea and they want their kids to be better off’.

This ‘American dream’, a pillar of the United States’ culture, was most famously defined by scholar James Truslow Adams, in his 1931 book The Epic of America. “It is a difficult dream for the European upper classes to interpret adequately […]. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position”.

In short, it is a conception of social justice based on individuals’ merit : hard work and talent should be rewarded, regardless of social background – indeed, a very legitimate ideal.

But the class rigidities of early 20th century Europe are not as salient as they used to be. What is more, inequalities directly related to social background (‘social reproduction’) may have grown stronger in the US. This is the conclusion that epidemiologists Richard Wilkinson and Kate Pickett reach in their groundbreaking study The Spirit Level (2010). Their graph on income mobility related to income inequality (a way of accounting for social mobility) is based on the figures of a London School of Economics study (Blanden, Gregg, Machin, 2005) and reveals some striking features of the American situation.

Source: The Spirit Level, 2010, p. 160

 

Two analyses are drawn. First, the more equal the income distribution, the stronger social mobility is (Finland promising more ‘American Dream’ than, say, the UK). Second, Wilkinson and Pickett nuance their approach by assessing historically that social mobility in the US actually declined rapidly from 1950 to 1980, before it increased dramatically along with income inequalities afterwards.

Several explanations could be put forward to explain such a correlation. One is the idea of a ‘symbolic capital’, described by French sociologist Pierre Bourdieu, as the range of rights accent, ‘correct’ education and culture that the elite transfers to its children in order to secure the social position of the latter (Bourdieu, 1979). The more marked the hierarchy, the more developed the process of building ‘social capital’.

Another one is perhaps a dogmatic social ideology that is deeply rooted in a certain media representation of the US, and well illustrated by Paul Ryan’s stance. Historian Tony Judt, of Columbia University, thus summed up the idea: “Here is the US, taxes are typically regarded as uncompensated income loss. […] In continental Europe as in much of the developed world, the idea that any one person could be completely ‘self-made’ evaporated with the illusions of 19th century individualism. We are all the beneficiaries of those who went before us, as those who will care for us in old age or ill health” (Judt, 2011).

The American dream may not be outdated. But Europe is sure not the antithesis it was meant to be one century ago.

What lessons from Europe?

During the crisis, and even before, the European welfare state was used in the United States as a counter example of efficient practices. Those who hold this position affirm that an overly generous welfare state is responsible for the stagnation of growth in Europe and nowadays for the persistence of the crisis. They affirm furthermore that the cuts in unemployment and retirement benefits are element indicating its failure.

Nevertheless, this view is proved to be over-simplistic and even fairly mistaken. Scholars as Gornick and Meyers (2001) answer that despite the pressures on the European welfare state caused either by the aging population or the crisis, it is wrong to affirm it is a failure. First of all, there is not a fixed pattern in the cut of benefits: some countries apply stricter reforms than others. Moreover, some reforms only affect particular programs, the fundamental structure remaining intact.

Nowadays, the tendency observed in the early two thousands continues. If there are debates on how to reform the welfare state and if some systems are collapsing, such as the Greek, Italian or Spanish one, other welfare states remain strong and will so for the few decades to come. Indeed, European scholars such as Francesco Saraceno and Jean Paul Fitoussi (2010) proved that one of the main triggers of the current economic situation is the raise of inequalities and implied that the welfare state is a tool to correct this imbalance. Here is a lesson to be learnt.

To go further

On Nouvelle Europe 

To read 

  • Blanden, J., Gregg, P., Machin, S., Intergenerational mobility in Europe and North America, London: Centre for Economic Performance, London School of Economics, 2005
  • Bourdieu, P., La distinction. Critique sociale du jugement, Paris: Les editions de minuit, 1979
  • Gornick J & Meyers M. Lesson drawing in family policy : Media reports and empirical evidence about European developments. Journal of Comparative policy analysis : Research and practice 3 : 31-57 (2001)
  • Judt, T., Ill Fares The Land, London:  Penguin Press, 2011
  • New, M. Welfare reform that works. Explaining the welfare caseload decline between 1996 and 2000. Cato Institute, Policy analysis No 435 (May 2002)
  • Saraceno F, Fitoussi JP Inequality and macroeconomic performance. OFCE document No 2010-13, July 2010.
  • Wilkinson, R., Pickett, K., The Spirit Level, London: Penguin Press, 2010

On the internet

 

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