tv [untitled] October 3, 2011 3:31am-4:01am EDT
wealthy british scientists say the time to experiment. with. markets weiner scandal. find out what's really happening to the global economy car is a report on r.g.p. . and. low and welcome to cross talk i'm peter lavelle the life and slow death of social democracy in the west an idea once deemed to be part of the very foundation of democratic values and economic prosperity is not only question today but also scorned by some is the west entering an era of radical ideologies and policies.
and if you. start. to cross talk the condition of social democracy i'm joined by allan meltzer in pittsburgh he's a professor of political economy and public policy at carnegie mellon university in new york we have richard wolfe he's professor of economics americas university of massachusetts amherst and in chicago we cross the steve stanek he is a research fellow at the heartland institute all right gentlemen this is crosstalk that means you can jump in anytime you want i very much encourage it but first marcia this is not the first idea to be batted around exactly at a time when free market capitalism is coming on and uncertainty as us probative as ever the political and economic discourse in the rich industrialised north is shifting rapidly the current crisis has exposed the flaws of rampant capitalism as well as political forces and power with the global economy is experiencing is not merely a recession it is a nun precedented post-war contraction when the developed. world's governments
first stepped in to socialize debts accrued by the financial markets the public sector was the first thing to suffer education health care public pensions full employment the basic provisions introduced as a bulwark against the precariousness of earlier decades were hardest hit what's really missing is that steady average rise of the real wage where the fruits of productivity are shared broadly that stop we. brave new world of sort of milton friedman capitalism the great experiment of deregulation killed that natural progression that we had gone since world war two at the same time however many pundits have sounded warnings of capitalism is death and some have even heralded the advent of the never before seen socialism in two thousand and nine the american newsweek magazine wrote we are all socialists now indeed continued financial disintegration leave little choice for western governments the further bank
bailouts and this means government oversight on a scale that would send europe for example back into the one nine hundred fifty s. all the while generations of classical social democracy policies could be raised from the present and future the entire social democracy experience in the west has its origins in assuring that the rise of radical and tie democratic politics like fascism could not meant to societies again as this mindset and policy agenda decline it remains to be seen how the west will protect itself from the worst of ideological extremes to ponder there peter thank you very much for that richard if i go to you first in new york when you hear the term social democracy and i think that it's fair to say i think we all agree is that it's very much associated with the post war era meaning the end of the second world war up until somewhere around now but it's a lot of people are beginning to question it so what does it mean to you in two thousand and eleven the term social democracy. well i think it's
a leftover of the past it was mostly a reaction not so much to world war two as it was to the great depression the last time capitalism as a system collapsed it was a new policy regime forced on capitalist governments by the mass of people their suffering their anger their bitterness about inequality and it was put into effect over the objections of the business community and the conservatives for many many many years it lasted really well but capitalism in a sense cannot afford it right now is cutting back sometimes over a period of time that lasts for decades and now because of the latest great crisis of capitalism an acceleration in cutting it back but i expect and i think i already see the reaction there to the beginning of a new groundswell to reestablish a last contract around social democracy it's already evident here in the united
states and i think we'll be all watching that as it unfolds in the years ahead steve if i can go to you i mean richard covered a lot of ground there very interesting answer to our right now and even on the program before so you go first go ahead. i'm appalled at the nature of what you're proposing first of all capitalism is not dying and it is spreading all over the world look at what's going on in asia in china good luck in america alan we're not talking about jamal we're not talking about capitalism per se we're talking about social democracy that's something a little bit different and is richard pointed out here and have a pretty good record we had a pretty good record for a number of decades now it's a question that's how this program was introduced so we're talking about social democracy obviously capitalism is part of that go ahead alan. alan five percent of g.d.p. is twenty five percent of g.d.p. is spent by the government here forty five to fifty percent in europe that's hardly
the end of social democracy i mean the germans have what they call social democracy and they like it and they keep it and it's their form of capitalism and there isn't the slightest sign that i can see that anything is going to erode it yes there will be cuts in the budget but those cuts are coming after a very very large increases over the last five to ten years so it isn't true i mean we've just passed the health care bill we have a government which is into the room i mean alan there's a lot of people are saying look if you look at the budget right now you can't afford these things steve what do you think about that because i mean there's it's easy to rule you can't afford to leave i want to go to steve i mean it's easy to praise social the social democracy experiment and it's easy to criticize it as well it's very interesting phenomena go ahead steve.
with professor meltzer. in the eighteen hundreds there was a french philosopher an economist named frederick boston who said government is the great fiction through which everybody and devers to live at the expense of everybody else and i think that's a very good description of these socialist governments that professor wolfe apparently believes are good the problem is that the fiction is dying it's dying because the reality of the bills are coming due governments all around the world at least in the united states north america. and europe and some in asia have been spending well beyond their means the idea that consumption can create prosperity to me is i think ludicrous consumption is not creation creation builds prosperity and as we have governments that redistribute income from some and to others we have governments that. hinder
creation they hinder in of the state but steve it's not clear to me it's fair to say that say we seriously want to definitely going to take and i just point out to everyone on the panel is that you know we have electorate voted for these kinds of programs for decades ok so don't say governments i mean if we're talking about people voting for politicians that say give me more and more and more and make other people pay for it later or maybe we can supply in some commonality there i agree with that i didn't think i mean i really am. pretty sure. and i want richard in new york to go ahead yeah go ahead. let me let me just respond to one thing that this notion that governments act as if they are the origin of what they do governments are elected and under enormous pressure from their constituencies and to explain what governments do without an analyzer and who's pushing them to do what is a very strange logic here in the united states this statement that we can't afford
social democracy forty years ago when we arguably began that program in the aftermath of the great the depression we had levels of taxation of corporations much higher than they are today relative to individuals we had income tax rates on the highest and richest americans far higher three times what they are today it's extraordinary that we can talk about this inability to afford social democracy without noticing that the government's so-called inability is because it no longer taxes corporations and rich people anything like it did before when this whole social democracy got under way of course if you stop dancing those who made it was a lot of pressure for then you can't do it as who is ignoring the. first alan jumped in first i'm very appreciative you guys take girls a very very close here arjan alan go ahead. we never recovered from the great
depression by nine hundred thirty eight even members of the roosevelt cabinet was saying we failed the unemployment rate is still high we haven't been able to do much until the war the war made a great difference was because for the first time roosevelt had and coherent policy that people expected to continue and that was something that the public shared they don't share government nowadays is not. doing what its public wants it's doing what its interest groups want at the moment those interest groups or the labor unions and this platform or a big corporation in some cases well ok labor unions are really really makes an excellent go ahead steve expects that john meant what an extraordinary history of our belts amnesia here let's remember one simple fact right in the united states today in the private sector that dominates our economy six point nine percent of
workers are represented by a trade union ninety three and point one percent of our working class in the private sector has no union to explain government policy based on the union movement as tiny and powerless as this is a fantasy designed to obscure the issues when we all know that the distribution of wealth and income in the united states has become widely more all right equal right richard let me jump in here standing resources to the legal immigration system and steve has no label it lays you bandy so we want to break go ahead steve the national labor relations board right now is suing boeing to stop it from all planning a plant in south carolina even though that plant will not get rid of one union worker and will in fact create more jobs about forty percent of all government workers are in unions and they are a powerful constituency in this country when it comes to state local. and the
federal government pride then says the more you know obama administration has them by letting the story on for them the issue or one issue it's labor relations and then the illegal not all americans laying laid off to the private sectors of a union in one state by moving to another which is against the law in the united states that's the issue it has nothing to do with prize anybody only your right gentlemen show me any area where you can go to a break we're going to go to a parade and after that short break we'll continue our discussion on social democracy state party. and. the problem are here. we hear it because of our
patchy outs that. god promised them this the land belongs to us. we'll if they are still going to be thinking. of going to chosen people where we believe that god is real estate say look at this that is this for you guys and this guy this is. under the law no this is the one my research my them. up. even the rocks if this can shed light on the sacred. magic is the essence of
life. whether it is a buddhist prayer. or a shamanistic ritual. crossroads of two religions. say something strong a spirit is calm. and you can say. welcome back to cross talk i'm peter about to mind you we're discussing if social democracy is dead. and you can. say. ok alan if i go back to you in pittsburgh again i'd like to remind our audience why social democracy entire concept called the welfare state or other
kinds of isms that you want to add to it socialism whatever but we have to remember it is a in the aftermath of the rise of fascism in europe in the one nine hundred thirty s. and the great depression and it was a political agenda to make sure that people were inclusive in society where there was some modicum of education people would get a modicum of some kind of healthcare a modicum of maybe some kind of job but not absolute promises ok but an inclusive thing it was a political agenda we see the ideas of social democracy falling apart in some parts of the world do you think that that's going to see the rise of radical politics again in europe in the united states. no i don't believe the people the well i guess they all remains it will be cut back it will be cut back because it's that we've overspent because productivity is low and because when we transfer resources from bike to high taxes from corporations and the high
income individuals to welfare programs we increase welfare programs but we lower productivity growth and when we do it with blodget deficits we tell people look your taxes are going to go up in the future and that deters investment so that's really where we are and that's where the europeans are and what i see at the moment is a total failure of government to be able to reach agreements about how to solve these problems i don't see a major failure in the private sector i see him i have got to tell you her fessor got it right i see only one day all right since january eighth or if you go because this is crosstalk i don't think you agree go ahead. no i don't think a greedy not even a little bit you know if we were all talking about a constant distribution of wealth and income this might be an argument that would make sense but we have a period of time in the united states above all of a vastly growing inequality of wealth and income with money earned at the top while
and disproportionate to anything that anyone else enjoys precisely because among other things of the destruction of our trade union movement that's why we have such a low number of people in the trade union movement by the cut on taxes on corporations by the cut of taxes on wealthy people if that was not done if that was undone now by a no new social democracy compact all of these situations would change and the capacity of the government to pay for these programs would be enhanced and in terms of the politics let's take a little look the elections over the last few weeks in denmark bringing in a red block committed to social democracy the complete the first time since one thousand nine hundred fifty eight that the french socialist took over the senate in that country is remarkable and here in new york city surprising so many americans the upset of the european masses has arrived in the united states and we're seeing more and more demonstrations that are pinpointing the inequality in the united
states that drives and funds government we have a serious direction of destroying sons among rizzi i want to go to steve in chicago steve go ahead because and i just i just received one i don't have one just equal ease please i'd like to go to steve here again i'd like to point out is that the whole social democracy project was to cut down on the inequality ok rightly or wrongly for it was done the good way or a bad way and i was one of the reasons why they did so go ahead steve you could reply to what alan said and what richard just said go ahead sir right now in the united states virtually half the households pay no federal income taxes. the largest tax fair by far are the very top income earners they pay disproportionately more of their income in taxes and fees to the government and the lower quintiles do by many mar
by many measures. but he hasn't explained that he was only fact these things are happening we have unions when he talks about the decline of the union in the private sector that is because the unions have failed to adjust to changing economic conditions over the years the unions have not been crushed by governments the unions are losing out can cause an individual a voice and even the one your size in the early in the hands of. the words they do you can blame it on whatever you want but you can't then make the only a minute when you lose it is going to lol have a lot of hell are going to tattle lot of power cells able and government wide. government unions do not get a little young going to our neighbors in the middle of the government during a well being moved over many of that is why it was. only you are right gentlemen we are all talking over each other here ok ok still right. that happens on this program i want to ask all of you is that it would say when we look at the crisis
starting in two thousand a to the present you know we talk about what government should do what they should do but it's really the central banks everywhere very the ones that have called the shots and now i'll give an opinion out now we have socialism for the rich and we have capitalism for the working class and the poor what do you think about that our. i'm opposed to the central banks bailing out banks i mean if people. objected to the eight hundred billion dollar bailout when the bush administration did it i did it on public television i was invited into the treasury to because they said well what would you do and i told them what i would do i told them the bank needs capital than the capital should be raised in the capital market half of that and then we'll give them concessional aid if they do but if they don't raise the money in the in the capital markets they're dead and will take over the bank that's what i think the europeans should do i think the europeans are wasting money terribly to keep protect the bankers and
to prevent the greeks from believing the euro i've written a paper or a column for the wall street journal which says that's a fool's policy we need to do much more timely and it's all right governments are failing all right richard if i know how do you happen to know that you know this whole regime under richard here because it's two against one it's all but actually it's not only it's two against one from this program gentlemen and we have to be fair it's two again was this problem we don't want to talk about i want to raise shared richard in a new york would you comment on that what mother what i said earlier about we have we have we have we have capitalism for the for the working class and the poor and we have socialism for the rich because the new social contract is to make sure the rich stay rich ok and they're happy with that we can they have their congresses in their parliaments and their central banks in their pocket they've done very well here they like to know so go ahead richard then then i can be contradicted by other
gas go ahead richard. yes i think that i go back to the cutting of social welfare by the inequality of distribution of wealth and income over the last thirty years that also allows the rich to have much more influence as the corporations have that's what we call neo liberalism on shaping government policy and that includes central bank policy what we've had since two thousand and seven when this crisis hit is what we used to call trickle down economics the central bank together with the treasury or whatever the government agency is bails out those at the top the biggest banks the biggest insurance companies the biggest corporations and it hopes may be that it will trickle down to everybody else we now know as we enter year five of this ongoing capitalist crisis that the trickle down didn't happen as most of us predicted it would not so now we confront the fact that we've wasted a lot of money bailing out the top keeping them in
a place they could call recovery while everybody else suffers through this crisis and now they have the nerve to suggest that having failed in this critical down policy the solution is an austerity that is not just socialism for the rich it's the worst kind of capitalism for them as a see people and they're not going to tolerate it steve jump in go ahead steve. i believe the central banks have been major players in causing the booms they were major players in causing the bus and i will agree with professor wolf that what the central banks have been doing now is is i think not just wrong it is immoral they are in effect stealing from millions of people all around the world to prop up banks the federal reserve's main client in this country anyway and i'm sure the central banks in europe of the studio the same way are the banks they are supporting banks that should have failed and allan meltzer is exactly right they
should have been allowed to go down millions of americans overwhelmingly opposed the tarp but our congress and then and let's remember this was a bush administration what henry paulson from former goldman sachs's got get of gave us a tarp that poll after poll showed was overwhelmingly opposed by americans it never should have been done we should all let chrysler and general motors go down and i have no doubt that if they had it happened they're good assets would have been bought by other automakers maybe some new automakers would or is it would have arisen i live near and what is can osha wisconsin and i was in juneau should just last weekend people in this country forget there used to be a big four automakers the big the fourth was american motors which used to be headquartered in incan osha when kenosha went down part of that company was bought by chrysler people forget that m. erica motors used to own jeep i have no doubt if chrysler and if general motors
have been allowed to fail other automakers would have bought good parts of those companies and we would be rolling along much faster than we are now all right now we're doing it was the son of john mayer when i asked everyone who. ran their budget and i said this guy should hear if i go to you when we were talking about social democracy is there a new social contract in the air now because of this crisis. the old social contract is still here look this raving about about the income distribution is foolish nonsense the reason it's foolish nonsense is because he's entitled to his opinion but he's not entitled to his facts the facts are that the reason there's a yards of research on the question of why the income distribution is spread the answer is because the failure of the education system we just have a large number of people who are illiterate and richard richard i want to give you the last two or three second scripture the last last word go ahead blaming the
education system is what we used to call blaming the victim this is absurd our education system is starved for money we are cutting back across all of our state universities to han's because it leads to only. pay learning we settled on education and even on stats occasion gentlemen gentlemen i want to thank you sincerely for a great conversation but we've run out of time to ask thanks to my guest today in pittsburgh new york and in chicago and thanks to our viewers for watching us here are to see you next time and remember cross talk rules. can.
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