In his 1968 book, “The American Challenge”, author J.-J. Servan-Schreiber, founder and editor of the French weekly L’Express, examined the sources of American economic dynamism in 1960’s Europe. It was American companies that moved aggressively to take advantage of the liberalization of European trade regulations created by the establishment of The European Economic Community (EEC) in 1958. They established European headquarters to manage their European operations. They built new plants and acquired European companies. They captured large shares of European markets while European businesses, with a few notable exceptions, sat on the sidelines.
Many European business and political leaders, including Charles de Gaulle of France, attributed the American economic expansion into Europe to the greater availability of capital in the U.S. vis-à-vis European nations that were still rebuilding after World War II. M. Servan-Schreiber disagreed sharply with this view, noting that ninety-percent of the expansion was financed by European sources. Instead, he saw American economic dynamism in Europe as a result of the dynamism of American society and a powerful academic-industrial-governmental partnership financed and led by the U.S. government.
America’s advantage, in M. Servan-Schreiber’s view, was both institutional and cultural. It was institutional in the sense that both government and academia were active participants in a mission to advance the interests of American business and society. The U.S. government funded fully 85 percent of American research and development costs and assisted key U.S. industries through contracts and research grants — governmental contracts accounted for more than 60 percent of revenue for the U.S. electronics industry. American universities provided a consistent source of innovation and invention as well as a steady stream of technological and managerial talent for U.S. businesses.
The most important and fundamental source of American economic dynamism, according to M. Servan-Schreiber, lay in its culture. More specifically, in the high level of social mobility (at least among whites) in U.S. society, the emphasis on individual responsibility and the commitment to equal rights and opportunity for all U.S. citizens. Underlying all of this was the willingness of Americans, including the U.S. government, to invest in human beings through education. Ultimately, according to historian Arthur Schlesinger, Jr. in the book’s foreword, Servan-Schreiber believed that, “The real American secret …is the discovery that social justice, far from being the enemy of economic growth, is the necessary technical condition for growth in an industrial society”.
What a Difference Four Decades Make
Fast forward to 2009. M. Servan-Schreiber would be stunned to see that America has all but abandoned the model he so highly admired. The partnership between government, business and academia that was so effective in the 1960’s no longer exists. The burgeoning middle-class that was America’s engine for economic growth is in decline as the income gap between the top 10 percent of American society and the bottom 90 percent grows. Social mobility is now lower in the U.S. than in any other industrialized nation. A person born today in France, Germany, Sweden, etc., would have a better chance of improving their economic and social status than a person born in the U.S.
Sowing the Seeds of Socialism
Slowly but surely, we are witnessing our own economic and social demise. The end result will be a European style socialist system for the U.S. — a prospect that strikes fear into the hearts of American conservatives. However, if the bottom 90 percent of Americans continue to lose ground economically, they will eventually begin to demand more government programs to fill the income gap. Their frustration will be exercised at the polls and, since there are substantially more of them, they will prevail. Conservatives will naturally blame liberals for this development, but it will be conservative policies that have caused it.
The Influence of Money and Conservative Philosophy
America’s declining economic and social conditions are attributable to two fundamental causes: the influence of money in U.S. politics and public policy, and conservative economic and social policies. American politics have become a battleground for financially powerful special interests on both the right and the left. These special interests wage political war by filling the campaign coffers of politicians and, with the assistance of these politicians, inundating American voters with misleading and frequently false political information designed to “spin” the facts in their favor rather than enlighten voters. The special interests have usurped the sovereignty of American citizens. Instead of government “of the people, by the people”, it is now government of the people, by special interests.
Since President Reagan took office in 1981, U.S. economic and social policy has generally reflected conservative political philosophy. Even during the Clinton presidency, conservatives controlled congress and were usually able to thwart Clinton proposals that did not suit them. Over the years this philosophy has mutated to become even more conservative. Today’s conservatives call themselves Reagan conservatives, but they represent attitudes and ideas that even President Reagan would be unlikely to support. Real Reagan conservatives, such as political columnist George Will, frequently try to distance themselves from today’s self-styled Reagan conservatives. The truth is, today’s conservatives are, for the most part, Limbaugh conservatives.
Current conservative philosophy is backward looking. Resistance to change under this philosophy is insufficient. It actually seeks to turn the political and social clocks back — in some cases to the 19th century. The philosophy is pro-business, yet anti-growth. Rather than supporting investment in technologies of the future, it seeks to protect old technologies and their purveyors from competition. It rejects any role for government. Conservatives see conspiracies around every corner, including academia. Conservatism purports to be a free market philosophy, yet its practitioners oppose regulation that would open markets to greater competition –Americans pay higher prices for prescription medications than citizens of any other country because these free marketers deny the Medicare system the ability to negotiate with pharmaceutical companies.
Conservative tax policy is designed to redistribute income upward to the very richest Americans. Profits from trading securities and derivatives –activities that contribute nothing to real economic growth — are taxed at a lower rate than wages from an individual’s labor. Incredibly, conservative tax policy provides favorable capital gains treatment for purchases of foreign manufactured capital equipment. The predictable results of these policies are a declining middle-class and slower economic growth.
So What Do We Do Now?
The combination of conservative philosophy and special interest money has stifled U.S. economic and social progress. But it is not too late to reverse this trend and set the nation back on the right track. It will require moving away from conservative philosophy toward a more centrist political philosophy — liberal philosophy is no better than conservative. Furthermore, Americans must be more skeptical of the information they receive from politicians and other sources and demand that politicians reject the corrupting influence of special interest money.
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