Tuesday, December 22, 2015

Brad DeLong — The Melting Away of North Atlantic Social Democracy

The social democratic economy model the major North Atlantic economies followed as recently as a single generation ago had five salient features.
  •  First, that labor was important relative to ownership of wealth as a source of income. 
  • Next, enterprise and savings were important relative to inheritance as a source of accumulated wealth. 
  • Opportunity, while constrained by race and gender, was not that constrained by class—there was upward mobility. 
  • Economic growth—both numbers of workers and the productivity of the average worker—was relatively rapid, with each generation clearly larger and more productive than its predecessor. 
  • And finally, politics were relatively democratic, in that while the rich spoke with a louder voice, their concerns did not drown out the economic interests of others.
And Thomas Piketty’s central claim is that all five of these once-salient features of our social democracy are vanishing. We are, he believes, on a long-run historical trajectory to return us to a situation more like the nineteenth century, in which ownership of capital is more important relative to labor as a source of income; inheritance dominates enterprise and savings as a source of wealth; opportunity is tightly constrained by class of birth; economic growth is slow (both because of declining technological invention andbirth rates on the one hand, and because established wealth, which is hostile to the creative destruction that drives economic growth, possesses a bigger voice in shaping the political economy), and politics is dominated by plutocrats.
Capital in the Twenty-First Century has struck a chord—hence its 2.2 million copies. 
And it has excited a fierce debate, with more and more people finding it worth arguing about both for the reasons that it struck a chord and because of the fact that it has struck a chord.…
The Melting Away of North Atlantic Social Democracy
J. Bradford DeLong

No comments: