WHY CAN'T WE BE FRANCE? (via Jeff Guinn):

Dismal Scientists: A new book spurs the thought: It's time to link economics to a language of values. (Lawrence Mishel, 05.27.04, American Prospect)

It is curious that in American politics, "values" issues are always social issues but never economic ones. Yet how the disadvantaged among us are treated is clearly a reflection of who we are as a people. Similarly, how workers are treated on the job -- their safety, their working conditions, their remuneration -- also speaks volumes about our values as a nation. This is also true for child poverty.

After reading Is the Market Moral? by Rebecca Blank and William McGurn, a new Brookings Institution book sponsored by the Pew Forum on Religion and Public Life, I began to consider how small a role religious, even secular, values play in discussions of economic policies and trends.

Of course, economists contend that economics is a science. "Tell me what you want to do and I will tell you the best way to do it" is the economist's usual stance. (Actually, as one economist said, his role is to say, "Tell me what you want and I'll tell you why you can't have it.") Clearly, there's no room for values. The underlying assumption is that unfettered markets produce the best outcomes, except in a few very specified situations: externalities (such as pollution imposed on society but not reflected in producers' costs), monopolies, and other "market failure" cases everyone has had to study in Econ 101. Some economists (Martin Feldstein, for one) have contended that inequality is not a proper concern for economists. They should be concerned only with determining how to maximize the output of goods and services.

It is important to examine whether unfettered markets are the appropriate means of organizing our economy, both in terms of the values we seek to see reflected in our society and for achieving our economic goals. One's view of the proper role of individuals, institutions, and government in the economy is determined, in large part, by one's assessment of the merits of "unfettered markets." The U.S. economic-policy debate is in fact dominated by the assumption that unfettered markets work best, a view that's applied to our domestic economy and to that of other countries through international financial institutions that the United States controls. John Kerry's recent statement that he is "not a redistributionist" indicates how dominant this view has become.

Yet there is plenty of room for applying values to the economy. An economy can be structured in many different ways and yet achieve the same amount of efficiency, i.e., produce the same outputs with the same inputs. This was the conclusion of a book that Rebecca Blank edited for the National Bureau of Economic Research (NBER) a decade ago. Major European countries, for example, have a set of policies that are far different from ours: a strong social insurance system, government provision of health care, higher taxes, and far less inequality. Yet these countries have seen faster productivity growth -- the gain in economic efficiency -- than the United States for most of the last four decades. At first, this trend was mainly a process of "catching up" to the United States, the technological leader. However, many of these countries have now surpassed the United States in productivity.

One would hardly expect an informed discussion of the role of values in our economic policies from someone to whom the question has just now occurred, but this is particularly weak. The biggest problems arise because the author makes two mistaken assumption: first, that we are rather similar to the Europeans; second, that they are doing as well as us economically. The reason he has to make these assumptions is obvious enough, because he wants to argue that we should change our economy to be more like theirs, but, of course, if the assumptions were true there'd be no need to make changes. In fact, the demand that we change is an implicit admission that he doesn't share our values and wants them to be changed and become more European. This is a losing battle since we are instead diverging ever more from each other. But we should expect to hear this kind of plea increasingly from a dwindling liberal elite that feels more ideological kinship with Europeans than Americans.

If we can oversimplify drastically, Mr. Mishel desires what Old Europe in particular has: a secular society focussed on economic security and equality of outcomes. What America actually has is a religious society that is focussed on freedom and equality of opportunity. These facts really stand out if you look at our position in the Index of Economic Freedom and the World Values Survey. The result --how directly a result could be debated--is that we are pretty nearly the wealthiest nation on Earth and easily the wealthiest large nation. What Mr. Mishel proposes then is an assault on our traditional values that will leave us poorer and less free. But he's right, as we declined what we had left would be distributed more evenly. Whoopee!

MORE:
Faith Can Enrich More Than the Soul (Felicia R. Lee, January 31, 2004, New York Times)
Living with a superpower: Some values are held in common by America and its allies. As three studies show, many others are not (The Economist, Jan 2nd 2003)

West Europeans have a slightly more positive view of the people than the country, but they are exceptions: only 14 of 43 countries expressed more positive views about Americans than of America. And even though most Europeans say they like America, between half (in Britain) and three-quarters (in France) also say the spread of American ideas and customs is bad. As many Europeans say they dislike American ideas about democracy as like them. And this is from the part of the world that knows and claims to like America best.

In other words, people outside Muslim countries like America but not some of the most important things it stands for. What is one to make of that conflicting evidence? The short answer is that Europeans and Americans dispute some values and share others. But one can do better than that. Consider the third recent report, the world values survey run by the University of Michigan.

Unlike the other two polls, this survey goes back a long way. The university has been sending out hundreds of questions for the past 25 years (it now covers 78 countries with 85% of the world's population). Its distinctive feature is the way it organises the replies. It arranges them in two broad categories. The first it calls traditional values; the second, values of self-expression.

The survey defines “traditional values” as those of religion, family and country. Traditionalists say religion is important in their lives. They have a strong sense of national pride, think children should be taught to obey and that the first duty of a child is to make his or her parents proud. They say abortion, euthanasia, divorce and suicide are never justifiable. At the other end of this spectrum are “secular-rational” values: they emphasise the opposite qualities.

The other category looks at “quality of life” attributes. At one end of this spectrum are the values people hold when the struggle for survival is uppermost: they say that economic and physical security are more important than self-expression. People who cannot take food or safety for granted tend to dislike foreigners, homosexuals and people with AIDS. They are wary of any form of political activity, even signing a petition. And they think men make better political leaders than women. “Self-expression” values are the opposite.

Obviously, these ideas overlap. The difference between the two is actually rooted in an academic theory of development (not that it matters). The notion is that industrialisation turns traditional societies into secular-rational ones, while post-industrial development brings about a shift towards values of self-expression.

The usefulness of dividing the broad subject of “values” in this way can be seen by plotting countries on a chart whose axes are the two spectrums. The chart alongside (click to enlarge it) shows how the countries group: as you would expect, poor countries, with low self-expression and high levels of traditionalism, are at the bottom left, richer Europeans to the top right.

But America's position is odd. On the quality-of-life axis, it is like Europe: a little more “self-expressive” than Catholic countries, such as France and Italy, a little less so than Protestant ones such as Holland or Sweden. This is more than a matter of individual preference. The “quality of life” axis is the one most closely associated with political and economic freedoms. So Mr Bush is right when he claims that Americans and European share common values of democracy and freedom and that these have broad implications because, at root, alliances are built on such common interests.

But now look at America's position on the traditional-secular axis. It is far more traditional than any west European country except Ireland. It is more traditional than any place at all in central or Eastern Europe. America is near the bottom-right corner of the chart, a strange mix of tradition and self-expression.

Americans are the most patriotic people in the survey: 72% say they are very proud of their country (and this bit of the poll was taken before September 2001). That puts America in the same category as India and Turkey. The survey reckons religious attitudes are the single most important component of traditionalism. On that score, Americans are closer to Nigerians and Turks than Germans or Swedes.

Of course, America is hardly monolithic. It is strikingly traditional on average. But, to generalise wildly, that average is made up of two Americas: one that is almost as secular as Europe (and tends to vote Democratic), and one that is more traditionalist than the average (and tends to vote Republican).

But even this makes America more distinctive. Partly because America is divided in this way, its domestic political debate revolves around values to a much greater extent than in Europe. Political affiliation there is based less on income than on church-going, attitudes to abortion and attitudes to race. In America, even technical matters become moral questions. It is almost impossible to have a debate about gun registration without it becoming an argument about the right to self-defence. In Europe, even moral questions are sometimes treated as technical ones, as happened with stem-cell research.

The difference between the two appears to be widening. Since the first world values survey in 1981, every western country has shifted markedly along the spectrum towards greater self-expression. America is no exception. But on the other spectrum America seems to have become more traditional, rather than less. The change is only a half-step. And Italy, Spain and France have taken the same half-step. But if you look at Europe as a whole, the small movement back towards old-fashioned virtues in big Catholic countries is far outweighed by the stride the other way in post-Protestant countries such as Germany and Sweden. On average, then, the values gap between America and European countries seems to be widening.

Where evil is real

What is the significance of this? If “quality-of-life” values have political implications, helping to underpin democracy, might traditional values help explain differing attitudes to, say, the projection of power?

In principle, two things suggest they might. Patriotism is one of the core traditional values and there is an obvious link between it, military might and popular willingness to sustain large defence budgets. There may also be a link between America's religiosity and its tendency to see foreign policy in moral terms. To Americans, evil exists and can be fought in their lives and in the world. Compared with Europe, this is a different world-view in both senses: different prevailing attitudes, different ways of looking at the world.

Posted by Orrin Judd at July 8, 2004 8:03 PM