The Latest Brooks Snowjob

In his most recent New York Times op-ed, David Brooks argues that the European model of social organization (and by inference, the liberal model) has been rendered impractical by changing demographics. Because the population of Europe (and to a lesser extent, the United States) is becoming more elderly, economic growth is going to be lower and hence generous social benefits to retirees and the poor will become infeasible. Brooks also suggests that the reason for Europe's slower growth since the 1970's has been its welfare state.

This is a very slippery piece. Brooks is conflating ideas and moving between assumptions with great (if sinister) skill. He identifies a basic problem confronting all industrial nations: flat population growth. This is indeed a challenge, since if the working population is smaller relative to the nonworking population, each worker will bear a higher burden. And population growth is a driver of economic growth, since it creates a new source of demand. But Brooks takes this real problem and uses it to push his pre-conceived political agenda: smaller government and less equality. But his analysis his faulty, and his solutions not necessarily the only ones.

First of all, Brooks is assuming that the current projections of flat population growth in Europe will continue. This is a very large assumption, since the past is not necessarily prologue. It is possible that Europeans, seeing a world with no children, decide to make some. But let's say that the expectations are correct, that Europe's population will continue to age and, eventually, shrink. The solution to this difficulty is precisely the same as that of the United States: immigration. By importing younger workers from the impoverished 3rd world, the U.S. has alleviated the severity of its demographic woes. There is no reason Europe could not do the same. There would be no need for an evisceration of the welfare state.

Which brings me to my second critique. Brooks deploys the conservative orthodoxy that Europe has had slower growth over the last generation because of its high taxes and expansive public services. But wait a minute, I thought the low growth was due to an aging population! Which is it David?

Now Brooks could reasonably argue that Europe's generous welfare state has slowed growth in the past, and that this growth will slow further as the population ages. But this assumes that Europe has in fact been experiencing slower growth over the last thirty years. And you guessed it - it hasn't. While the U.S. has experienced higher overall growth, its per capita growth since 1975 has been basically the same as Western Europe's. In other words, our higher titular growth rates are strictly the result of higher population growth. There is just no relationship between a larger welfare state and slower growth. Oh and of the per capita growth in the U.S., how much do you think has wound up the hands of the middle class? That's right. Zero.

Oh, but Europe has higher unemployment! Not really. When the EU calculates unemployment rates, they use the share of the working age population that is not employed. In the U.S., we exclude people in prison and people who have given up looking for work from the labor force, and count temporary and part-time workers as employed. If we measured the same way as they do across the pond, we've have roughly the same rate of unemployment.

But aren't Europeans poorer than Americans? In a word, no. They do have lower per capita incomes, but per capita figures take no account of a) currency fluctuations, b) government and corporate benefits, c) personal debt, or d) distribution. Median incomes in the U.S. are in reality no higher than in Europe. Anyone who has been to Europe will see that they are just as rich as we are.

So America's economic model has delivered average per capita growth and unemployment rates in exchange for 1) fewer government services and 2) greater wealth inequalities. In other words, Americans are running up their credit cards in order to tread water, while the Europeans are experienced greater median income gains AND free health care.

So what Brooks is doing here is taking a nonexistent past problem as evidence for a potential (and avoidable) future problem in the name of hurting people at the bottom and helping people at the top. Sound familiar?