Developed Countries & the Good Society

Developed Countries & the Good Society Chapter Nine Pearson Publishing 2011

Sweden, the U.S., and Germany represent different types of political models found among affluent democracies. • Political model: countries that share similar institutions, politics, and policies. Certain types cluster. • Ex: Democracies in which social democratic parties are dominant (politics) also tend to have proportional representation electoral systems (institutions) and be high welfare state spenders (policy). • Select group of affluent countries: France, Germany and Britain, the U.S. and Canada, Japan, Australia and New Zealand. • All democracies that are fairly wealthy and have higher per capita GDP; have moved the furthest along the postindustrial occupational structure (growth of white-collar, service, professional, and managerial sector jobs) Developed Countries & the Good Society Pearson Publishing 2011

Three primary models found among Western countries: • Social democratic – Sweden example • Extreme market – U.S. • Christian democratic political – Germany Developed Countries & the Good Society Pearson Publishing 2011

First emerged in the 19th century to represent the political interests of a growing and newly-enfranchised working class. • Many had Marxist origins • Many shed these ideas in favor of socialism, which could be achieved via the ballot box and a working class majority. • Parties dropped revolutionary rhetoric and proposed reforms and incremental improvements that would lessen the worst aspects of capitalism. • Social democratic model best exemplified by Scandinavian countries of Denmark, Norway, and Sweden. • Strong working class; thoroughly capitalist. • But public sector employment is high, with over 20 percent of the workforce employed by the state; they deliver an array of welfare state services. Social Democracy Pearson Publishing 2011

Social democratic welfare state is distinctive in many respects: • Eligibility for welfare state programs is universal. • The welfare state is comprehensive; cradle to grave. • It is a generous system. • Also provides an extensive array of services such as health care, day care, elder care, job training and after-school programs. • Redistributive: reduces inequality between the rich and the poor. • Impact of these: detach a citizen’s quality of life from their job. Critics contend that social democracy needs to be rethought because of: • High taxes, large welfare states, deficit spending. • Undermine the work ethic. • High taxes punish entrepreneurial risk-taking. • Decline of unions and industry subverts the working class base of the party. Social Democracy Pearson Publishing 2011

Social democracy has been resilient in response to changes. • Economists do not find lack of capital or competitiveness or skilled people in these countries. • Benefits: allow large workforce of women. • Highest labor force participation rates among all affluent societies. • Less fearful of economic change as costs are shared across society not only on certain workers. • So less resistant to technological innovation and moving resources from declining sectors to rising new industries in response to shifting markets. • Welfare state helps moderate wage demands by offering compensating benefits in place of higher wages that might hurt competitiveness, and active labor market policies that offer retraining, job placement, and relocation assistance to unemployed workers. • RESULT: highly competitive economies alongside large and redistributive welfare states. • In 2009, the World Economic Forum, a group of world business and political leaders, ranked Sweden fourth, Denmark fifth, and Norway the fourteenth most competitive economies in the world. Social Democracy Pearson Publishing 2011

Sweden has 9 million people • 1 million more than the population of New York City • Country is about the size of California • Mainstream press has lampooned Sweden as the country of sex, suicide, socialism, and spirits. • Working class most successfully organized. • Labor unions; Swedish Social Democratic Party (SAP) • Industrialization did not begin 1880s, but it was speedy. • Democracy also got a late start; not until the end of WWI. Sweden: Historical Background Pearson Publishing 2011

Lijphart categorizes Sweden as a “consensual democracy” • Political institutions promote “inclusiveness, bargaining and compromise.” • Sharing of power – coalition governments are the norm & inclusiveness of the policy-making process. • Role of interest groups; views of nongovernmental parties. • Proportional representation electoral rules ensure that parties with only modest support win some parliamentary seats. • Sweden is a parliamentary democracy. • Riksdag – unicameral legislature; elections every four years (unless parliament is dissolved, which is rare) – 29 multimember election districts. • Strong committee system; strong oversight • Parliamentary Ombudsman: investigates state agencies for malfeasance. Sweden: The State Pearson Publishing 2011

The executive branch dominates policy-making in Sweden, as it does in all parliamentary democracies. • Process more inclusive and permeable. • Tempered by limited form of judicial review. • Swedish Federalism • Unitary state, with political power concentrated at the national level. • Cabinet appoints the governor to each of the 24 regional, provincial units. • Recently the autonomy of regional and local governments has increased. • More decentralization Sweden: The State Pearson Publishing 2011

Following democratization, the SAP emerged as the single largest party in the 1920s. • No significant success until it dropped the image of a worker’s party and moved to the “people’s home” • No to socializing production but rather to socialize distribution. • This brought success and dominance for a significant period of time with some fluctuations. • Today the Social Democratic vote fluctuates around 40% • Concentrated among women, public sector employees, and a declining blue collar proletariat. • Must depend on the cooperation of other parties to govern. • Most of the change within the Swedish party system has occurred among the non-socialist or right-wing bloc of parties. • Agrarian Party > Centre Party • Rising fortunes of the Moderate (critic of tax and spend) and Christian Democratic Parties (defends family values) • Change without change. • Emergence of new parties, loss of support to Social Democrats and Centre Parties. • Class voting has declined. • Party system no longer defined by the traditional left-right cleavage of class divisions. • Social Democrats still dominant although they had their worst showing in the 2006 election. Sweden: The State & Society Pearson Publishing 2011

Table 9.1 Pearson Publishing 2011

Swedish Culture: individualism and statism are respected and perceived as augmenting each other. • No serfdom in history thus the belief that individualism, democracy and freedom are birthrights. • Legacies can only be achieved through the state, not against it. • State creates an egalitarian community that protects its members from the injustice of social inequality and liberates them from degrading ties of dependency. • Equalitarian: Swedes less tolerant of wage differentials between high and low earners than citizens in other countries. Also approve of government’s efforts to reduce it. • Value consensus and pragmatism • Considered a high trust society • Issues that are emerging: “minority culture of distrust” Sweden: Political Culture Pearson Publishing 2011

About 50% of all Swedish citizens are said to derive their income from the state as either: • Clients who depend on welfare state programs, or • Public sector workers who deliver them. • This gives many an incentive to vote for the Social Democrats; protect their benefits or their jobs. • Welfare state originally designed in 1930s to eliminate poverty. • Transformed in the 1960s to “provide a lifelong middle class standard of living for all” and redistribute income. • 1990s Sweden experienced the sharpest recession in its history. • Economy contracted by 6 percent, unemployment soared from 2 to 12 percent, with the result of a severe budget deficit. • Required state to trim; became less redistributive. • More privatization and markets introduced; school choice. Sweden: Political Economy Pearson Publishing 2011

Economy is thoroughly capitalist even though it supports a large welfare state. • Means of production privately owned and the market rules. • Model of capitalism based on three precepts: • Full employment • Centralized wage bargaining • Wage solidarity • This model fell on hard times in the 1990s: major recession-adjustments such as sector level bargaining • Current Swedish Model may only be a shadow of itself, but it produces very similar results. Sweden: Political Economy Pearson Publishing 2011

Found in former British colonies of Canada, Ireland and the United States. • Politically left-wing parties are either completely absent or have been outsiders in the political process. • Class identification is very weak; socialist parties have not fared well due to this. • Other cleavages in these societies crosscut and weaken class identification. • Business has been politically dominant. • Electoral system is afflicted with low voter turnout (working class dropped out leaving core of wealthy voters). • Politicians appeal to this core and ignore the demands of peripheral, working-class voters. Extreme Market Democracy Pearson Publishing 2011

The politics of extreme market democracies distinguishes them from other Anglo-American democracies such as Britain, Australia, and New Zealand. • Share a similar policy profile, but these other countries have viable Labour Parties that are absent in extreme market democracies; class is a more significant cleavage. • Price of a cup of coffee: $3 in Sweden; $1.50 in the U.S. or less because higher taxes and wages make a cup of coffee cost more in Sweden than in the U.S. • However, cost of affordable coffee comes in the form of a lower standard of living for coffee servers and fewer public services in the U.S. Extreme Market Democracy Pearson Publishing 2011

More likely to leave the production and allocation of goods to the market more so than other affluent democracies. • Public sector relatively small. • Rank low in terms of welfare effort – spend less than 20% of GDP. • Targeted at poor. • Relatively stingy benefit levels. • Have some institutional variety. • Federal and unitary systems. • Interest group structure is similar. • Union density is low. Extreme Market Democracy Pearson Publishing 2011

Nowhere else is the gap between the power of businesses versus labor as large. • Why? Host of factors: • Success of American capitalism seduced workers. • Ethnic and racial tensions divided workers. • Capitalist values of competition and individualism distracted them. • Repression intimidated them. • Some success for workers: • New Deal United States: Historical Background Pearson Publishing 2011

U.S. has a federal system with power divided vertically between national and state governments. • The Constitution also divides power horizontally among the executive, legislative, and judicial branches to create a system of checks and balances. • Founders believed in democracy, but wanted to avoid what they regarded as its egalitarian consequences: endangerment of property owners to preserve their property and use it as they please (Dahl). • Majority rule difficult when in order to control government a group must win three different contests: nationally at the presidential level, at the level of the states in the Senate, and by district based on population in the House of Representatives. United States: The State Pearson Publishing 2011

President is the “energy center” of the federal government, setting its agenda and providing leadership to it. • Have two roles: head of state and head of government. • Must deal with Congress, interest groups • Congress: bicameral • House of Representatives – # districts in state based on population; serve two year terms • Senate – 2 from each state; six year terms • Policy process very involved; many veto-points at which bills can be defeated. • Judiciary • Must depend on the other branches to implement their decisions • But very influential. Federal judges serve for lifetime tenure; insulated from political pressure; power of judicial review (gives them authority to nullify and overturn laws as incompatible with the Constitution). United States: The State Pearson Publishing 2011

New Deal made the Democratic Party into the majority. • Was the ruling party from 1932 to 1994. • Welfare state matured • Medicare added • Unions grew • Through the 1960s, worker’s standards of living rose and inequality declined. • New Deal began to unravel in the 1960s • Civil rights • Cultural issues: abortion, feminism • Policy failure: did not deal with unemployment and inflation • Republican Party gained momentum and changed direction • Turned right and moved south • First evident at the presidential level • 1994 congressional elections • Unclear whether Democratic sweep of 2008 means a new period of Democratic Party rule • May simply reflect the failed policies of Republican President George W. Bush United States: The State & Society Pearson Publishing 2011

United States: The State & Society Pearson Publishing 2011

The two parties are almost equal in strength, but their differences are profound. • They have become internally more cohesive; very limited differences among members within the party, BUT • Externally, they are very polarized. This means the differences between the two major parties are stark. • The moderate center has disappeared. • Consequently, American politics is more ideological, with more party discipline, and it is now harder to forge bipartisan compromises. United States: The State & Society Pearson Publishing 2011

The American state was designed by people who were deeply suspicious and skeptical of it. • Created fragmented government with checks and balances to produce limited government. • Liberal capitalism was unchallenged because the U.S. never had a feudal past that nourished alternatives such as socialism and fascism. • In the U.S. there is consensus over the liberal democratic model, so basic principles rarely compete. • Arguments do arise over the interpretation of common liberal democratic values. • Americans are strong individualists. • Independence and self-reliance; responsible for own life • Political equality and democracy United States: Political Culture Pearson Publishing 2011

Class differences in political participation are greater in the U.S. than in other affluent democracies. • Playing field of politics very tilted in the favor of those with means. • Reflected in public policy: collects less in taxes and spends less as a proportion of GDP than almost any other rich democracy. • Business enjoys autonomy in U.S. compared to other western democracies • Less collective bargaining; state regulations governing the workplace are minimal and not vigorously enforced. • Letting markets rule has encouraged innovation and wealth. • Negative result is that there is more inequality and greater volatility than in other affluent democracies. United States: Political Economy Pearson Publishing 2011

Austria, Belgium, the Netherlands, and Germany are countries that follow the Christian democratic model. • Christian democratic parties often largest though not dominant party; size and location in the middle of the political spectrum make them frequent partners in any ruling coalition. • First arose in the 19th century when state attempted to take over education and family policy that churches believed properly belonged to them. • Today not so linked to churches. Mostly secular parties and present themselves more as defenders of Christian values more than Church dogma. • Seek to moderate class cleavages at the same time they defend class differences. • Safeguard strength of the family and moral authority of the Church from threats posed to them by divisive class conflict, an intrusive market and an encroaching state. Christian Democracy Pearson Publishing 2011

Christian democracy believes in capitalism but does not like its inegalitarian effects. • Supports welfare state and unions. • Tend to be high tax and spend states due to their welfare support. • Do not offer the array of collective services that social democrats do. • Rather they provide transfer payments in order to provide income security to families. • Distrustful of too much state intervention. • Parliamentary democracies • Some variation among the states: Netherlands has no judicial review; Belgium and Austria only mild forms of it. • German Federal Constitutional Court can nullify laws it finds unconstitutional • Germany is a federal sate in which powers are reserved to the lander, or states, which elect their own officials and raise their own revenue. Belgium also high degree of federalism. • Corporatism is most important feature: • Groups are organized into a limited number of hierarchical associations and recognized by the state and participate in the policy making process. Christian Democracy Pearson Publishing 2011

Volatile history • Span of 100 years: victory, defeat, scarcity, prosperity, fascism, communist party dictatorship, and parliamentary democracy. • Borders in flux • Now biggest country in Europe • 82 million people • Fourth largest economy • Late start politically: Otto Von Bismarck united small independent principalities into modern German state in 1871. • Agrarian feudal society • Rapid transformation • WWI = defeat in greatest mass slaughter brought an end to the Second Reich • Weimer Republican – first democracy but a troubled one • Political and economic problems • Nazi Party; Hitler, 1932 • WWII – German armies invaded Poland in 1939 • At first success – occupied much of Europe • May 1945 – Russian, Britain and America forced surrender • Occupation of the Allies; four zones; reduced to two during Cold War • East and West Germany Germany: Historical Background Pearson Publishing 2011

Semi-sovereign character attributed to: • Federal character in which authority is divided between the central government and 16 federal states, or lander. • The states raise their own taxes and elect their own governments but select members to the Bundesrat, the upper house of the national legislature, which has veto powers over bills that affect their jurisdictions. • European Union has some authority in some policy arenas • Trade, environmental policy, and border controls • European Central Bank • Monetary policy • Fiscal policy constrained by EU agreements • Laws are subject to judicial review by the European Court of Justice • Role of interest groups as constraints • Role of bicameralism • Bundesrat, upper chamber; Bundestag, lower chamber, selects government • Divided government becoming more prevalent • Ruling coalitions less stable and predictable Germany: The State Pearson Publishing 2011

Elections to the Bundestag occur every four years. • Early elections can occur following no-confidence votes. • Citizens cast two ballots in electing deputies to the lower house. • One for party they favor and one for candidate of the party they favor among a list of choices. • Proportional representation; must win at least 5 % of the vote before being awarded representation. • Head of state is the president • Ceremonial functions and selects a party leader to form a government. • Head of government is the chancellor • Commands majority support in the Bundestag • Most powerful position in the German political system; but less powerful than other chief executives; powers are limited by coalition treaties they negotiate with their partners in government and by ministers they appoint. • Generally stable • Has problems: immigration, balancing the budget, reviving the economy • May be difficult to attain consensus and incremental solutions Germany: The State Pearson Publishing 2011

East Germany versus West Germany • Planned economy and communism versus capitalist democracy • SPD Social Democratic Party • Rise to power • Unification – East Germany incorporated into FRG as five new federal states. • Accelerated dealignment of the party system; new party emerged: Party of Democratic Socialism (PDS), to attract voters from disgruntled East Germans • 1998- CDU-FDP ruling government led by H. Kohl was defeated by a coalition of the SDP and the Greens. • Chancellor Gerhard Schroeder (1998-2005) • 2005 close race between CDU and SPD • Angela Merkel of CDU became Chancellor – allied with FDP to form government Germany: The State & Society Pearson Publishing 2011

Reconstructed culture after a past that had glorified militarism, nationalism and anti-Semitism. • Contrition • Imposition • Based on new principles: demilitarization, post-nationalistic, supporters of European unity, pro-democracy, unification, immigration Germany: Political Culture Pearson Publishing 2011

Post-WWII revival steady and fast economic growth • High wages; low inflation and generous welfare benefits • Renowned as a producer of high-quality manufactured goods; until recent economic global downturn, Germany exported more goods on a per capita basis than any country in the world. • MODEL: social market economy • As little state intervention as possible and as much state intervention as necessary • Role of government: to promote cooperation among its different actors. Germany: Political Economy Pearson Publishing 2011

German Model of the social market economy delivered it all: high quality products, high wages, high fringe benefits, high levels of worker representation, and high levels of time off work. • Model rested upon consensus and coordination of well organized and powerful private actors, including employer associations, unions, and banks that the state helped bring together. • Growth rates began to decline in 1980s and 1990s. Almost no growth since 2000. • Created labor market issues. • Models advantages now considered part of problem – erosion of support for the model. • More assertive in foreign policy, but economic problems have weakened the “soft power” it might have wielded. Germany : Political Economy Pearson Publishing 2011

Problem Methods and Hypothesis Marks goes back to the late 19th and early 20th century to compare union strategies at the national level in these three states. Hypothesizes that unions that could control their labor market would choose collective bargaining over electoral activity and unions that faced hostile legal environments would be radicalized by it. • Why did the unions create leftist parties in Britain, want nothing to do with them in the United States (using picket lines rather than the ballot box), and get radicalized (unions and socialism) by them in Germany? Comparative Political Analysis: Why do Unions Pursue Different Strategies in Response to Similar Challenges? Pearson Publishing 2011

Operationalization Results Marks found that skilled unions in the AFL pursued their interest through collective bargaining. Where the labor market included unskilled workers as well as unskilled workers in large voting blocs, unions would instead try to make gains through politics – British Unions did through the Labour Party. Unions in a hostile legal environment that constrained organizing adopted a socialist orientation as they did in Germany. • Dependent variable is union strategy. • Influenced by two independent variables: organizational strength of unions (how encompassing they were) and the legal framework (regulatory legislation of union activity and workers’ political rights to strike, and voting rights) in which they operate. Comparative Political Analysis: Why do Unions Pursue Different Strategies in Response to Similar Challenges? Pearson Publishing 2011

Physical Well-being Informed-Decision Making Literacy rates are 99 percent in each of the three states. Use International Adult Literacy Survey as a more discerning measure. Five levels with III, IV, and V being the higher literacy levels. Proportion of citizens whose average scores placed them in level one or two, which are the lowest levels. Sweden had far fewer citizens (only 23%) in the lower levels than the U.S. and Germany, whose percentages in the lower literacy levels were relatively close and roughly double that of Sweden. • Poverty rates will provide a better, more discriminating and accurate measure. • Poverty line for family in four in 2008 in the U.S. was $22,025 – adjust measure for comparison. • Sweden and Germany perform better than the U.S. • Only measuring income; do not include public services or welfare benefits, which are greater in Sweden and Germany. Comparing Capabilities Among Sweden, the U.S. & Germany: A more difficult task needing more subtle measures Pearson Publishing 2011

Safety Civil/Political Rights Need to examine the quality of rights given they all have these rights. Measuring the quality of democracy is difficult. U.N. Human Development Report: 5 criteria On four no difference found among our case studies; only difference on Voice and Accountability Sweden, Germany, then U.S. • Sweden, the U.S. and Germany do not suffer from political violence and civil war. • But physical safety is still an issue. • Homicide rate data show that Germany and Sweden perform similarly and the U.S. clearly performed worst according to this measure. Democracy, Authoritarianism, & the Good Society: How do they compare on capabilities? Pearson Publishing 2011

Some political models are better able to create conditions that enhance the capability of their citizens more than others. • Social democracy, in the form of Sweden, generally performed better than the other models. • Christian democracy did better at meeting the physical needs of their citizens. • Extreme market democracies came in last according to the author’s criteria and tests utilized. Conclusion: Political Models & the Good Society Pearson Publishing 2011

How would you operationalize the four criteria we use to assess regime performance? Using your measures, which countries enhance the capabilities of their citizens most and come closest to the standard of the Good Society? • Do you think the different regimes among western democracies are converging, becoming more alike, in any of the areas we investigated: politics, political institutions, political culture, or political economy? Or have their differences in all of these arenas remained profound? Critical Thinking Questions Pearson Publishing 2011

What would have had to be different for the United States to end up like Germany or Sweden? • What do you believe is the greatest challenge social democratic, liberal democratic, and Christian democratic regimes face today? In what respect are their challenges similar to each other or specific to each model? • What do you see as the strengths and weaknesses of each political model? Critical Thinking Questions Pearson Publishing 2011

Developed Countries & the Good Society