Moving away from the subsidy model

Politics in a democracy is rough because people do not react to anything but immediate problems. If it can be put off, it will be — because solutions cause inconvenience, cost and most of all, uncertainty.

Thanks to our recent world financial crisis, people are re-evaluating their stance on politics. In addition, they’re combining coming crises and seeing a pattern of failure in what we have done in the past.

The resulting pattern is of Europe and the USA switching alignments as they try to un-do what was wrong in the past. The USA, coming out of the George Bush years, drifts more leftward, and Europe coming out of the boom years of the Cold War era and beyond is drifting more rightward.

Each side is re-thinking where it went wrong with its political and economic strategies from WWII to last year.

One interesting leader is Sweden. Steadily Sweden is acknowledging that it is moving away from the facilitative society toward a culturally-unified, competitive one. Facilitative societies have several traits:

  • No unifying culture. There is no us-against-them, but we are all citizens of the world, and anyone can come here. Culture — we don’t need that. You can get that from TV. The goal of society is to provide a place where you can do business.
  • Consumers dictate commerce. Desire-driven societies are facilitative because they do not judge at all what is appropriate, but reward whatever people want to buy or do. It’s like a big American shopping mall where you choose your house, choose your career, your pleasures and your spouse and family decisions.
  • A strong welfare state. Allowing consumers to make any decision they desire means that many of them will screw it up. As a result, government steps in with all sorts of helpful programs that are not so much expensive as they are a drain of money from activity in the economy. When you pay citizens directly, they spend that money on products which are at their final state in the economy. No more value will be added, and they will not produce any greater value.
  • Tail wags the dog. In a facilitative society, there are no standards and no leadership. It’s whatever you the individual want to do. As a result, your society goes from producing objects and services of universal value to making products and services that address the desires of its citizens, without wondering if those are rational beyond its borders.

You can see how facilitative societies quickly become Ponzi schemes of a benevolent sort. You make products to sell to your citizens, so your culture becomes entertainment/design/internet driven. This means people are buying many products with high markup but from whom no further income is generated; this means that wealth goes from your productive citizens to conglomerates who most frequently outsource the hard work and direct their money into closed industries and high profits. They aren’t adding much value in the process of making these goods and services, so that money doesn’t get spread around the economy. It gets concentrated, usually in products like what they make or worse, financial instruments and stocks, which have become like a betting pool for computers to temporarily store wealth in.

If you want a vision of the facilitative society, this commercial expresses it fairly accurately. There are no right choices, only desires, whims and caprices. These in turn don’t make anyone any money, but since it’s all about you the consumer, we don’t think about that — or the opportunities we lose by focusing on selling within our society instead of selling products of broad value.

The facilitative society will always be identified with America because as a melting pot, first of Western Europeans prior to 1840 and later of all Europeans and finally, of all people starting in 1965, the USA has no dominant culture that can be clearly identified. It always had a culture mostly borrowed from the UK and Germany, but that culture wasn’t visible because “USian” is not an ethnic or cultural group. It’s a location. So it was natural for people to treat the USA as a giant shopping mall in which the goal of society was the individual, not cultural standards or goals.

America also faced different revolutions than Europe, which kept it vital for longer. While Europe fought a series of revolutions for the equality of all people and to dismember its aristocracy, starting with the Magna Carta and picking up steam with the French Revolution only to fully explode in WWI, the United States fought a revolution and then a Civil War over how it would rule itself from a strong central authority. Europe went socialist, where America went federalist and stayed capitalist to keep that issue at bay while others were resolved. European socialism was basically a payoff to the unruly proles who murdered many of the best in France. The entitlement payments were designed to keep them pacified and oblivious voters who did not riot or revolt.

As a result, Europeans began to work on the model of socialism to integrate other ideas, especially as the post-WWII period showed us how socialism and communism together had an ugly tendency to fail only after wrecking culture, killing off the smart people, and then starving the rest. Pure socialism could not stand. So modified socialism took on many new forms, and behind the scenes while bigger events played out, European nations have been steadily revising their vision of it.

For many years, foreign policy-makers have pointed to Sweden as a positive model to follow, making Swedes like me proud. Too often, though, foreigners have drawn the wrong lessons from Sweden’s success. For instance, whenever I give a lecture, anywhere in Europe, about economic reform, I always get the following response: “But you come from Sweden, which is socialist and successful—why should we launch free-market policies ?”

The simple truth is that Sweden is not socialist. According to the World Values Survey and other similar studies, Sweden combines one of the highest degrees of individualism in the world, solid trust in well-functioning institutions, and a high degree of social cohesion. Among the 160 countries studied in the Index of Economic Freedom, Sweden ranks 21st, and is one of the few countries that increased its economic freedoms during the financial crisis. Sweden gets higher scores for liberal markets than Germany and Belgium, or reformers such as Cyprus and Georgia.

It’s true that Sweden wasn’t always so free. But Sweden’s socialism lasted only for a couple of decades, roughly during the 1970s and 1980s. And as it happens, these decades mark the only break in the modern Swedish success story. – WSJ

We hear about the Swedish model because in the 1960s and 1970s, an indignant Europe rebelled against its occupying force — the Americans (a form of resentment at the necessary sense of obligation for the US keeping the Russians and Germans at bay). As the writer above says:

But Socialism was fashionable in post-War Europe and Sweden was not immune.

Sweden as the land of intellectuals and idealists is most susceptible to trendy ideas, especially insane ones, because smart people when confronted with an insane idea tend to chew it over, often for decades. They get curious and have to try it out. And if that ideal appeals to their emotional side, like promising some kind of Utopia or another, they’re doubly likely to give in. This explains why the fairest nations of Europe are the first to indulge in whatever decadent trend drifts through their newspapers, and Sweden is slowly recovering from the last bout of that memetic infection.

Yet Sweden is not the only place. Germany has figured out that if it doesn’t get away from a subsidy model, it will soon replace itself with people who come to take advantage of its economic miracle, and they will likely kill the goose that laid the golden eggs. All of the wealthy nations in Europe are finding out that pan-European socialism is going to mean a steady flow of Western European wealth to the chronic disaster states of Southern and Eastern Europe, who are impoverished not from a lack of resources but from a persistent pattern of corruption, disorganization and instability, not to mention lower average IQ scores.

As a result, Europe is reconsidering the American model at the same time the Americans are flirting with socialism, hoping that they can buy off the surly mob of drones by paying them entitlements, through racial reconciliation in the form of guilt payments, and finally, by doing what is popular instead of what we know to be rational. The American model is crumbling under the pressures of democracy, and for added humor, oftentimes it is being urged to this state by people who are citing the European model as proof the nu-American socialist model will succeed.

Yet cracks show in the plan:

If you count the “Part time employed for non-economic reasons”, you get 126.8 million Americans who are unemployed, underemployed, working part time or “Not in the labor force”. That represents 53% of working age Americans.

So only 47% of working age Americans have full time jobs. While the official unemployment rate is 9.4%. Something’s missing somewhere.

43.2 million Americans receive foodstamps. That’s 18.1% of all working age Americans. If they all have on average 1.5 dependents, which is probably a reasonable estimate, a full one third of the US population receives at least part of their food through this system. – Business Insider

America is focusing on what failed in the European socialist model, which is a transfer of wealth from where more wealth can be made to areas where no more wealth will be made. Products in the supermarket are at their highest state of value. People are not buying stocks or tools with food stamps; they’re throwing money into established businesses that then do not spread that wealth around, at least in the USA. In fact, they’d be insane not to outsource to some place without a subsidy-based facilitative economy, so that their wealth can go farther.

As a result, we’re seeing this kind of pattern:

Employment prospects for young people have been particularly hard hit by the economic downturn, with data last week showing that the number of 16 to 24-year-olds out of work reached 951,000 giving a rate of 20.3% — the highest since records began in 1992.

The unemployment rate for the wider U.K. population stands at 7.9%. – WSJ

If you spread the money too thin, and try to get every person into an office job, you will attract more people and be popular — but this is unsustainable.

This is why conservatives tend to oppose big government. Big government subsidizes people on the basis of being people, so it reverses evolution and supports the clueless at the expense of those who can control themselves. The result is a swelling of the population of confused people and an increasing burden for the productive. The spreading of wealth means that we are a “meritocracy” that promotes people for trivial abilities and pays them higher salaries, but they’re not doing anything productive because their roles are so clearly defined within the system. They work a job, not work toward a goal, and they know that a safety net of regulations is in place to keep them from being fired. There are too many union rules, lawsuits, regulations, etc. to keep employers from simply firing the incompetents and keeping the most competent. So more people have jobs, and those jobs pay more, but the value of the economy declines as it becomes bloated, calcified and filled with incompetents.

Usury — a favorite target of Traditionalists — makes the situation even worse. The clueless among us do not fear high interest payments because they have no idea of the consequences those will bring. As a result, they take on huge debt loads and get the education, certification, etc. that they need, but aren’t particularly competent or even realistic. Yet we have to hire them and promote them, because according to our “meritocracy” they have “worked hard” to achieve “results.” The bloat explodes. All of these new confused people then rush off to buy homes, cars and luxuries with their newfound credit, creating a giant ticking time bomb of a credit bubble, which encourages our economy to further become based on re-financialization, or the buying and selling of paper instruments including debt, in lieu of actual productive activity.

We didn’t stumble down this bad path from bad intentions. Wanting everyone to be happy is a good intention. Wanting them to be happy without worrying about whether they’re competent however creates a society of parasites and leeches who then drain the economy of its blood, destroy the culture of the nation, and make a once-prosperous country into a giant shopping mall that thinks it has a health economy because it keeps selling itself stuff and wow, look at all the cool entertainment products and useful web 2.0 services we have. This is why recessions like the recent one come “out of the blue” but not really; the market is adjusting to our new worthless value.

Conservatism takes no stand that is not rational, but unlike liberalism, conservatism is about the long term, or avoiding problems that may be centuries away instead of a pay period away. Most people cannot understand this, and so they prefer the subsidy model, which democracy steadfastly encourages. But we are seeing changes as a convergence of systemic failures encourage re-thinking of a society based on individual desire.

From the first article:

Sweden combines one of the highest degrees of individualism in the world, solid trust in well-functioning institutions, and a high degree of social cohesion.

Leaving aside the questionable assessment of “individualism,” which probably refers more to the ability of the individual to act without others rather than the tendency of the individual to prioritize their own desires above all others, we can see what the article cites at work: trust in well-functioning institutions and social cohesion. The rule of law and the rule of culture, put together, are a more effective guide to national success than all the subsidized shopping malls in the world.

3 Comments

  1. Justin says:

    If “trust in well-functioning institutions and social cohesion” are the keys, the USA is done.

    However…

    Never underestimate the power of authoritarians ordering around large groups of ignorants.

    Sure, America our Beloved Republic is gone…

    All hail, Amerika the Mighty Empire!

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