A reader writes:
While I agree with you that this is one of the most interesting (and consequential) policy discussions I've observed in a long while, I think pretty much all of the participants are missing a critical point: it's not clear to me that Europe's growth rate since 1980 is a particularly useful statistic. "Europe" is so diverse, and its members starting from such different baselines in 1980, that it would be very difficult to account for all of the relevant variables.
In 1980, East Germany was a communist wasteland; it no doubt experienced a period of rapid growth after reunification. But this was the result of economic liberalization — going from communism to social democracy is a move towards freer markets. Ireland in 1980 was much poorer than just about any region of the United States. But it experienced an astonishing boom when it cut its corporate tax rate to 12.5%. Spain was likewise very poor and experienced rapid growth (again, from a low baseline) when it modernized its economy after Franco's death and its accession to the EU. In fact, many poorer EU countries benefited from a one-off increase in output as they joined the EU over the last 25 years and gained the benefits of the common market.
My point is not so much that Europe's respectable growth is the result of economic liberalization, although that's entirely plausible. My point is that there are so many variables and so many unique historical circumstances that I don't think it's appropriate for Chait to glibly conclude that large welfare states and strong economic growth are compatible. Europe's story since 1980 is so much more complicated than that.
Another reader:
In your emphasis of the last lines of the latest in this series, there are quite a few assumptions and implications that I think you need to develop/unpack/talk about.
Over the long-term a civilization needs aggregate power to protect itself in an inherently hostile world. In this respect (though certainly not in all ways) Europe is free-riding on the US, and following a non-sustainable strategy in a world that (IMHO) will always turn violent.
First, I think you seem to emphasize the idea that US military spending, which you have criticized as excessive in the past, is giving Europe a free-ride to develop more egalitarian/social democracy programs, while depriving the US of the money to do the same. This is pretty significant because it cuts to the heart of a lot of deficit concerns for legitimate budget-hawks and the budget chicken-hawks. Rather than pointing out that our system of capitalism is superior to Europe's system of capitalism, isn't this free-riding showing that the US is acting irrationally and that Europe, by free-riding, is acting rationally in response? After all, from "Europe's perspective" (I'm not comfortable assuming one perspective on an entire continent of people), if you could get away with lower defense spending and more welfare, why wouldn't you?
Second, I think the assumption that this free-riding is non-sustainable needs to be explained. Why is it non-sustainable? I understand that strategies based on free-riding the actions of others is inherently unstable if you can't sufficiently control the actions of the party which you are free-riding, but I think Manzi, or you, need to explain what the first break-down will be, how it will occur, and what's to stop Europe from responding.
Finally, "long-term", "aggregate power" and "protect" have a lot of wiggle room. "Long-term" means what exactly, 10 years, 50 years, 100 years?
"Aggregate power" is just as ambiguous a term here because it might be simply military power but it might also include financial, diplomatic, and cultural powers. Europe is not exactly lacking in those departments, I might add.
"Protect" really, more than the others, deserves defining better because in the way its used, I'm not sure if Manzi is talking about "protect from existential threats" or "protect the current world order/status quo position of Europe". While I don't think that global economic progress is a zero-sum game, the rapid industrialization of Africa, Asia, and South America does mean that Europe, in order to maintain its same relative status in the world, would have to either suppress economic growth in developing nations or find some way to grow in gigantic leaps and bounds. If there's one thing that this discussion has created, it's a consensus that American-style capitalism isn't leaps-and-bounds better than European-style capitalism, i.e. that our way isn't so much better than Europe's that we are crushing them.
Another reader:
As I read the discussions between those 2 (and many of Chait's questions occurred to me as I read Manzi's article), there's one thing Manzi doesn't really address. It's foreign aid. And I don't mean 'hand outs' that so enrage conservatives. I mean, what Manzi has accurately characterized as Europe's free riding on the US for defense.
This is a form of foreign aid. American taxpayers pay for aircraft carriers, soldiers, etc., to defend Europe. And Europe is rich. So we're actually providing ALOT of foreign aid to the richest countries on earth. Japan pays the way for our soldiers; they reimburse us for the cost of stationing them in Japan. Europe does not.
The USSR collapsed in 1991, but our military hasn't really changed. We don't face tanks, or millions of soldiers across our allies' borders, yet the military structure we have still reflects those long dead threats. It's true that much of the military is multi-capable; tanks can be use for destroying other tanks, or for chasing insurgents across open fields. But do we need $600B of them to do this?
And I recognize having stable trading partners is essential to our economy. But it's obvious we simply can't afford it anymore. It's time to end foreign aid to the richest countries in the world. We should maintain a worldclass military that can defend the US. Let the allies evaluate their own situations and start paying their own way.
The Dish 