July 26, 2018 / 12:25 PM / 21 days ago

Breakingviews - Hadas: U.S. radicals are a fit for EU mainstream

DANVILLE, Vermont (Reuters Breakingviews) - Alexandria Ocasio-Cortez has become a poster child for radical left-wing politics in the United States. The young New York candidate for the House of Representatives has a small army of enthusiastic fans, who last month helped her win the Democratic nomination over an established veteran.

Alexandria Ocasio-Cortez marches during the Bronx's pride parade in the Bronx borough of New York City, New York, U.S., June 17, 2018. Picture taken June 17, 2018. REUTERS/David Delgado

The political elite are far more skeptical. As far as economic plans are concerned, though, there is no reason to shun Ocasio-Cortez and her allies as dreamers. Many policies considered wild fantasies in the United States are fixtures in the European centrist consensus.

Healthcare is perhaps the most extreme example of American economic exceptionalism. The land of the free is not only the only developed country with a huge opioid-abuse problem. It is also the land of expensive and, on average, relatively ineffective care. U.S. healthcare spending per person in 2017 was 73 percent higher than the average of the next 10 biggest spenders, the OECD calculates, while the World Bank reckons the typical American’s life expectancy is three years less than the average euro-zone resident.

Every European nation has a way to manage healthcare which is both less expensive and, overall, more successful than the U.S. system. In the real world of hard choices, Ocasio-Cortez’s demand that “no person goes without dignified healthcare” is not utopian. It is basically technocratic, a call to study and learn from the readily available superior alternatives.

Similarly, while “tuition-free public college and trade school” may sound like a bizarre demand to American ears, it is hardly controversial in Europe. In the European Union, only the UK has anything approaching U.S. levels of tuition fees and the beginnings of U.S.-style student-loan problems.

In Germany and the Scandinavian countries, the typical tuition cost is zero, according to European Commission data. Elsewhere the annual charge is often below 1,000 euros, and there are grants for poorer students. The only downside is that in most of these countries, a smaller proportion of young people attend universities than in the United States, according to the Our World in Data website.

Ocasio-Cortez also calls for a “federal jobs guarantee.” That is a radical notion even by the standards of Europe, where labor markets are mostly deeply flawed. Rather than guarantee paid jobs for all comers, the systems across the Atlantic often give employees too much protection and charge employers taxes that are too high. Job creation is chronically weak.

Still, much of the logic behind the Democrat’s call for mass U.S. government hiring is widely accepted in Europe. The main goal is to help marginalized workers. The Americans are a long way behind on that. An OECD comparison of labor practices suggests the United States is close to the bottom in the rankings of developed economies for unemployment benefits and spending on labor-market programs.

Finally, “Alexandria believes that housing is a right.” So does almost any mainstream European politician, outside the UK. There have been property booms and busts in a few European countries, but the conventional wisdom is that housing supply should keep up with demand – and that governments are responsible for maintaining the right pace of construction and renovation.

For all its controversy in a domestic context, adoption of the Ocasio-Cortez economic agenda would bring the United States much closer to Europe’s best practices in government-society relations. For Americans, a particularly helpful gain would be a sharp reduction in what sociologists have termed precariousness – the risk of a sudden steep fall down the socio-economic ladder.

Such drops are far more common in the United States than in Europe. But with better support for unemployed and marginal workers, no huge healthcare bills, more affordable housing and little or no new student debt, downward social mobility would be much less of a danger.

Of course, a more European-style American welfare state would also have European-style bureaucratic problems. Complex regulations, overlapping bureaucracies and inefficient taxation would be unavoidable. Ocasio-Cortez and other radical American politicians are not likely to highlight that. Still, the goal of economic policies can never be perfection – the flaws have to be set against what global comparisons suggest are significant potential gains.

Ocasio-Cortez even calls herself a socialist, a standard term in Europe but an incendiary one in the United States. The majority of her compatriots seem to be allergic to the basic socialist logic: Since the nation creates its prosperity through a common effort, the nation’s government is responsible for ensuring that prosperity is shared fairly.

Many Americans like to think that talent and effort determine every individual’s success, a belief which may explain their acceptance of far greater inequality – in both wealth and services like healthcare – than most Europeans would tolerate. Even the leaders of Ocasio-Cortez’s party think her progressive platform is electoral poison in most of the country. The higher taxes needed to pay for a bigger government are sure vote-losers, whatever the potential gains.

That political assessment may be right now, but perhaps not forever. The percentage of Americans with passports is up from under 3 percent in 1989 to over 40 percent in 2017, by State Department data. The dramatic increase hints at a more international perspective. If that is the trend, then the future may belong closer to Ocasio-Cortez’s more global standard, not the American exception.

Breakingviews

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