euroconcerns

Patricia Lawson

As so often, Germany provides us with a model for responsibly addressing a compelling social issue, in this case, long-term care for the aged.  Germany is a country that works.  It is the world’s fourth largest economy, although it has roughly a quarter of our population.  As the economic powerhouse of Europe, it drives the prosperity of the Eurozone (until, of course, Wall Street’s financial meltdown put the Euro on the skids temporarily).  Germany’s extremely generous labor laws and wages, and its consequent huge middle class, are living proof that one best builds a stable, prosperous, and productive society from the ground up, rather than hoping that something will eventually trickle from the top down.  For all these reasons, Germany’s social solutions are well worth considering.

Interestingly, Germany had no public sector involvement in long-term care until the mid-nineties, except for the indigent.  Traditionally, the elderly were expected to be cared for by the family, still a very strong unit in Germany well into the contemporary era.  Filial piety is a powerful social more in Germany, to an extent bemusing to Anglo-Americans.   That culture’s divisive generation gaps and tendency to blame the parents for all misfortune are alien to the German mentality.  Consequently, very few nursing homes even existed, and these were primarily for the poor. But the increasing lifespan, coupled with the entry of women into the workplace and a higher divorce rate, left fewer intact homes where the elderly could be cared for and fewer women, the vast majority of the caregivers, at home to perform the care.  In response to public demand, in 1995, the Bundestag (German Parliament) passed a long-term insurance program, which required all workers  to pay 1.7% of their salaries into an insurance fund, with the employer making a matching contribution. [1] In 2004, pensioners were required to make this contribution as well, and in 2005, those without children, who were more likely to be relying on outside assistance, were required to make a somewhat higher contribution.

The thrust of the program is to keep patients at home for as long as possible.  In fact, the assessment for this program is done in the home, so that the consultant can see exactly how the patient copes on a daily basis. There are three levels of assessment of the patient’s ability to perform such activities of daily living (ADL) as eating, dressing, bathing, etc.    In the first level, the insurance will pay for walkers and such improvements to the household as removing barriers, elevating toilet seats, providing a step into a shower and handrails in the bath, etc.   The second level involves much greater incapacity and a much higher level of care, either at home or in a nursing home.  The third requires residency in a nursing home.

A set schedule of benefits is provided, and patients have the option of either cash or professional services.  Most prefer cash, so they can make their own household modifications and pay family members or housekeepers for necessary help.  At the higher levels of assistance, means-testing kicks in.  The poor are completely covered, whereas a middle-class family will pay for the uncovered portion of the care ( i.e. room and board in a nursing facility as opposed to the nursing and medical care, which are covered.)  Nursing home facilities have been upgraded and daycare centers are provided.  The daycare centers usually serve those over 80 who have dementia.  For the first time, with the insurance program, family caregivers have been taken into consideration and some relief provided for them in terms of training as well as back-up when they need to be absent.

In 2007, this public insurance covered 70.36 million individuals, and private insurance covered an additional 9.25 million, which amounted to 97% of the population.  [2] That year the program spent 17.3 billion euros, and had a 3.6 billion surplus.   Because of this tremendous surplus and the perceived insufficiency of benefits, which were not indexed to inflation, the system was reformed in 2007-8.

With the reforms [3], payroll contributions were increased to 1.95%, and benefits were increased as well (with provision for them to increase again in 2010 and 2012). Furthermore, the purchase of private LTC insurance was made compulsory for the wealthy, but the premiums could not exceed the costs for the public program.  Because a payment gap still persists for middle-class patients, the state, in the 2008 reform, encouraged citizens to purchase supplementary private insurance as well, giving them a 184-Euro tax deduction for doing so. [2]  Again, the premiums and benefits must be in line with the public program, so no exorbitant charges are possible.  This avoids the high premiums charged in the U.S. by such firms as John Hancock. (See previous post, Son of Deficit Reduction Act of 2005.). About 1.6 million people (3.5% of the population) held supplementary private insurance in 2009. [4]

The new reforms allowed benefits to be drawn on after two years of payments, rather than five.  The dementia benefit was increased, in recognition that this condition increases with longevity.  Furthermore, the criteria for qualifying for benefits on grounds of dementia were relaxed, and staffing for dementia patients in nursing homes was supplemented.   Community care centers were established to provide care management and advice to caregivers, and funding for voluntary care respite services was increased.  Respite assistance for caregivers could now be claimed after six rather than twelve months.  Furthermore, caregivers were now entitled to unpaid care leave for up to six months, which would be covered by professional services, while their pensions contributions were made for them. They could also take a short-notice, ten-day leave.  Nevertheless, these reforms are not a permanent fix.  Because the system is expected to be in deficit in 2015, another re-evaluation is on the horizon.

The AARP has done a comparative study of the German system versus that of the U.S. [5] They found that both countries, in 2005, spent roughly the same percentage of GDP overall  on long-term care:  1.44% in Germany  vs. 1.37% in the U.S.  But Germany spent significantly less on institutional care:  0.80% vs. 0.98% in U S.  and more on home care:  0.64% vs. 0.39%.  Public spending on LTC was somewhat higher in Germany at 1.09% of GDP vs. 90% in US.  In the U.S. this spending is primarily from Medicaid, which is entirely based on means-testing, as opposed to Germany’s universal public insurance program.  Since Germany’s program was introduced, social assistance spending in that country on LTC has been reduced by two-thirds.  Thus, the German system relieves financial pressure on the Länder (German states). Germany provides much more systematic support for caregivers, who tend to be working women in mid-life.   But the most significant difference between the two systems is that elderly Germans are not required to impoverish themselves (à la the Medicaid spend-down) in order to receive long-term care.  Although the German insurance program doesn’t completely cover LTC needs, it makes such a substantial contribution that the majority of family assets are protected.  A pension, for example, would normally cover the gap for those who do not buy supplementary private insurance, rather than families having to divest themselves of the parental home or the state placing a lien on the home, as happens too often in this country to repay Medicaid nursing-home costs.

Among all the OECD countries, in 2008 [6], the U.S. spent in the lower third on long-term care, at 1%,  when percentage of GDP spent on LTC is considered, as opposed to 1.3% in Germany and a whopping 3.5 and 3.6% in the Netherlands and Sweden respectively.  Furthermore, in the latter two cases, that expenditure was entirely public, whereas the U.S. has the highest ratio of private-to-public spending, at about 2:3, of any OECD country except Switzerland.  Although in Switzerland, a considerably more generous 2.1 percent of GDP is spent on LTC, of that, an exceptional 1.3% of GDP is private spending and only .8% is public spending.   Switzerland also has the highest asset inequality figure for the OECD, money-laundering being a very lucrative business, the only such figure higher than that for the U.S., according to a 2006 study done by the World Institute for Development Economic Research based on 2000 figures. [7] In Switzerland, 71% of wealth is concentrated in the hands of the top 10%, as opposed to the U.S. figure of 69.8%.  (This statistic has undoubtedly worsened for both countries since 2000).   It’s not difficult to imagine that Switzerland’s high private LTC expenditure is a function of the wealthy lavishing the very best of private home care or luxury nursing-home care upon themselves.  But, at least they have the good sense to spread the wealth around.  Although asset inequality is high in Switzerland, income inequality, at a 33.7 Gini coefficient, is markedly less than that of the U.S. at 45. (These are CIA figures for 2011.)[7]

As usual, the U.S. is something of an OECD outlier.  Although the trend toward home care of the elderly is positive, the requirement that assets be stripped to qualify one for Medicaid makes the U.S. LTC program one of the harshest in the OECD.  Germany provides a positive model for the U.S. to follow, with an insurance program, not an entitlement.  It’s called pooling resources, not exactly a radical concept. But in these anti-spending times, when social security, a self-funding insurance program, and Medicare, also paid for over long working careers by payroll taxes, are reviled as “entitlements, ” don’t expect a Republican-dominated House of Representatives to do the right thing and allow low- and lower middle-income elders to pass on their assets to the next generation.    This is the last in a series of posts (Asset Transfer Alert!, Son of DRA 2005) inspired by my real-life encounter with a family who had had Medicaid liens placed on their assets to pay for their 95-year-old mother’s nursing-home care.

[1] http://bibliothek.wzb.eu/pdf/2004/i04-302.pdf

[2]http://www.eucss.org.cn/fileadmin/research_papers/policy/Medical_insurance/Case_Study_LTC_Germany_Final_en.pdf

[3]  http://www.york.ac.uk/inst/spru/research/pdf/LTCare.pdf

[4]  http://www.oecd.org/dataoecd/52/12/47884985.pdf

[5] http://assets.aarp.org/rgcenter/il/2007_19_usgerman_ltc.pdf

[6] http://www.oecd.org/dataoecd/51/45/47884520.pdf

[7] http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Patricia Lawson

As a break from the typically earnest tone of this blog, it’s time for a little French food porn.

We were halfway down the autoroute, heading for the Mediterranean coast, when it hit me that we really were in France again.  We had stopped at a service area, and at the moment of epiphany I was biting into a tartelette aux framboises, a raspberry tart with a delicious sandy crust filled with a layer of crème patissière and sweet ripe raspberries.  I was standing next to a group of truckers drinking demitasses of intensely strong coffee (it’s really an espresso, but is simply called un café).  Their proximity reminded me that exquisite food such as my tartelette is the food of the people, not restricted to high-priced tearooms.

In spite of such delicious tidbits, we arrived at our apartment at 11:00 p.m. or so completely ravenous. We had not eaten a complete meal all day.  We walked a few blocks downtown to the main place, which is almost entirely covered with the big square umbrellas of five restaurants.  All had stopped serving but one.  That one, however, was eager for business, and we were soon sitting in the mild southern air, listening to the play of the long, low fountain that runs alongside the place like a creek.  A glass of wine later, I was dining on salade au chèvre chaud, one of my favorite meals, pieces of hot , soft, chèvre in a bed of lettuce.

I recognized the headwaiter.  He used to work two restaurants up as a regular waiter.  But I guess he had changed restaurants for the promotion.  Being a waiter is a respected profession in France.  Anyone who administers the sacraments of the meal plays a critical role in this culture.  A waiter is addressed as Monsieur, no longer, as I was taught in high school, Garçon (boy). Thank God.  I’ve never had a French waiter tell me his name, nor linger over the table obtrusively.  First names are exchanged only among good friends in this culture, and his role is much too important for more than a few moments of idle chatter.  (Nor have I ever been treated with the superciliousness of a French waiter in a pricey restaurant in America.)  Not that waiters in France are robots.  They are just as personable as the rest of the population, always ready with a joke.  In France, they have these cell-phone looking devices for paying with a credit card, which they bring to your table.  That night the system was slow, and the device wouldn’t print out our receipt.  The waiter put it to his ear, miming a conversation,  “Allô, allô.”  That seemed to do the trick. Incidentally, all waitpersons in Europe are paid salaries with benefits, rather than having to rely mostly on tips for a living.  They take tips as well, but these are a fraction of the tips in America, because they already make a living wage.

The next morning I got up before the others and headed out to my favorite bakery.  If I make a sharp turn behind our triangle building, I can follow one of the oldest streets in the town at an acute angle as it cuts across several blocks to end up exactly at Martinez, the best bakery in the quartier.  It’s good to feel somehow tethered to Martinez.  I buy bichon, a folded-over flaky pastry filled with lemon cream.  I’ve never found this at any other bakery anywhere else in my six years in France, and it is absolutely delectable.  I also take along a couple of croissants filled with almond paste and topped with almonds.  And a baguette for spreading with butter, to make what the French call tartine, which always tastes so much more delicious than any mere bread and butter has the right to do.

The business of the day is in a little town by the sea, where we used to live. The approach is a slalom along a rocky coast road that runs through vineyards toward a foreground of deep blue with shark-fin sails.  Artists of all descriptions spent a lot of time on this coast, for good reason.  As we walk along the promenade in town by the marina, my son says, “Let me get this straight, we left this for the Midwest?”

Soon it’s lunchtime, a big meal in France.  We have a shock when we head for our favorite restaurant and find it shut down.   This is a major blow, because we knew the proprietress.  Her cuisine was a triumph of imagination, yet ridiculously affordable .  We end up eating at a newly opened competitor across the street.  They’ve been here for three years, it turns out, which probably contributed to the demise of our beloved restaurant.  So we settle for second-best, which is reasonably exquisite anyway.  An hors d’oeuvre of foie gras—you have to eat foie gras at least once in France, all moral considerations and health issues aside.  It comes with white and spiced bread and is accompanied by an herbed honey sauce.  The main course is a skewer of grilled scallops, shrimps, and monkfish, perfectly tender.  For dessert, souffle’d ice cream flavored with Grand Marnier, sitting on a thin cake base with a little pomegranate sauce.

This is one of those meals that convinces you that you will never eat again.  But sure enough, as 8 p.m. rolls around, the standard dining hour in France, the restaurant place beckons once more.  This time we eat at our preferred restaurant rather than at the only one that happens to be open.  I’ve been anticipating   my favorite meal: a salad of scallops with an orange sauce, avocado, and lots of frizzy lettuce.  It’s delectable in every respect, as always.  For dessert, a noûgat glacé, a little rectangle of ice cream, based on the white nougat candy with its almonds and pistachios.   Again, with a raspberry coulis, a thin fruit sauce.  At home, I never eat ice cream, but here it’s served in manageable amounts in irresistible forms.

Breakfast the next day is rushed.  We only have two-and-a-half days here, and they are action-packed.  I have to buy things for the apartment, which allows me to tour the local mini-Galeries Lafayette.  Also, because it’s a day dedicated to celebrating European culture, all the museums and historical sites are open and free.  I know the historical center of this town very well, but I want to fill in one gap in that knowledge.  That’s what will sustain me for the all-too-long intervals when I’m away.  I visit a hôtel particulier, a mansion once owned by a cigarette paper magnate.  His son-in-law inherited the place and refurbished it with ebulliently colored, art nouveau-influenced murals of love goddesses.  With its domed grand entrance and its beautifully be-fountained courtyard, it’s a knockout.

Back to the important stuff, food.  Having run around all day and missed lunch, I am ready for some serious dining.  After some discussion with a French friend, we end up at a little neighborhood restaurant.  In fact, it’s a block down the street on a pretty little square in our anything-but-fashionable quartier.  They specialize in French home cooking, if ravioli stuffed with foie gras and forest mushrooms can be considered home cooking.  I had  duck breast stuffed with chèvre, accompanied by a polenta soufflé.  For dessert, a lavender-flavored crème brulée.  And afterwards, the intense little demitasse of coffee, which restores clarity to the head no matter how many pichets of wine have been downed.   Incidentally, we drank rosé with all our meals, because it’s the regional product.  It’s dry and not at all like the syrupy goo I often encounter elsewhere.  In fact, this is the only place in the world that I drink rosé.

Departure by car for Switzerland, lunch and dinner on the way.  Both excellent roadside meals.  For lunch in France, a sandwich a l’Auvergne, meaning a delicious smoked ham with a Roquefort sauce, frisée lettuce and tomato on a supremely fresh half-baguette, with bottled water to drink and a fresh chocolate éclair for dessert.  At about $14 for all three items at a sandwich stand in a gas station, it’s a bargain for the quality.  You could easily pay $8 to $10 in America for a soggy, stale equivalent.  Besides, people get paid more in France.  In any case, the lunch keeps me completely content until dinner in Switzerland, where I have the best roadside meal I have ever eaten in my life.  If you’re ever on the highway in Switzerland, and the service area has a huge fighter jet outside, rush in and order some of their cèpe risotto.  The alpha and omega of risottos everywhere, creamy and full of porcini mushroom.

I’m very moved by the integrity of these cultures, that don’t attempt to deceive one with inferior quality by cheap marketing tricks.  Food is what it is, everyone knows and recognizes it, and there’s no point in the phony baloney of American food processing.  There may be cheaper versions of foods, but they will almost always be tasty.  Among less expensive food in France, there’s the wonderful North African cuisine , with its tajine, lamb stew baked in a peaked earthenware pot.  I once sat across from my twelve-year-old son (now eighteen) eating an artichoke tajine, while he ate one with apricots.  I know the experience made a deep impression on him, because he refers to that meal, now and again, nostalgically.  I’m grateful that he grew up eating in Europe. (Even if it makes him pretty picky about my meals.)  People on the Continent have not been acculturated away from their own natural sense of taste.  Life feels whole, the social fabric intact.

By Patricia Lawson

One element of a certain reverse culture shock I’ve been experiencing since returning to the U.S. after nearly two decades in Europe is the high cost of college.  Since I have a high-school senior poised on the brink of higher education, this issue is very immediate.  But unlike my son’s friends’ parents, who are ten to fifteen years younger than I, I have a clear memory of a time when college was affordable.  For example, I remember that in 1967 the cost of a year’s tuition at Harvard was around $2,400 (excluding room and board).  This was considered an exorbitant sum at the time.  And indeed, it is worth $15,700 in today’s dollars.  Still, a very reasonable price for the top education America had to offer.  Most of the other parents, on the other hand, came of age in the 80’s, when college costs had already spiraled out of control.  According to a 2010 study:

A comparison of inflation statistics from the Bureau of Labor Statistics and the College Board reveals that since 1978, the cost of attendance at community colleges and 4-year public and private colleges and universities has tripled, with tuition increases rising at an average of double the general inflation rate.¹

Furthermore, “From 1982 to 2007, college costs rose a whopping 439%, according to the most recent biennial report by the National Center for Public Policy and Higher Education,www.highereducation.org.”²   An article in the Huffington Post states, “A recent College Board report found average in-state tuition and fees at public colleges and universities this fall rose 7.9 percent to $7,605, while the average sticker price at private nonprofit colleges increased 4.5 percent, to $27,293.”³

Before the inflationary spiral began, in the late seventies,⁴  college costs constituted an average of 3-4% of family income.  Today, according to a 2008 report from the National Center for Public Policy and Higher Education, “On average, students from working and poor families must pay 40 percent of family income to enroll in public four-year colleges. Students from middle-income families and upper-income families must pay 25 percent and 13 percent of family income, respectively.”⁵

Pointing out how this increase affects student debt, The New York Times on April 17 cited Mark Kantrowitz, publisher of FinAid and Fast Web:

Two-thirds of bachelors´ degree recipients graduated with debt in 2008, compared with less than half in 1993.  Overall, student loan debt out-paced credit card debt for the first time last year and is likely to top a trillion dollars this year as more students go to college and more borrow money to do so.  “In the coming years, a lot of people will still be paying off their student loans when it´s time for their kids to go to college,”Mr. Kantrowitz said.

Sufficiently overwhelmed?  Yet today’s  parents seem conditioned to the exorbitant costs and take for granted that their children must graduate with an average of $24,000 of debt.⁶ I, on the contrary, hark back not only to an earlier time but to my recent stay in Europe, where most higher education institutions are public or quasi-public and the cost ranges from nominal to nothing.

My son, for example, who has dual German-American citizenship, is getting his Ph.D. at Oxbridge.  Sum total of tuition and fees for his first year, as a European Union (EU) student?  A little less than $9,000.  Sum total of a similar year at Harvard?  $38,000.  (I am excluding room and board, which are too variable across the different countries we’ll discuss.)  Until 1998, higher education was free in England.  When they finally introduced tuition, they initially capped it at £1,000 (about $1,600) per year.   In the course of the decade it has crept up to the present amount of £3,300 (about $5,300 at today’s rates) for EU students.  Oxford and Cambridge are exceptions, each having a £ 2,200 ($3,300) surcharge or “college fee.”  Non-EU students pay three times the total amount at any given university, although even at that they still pay considerably less than in America.

You could argue that Harvard and Yale are private, and Oxford and Cambridge are public.  But the highly-ranked public University of Michigan has a $36,000 out-of-state price-tag.  Also, both Oxford and Cambridge, although subsidized by the government, are private in the sense that their endowment takes the form of large chunks of real estate (often seized monastery lands) first granted them in the medieval era or during the Reformation.   Fully private universities do exist in Europe, and some are just as exorbitantly priced as in America, but they are the exception.

But on to the continent, to which England is the American-model outlier.  (In fact, in 2012, tuition costs in the U.K. are slated to triple, thanks to legislation passed by the new Tory government, over the vociferous protests of students all over England.)  On the continent, however, costs are vanishingly low.⁷  Denmark, Sweden,  Finland, and Poland for example, charge nothing for a public university education. Other countries, such as Spain and Germany,  in response to neoliberal emanations from America and England, have instituted  nominal tuitions.  Spain’s is set at a maximum of $1,200 per year.  Portugal charges very slightly more.  Since 2006, some German states charge an annual $1,600 for a year’s tuition and fees, although other German states continue to charge no tuition at all.   At most, a vanishingly small administrative fee.  France’s universities follow a similar pattern, with a nominal $200 per year fee for an undergraduate degree, with some higher or specialized degrees costing $1,000 per year.  Austria’s higher education is essentially free for those pursuing a degree program, who do not exceed its normal limits by two semesters.

On what basis can the countries of the EU afford to provide all this free education?  It’s a meritocracy.  Most countries have a fairly stringent set of exams at the end of secondary education that determine whether one can go on to University:  the “Bac” for Baccalauréat, in France, the “Abitur” in Germany.  Once a student has passed these, the state perceives her as a resource and is willing to invest in her further education.  In France, where a loose societal goal is universal university education, admission to ordinary universities is relatively easy (as opposed to the extremely selective Grandes Ecoles, where the country’s elite are educated).   Making the grade to remain in the system, however, is up to the student.   Germany’s system is stricter, beginning with an unusually early age for selection into university-track secondary education.  One’s GPA at the tender age of 9 determines this, whereas in France students don’t enter the university track until 15.  There are ways around the German system, however.  Gerhard Schroeder himself, Germany’s chancellor before Angela Merkel, missed the academic boat as a boy, but ultimately made his Abitur, went on to law school, and the rest is history.

But personal histories aside, the point about higher education in Europe is that it is not a luxury or privilege to be paid for, but a resource for all who are qualified, which is provided for the betterment of society. On the principle that the better educated a society’s members are, the more advanced and inherently healthy that society will be.  In fact, in spite of the recession, France upped its spending on higher education in 2010 by $2.4 billion, an increase of 5.3%, and Germany increased its education budget by 9%.⁸  Remembering as I do the days when America’s colleges were affordable, and having seen the inexpensive European system up close, I weep for the young people of America who graduate saddled with crippling debt.  The $24,000 average I can’t help but think low, since I know in my personal circle a young man who went to two years of community college, benefited to some extent from the GI Bill and paid in-state tuition in the SUNY system, yet who graduated with a debt more than twice the average, while getting a BA.

What is America doing to its youth to saddle them with exorbitant debt?  It begins to approach a form of indentured servitude. Next, with the increasing privatization of our society, enterprising parents will present their kids with a bill for their upbringing upon high school graduation.   Why is it that an aggregate of European countries of diverse makeup, numbering 500 million people, uniformly perceive higher education to be society’s obligation to the individual, whereas our society seems to increasingly view education as a consumer good like any other?

Some claim that the quality of education at America’s universities is so far superior to that of Europe that the higher tuitions are justified.  There is an argument to be made that American higher education and postgraduate education is a lure for the children of elites and the academically proficient worldwide.  There’s no denying the flexibility of the system for enabling  excellent graduate and post-doctoral research. American universities have produced scores of Nobel Prize winners.  But I’m addressing here primarily the costs of a B.A. or B.S., which in America all too often, for the first two years, constitute a remedial review of things that should have been learned in high school.  At $20,000 or $25,000, considered moderate tuitions by today’s standards, that’s a pretty bad deal. Whereas the European system tends to accomplish the first two years of liberal arts college in the course of secondary school, leaving the student free to focus on his area of specialization at university.  In England, at university, one “reads” and attends classes exclusively in one’s subject. Germany takes the broadening approach of requiring two minor subjects in addition to a major.  A greater problem with American education is a certain recent debasement, in that grade inflation is epidemic on American college campuses⁹, with students expecting to receive A’s simply for showing up.

In terms of facilities and teacher/student ratio, it’s true that in some continental universities, basic university classes are attended by casts of hundreds and classroom space runs short.  (Not that large classes for basic courses are unusual in America.) Again, my son, having attended English, French, and German universities, can give credible testimony on the subject. (He did his undergraduate degree in England and his Masters in Germany.  Also, he was an exchange student for a year to a French university).   At all three universities, he experienced very large classes for basic courses.  Germany’s were the largest, at about 200 students in a class, with any excess students sitting on the floor.  England’s were the smallest and best accommodated large courses, at about one hundred students a class and no SRO.  In Germany,  places in seminars for fifty people were allotted on the basis of drawing names, again, with any overflow sitting on the floor.  Whereas in England, my son attended undergraduate seminars that had merely ten to twenty  people.   Dealing with the administrative bureaucracy in terms of getting various certifications needed for his courses was a severe headache in Germany.  Once again, in England he felt that the administration was much more student-oriented.  But whether this reflects the relatively nominal tuitions that have until now been charged in England, or simply a different cultural orientation, it’s difficult to know.  At least Germany, with its recent hefty budget increase, seems to be acknowledging that more money needs to be put into the system.

In all three systems, my son had every respect for the quality of the professors and the instruction they gave, although he did perceive certain cultural biases that shaped the character of learning.  In France, there was a great deal of emphasis on detail and thoroughness in terms of mastering factual content.  Germany had a more rigorous theoretical and abstract approach to the material.  Finally, England emphasized a cultural-historical context and focused on developing the skill of defending an argument.

For my part, the ranking system used in the Anglo-American world seems to me to be extremely chauvinistic.  The Quacquarelli Symonds list and the THE (Times Higher Education)  ranking system both cheerfully list US and UK universities exclusively in the top ten, while a few continental universities are allowed to creep into the lower ranks of the top twenty.  Whereas universities that are highly rated in the German-speaking world, such as the University of Freibourg, rated by a consortium of respected German  journals as second in Germany and sixth in Europe, rank  97^th in the QS list and 132 on the THE ranking.  Sankt Gallen , a well-reputed business and economics-focused university in Switzerland doesn’t even make the top 200.  But the Swiss and Germans are no slouches, as we all well know.   Both countries are very high-functioning, with extremely high standards of living.  Part of this distortion might be the weight given to expenditure-per-student, which will give private and well-endowed universities an edge, while penalizing the primarily public universities in Europe that have economies of scale and strive to keep costs down.   Also, these ranking systems have their share of critics who have questioned the reliability of the methodology, charging too much emphasis on citation indexes, for example, which heavily favor natural science-heavy institutions over those emphasizing the social sciences.¹⁰

In my personal experience, the general savviness and sophistication of the educated in European countries—of the average graduate—far exceeds that of the college-educated in America.  In Europe the level of discourse is very high.  In France, talk-shows are more like debating forums rather than the laidback gabfests we have in America.  In Europe, readership of books, newspaper and journals far exceeds American levels.  Publicly subsidized cultural experiences such as symphony, opera, art history lectures, art films and theater abound.  I have sat in a French summer-festival theater in a provincial town watching Racine’s Andromaque, which was written in Alexandrine verse, amazed to see the entire audience on the edge of their seats, reciting the words silently along with the cast.  I can’t imagine a similar experience at a Shakespeare performance in America.  I’ve spoken to an immigrant-origin market worker in France who knew more about the electoral college system in America than the average American does.  No one would expect in their wildest dreams that said American would have the faintest concept of how elections are run in France.   Who knows, maybe the market worker was taking courses at university, according to the French social goal?  He certainly sounded like it.

But relative merits of European versus American education aside, the critical question about American tuition costs is how did they get to be so high? Ronald Ehrenberg of Cornell University, director of the Cornell Higher Education Research Institute, has made a study of this issue with regard private institutions.  The ranking system and colleges’ desire to achieve high rankings turns out to be a great driver of tuition inflation.  “To look better than their competitors,the institutions wind up in an arms race of spending to improve facilities, faculty, students, research, and instructional technology.”¹¹   And further, “With long lines of high quality applicants flocking to their doors, top institutions have chosen to maintain and increase quality largely by spending more, not by increasing efficiency, reducing costs, or reallocating funds.”¹¹

According to Ehrenberg, a structural cause of cost increases is decentralized fund allocation under the territorial prerogative of individual deans of colleges, each in competition with the others.  Also a factor is government’s  requirement for higher matching contributions for research grants these days.  Alumnae may threaten to withhold funding if favorite programs are cut. Faculty may object to cuts and may bring a great deal of pressure to bear.  Cities may require special payments for new development to compensate for a university’s tax-exempt status.

But perhaps the most perverse factor in high costs is that the much sought-after rankings are to some extent based on the amount spent per student, and no institution wants to look like a cheapskate.  This creates a vicious circle, because when costs increase, institutions give more financial aid, which forces them again to increase tuitions so that the people who can pay will cover the aid.

Also, for all campuses, public and private, more and better services are expected these days for students, including supplementary tutoring, psychological counseling, and college placement, not to mention increased on-campus security.  “According to a 2009 report by the Delta Cost Project¹²  the amount of money spent on administrative costs and student services such as security, counseling and career advisement and maintenance has increased by as much as 23 percent since 2002, whereas spending on classroom instruction per student has topped out at 9 percent.”¹

For public institutions, recession-induced cuts by state governments are passed on to parents and students in the form of higher tuition.  According to the New York Times, in most states, tuition payments rather than state appropriations cover the budget now.¹³  Many authorities agree that  “the era of affordable four-year public universities, heavily subsidized by the state, may be over.”¹³

“In the next three or four years, we’re going to have more students who are spilling out the bottom, priced out of the expensive institutions,” Ms. [Jane V.]Wellman [Executive Director ] of the Delta Cost Project said. “We’re going to be rationing opportunity. We’re moving in that direction fairly rapidly.”¹³

In my opinion, for private and a number of public universities, a major factor is also the voracious endowment, which has taken on a life of its own.  Traditionally, only a fraction of the very substantial returns on endowment investments benefited  students in terms of payouts used for tuition aid that could have obviated the need for tuition hikes. Lyn Munson, an adjunct fellow at the Center for College Affordability and Productivity, and an activist who helped prompt two Senators to hold hearings on the subject in 2007, said she was shocked to realize that some college endowments are the size of certain countries’ GDP.  She found this out while working for the National Endowment for the Humanities and reviewing college funding applications.¹⁴   She was not alone in her criticism.  At those hearings, Congressional Research Service specialist Jane Gravelle cited an average 2006 endowment return of 15.3%, versus a payout rate of 4.6%.

“If Harvard, Yale, Princeton … or Stanford had paid out one-tenth of 1 percent of their endowment for undergraduate tuition, undergraduate tuition increases would have been unnecessary,” she said. “It appears that the main effect of the high returns on endowments, for those institutions with large endowments, is to increase the size of the endowment.”¹⁵

The hearings held by Senators Grassley and Welch did have the effect of inducing many Ivy League colleges, on threat of being required by the federal government to pay out at least 5% of their endowment each year, to reform their financial aid systems by substituting more direct grants for loans.   Although the committee took no formal action in the face of the 2008 recession and the losses to college endowments, today a larger proportion of qualified students at elite universities have their tuition paid for them through grants from their college.  For example, 60% of Harvard students receive some financial aid.¹⁶  For families that make under $60,000, tuition is free.  Those making up to $180,000 are required to pay no more than 10% of their income.  But the Ivy League schools are not necessarily typical, either in the size of their endowments, or their newfound relative generosity with them.

In any case, the recession’s dramatic losses to college endowments might lead one to think that playing the stocks is probably not the wisest application of those funds.  Harvard’s $34 billion endowment lost 30% of its value.   Nevertheless, by 2010, endowments were showing substantial growth again over 2009, with Harvard back up at $27.6 billion, and Yale at $16.6 billion.

Although everyone wants our universities to be run on a sound financial basis, they appear to be being run on a business model, according to the interests of the institution rather than those of the students or faculty. The for-profit institutions are bad enough, with their blatant Pell Grant scams, whereby they lure in low-income students on exaggerated promises of job placement, without providing sufficient support to the student to enable him or her to complete their degree.   There are always plenty more Pell Grants to skim off where the dropped-out student came from.   But what are the non-profits doing generating revenues in the tens of millions and investing heavily in financial assets?  Furthermore, the use of adjunct professors, who may be paid a paltry $3,000 a semester for teaching two 150-student classes, with no question of benefits, is one manifestation of the penchant for exploitation in the name of “sound business principles” on the part of even our “non-profit” universities.

Can tuition costs in America be brought under control? According to Ehrenburg,

In private institutions, trustees can play a crucial role in backing efforts on the part of presidents and provosts to control costs. Further, colleges and universities must assume the mindset of growing by substitution, not by expansion. And finally, institutions must increase cooperation with their competitors. Consortia to share academic and administrative resources both within campus and across institutions promise significant savings in a number of areas.  Clearly, tuition increases need not—and, indeed, given the changes sweeping throughout higher education, cannot—march on inexorably for another century.¹¹

In an recent article entitled “The Endowment Trap,”¹⁷ Dr. Vance Fried of the University of Oklahoma goes much further.   He acknowledges that limited endowments have the legitimate purposes of providing liquidity, smoothing out expenditures between big donations, and making donors feel immortal by being able to give donations in perpetuity.  Nevertheless, he sees today’s behemoth endowments (and not just the Ivy Leagues’) as robbing the student of today in favor of “future generations.”   A huge endowment may function primarily as a source of pride for students, trustees, and alumni, giving the college the appearance of being rock-solid regardless of the actual quality of learning that occurs on the campus. Noting that 62 American colleges have endowments of more than $1 billion and 364 have endowments of more than  $100 million, Fried is adamant,

These colleges are like poor little rich kids fixated upon their wealth. Although rich, they constantly complain about not having enough money to cover their needs. Although rich, they constantly try to get more money out of their students and society at large. They continue to build their endowments even though each dollar added to endowment represents a dollar that could have gone to providing an education to current students, researching today’s great problems, or to reducing tuition. …

Furthermore, he says,

 excess endowments are a non-productive use of society’s limited resources. If a college has excess assets, then it should figure out how to put them to a productive use over the next twenty years. Spend them on research to cure cancer, or start a partner college in Africa, or give full-ride scholarships to low-income students, or build a small cathedral. Or be really radical and cut tuition.¹⁷

 

I would add, this should go double for public institutions.  Furthermore, states must stop using the recession as an excuse to cut grants to their public colleges and universities, but should reverse that practice and invest in their young people as Europeans are so obviously willing to do.  Instead, American youth are told at each high school graduation ceremony that they are the future and hope of our country, only to find out that’s only really true if they have the funds to pay for it.

But my immediate practical problem is what to do about my younger son’s education.  The college of his choice has given him some scholarship money and promises some work-study support against a tuition, room, and board cost of $40,000 per year.  Actually, $55,000 if he exercises a certain study option.  At this point, I’m inclined to have him put on his German hat (both sons have dual citizenship by virtue of their father’s being German) and head back to Europe.

¹Facts About the Rising Cost of College Tuition | eHow.com http://www.ehow.com/about_5434841_rising-cost-college-tuition.html#ixzz1IUbgCugy

²http://degreedirectory.org/articles/How_Fast_are_College_Costs_Rising.html

³http://www.huffingtonpost.com/2011/01/27/college-endowments-reboun_n_814844.html

⁴HIGHER EDUCATION:HANDBOOK OF THEORY AND RESEARCH.  By American Educational Research    Association. Division J–Postsecondary Education, John C. Smart,University of Memphis.   Kluwer Academic Publishers,Dordrecht, the Netherlands, 2002.

⁵http://articles.cnn.com/2008-12-03/living/college.costs_1_family-income-college-affordability-higher-education-report?_s=PM:LIVING.

⁶New York Times, Sunday, April 17, 2011, Week in Review, p.3

⁷http://en.wikipedia.org/wiki/Public_university#Continental_Europe

⁸ http://www.time.com/time/world/article/0,8599,1976724,00.html#ixzz1IbmEARQC

 ⁹ http://gradeinflation.com/     

¹⁰http://en.wikipedia.org/wiki/QS_World_University_Rankings#2010_rankings

¹¹http://net.educause.edu/ir/library/pdf/ffp0005s.pdf

¹²Why Are College Costs Rising?: The Truth Behind Runaway Tuitionhttp://www.suite101.com/content/why-are-                  college-costs-rising-a90578#ixzz1IUaXxQlr

¹³http://www.nytimes.com/2011/01/24/education/24tuition.html?pagewanted=1

¹⁴http://www.thenewjournalatyale.com/2008/11/fortune-tellers/

¹⁵http://www.reuters.com/article/2007/10/24/us-college-endowments-congress-idUSN2427438120071024?pageNumber=2

¹⁶http://www.thecrimson.com/article/2011/2/25/aid-financial-percent-year/

  ¹⁷http://popecenter.org/clarion_call/article.html?id=2499

By

Patricia Lawson

The right-wing press, in drumming up fears of European socialism, implies a loss of civil liberties in European countries.  At worst, the terms of their discourse evoke the strictures of  Stalin’s Gulag empire and Arthur Koestler’s Darkness at Noon.  In my sixteen years on the continent, I must say that I never felt any infringement whatsoever on my civil rights.  I had the right to free speech and freedom of the press and to public assembly, just as we do in America.

Furthermore, I felt there was a certain mature laxity in the culture that was based on its citizens being perceived as adults able to take care of themselves.  For example, the dreaded state trooper who strikes fear into the average American driver with his leather-booted look simply does not exist on European highways.  This is to be expected in Germany, for example, where there is no speed limit on the autobahn, although there are speed zones around the cities.  But it’s just as true in France, where there is a speed limit.  I always had the sense, in Europe, that the cops had better things to do, like catching actual criminals.  Of course, recently, in an attempt to keep energy use and greenhouse gas emissions down, speed camera machines have come into heavy use.  But that is a very different thing from having an actual person who incorporates the law looming over you to demand your license at the slightest sign of an infraction.

The policing of our schools has also been carried to an extreme.  A recent online issue of the Annie E. Casey Foundation  newsletter¹ cites the example of a 7-year-old being arrested for having a pocketknife at school.   This Foundation is a private charitable organization dedicated to disadvantaged children.  The article notes,

As a consequence of the 1994 Gun Free School Act, and the stream of federal dollars that followed, schools enacted strict zero-tolerance policies and hired police (otherwise known as “school resource officers”) to be present on campus. Before long, school administrators began applying zero tolerance policies across the board, to deal with bullying, cursing, minor threats, and disobedience, etc. To manage disruptive students, these same administrators relied more and more on their school resource officers, who arrest and refer problem students to the local juvenile court.

And further,

“Although schools have dedicated greater time and resources to school discipline, there is little evidence that zero-tolerance policies have resulted in improved school safety,” said Dr. Peter Leone, .  .  . a University of Maryland professor.

In spite of school shootings having occurred in Germany, I know of no equivalent reaction there.  Instead, they raised the age of gun ownership from 18 to 21.   They’ve also placed an emphasis on “Leaking”, a word borrowed from the English to signify monitoring for the tell-tale signs of potential violence in an individual.

On the less draconian community level, a pet peeve of mine in America has always been lifeguard bullying.  My experience of public swimming in America was the constant shriek of whistles and commands, as lifeguards felt obliged to counter the natural instinct of children to run when they’re enjoying themselves.  In Germany, which Americans think of as an authoritarian culture, any interference at a public swimming pool on the part of a lifeguard is conducted in a reasonable tone of voice and the sounds of a whistle are few and far between.  Families are expected to police themselves, are trusted to do so.  I don’t recall ever seeing an incident of anyone in any trouble, let alone serious trouble, at our local pools in Munich or in Neuss (near Düsseldorf).  And the public facilities themselves are the equivalent of our country clubs, but that’s another subject.

As long as we’re on the topic of public recreation, compare the difference between using a chair ski-lift in America with one in Europe. In Europe, there’s an attendant who assists when and if needed, but one is normally expected to manage oneself on entry and exit.  In my experience using a chair-lift here in the summer, and this without the slippery effects of snow underfoot, lines, arrows, and captions indicated exactly where I should stand and a heavy-handed attendant practically forced me down in the lift.  If that’s not paternalistic over-control, I don’t know what is.

Over and over in Europe, I found officials, whether they were police officers, immigration officials or bureaucrats, for the most part willing to be reasonable, to deal with one as a human-being, to bend the rules if necessary.  It’s in America that I find a rigidity of mind that invokes rules, duties and obligations, that says you can’t do this, or you can’t do that with finality, that seems afraid to use its own judgment.  It’s a form of collective insecurity.  Thus you have kids being arrested for normal schoolyard infractions, people being tased unnecessarily when they show any natural protest at being unfairly arrested, like the young woman recently who had not shoplifted and had the receipt to prove it, or the notorious instance of the heckler at John Kerry’s speech in 2004.

Then there are the wholesale infringements of civil liberties on the part of the Patriot Act, with its domestic spying via warrantless wiretapping.  It looked as though the most intrusive provisions would be curtailed last week, when the strange bedfellows of House Democrats and a number of Tea-Partiers voted against extending them.  But a scant week later, the House pushed through an extension of all those provisions until December of this year.  Furthermore, the Senate Judiciary Committee just voted on Thursday, March 10, to extend them until the end of 2013.² This would allow the continuation of roving wiretaps on multiple electronic devices as well as court-approved access to business records.  It would also allow further surveillance of non-American “lone-wolf” suspects with no proven links to specific terrorist groups.  It would extend, but then end in 2013, the National Security Letters provision, which requires businesses to turn over customer records without a judge’s order.

Are these powers really necessary?  Arguably, most of the intelligence necessary to prevent 9/11 was on hand before the event, if only the intelligence agencies had coordinated their efforts, and if the Bush administration had had it’s eye on the Al Quaeda ball.  One can take small comfort from the assertion that some new civil liberty safeguards and more oversight have been introduced into the Patriot Act provisions.

What do we have to show for all this enforcing of the law, not to mention domestic snooping?   Although domestic terrorism is in check, we still have homicide rates that soar well above Western Europe’s.  Ira M. Leonard, a historian at Southern Connecticut State University, has calculated that during the 20th century, more Americans were murdered than soldiers died on active duty during all America’s wars of that century.³ Today, at a rate of around 5.4 homicides per 100,000,³ we exceed all Western European nations by a factor of 3 to 5.  Murders in America each year number in the tens of thousands.

It’s not that we’re not sufficiently punitive.  America’s incarceration rates should qualify us for the Guinness Book of World Records.  With nearly 2 ½ million people behind bars, we manage to outdo, in absolute numbers, China, which has a population four times the size of our own. (This does not count their administratively detained political prisoners who are in labor camps.  Obviously, things have not gone that far in America.)⁴ But we do have 751 people in prison or jail for every 100,000 of us, according to a 2008 article by Adam Liptak in the New York Times⁴, which notes,

The only other major industrialized nation that even comes close is Russia, with 627 prisoners for every 100,000 people. The others have much lower rates. England’s rate is 151; Germany’s is 88; and Japan’s is 63.

The median among all nations is about 125, roughly a sixth of the American rate.

This is a function of a penal system that has run amok since the 1970’s, with mandatory sentencing, including far lengthier sentences (three times as long for equivalent crimes) than the rest of the world for minor crimes, particularly drug crimes.  Incarceration costs the country $60 billion a year, at this point.  Proponents claim that the non-violent crime rate has declined because of this excessive incarceration, for which there is some degree of evidence if you compare us to the U.K.  But more conclusive research indicates that imprisonment is responsible for no more than a quarter of this reduction.⁵ Our crime rates have fluctuated and declined in tandem with those of Canada, which has not seen fit to incarcerate such a large proportion of its population.⁴

Granted, in Europe, although your risk of being slammed into jail rather than being given probation or community service is much lower, government intrudes in ways to which we are not subjected in America.  For example, in most European countries, you are required to register in your town of residence when you move.   (Of course, where, when and why you choose to move is entirely up to you.)   This system is a carryover from World War II, when many countries imposed registration by residence, or if they didn’t, the Nazis did it for them.   Postwar, these systems were maintained, I imagine, to deal with the flood of displaced persons in Europe.

In Germany, this is a local, rather than a national system, run by over 5,000 local offices.  Efforts to make it a national register were roundly rejected last year.   This system does tend to make tax evasion less likely.  And I imagine it makes known criminals think twice before indulging in crime.  I personally never felt it to be onerous.  Half-an-hour at the City Hall, and that was it.  Perhaps our voter registration, although not universally applied, is something of an equivalent. After all, it is used to tap people for such governmental purposes as jury duty.  (Incidentally, most Europeans regard voter registration as antidemocratic and exclusionary, feeling that all citizens should be automatically registered to vote.)

Identity cards are another issue, again the heritage of WWII or, in eastern Europe, the Soviet system.   Most countries, however, do not require them to be carried on one’s person.  They have been used to substitute for passports, when travelling to countries that had not yet signed the Schengen border agreement.  (The Schengen agreement  eliminates controls at the shared borders of its signatories.)  Whereas we might find having an ID card onerous, most of us have driver’s licenses, which we also produce regularly as proof of identity.  Some states even issue ID cards to people who do not have driver’s licenses.

The one outrageous form of governmental restriction to my mind, which exists in Germany and in some of the Scandinavian states, is on the naming of children.  Depending on the country, one’s local vital statistics office or parish church must approve the name submitted.  Some of these laws were initially introduced to impose order on surnames.  Others, of more recent origin, introduced, surprisingly enough, in the sixties or even the eighties,^6,7 were intended to keep non-nobles from encroaching on noble names(!).  In Germany, the intent is to indicate the child’s sex, as well as to protect the child from the embarrassment of being saddled with an outlandish name.  Whereas we’ve all known people so afflicted, who go through life with an initial for a first name, I feel strongly that this is too great an infringement on parents’ rights. Of course, if it keeps people from being named “Adolf Hitler,” as was notoriously the case with one unfortunate child here in the States recently, perhaps it’s not all bad.  As I recall, the courts ended up requiring the parents to change the child’s name, after all, in addition to providing new foster parents for him.

But, in spite of these arguable invasions of privacy, Europe protects citizen’s personal data use far more stringently than does our own government.  According to Wikipedia⁸, “Article 8 of the European Convention on Human Rights (ECHR) provides a right to respect for one’s ‘private and family life, his home and his correspondence’, subject to certain restrictions.”   The European Court of Human Rights interprets this law very broadly.   The collection of information by state officials without an individual’s consent is within the province of Article 8. This includes census, fingerprints and police photographs, medical data, financial information and personal identification.  Furthermore,

Any state interference with a person’s privacy is only acceptable for the Court if three conditions are fulfilled:

1. The interference is in accordance with the law
2. The interference pursues a legitimate goal
3. The interference is necessary in a democratic society⁸

In addition, in 1995, The European Commission passed the Directive on Protection of Personal Information, which member states converted into law, with supervisory authority.  This Directive resulted, in many parts of Europe, in the following strictures on corporate use of private information, according to Bob Sullivan, Technology Correspondent for MSNBC⁹:

Personal information cannot be collected without consumers’ permission, and they have the right to review the data and correct inaccuracies.

Companies that process data must register their activities with the government.

Employers cannot read workers’ private e-mail.

Personal information cannot be shared by companies or across borders without express permission from the data subject.

Checkout clerks cannot ask for shoppers’ phone numbers.

In contrast, in the U.S., data flow is subservient to corporate interest, and private financial information is readily available in the form of a credit report to the potential creditor, employer, or even medical caregiver.

Nevertheless, it’s true that in Europe, since 9/11, anti-terrorism laws have facilitated creeping government encroachment on previously sacrosanct areas.  For example, the restriction on collecting personal information has been amended by the 2006 EU Directive on Data Retention, which requires all EU member states to adopt rules on data retention and allow the  collecting and holding information for as long as two years.¹⁰ EU countries now require Internet service providers and mobile phone companies to keep records of all transmissions or calls for a certain period of time, which can range from six months in Germany to three years in Ireland.  Access to this information on the part of the government usually requires a judge’s order, but in some countries supervision is less stringent. The protection of journalists’ sources in cases that involve terrorism is not as secure as it used to be.

Furthermore, depending on the particular country’s history of terrorism, the anti-terrorism laws can be far-reaching.  France, for example, has the largest Muslim population in Europe, and, because of its colonial past, a history of Algerian (as well as Palestinian) terrorist events, which began in the fifties and continued intermittently until 1996.  Furthermore, its citizens have been kidnapped all too frequently by Al Quaeda in North Africa.  Consequently, France has developed the most comprehensive anti-terrorism police practices in Europe.  Its laws allow preventive detention for a number of days for very broadly defined activities that might entail complicity with terrorism.^11,12 Family members and acquaintances can be swept up in these investigations.   Serious suspects can be held in investigative prison for several years, depending on the gravity of the felony in question.  (This is now happening in the case of a CERN [European Organization for Nuclear Research] physicist of Algerian heritage who visited Islamic fundamentalist websites and conducted discussions online.  The police maintain that he had established contact with Al Quaeda.)¹³ Terrorism trials are centralized and conducted in Paris by a special court.  Furthermore, France regularly deports those determined to be inciting terrorism or hatred and has deported fifteen Imams under these laws.  Human Rights Watch has protested France’s laws to the United Nations Committee on Human Rights.¹² Whatever the ultimate judgment on these laws, there have been no major terrorist incidents on French soil since a gas bottle explosion in a Paris suburban subway in 1996.  However, because of France’s difficulties with integrating its North African population, as manifested in the riots of 2005, the French riot police are much more visible since that time at any sign of trouble in areas of ethnic tension.

Germany, although it has its own history of terrorism, carried out by the Red Army Faction of the sixties and seventies, is at the opposite end of the European spectrum.   Theirs was a more manageable problem than that of France in that it was caused by a small number of middle-class leftist extremists, although, admittedly, they rode a wave of perverse popularity in the counterculture era.    Nevertheless, their last activity took place in 1993, and most surviving members have been imprisoned for decades.   Since 9/11, Germany has time and again seen its Constitutional Court restrict the police and government’s ability to conduct anti-terrorist investigations in favor of the citizen’s right to privacy.  In addition to the above limitation of data retention to six months, the Court has insisted that investigators have access to such data only for serious crimes and has limited cyber-spying on a suspect’s computer to exceptional cases.¹⁴ It has also refused to make journalists’ sources accessible in terrorism cases.¹⁵ Furthermore, it struck down a law that would have permitted the government to shoot down a commercial or private aircraft on suspicion that it was being used as a weapon, 9/11 style.¹⁶

But terrorism is a special issue.  Europe is close to the middle East and has been more vulnerable to terrorist activities for a longer period of time than the U.S.  A visible anti-terrorist presence at airports and some major train stations (police officers wielding sub-machine guns) has been a long-standing feature of travel in Europe when the immediate threat of terrorism is high.  But this has been a response to a clear and present danger.  On normal city streets, life is placid, not to say, staid.

In my experience, there is an inherent order and serenity in European life that obviates heavy-handed police interference in everyday life.  European cultures are older, settled ones, in which much behavior is internalized at home at an early age.  This is not to say that children are over-disciplined.  By no means.  Although there might be more attention paid to table manners in Europe, there is a loving tolerance of European children that is impressive in its benignity. Children learn much of their discipline by modeling on parents.   The sense of security their parents impart, a comfortableness in their own skin, the ingrained mores of social behavior, all give the child a head start when it come to interacting with the world.  This is why Europeans don’t feel the need for individual gun-ownership to keep the peace in their society. And why the police presence on the street (positive as that is when necessary), and the general policing of everyday life, can be minimal.

¹http://www.aecf.org/MajorInitiatives/JuvenileDetentionAlternativesInitiative/Resources/May10newsle  tter/FeatureStory.aspx

²http://www.bradenton.com/2011/03/10/3023846/senate-panel-approves-patriot.html

³http://en.wikipedia.org/wiki/Crime_in_the_United_States

⁴http://www.nytimes.com/2008/04/23/world/americas/23iht23prison.12253738.html?_r=1&pagewant ed=2

⁵http://www.alternet.org/rights/45647/?page=1

⁶http://articles.cnn.com/2010-07-03/living/mf.baby.naming.laws_1_names-baby-naming-office-of-vital-   statistics?_s=PM:LIVING

⁷http://www.mentalfloss.com/blogs/archives/59277

⁸http://en.wikipedia.org/wiki/Information_privacy

⁹http://www.msnbc.msn.com/id/15221111/ns/technology_and_science-privacy_lost/

¹⁰https://www.privacyinternational.org/issues/terrorism/speakingofterror.pdf

¹¹http://www.foreignpolicy.com/articles/2006/01/18/how_the_french_fight_terror

¹²http://www2.ohchr.org/english/bodies/hrc/docs/ngos/HRWFrance93_170608.pdf

¹³Overbye, Dennis, Physicist’s Jailing Is Veiled in Mystery, New York Times, Tuesday, March 15, 2011. Sec. A, p. 9

¹⁴http://news.bbc.co.uk/2/hi/europe/7305636.stm

¹⁵http://www.ifex.org/germany/2008/11/28/parliament_defeats_anti_terrorism/

¹⁶https://www.unodc.org/tldb/pdf/EssayCivilAviation2.pdf

By

Patricia Lawson

The problem with America’s take on socialism is that it has been largely shaped by two very distorted perceptions—Ayn Rand’s and the Koch brothers’.  Rand’s novels, The Fountainhead and Atlas Shrugged, were published in the 1943 and 1957 respectively. Her works are now enjoying a resurgence, and, in 2009,  Atlas Shrugged sold in excess of  500,000 copies(although a film version appears to have flopped).¹ Both novels glorify the exceptional individual, someone beholden only to himself and his personal achievement.  Altruism and duty to society are considered detrimental impulses.  Only laissez-faire capitalism and limited government can provide the proper environment for “rational self-interest.”

When I read Rand in my teens, as the scion of a Catholic military family, I found her philosophy entirely credible.   In addition to its conservative and nationalistic values, which were in keeping with my upbringing, how could it not—with its unrelenting focus on self—have appealed to the solipsistic adolescent worldview?  But that doesn’t account for its appeal to far too many adult Americans.  This can be explained only by acknowledging that it speaks to the worst in human nature, a characteristic of fascistic thought-forms.  It can be deeply gratifying to be given license to be selfish, not only for the good of oneself but for the greater good.  This is similar to the appeal that Nazism had for the youth of Germany, with its insistence on the German people’s superiority.   That superiority entailed the right to wrest whatever was needed from weaker nations.  Tolerance, charity, and empathy require considerably more self-discipline.

In 1998, Modern Library poll readers called Atlas Shrugged and The Fountainhead the two greatest novels of the twentieth century.² More reassuringly, Freestar Media/Zogby polls conducted in 2007 found that only 8 percent of adults had read Atlas Shrugged.³ Delineating the middle ground, in a recent 2010 Zogby online survey, 29 percent of adult respondents had read the novel and about half of those agreed that the novel had changed their way of thinking.⁴ As for myself, with maturity, my view of Rand has reversed itself.  After having lived in Europe for 16 years, I know that her vision of socialism was woefully short-sighted.

Rand’s confreres in ultra-right conservativism, the Koch brothers, are owners of Koch Industries, a private energy company. With their other interests, which include Stainmaster carpets and Lycra, Koch Industries is ranked by Forbes as the second-largest private company in the country, after Cargill.  The brothers’ combined fortunes make them among the top ten wealthiest people in America. For decades, the Kochs have been funding rightwing propaganda through their support of conservative or libertarian think-tanks and publications, as has been convincingly documented by Janet Mayer in the New Yorker.⁵ According to Mayer, the brothers were indoctrinated in the horrors of socialism by their father, based on his experience of Soviet Russia in the thirties.  When their father died in 1967, they inherited his already considerable fortune, which they have since multiplied many times over.  They have used their extravagant profits to promote their anti-government ideology.  Of course, their ideology is heavily tainted with self-interest, in that only government has the power to constrain the oil industry in favor of alternative energy.  Whereas they have made the occasional concession to environmentalism, in that, for example, in 2005, Koch’s Flint Hills Resources refinery was recognized by the EPA’s Clean Air Awards program for reducing air emissions by 50 percent,⁶ such citations are few and far between.More typically, in 2010, Koch Industries was ranked 10th on the list of top US corporate air polluters, the “Toxic 100 Air Polluters,” by the Political Economic Research Institute at the University of Massachusetts Amherst.⁷

According to Mayer,

The Kochs have gone well beyond their immediate self-interest, however, funding organizations that aim to push the country in a libertarian direction. Among the institutions that they have subsidized are the Institute for Justice, which files lawsuits opposing state and federal regulations; the Institute for Humane Studies, which underwrites libertarian academics; and the Bill of Rights Institute, which promotes a conservative slant on the Constitution. Many of the organizations funded by the Kochs employ specialists who write position papers that are subsequently quoted by politicians and pundits.⁴

In 1977, the Kochs funded the launch of the libertarian Cato Institute, which today has more than a hundred full-time employees.  In the mid-eighties, they set up the hard-line, free-market oriented Mercatus Center at George Mason University, with the goal of promoting deregulation. Their more recent efforts involve funding Americans for Prosperity, which supports the Tea Party.  The Tea Party movement provides the Kochs with actual voters, their long-sought boots-on-the-ground, to agitate for their policy positions.

The origins of Rand’s and the Koch brothers’ conservatism is very clear and even understandable.  Ayn Rand witnessed the Russian Revolution as an adolescent in St. Petersburg.  Her father’s pharmacy was confiscated by the communist regime and the family was reduced to the edge of starvation.  In 1926, she was able to obtain a visa to visit relatives in America, and she never looked back.  It’s completely comprehensible that her experiences of the Bolshevik regime, given the triumph of the hard-liners under Lenin, would have imbued her with a hatred for socialism.

As for the Koch brothers, their father the chemical engineer, in a bizarre twist of destiny, actually developed the oil industry for the Soviet regime in the thirties, after having had difficulties with his new, more efficient process for turning oil into gasoline in the overly competitive free market in America.  After building fifteen refineries for the Soviets, he left Russia when the regime purged several of his Soviet oil-industry colleagues.  As with Rand, his trauma is understandable.   The regimentation of social life and the suppression of personal liberty, not to mention the habitual purges of dissenters in Stalin’s Russian, were intolerable.  The problem is that Koch and Rand, from these positions of justified antipathy, proceeded to throw out the baby of socialism with the bathwater of totalitarian communism.

In their fear of the spread of the Soviet system to Europe and America, a very real possibility at the time, especially where Europe was concerned, Rand and Koch overreacted and refused to acknowledge any possibility of a more constructive version of socialism.  Whereas in fact, socialism had already been functioning to some extent in Germany, the Netherlands and some of the Nordic countries, as early as the latter part of the 19^th century.  In 1883, the Iron Chancellor, Otto von Bismarck, had introduced such socialist measures as government-paid health insurance and pension plans for the elderly precisely to prevent a socialist revolution, or at least a triumph of the Social Democrats at the ballot box.  The Netherlands and Nordic European countries soon followed suit.

Rand and Koch père could be forgiven for reserving judgment about such experiments or even rushing to judgment, based on what they had seen in Russia several decades later.  In the tumultuous first half of the 20^th century in Europe, it must have been difficult to disentangle the threads of communism from those of moderate socialism.   But with the Great Depression, just as Americans embraced Social Security and other social projects intended to generate work or harness collective energies, more European countries moved toward socialism.   After World War II, with the discrediting of the fascist worldview, European countries embraced a mixed economy, combining selected elements of capitalism and socialism.

The overwhelming success of these societies in creating prosperity and happiness on a large scale was something that Rand perhaps felt was not yet proven when she was writing her novels. Nor could the Koch’s father have been expected to embrace this notion based on the early evidence.   His experience of totalitarian communism’s nightmare world predated the successful phase of socialistic democracy in Europe, which has only reached its full flower in last several decades.  But the Koch brothers themselves, who are in a position to rectify their story, seem not to acknowledge any part of the societal success of modern Europe.  Europe-bashing is a favorite pastime of  the right-wing think-tanks, which are readily imitated by American media.   The grounds for this position are flimsy.  Whereas some EU countries may lag in certain economic indicators, they exceed us in others.   Furthermore, most social statistics show their quality of life to be superior.  A quality which is not always a function of quantity.  Human happiness is not necessarily measurable by per capita GDP and quantities of TVs consumed.

I myself experienced this in Germany, for example, in visiting the homes of working- class people who were my son’s friends.  Everything in these homes, from furniture to appliances, bespoke the solid middle class by American standards.  These homes had real wood furniture and Siemens and Bosch equipment.   The food on the table was of a delicacy that we would find only in our specialty supermarkets, but it was the everyday food of everyday life.  The emphasis on quality and genuineness, rather than the ersatz and plastic that underpins so much of the American lifestyle, gives a very substantial feel to life in Europe, at all class levels.  I sensed no quiet desperation in these homes, but rather, a settled contentment.  The placidity and security of Europe, as opposed to our anxious hyper-mobility, never failed to impress me.

But it’s not only a question of quality vs. quantity.  The economic statistics also bear out the viability of the European way.  Bernd Debusmann, in a Reuters post comparing Europe and the U.S.⁸, directly addresses the issue of America’s misconceptions about Europe:

In these days of renewed gloom about the future of Europe, a quick test is in order. Who has the world’s biggest economy? A) The United States B) China/Asia C) Europe? Who has the most Fortune 500 companies? A) The United States B) China C) Europe. Who attracts most U.S. investment? A) Europe B) China C) Asia.

The correct answer in each case is Europe, short for the 27-member European Union (EU), a region with 500 million citizens. They produce an economy almost as large as the United States and China combined but have, so far, largely failed to make much of a dent in American perceptions that theirs is a collection of cradle-to-grave nanny states doomed to be left behind in a 21st century that will belong to China.

Already in early 2008, Kimberly Amadeo of Kimberly’s U.S. Economy Blog⁹ pointed out that in 2007, the European Union had surpassed the U.S. as the world’s largest economy.  “The E.U.’s economy produced $14.4 trillion in goods and services, while U.S. GDP came in at $13.86 trillion. . . . (Source: CIA World Factbook, Rank Order GDP)”

Debusmann’s comparison is essentially a review of a book by Steven Hill, of the New America Foundation, Europe’s Promise. Why the European Way Is the Best Hope in an Insecure Future.¹⁰ Hill points out the disconnect between American perceptions and European realities.

‘When I talk to American audiences,’ Hill said in an interview, ‘many find the figures I cite hard to believe. They haven’t heard them before. U.S. businesses making more profits in Europe than anywhere else, 20 times more than in China? 179 of the world’s top companies are European compared with 140 American? That does not fit the preconceptions.’

Such preconceptions exist, in part, because U.S. media have portrayed Europe as a region in perpetual crisis, its economies sclerotic, its taxes a disincentive to personal initiative, its standards of living lower than America’s, its universal health care, guaranteed pensions, long vacations and considerably shorter working hours a recipe for low growth and stagnation. ‘In the transmission of news across the Atlantic, myth has been substituted for reality,’ says Hill.⁸

The Koch Brothers, indoctrinated decades ago by their traumatized father and further motivated by self-interest, foster, through their think-tanks, a narrative that amounts to either-or:  laissez-faire capitalism must be allowed to run amok, as it did in 2008, or America will inevitably model itself on Stalinist Russia and Maoist China.^11,12 Millions of Americans readily consume this outdated notion, partly because it panders to their desire to feel superior and wallow in a sense of American exceptionalism.  Free-market capitalism is what made this country great!

Is it great to have an infant mortality rate comparable to that of the third world?  Is it great to rank 27^th in PISA (education) ratings?  Is it great to have one-sixth of the country living under the poverty line?  Is it great to have a lower life-expectancy rate than the much-deplored Greece, which ranks at 18, while the U.S.  ranks 36, tied with Cuba, out of 147 nations?¹³ Is it great to have a homicide rate 3-to-5 times as high as almost all European countries?   Is it great to have the death penalty, a distinction we share with China, Iran, and North Korea?

Finally, and most importantly, is it great to have 34.6% of American’s wealth concentrated in the hands of the top 1%, with a further 50.5% of wealth concentrated in the hands of the top 19%?  This means that 20% of Americans own 85% of its wealth.¹⁴ The last comparison of international statistics of the top 10% percent of the population done in 2006, by the World Institute for Development Economics Research, using 2000 statistics, show America, at 69.8%, exceeded only by Switzerland (not an E.U. member and the world’s banker), at 71% in concentration of wealth.  All other European countries listed had a lower level of concentration of wealth than the U.S., with Finland clocking in at 42.3% of the country’s wealth in the hands of the top 10%.¹⁴

Furthermore, according to the source of the above information, Professor G. William Donhoff, of the University of California at Santa Cruz,

The degree of income inequality in the United States can be compared to that in other countries on the basis of the Gini coefficient, a mathematical ratio that allows economists to put all countries on a scale with values that range (hypothetically) from zero (everyone in the country has the same income) to 100 (one person in the country has all the income). On this widely used measure, the United States ends up 95th out of the 134 countries that have been studied — that is, only 39 of the 134 countries have worse income inequality. The U.S. has a Gini index of 45.0; Sweden is the lowest with 23.0, and South Africa is near the top with 65.0.¹⁴

As he explains further,

.  .  .  a country can have a highly concentrated wealth distribution and still have a more equal distribution of income — both Switzerland and Sweden follow this pattern. So one thing that’s distinctive about the U.S. compared to other industrialized democracies is that both its wealth and income distributions are highly concentrated.

America, land of the free and home of the brave, country of refugees from the excesses of European aristocracy, has created a new aristocracy with a degree of wealth unimaginable in the pre-modern world, that promises to be more powerful and more ruthless than any feudal baron or French noble of the 18^th century could have conceived of being.  The mistaken and short-sighted narratives of Rand and Koch have played, with their wide dissemination, a major role in bringing us to this benighted condition.  In the meantime, the Europeans have, for the most part, managed to curb the voracity of their elite.

In the information age, it is appalling that most Americans should be so ignorant about real life in Europe.  I myself, in researching this post, came across anti-European blogs with such titles as “Lesson from Europe:  Socialism doesn’t work,”¹⁵ and  “Socialism has failed miserably in Europe,”¹⁶ in a four-to-one ratio to pro-European posts.  These blogs are based on ideology and not on researched fact.  In reality, we need not wonder if an equitable and prosperous society is possible.  We need not seek far and wide for models.  We need not yearn for utopia.  It exists, an open secret, and has for decades, in the countries of western Europe.

¹Atlas Shrugged Sets a New Record!”. Ayn Rand Institute. January 21, 2010.

²http://www.thenation.com/article/garbage-and-gravitas

³ “Atlas Shrugged by Ayn Rand Read by 8.1%”. Freestar Media. October 17, 2007. Retrieved June 2, 2009.

⁴ “Atlas Shrugged Influential, Poll Reveals”. ARI. December 2010. Retrieved 2010-12-6.

⁵ http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer#ixzz1EhxdG3pl)

⁶Jessica Harper (18 November 2009). “Flint Hills is coming out of murky waters”.Dakota County Tribune

⁷Toxic 100 Air Polluters Press release, March 31, 2010,http://www.peri.umass.edu/toxic_press/

⁸http://blogs.reuters.com/great-debate/2010/02/12/who-wins-in-u-s-vs-europe-contest/

⁹http://useconomy.about.com/b/2008/02/12/us-no-longer-worlds-largest-economy.htm

¹⁰Hill, Steven, Europe’s Promise,  Why the European Way is the Best Hope in an Insecure Future.     University of California Press, 2010. 488 pp.

¹¹http://cubachi.com/2010/10/03/daniel-hannans-speech-at-the-cato-institute/

¹² http://mercatus.org/publication/social-cooperation-and-process-economic-development

¹³http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

¹⁴http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

¹⁵http://www.firstthings.com/blogs/firstthoughts/2010/05/21/lesson-from-europe-socialism-doesnt-work/

¹⁶http://www.americansfortheconstitution.com/2010/06/07/socialism-has-failed-miserably-in-europe/

By

Patricia Lawson

The term “European socialism” has become a pejorative label, used by the right to imply sociopolitical malaise. As in, “Obama’s health care will put us on the road to European socialism.” This distortion is easily perpetrated on a people whose only exposure to Europe is the occasional two-week holiday, during which one is insulated from social realities by the cocoon of the tourist experience.  The majority of America’s 300 million population have not even had that much exposure, as only a little over a third of us have passports.

To counter, I’m inclined to say that 500 million Europeans can’t be wrong.  Having lived in Europe for 16 years, from 1990 until 2006, I have a certain amount of personal experience to draw on, and that personal experience has been overwhelmingly positive.  We Americans who’ve had the good luck to live in Europe by virtue of employment, sabbatical, or marriage to a European, come back delighted with the free or minimally priced health care, the three years of maternity leave with job guaranteed upon one’s return, and the 13^th- month’s salary as a Christmas bonus, just to name a few perks of a typical “nanny state.”  This kind of stuff wouldn’t enter the wildest fantasies of the average American worker, blue or white collar.

What you won’t find in Europe are the bombed-out slums characteristic of most American large cities, or a huge gap in the transportation structure where passenger rail should be, or people being bankrupted by medical bills.

There’s a movement in America call the Third Way, which attempts to find middle ground between Democrats and Republicans.  Well, European Socialism is a functioning Third Way, an effective compromise between Stalinist communism and an unfettered capitalism, which has successfully governed Europe for decades.  In European countries, the economy relies on the engine of capitalism as a driver and a moderate kind of socialism to extend the fruits thereof to the larger population.  The resulting societies have the very healthy shape of a bell-curve, with a few wealthy and poor on either end and a generous bulging center where the middle class resides.  Some European countries, (Germany, for example), give the impression of being nothing but middle class.   I’ve been lost in German cities and have never come across anything resembling an American slum.  You might stumble into a low-income area (a bit unkempt, many apartment blocks, streets lined with VW ‘s instead of Mercedes and BMW’s), but it would not be the sinkhole of despair that America produces.

Before the collapse of the mortgage market and the resulting recession, America could boast an unemployment rate of under 6%, compared to the chronic rate of 10% or so in a country like France.  But Europeans call the kind of work that keeps the American rate so low
“McJobs,” i.e., minimum-wage work with no health insurance and scant benefits, and consider it a modern form of enslavement.  Europeans shudder when they speak of “American conditions,” the way we speak of Third-World conditions.  An electrician who came to my house once in Germany turned out to be half-American, the offspring of an American soldier and a German mother.  He had gone to America for a time, thinking it to be the land of opportunity, but eventually came back to Germany because compensation, working conditions, and benefits were so much better.  True, in Europe, a certain percentage of the population collects welfare or unemployment so that the rest can have better-paying jobs with more benefits, but that generous welfare or unemployment at least frees them from demeaning sweatshop work.

Furthermore, in Europe, much more money is channeled into the arts.  Artists, particularly musicians and singers, are subsidized or paid more generously, so that they don’t have to have day jobs, rather than being penalized for having an artistic vocation.   Public arts funding in Germany permits 23 times more full-time symphony orchestras per capita than the United States and about 28 more full-time opera houses.¹

At present, there’s much talk in America of the mess that Europe’s in.  First of all, although some European countries borrowed excessively during the boom years², the “mess” was in part a consequence of the recession precipitated by abuses in the American financial system.   American banks and mortgage brokers very deliberately made bad loans to subprime candidates to generate volume so that they could repackage and resell those loans, thereby making a profit while transferring any liability for the bad loan to the new purchaser.  They offered “stated-income” loans, grabbing nannies and garage mechanics off the street to put their names on mortgages for mansions.  It was the perfect con, as long as the market boomed.  But when the bubble burst, as it inevitably would, the perpetrators put the blame on the government for a “socialistic” encouragement of home-ownership on the part of the poor. A complete distortion of the facts, as subsequent research has shown. Alan Greenspan himself testified under oath in a Congressional hearing that government-sponsored enterprises (GSEs), such as Fannie Mae and Freddie Mac were not the cause for the mortgage market collapse.  Dean Baker has written³,

“. . . free market conservatives “believe” that the financial crisis is attributable to the close government relationship with Fannie Mae and Freddie Mac.  Actually, it is extremely unlikely that free market conservatives actually “believe” this assertion because it is so obviously not true.  Fannie and Freddie got into the subprime junk and helped fuel the housing bubble, but they were trailing the irrational exuberance of the private sector.  They lost market share in the years 2002-2007, as the volume of private issue mortgage backed securities exploded.”

Furthermore, Federal Reserve economists, who have studied this point diligently, point out in one paper, with regard to the Community Reinvestment Act:

“Two basic points emerge from our analysis of the available data. First, only a small portion of subprime mortgage originations is related to the CRA. Second, CRA-related loans appear to perform comparably to other types of subprime loans. Taken together, the available evidence seems to run counter to the contention that the CRA contributed in any substantive way to the current mortgage crisis.”⁴

In an Economist blog, the author states,

“.  .  .  the FHA’s share of the American mortgage market went from 11% in 1995 to 3.3% in 2004. Its share of new mortgage applications hit its all-time low of 5.8% in August, 2005, at the height of the boom. The FHA is not responsible for any of the nothing-down, no-income-documentation, no-inspection mortgages popular in those years, because FHA loans require a minimum down payment, income records, and an inspection of the property. That’s why they lost market share to private lenders that didn’t enforce such requirements. The FHA’s share began to rise in 2007 as private lenders exited the market due to the crash, and today it’s at record levels. But that is a result of the collapse of private lenders’ willingness to extend mortgages and of government efforts to use the FHA to mitigate the housing crisis. These government efforts are probably unwise. But they’re the response to the crisis, not its cause. The Fannie Mae and Freddie Mac story is similar to the FHA’s: they lost market share during the boom, and then tried to win it back.^5″

Furthermore, a recent detailed discussion of publicly backed versus private loan performance by Michael Hudson of the Center for Public Integrity confirms the culpability of the private sector.^6″

“Government data show Fannie and Freddie didn’t take the same risks that Wall Street’s mortgage-backed securities machine did. Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.”

And further,

“As of September, Federal Reserve data show, 2.2 percent of Fannie- and Freddie-backed mortgages were in foreclosure, compared to 13 percent of all subprime mortgages, 11.3 percent of all Alt-A mortgages, and 2.9 percent of all prime mortgages.Fannie and Freddie, in other words, have outperformed the overall mortgage market. If they had been the real ringleaders of the mortgage debacle, the numbers would tell a darker story.”

The Financial Crisis Inquiry Commission has placed the blame squarely where it lies, on slack regulation and Wall Street risk-taking, but the Republican Commission members have issued a dissenting report that essentially blames the government.  I’ve indulged in this digression because this point can’t be argued enough, as it reflects the free-marketers’ readiness to demonize any government efforts to improve the situation of the less well off, not to mention a blatant disregard for the facts of the matter.

Although the current European economic mess is undeniable, it is a function of the attempt at a unified currency.   Paul Krugman has recently written about the inherent weakness of the Euro as the sole currency for an only partially integrated set of nations.² Krugman points out that  these countries lack the laws to manipulate their shared currency according to an individual country’s need in an economic crisis.  But that is a very different issue from the viability of socialistic mixed economies, which have proven themselves repeatedly over the past six decades.  In the same article Krugman acknowledges, with regard to the recession,

“In much of Europe, rules governing worker firing helped limit job loss, while strong social-welfare programs ensured that even the jobless retained their health care and received a basic income. Europe’s gross domestic product might have fallen as much as ours, but the Europeans weren’t suffering anything like the same amount of misery. And the truth is that they still aren’t.”

Furthermore he says,

“. . . the Europeans have shown us that peace and unity can be brought to a region with a history of violence, and in the process they have created perhaps the most decent societies in human history, combining democracy and human rights with a level of individual economic security that America comes nowhere close to matching.”

The countries with real financial problems in Europe are the ones that went out on an American-style housing market limb, as in Ireland, Portugal and Spain, or the country that unwisely bought into debt solutions proffered by American megabanks intended to mask the real extent of their debt, as in Greece, (although this was only one form of its excessive borrowing).   Germany, the Netherlands, the Nordic countries, and France, have long-entrenched socialistic systems.  Yet these remain stable.

In the American press, though, these issues will be triumphantly conflated.  Every bit of bad news about Europe is bruited about the press here as though it somehow justifies the absurdities and injustices of laissez-faire capitalism.  Implied is the sense that there is something very wrong over there, as opposed to the happy condition here where the free market reigns (until, of course, it comes time to socialize the banks’ extravagant losses).  We are constantly being admonished that “we don’t want to end up like Greece.”  Although I very much doubt that the Greek people are being evicted from their homes or exceeding their unemployment benefits at anything like the rate of Americans. The latest Sunday New York Times Business section has a story on the front page that implies that all Greece’s problems are due to over-regulation and the stifling of entrepreneurship (which are, no doubt, a factor), without one word mentioning the role of the conservative National Party’s excessive borrowing, while it was in power for four years before Greece’s financial debacle.⁷ Their decision to hide excessive debt from the EU with a Goldman Sachs financial instrument⁸ certainly did not help Greece’s structural difficulties and only postponed the day of reckoning.

America seems determined to deny the success of the European model, to its own detriment.    Using the non-viability of the European model, among other false justifications, this country seems bent on moving in the direction of a fascistic plutocracy, with wealth increasingly concentrated in the hands of the few.  Such a society of extremes, alienated from its populace and from reality, will inevitably perpetrate a tragic cataclysm on its people.  Europe has already experienced its phase of fascism in the takeover by the Axis powers in the thirties and forties.  Europe now knows better, which is why most postwar governments adopted some form of social democracy or mixed economy.  Let us learn from Europe’s experience and not be forced to repeat their history here in the U.S.

¹http://www.osborne-conant.org/arts_funding.htm

²The New York Times Magazine, “Can Europe be Saved?” by Paul Krugman, January 12, 2011

³http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=09&year=2008&base_name=market_place_misleads_the_publ

⁴Federal Reserve Bank of Minneapolis publication, COMMUNITY DIVIDEND, “Did the CRA Cause the Mortgage Market Meltdown?” Two Federal Reserve economists examine whether available data support critics’ claims that the Community Reinvestment Act spawned the subprime mortgage crisis.

Neil Bhutta, Economist and Glenn B. Canner, Economist, March 2009

⁵ The Economist, American Politics, Democracy in America Blog, Inequality, the crisis and government, ctd, Aug 30th 2010, 21:46 by M.S.

⁶http://www.thedailybeast.com/blogs-and-stories/2011-01-17/wall-street-not-fannie-and-freddie-led-mortgage-meltdown/

⁷What’s Broken in Greece?  Ask an Entrepreneur, by Landon Thomas Jr., The New York Times, Sunday Business, January 30, 2011, pp.1, 5

⁸http://illinois.edu/lb/article/391/39144/page=1/list=list