The Anglo Saxon vs the European Model of Liberal Democracy
What the US has accomplished since the 1980’s is to move 50% of its population from a middle income living standard to a third world one.
We hear everyday that liberal democracy is under assault by nationalist or populist movements. And it’s not difficult to confirm. Brexit, Trump, plus the rise of far right (or left) political movements all over Europe are the proof. Places like Turkey, Russia or China don’t count as they have never been liberal democracies, or if so, only briefly.
The most widespread explanation is that globalisation together with automatisation have created winners and losers and that the middle classes in developed economies have fared the worst. These “losers of globalisation” form the core of supporters of nationalist/populist parties. But this analysis overlooks some nuances that are important to highlight. What is happening in France or Germany is not the same than what has happened in the UK and the US.
The National Front in France got crushed by 33 percentage points of margin in the run off of the 2017 presidential elections. That same year in the federal elections of Germany, Alternative for Germany (AfD) achieved the third largest vote but it amounted to only 12% of the total. This is in no way comparable to the results of the Brexit referendum or the 2016 American presidential election. Even if both Brexit’s win and Trump’s election occurred by tight margins, they occurred. The data shows that neither France nor Germany in 2017 were at risk of landing similar fiascos.
The latter points at the fact that there are underlying differences between the the Anglo-Saxon model of Liberal Democracy vs the European one. While the Anglo Saxon version holds true that the less government intervention the better, the European one calls for a stronger state that balances the interests of the markets vs society’s. But let’s focus in what is going on in the US because of its geopolitical weight, but also because it’s where the most extreme representation of the Anglo Saxon model is in place. The UK at least has a universal health care system.
According to the World Inequality Report, between 1980 and 2016 the share of total income that went to the top 1% in the US increased from 11% to 20%. Parallel to this, the share that went to the bottom 50% decreased from 21% to 13%. In the same period, the top 1% of earners in Western Europe increased their share from 10% to 12% and the bottom 50% decreased its own from 24% to 22%. This means that in the period where globalisation took off, American elites captured four times more of the income pie than their European peers. Similarly the poorest 50% of Americans quadrupled their loss compared to their European equals.
Another interesting parallel that points at the same is the level of concentration of wealth. On the global scale, the 26 richest people hold the same wealth than the poorest 50%. In the US the proportion is of 3 individuals who own as much wealth as the bottom half of the population. This is 8 times more. To put it bluntly, what the US has accomplished since the 1980’s is to move 50% of its population from a middle income living standard to a third world one. The Borgen Project defines third world countries as: “…Usually, the country will have an upper class and a lower class. Without a middle class to fill the gap, there is almost no way for a person to escape poverty because there is no next step for them on the economic ladder. This also allows the wealthy to control all the money in the country…”
And there is data to support this. While the median earnings of Americans grew 117% between 1990 — 2018, basic expenses raised at a much higher pace: Rent 130%, heating 162%, childcare (nursery schools) 182%, prescription drugs 185%, medical care 189% and college tuition 374%. Even with unemployment at its lowest rate in nearly 50 years, a 2018 study by the Urban Institute, a centrist think tank, found four in ten Americans struggle to pay for groceries, housing and other basic needs. In other words 40% of US citizens live like most people in developing countries do.
Unsurprisingly, amongst rich nations the US — and the UK — rank very low in indicators such as life expectancy, math and literacy, infant mortality, homicides, imprisonment, teenage births, trust, mental illness (including drug & alcohol addiction), obesity and social mobility. While both rank high in income inequality. The Anglo Saxon excessively free model of capitalist Liberal Democracy is clearly impoverishing the majority of its citizens.
Needless to say, Western Europe needs to make adjustments to its model if it is to scare away the threat of nationalist movements. But it is also obvious, which of the two models is faring worse. With this background it is really difficult to understand how the Republican Party Committee and its media ally Fox News call Bernie Sanders’s ideas like universal healthcare or college for all, radical or far-left. When these are exactly the kind of policies that make Western Europe rank way better in most human development indicators as well as in the quintessential American idea of the “American Dream”, which is nothing else but social mobility.
Fortunately, Donald Trump’s term in office is acting as a catalyst to move the Democratic party to the left, triggering the surge of figures like Alexandria Ocasio Cortez, the freshman star Democratic congresswoman from New York. An eventual rebalance of the US version of Liberal Democracy towards the European one is good not only for American citizens but for the entire world. The US is still the world’s heavyweight champion geopolitically speaking. Such a turn would help other countries following the Anglo Saxon model realise this is not exactly the best path.
While we wait, as Public Health Researcher Richard Wilkinson said “if Americans want to live the American dream they need to move to Denmark”