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Archive for September 5th, 2012

I wrote a celebratory post last November about the dramatic difference between Americans and Europeans. There truly is American exceptionalism in that Europeans are much more likely to think it is government’s responsibility to provide the basics of life.

Another poll in 2010 showed Americans, by a 20-percentage point margin, want smaller government and lower taxes. A 2011 poll revealed negative views, by an almost 2-1 margin, of the federal government. And it’s not scientific, or even a poll, but I also enjoyed this Mark Steyn column  describing how Americans were the only people in the world to protest for less government when the financial crisis hit.

Perhaps most impressive is this data from late last year showing that Americans overwhelmingly view big government as the greatest threat to the nation’s future.

But self reliance and individualism are not necessarily a permanent part of American DNA, and some left wingers openly argue that they want to create an entitlement mindset.

Based on what’s already happened, Nicholas Eberstadt of the American Enterprise Institute is worried that the narcotic of dependency may be diluting American exceptionalism.

Here are some key passages from Eberstadt’s column, beginning with a look at what makes America special.

From the founding of our nation until quite recently, the U.S. and its citizens were regarded, at home and abroad, as exceptional in a number of deep and important respects. One of these was their fierce and principled independence, which informed not only the design of the political experiment that is the U.S. Constitution but also their approach to everyday affairs. The proud self-reliance that struck Alexis de Tocqueville in his visit to the U.S. in the early 1830s extended to personal finances. The American “individualism” about which he wrote did not exclude social cooperation—the young nation was a hotbed of civic associations and voluntary organizations. But in an environment bursting with opportunity, American men and women viewed themselves as accountable for their own situation through their own achievements—a novel outlook at that time, markedly different from the prevailing attitudes of the Old World (or at least the Continent). The corollaries of this American ethos were, on the one hand, an affinity for personal enterprise and industry and, on the other, a horror of dependency and contempt for anything that smacked of a mendicant mentality. Although many Americans in earlier times were poor, even people in fairly desperate circumstances were known to refuse help or handouts as an affront to their dignity and independence. People who subsisted on public resources were known as “paupers,” and provision for them was a local undertaking. Neither beneficiaries nor recipients held the condition of pauperism in high regard.

That’s the good news. Now for the bad news.

The U.S. is now on the verge of a symbolic threshold: the point at which more than half of all American households receive and accept transfer benefits from the government. From cradle to grave, a treasure chest of government-supplied benefits is there for the taking for every American citizen—and exercising one’s legal rights to these many blandishments is now part of the American way of life. …Citizens have become ever more broad-minded about the propriety of tapping new sources of finance for supporting their appetite for more entitlements. The taker mentality has thus ineluctably gravitated toward taking from a pool of citizens who can offer no resistance to such schemes: the unborn descendants of today’s entitlement-seeking population. …The U.S. is a very wealthy society. If it so chooses, it has vast resources to squander. And internationally, the dollar is still the world’s reserve currency; there remains great scope for financial abuse of that privilege. Such devices might well postpone the day of fiscal judgment: not so the day of reckoning for American character, which may be sacrificed long before the credibility of the U.S. economy. Some would argue that it is an asset already wasting away before our very eyes.

If you think Eberstadt is being needlessly pessimistic, you may change your mind if you read this and this.

To be sure, it’s possible to reverse this trend if we implement entitlement reform. But how likely is that given the short-sighted outlook and self-interested attitude of the political class.

P.S. You can enjoy some cartoons about dependency here, here, and here. If you need some more humor, this cartoon looks at the issue from the government’s perspective, and here’s a great Ramirez cartoon about Julia, a.k.a., the poster child of dependency.

P.P.S. Redistribution is bad for prosperity because you’re paying some people not to produce and you’re penalizing some people who do produce. To get a better idea of how the former kills incentives, look at this amazing chart.

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Every year, I look forward to the annual releases of both Economic Freedom of the World and the Index of Economic Freedom. With their comprehensive rankings, these two publications enable interested parties to compare nations and see which countries are moving in the right direction.

As an American, I’m ashamed to say that these publications also show which nations are moving in the wrong direction. And the United States ranks poorly by this metric, having dropped from 3rd place to 10th place since 2000 according to Economic Freedom of the World.

The U.S. also has dropped to 10th place in the Index of Economic Freedom, and is now ranked only as a “mostly free” nation.

Some people dismiss these pieces of data because the two rankings are considered to reflect a pro-free market bias.

But the folks at the World Economic Forum surely can’t be pigeonholed as a bunch of small-government libertarians, and the WEF’s Global Competitiveness Report shows the same trend.

The United States took the top spot in the WEF’s Global Competitiveness Index as recently as 2007 and 2008, but then dropped to 2nd place in 2009.

I think Bush bears the full blame for that unfortunate development. But the decline has continued in recent years, and Obama deserves a good part of the blame for the drop to 4th place in 2010.

The U.S. then fell to 5th place last year, in part because of horrible scores for “Wastefulness of Government Spending” (68th place) and “Burden of Government Regulation” (49th place).

Given this dismal trend, I opened the just-released 2012 Report with considerable trepidation. And my fears were justified. The United States has now dropped to 7th place.

Here is some of what was said about America.

The United States continues the decline that began a few years ago, falling two more positions to take 7th place this year. Although many structural features continue to make its economy extremely productive, a number of escalating and unaddressed weaknesses have lowered the US ranking in recent years. …some weaknesses in particular areas have deepened since past assessments. The business community continues to be critical toward public and private institutions (41st). In particular, its trust in politicians is not strong (54th), perhaps not surprising in light of recent political disputes that threaten to push the country back into recession through automatic spending cuts. Business leaders also remain concerned about the government’s ability to maintain arms-length relationships with the private sector (59th), and consider that the government spends its resources relatively wastefully (76th). A lack of macroeconomic stability continues to be the country’s greatest area of weakness (111th, down from 90th last year).

For people who like to look at the glass as being 1/10th full, the U.S. does beat Portugal (116ht place) in the score for macroeconomic stability.

Here are a few additional highlights. Or lowlights might be a better word.

  • The U.S. scores 42nd in property rights, behind Namibia and Uruguay.
  • The U.S. ranks 59th in government favoritism, behind Guinea and Bolivia.
  • The U.S. scores 76th in wastefulness in government spending, behind Mali and Nicaragua.
  • The U.S. also is 76th in the burden of government regulation, behind Kenya and Thailand.
  • The U.S. scores 69th in extent of taxation, behind Gambia and Ethiopia.
  • The U.S. ranks 103rd for total tax rate, behind Greece (!) and Philippines.

Now time for some caveats. The WEF report is based on survey results, for better or worse, and it also probably is best characterized as a measure of the attitudes of the business community rather than an estimate of economic freedom.

Regardless of limitations, though, it is a good publication. As such, it is downright embarrassing to see the U.S. fare so poorly in key indices – particularly when third-world nations score better.

We know that small government and free markets are the keys to prosperity. Bush took us in the wrong direction, however, and Obama is repeating his mistakes.

So don’t be surprised to see the American score decline further as additional reports are issued.

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Welcome Instapundit readers. Thanks, Glenn. Since the declining score in the U.S. is partly due to poor fiscal policy, you may want to peruse this video primer on the size of government.

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