Sunday, April 23, 2006

The Neoliberal model and the European social model compared

(Suddenly during Katrina crisis, they sprang to view, all the poor coloured people who had not previously got much exposition in the media. Left behind by the "American dream", and below the poverty line, they were so poor that they didn't even own a car to get away in. The middle and upper classes had left long ago)

Very often the European social model and the American neoliberal model are compared. And it is generally assumed that the USA has a more advanced economy with a higher GDP pr capita and higher living standards. That is a questionable assumption.

According to the worldbank's latest figures for 2004, the US GDP is 11667 bn $. As a European example, the Danish one is 243 bn $. Divided by population, 295 and 5,4 mio. respectively, you get a GDP per capita of US: 39.549, Denmark: 45.000. The Danish lead has increased since 2004 due to currency rate changes. A few European countries have higher GDP per capita than Denmark.

America is living above its means. Due to artificially low interest rates house prices have shot up and provided many American households with equity that makes it possible for them to finance overconsumption through loans. The effects can be seen in the balance of payments position (in the red at 6 per cent of GNP or some 7-800 bn $).

If one wants to compare the US with Denmark, one should look at incomes, - and income distribution. There’s no doubt that the US has a serious poverty problem. For in stance, one could read in the Boston Globe after the Katrina disaster:

“When ordering people to leave New Orleans while Hurricane Katrina lurked in the Gulf of Mexico, state and federal authorities apparently failed to consider that 27.9 percent of the city was below the poverty line and therefore unlikely to have transportation” (The Boston Globe). The official poverty line is about 20.000 $ for a four-member household.

Quote: “On August 30, 2005, the U.S. Census Bureau published its poverty report for 2004. The official poverty rate rose from 12.5% in 2003 to 12.7% in 2004. This puts the number of people officially living in poverty in the U.S. at 37 million. For a family of 4 persons the threshold was listed as $19,307” (Census Bureau). That is considerably lower than a corresponding Danish family.

In the US a lot of workers make no more than the minimum pay, which at the national level is very low, much lower than in Denmark. Quote: “Workers who are covered by the FLSA are entitled to a minimum wage of not less than $5.15 an hour” (US, Department of Labor). In France the minimum wage (Le SMIC) was about 8 euros an hour in the beginning of 2006, or considerably more than the American minimum wage. In Denmark the minimum wage is not fixed by law, but as the workers are highly unionised by collective agreement. It was about 14 $ an hour at the end of 2005. Taking income taxes into consideration, it is only slightly higher than the French level.

In the other end of the income scale incomes are very high. Quote: “The average CEO of a Standard & Poor's 500 company made $11.75 million in total compensation in 2005” (Paywatch.org). Income disparities have been widening as a consequence of the neoliberal economic order.

Of course, for a comparison, what is interesting is to look at average pay, and what you can get for that pay. According to most surveys, the average American wage earner/salaried employee made about 17 $ an hour in the beginning of 2005. Here it is noteworthy that taking inflation into consideration, average pay has barely budged since the beginning of the 1980s. The neoliberal model has led to sharpening competition in the labour market and outsourcing to low-income countries. And average wage earners are the losers in the income race compared to high income earners. And how much – or rather – how little do they get for the average income? Quote: “Meanwhile, those who secure the middle-class jobs of the 21st century will have to make $17 an hour stretch further than ever as they pay more for health care or risk doing without insurance and assume much or all of the burden for their retirement. Meanwhile, those who secure the middle-class jobs of the 21st century will have to make $17 an hour stretch further than ever as they pay more for health care or risk doing without insurance and assume much or all of the burden for their retirement” (Washington Post 31st of December 2004).

There’s a lot of talk about taxes in the European social model being so high. That is correct when you look at taxation on high income earners. When you look at middle or low income earners, the Nordic welfare model, for instance Denmark is not the area with the highest tax burden. Countries like Belgium, Germany in France are close to leading the race. In a publication from the Danish ministry of Taxation, “Skattetryk en international Sammenligning, 2005, it is shown how several countries tax low and middle income earners more than Denmark does. The US is lower in this comparison than most EU countries, but for instance taking families with or without dependent children, the US is not so much lower that it compensates for the lower earnings plus the higher living costs to health care and other insurances.

4 Comments:

Blogger Sophia said...

Dear Cosmic,
For some reason I don't know yet I am not able to publish my post of today. I hereby send it to you in the comment section as a post in waiting.

I feel tired and angry.

Tired that our time is now paced by terror attacks, Bin Laden's apparitions on Al-Jazeera, terror spin and terror talk. We are becoming a global society obsessed by fear and terror.
Angry that a sinister jihadist whose only credence is to have fought, with the CIA as brothers in arms, the soviets in Afghanistan, is capitalizing on Muslims frustrations.
Angry that an army of 150000 is destroying Iraq, the mother of all civilisations, its society and its history in the name of 'Freedom' as conceived, packaged and exported by some ill advised minds in the West.
Angry that Palestine and the Palestinians are being stigmatized for their fight against opression because of the sisnister jihadist.
Angry that Israel is banking on the 'War on Terror' to better occupy and Oppress the Palestinians.
Angry that 30 years after I opened my eyes as a teenager on the Israeli-Palestinin conflict, Palestine is still opressed and occupied and Palestinians still without a land or an official identity.
Angry that the sinister jihadist is well served by:
The USA policy in the middle east, its sidelining with Israel in the face of the growing opression of the Palestinin people, its bullying of Arabs and Palestinians and its bullying of muslims.
Angry that some so-called 'intellectuals' can find a justification to this all non-sense.
Angry that my children will never dream or feel the freedom of protesting and speaking against an oppressive power because they will be labeled terrorrists.
Angry that the world is watching and silent while a part of its humanity is being scorned by torture policies in the name of the War on terror.
Angry that in our western 'democracies' we are so proud of, the average citizen has no voice in the face of avid politicians using the War on terror and its policies to take power more than what a real democracy would give them.
Tired to see rationality, morality, justice and all what we fought and still fight for are sacrificed on the altar of the 'war on terror'.

You can do all the analysis you want on yesterday's Bin Laden speech, there is one conclusion you canot negate:
This sinister jihadist has been elevated to the statute of a global statesman by a bunch of irresponsible political adventurers and he and them have irreversibly changed our lives, our values and our world.
For completely different reasons, Bush/Cheney and Bin Laden cannot live without fighting a global menace and for this purpose they had to invent it. Bin Laden had to export and globalize his fight against Saudi rulers because he lost it at home. Bush and Cheney had to find a global enemy (Islam) in order to replace the communist menace, to keep alive the business of arms and wars and to keep their citizens in a simili-democracy in which no dissent to their outrageous enrichment and outrageous war against the American people can be possible.
The irony is that, as citizens of the world, we are caught between two exported and global civil wars in which weare being drawn, every day, by an uncritical media, to believe that these are our wars.
Hand in hand, Bin Laden is still fighting with his american ally, not anymore against the Afghan rebels but this time against the entire world !

For more depressive reading about the state of this irresponsible war please go to these links.

Bin Laden's message in English

Timeline for Bin Laden's messages

7:44 AM  
Blogger Cosmic Duck said...

Dear Sophia.

Something seems to be wrong with blogger today. I also lost things I had been working on.

I understand how you feel. Today the Danish press wrote about a forthcoming report from the Danish foreing office in which they "analyse" the Mid East situation and predict that it'll not be solved in the next 15 years. We must learn to live with the "terror threat". That's saddening news - and wrongheaded, because we're probably ourselves responsible for a big part of the conflicts by enforcing Western "democracy and freedom" upon them. When you see what has happened, you can understand why they're a bit sceptical of our idea of democracy - Am I now labeled a potential terrorist for writing this?

You're right, that's the kind of fear people will feel when they want to use their constitutional rights to freedom of expression and political protest. But don't accept it! Encourage your children to keep up the good work!

11:10 AM  
Blogger Sophia said...

This comment has been removed by a blog administrator.

11:25 AM  
Blogger Sophia said...

Dear Cosmic,
I was finally able to publish, you can erase the comment if you want. I see that you posted also. It looks interesting.

11:26 AM  

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