Kenworthy has several points of disagreement with the Vermont senator, but both basically argue that the United States should adopt polices similar to those of Scandinavian countries in which the government provides more resources for parents and the economically insecure. In his book "Social Democratic America," Kenworthy calls for a raft of new government spending -- family and sick leave, paid for by the state; a pre-kindergarten program subsidized for all families; and more.
As Kenworthy explains it, social democracy is really just about setting up governmental insurance to cover Americans in the event of unexpected expenses and losses of income. These programs would guarantee Americans a certain level of economic stability, even if their circumstances change suddenly, and they would help many working-class families handle typical financial headaches.
Americans already have disability and unemployment insurance through the federal government, for example. They hold old-age insurance in the form of Social Security and Medicare to cover the cost of living and health care for people who live longer. President Obama's health reform helps many Americans pay for general medical insurance.
Likewise, paid sick leave would insure against loss of income due to short-term illness. Universal child care and more generous college-tuition grants would insure against some of the costs of parenting.
All this would require greater taxes, and many conservatives claim that a program along these lines would reduce economic growth.
Yet Kenworthy argues not only that social democracy is possible in the United States, but that it's inevitable. Just as Americans have expanded public insurance programs over the past century -- Social Security, Medicare, Medicaid and more -- they'll continue to do so in the future, he argues.
An edited transcript of Wonkblog's conversation with Kenworthy is below.
Wonkblog: At the beginning of the book, you write that social democracy is basically just a series of insurance programs, run by the government. Why are these programs necessary, and why can't the private sector provide this insurance?
Lane Kenworthy: There are some types of risk that are most effectively and efficiently dealt with by making them public, by creating a government program to deal with them. Those types of programs solve a problem. They address risk. They do so, typically, in a particularly efficient way and in a comprehensive way.
They spread the cost around, so the cost per person is relatively low. A public program, because it can require everybody to pay in, is able to spread the cost better and therefore reduce the cost to each individual person or household, and it's also able to insure that everybody is covered. We want everybody who is subject to a particular risk to be able to get access to good insurance. The private sector often doesn't do that. The private sector has an incentive to make profit, and that sometimes mean cutting people off who aren’t a good risk. Again, their incentive is to generate revenue at lower cost, so they probably want to rationally or reasonably keep folks who are not a very good risk -- people who are much more likely to get sick, have their house burn down, have lots of kids [in the case of paid family leave].
All these insurance programs sound pretty bland overall -- hardly the radical agenda that many people think of when they think of a candidate such as Bernie Sanders. How radical is social democracy?
I don't think they are radical proposals at all. A lot of Americans certainly, at least those who are to the right of center, might think that they’re quite radical, but they’re not. Almost everything that I conclude the United States is likely to eventually adopt and implement really just follows on the pattern of what’s happened since the 1930s, where we've very slowly but more or less steadily adopted these public insurance programs, like Social Security.
I think that’s for a very good reason. As people get richer, they're willing to spend more money on insurance. As countries get richer, they tend to spend more on public insurance. I don’t really see these proposals as radical at all.
When programs get put in place -- even if people aren’t sure what to make of them initially, or even if they impose them -- if they work well, and they don't seem to have any big adverse costs like slowing economic growth, then people grow to like them. People like the program, even though in the abstract, they don't really like the idea of big government.
At the same time, social democracy effectively requires people to buy insurance. Take existing programs: old-age insurance in the case of Social Security, which people pay for through the payroll tax, or health insurance in the case of President Obama's Affordable Care Act. Your college and early-childhood proposals would force everyone to buy insurance for educational expenses. Is it right to require people to buy insurance?
That's one of the main objections that conservatives, or people on the right side of the spectrum, tend to have: These types of programs, like Social Security or Medicare, that enroll everyone and force all taxpayers or force most taxpayers to pay for it, take too much freedom away. Even if they think that there's maybe some utility to having insurance, they're unwilling to force everyone to participate and pay for it. I think that's just a simple normative disagreement about what makes a better society.
Almost all conservatives, they're okay with some paternalism in certain circumstances. They think there should be stoplights, and maybe seat-belt laws, and taxes for certain things. It's just a question of how far they are willing to go. That is an important disagreement. I'm quite happy for the government to be paternalistic, where doing that yields a better outcome.
Conservative opponents might also argue that governmental insurance programs discourage people from working with increased taxes and benefits that are available to those who don't work. How would you respond?
There's very much a grain of truth in this. When you create some types of public insurance programs, you can reduce the incentive for people to be employed, or to be employed as much as they might otherwise be. I think it's important for government to be really careful about this.
There are definitely instances in Western European countries where policies have been made too generous. Sweden almost certainly overshot with its paid sick-leave program. In the late 1980s, on any given day, something like one-in-six Swedish employees was out of work sick.* They clearly weren't sick.
It's very much true that if you overshoot, if your tax rates are too high or if your government benefits are too generous, you might reduce economic growth -- but the question is where are we in relation to that tipping point, and you can only answer that question by looking at the data.
We've got data on gross domestic product per capita, which is the relevant thing you want to look at when you look at economic growth, going back to the late 1800s for about 10 or 15 of the world's rich countries, and what we've seen is the long run rates of economic growth have been remarkably stable in most of these countries. This is a period where in many of these countries, the size of government is increasing, at least if you measure it by the share of GDP that goes to taxes or at least to government spending. Even in the United States, there's been quite a large increase over the last century. The fact that rates of economic growth have been so stable over this period of time is another strongly suggestive piece of evidence that most and all of these countries probably haven't yet hit that tipping point where they've gone too far and are probably going to reduce economic growth.
What do social democrats think about work in general?
Modern social democracy also has a very strong employment orientation. The best known social democratic countries, the Scandinavian or Nordic countries, in the 1960s or 1970s had more of an orientation toward building up these programs with an aim toward reducing the amount of time that people spend in paid work. That's fundamentally changed in the last generation.
[Work] is really key to being able to pay for all of these public insurance programs. Over the long run, the idea is very much to have the budget balanced, so that requires raising a lot of tax revenues. That's harder to do if you don't have a lot of people employed. And so they've become more committed over the last generation to employment.
It was also a result of the fact that more and more women were entering the labor force and wanting to [work], and so again they created various policies that facilitated better balance between work and family. These things tended to work very well.
Employment also tends to be a good thing for lots of individuals. People who are unemployed are among the least happy of anyone in society. Unemployment is a really bad thing for people's subjective well being. There's a lot more worry now than there was back in the 1970s about the effects on individuals of not having some form of vocation or pursuit.
Sanders says he is "democratic socialist," but for some, the word "socialist" implies the government taking over major industries, like automakers or telecommunications. Your book is called "Social Democratic America" -- would "social democratic" be a better term for Sanders and his agenda?
I don't think there's anything particularly socialist about it. I suspect that he, like a lot of people, started calling himself a socialist in the 1960s and 1970s. Because he was running for election in Vermont, he never really had to drop that. In terms of what most people in the world's rich countries think of as socialist, he's really not.
Is Clinton a social democrat, too? She's talking about universal preschool, paid family leave, and a modest tax on financial transactions -- all ideas you endorse in your book.
She’s proposing a fairly sizable expansion of public insurance and proposing paying for it through tax increases, and in ways that would be pro-employment -- would, if anything, yield a higher employment rate rather than a lower one.
One difference between these two candidates' platforms and the social-democratic agenda in your book is that both are talking a lot about raising taxes on the rich, while in the Nordic countries, the middle and working classes pay more in taxes, too.
The tax strategy that these countries have tended to pursue is to spread the tax burden around, and in fact, their overall tax systems are pretty much flat. Almost everybody pays roughly the same share of their pre-tax income in taxes. You have a progressive income tax, but that's offset by regressive payroll taxes, and especially regressive consumption taxes, which are very large in these countries.
Everybody feels like they're paying in and getting something out of the system, so the system becomes more legitimate. You're less likely to get this kind of us-against-them argument from conservatives. Even high income households don’t tend to hate this kind of system.
If you're going to have a really big government, as these countries do -- government spending is the neighborhood of 45 to 50 percent of GDP -- if you're going to do that, you just have to go where the money is. There's obviously no way you could do that just by tapping money from the rich. Sanders has said that and is acknowledging that.
If we're talking about a big expansion of public insurance, you have to tax the middle class as well as the rich. In the short turn, for a smaller expansion, I don't necessarily think it's a terrible idea to say you're going to get most of that revenue from the rich. It is possible.
I don't like Hillary Clinton's promise, "I'm not going to raise any taxes on anybody in the bottom 95 percent." I don't think that's a smart or productive thing to do, but the general orientation -- to raise as much of the additional revenue as you can from those at the top -- I don't necessarily oppose.
Right now, Clinton and Sanders are arguing about whether the Affordable Care Act (also called Obamacare) goes far enough in insuring people against the risk of illness. Sanders wants to institute national, single-payer insurance, which he often calls "Medicare for All." What do you think?
No, I don't think Obamacare is sufficient, by any stretch. Once it's fully implemented, we'll still be left with somewhere between 6 and 9 percent of the population uninsured.
My best guess is that, eventually, either Medicaid eligibility will be pushed up in the income distribution, or the subsidies will be increased, or a public option is added on, or maybe all three of these things. Eventually, through those mechanisms, we can get much closer to 100 percent health-insurance coverage.
It's very important that we try as best we can to wring as much inefficiency out of the health care system as possible, and it may turn out to be the case that it's just very difficult to do that with the Obamacare set-up. Something like Medicare for all would just be much much more effective, because [the federal government] can impose price constraints on providers more effectively and reduce the administrative costs.
It could be 30 years from now. It could be 100 years from now. It just makes sense to go toward "Medicare for All."
Sanders has received from criticism for his single-payer plan, which doesn't clearly spell out whether he'd try to constrain providers' prices by limiting the types of treatment that are covered. What do you think about the plan?
He's punting on the question of "Would we work very hard to keep a lid on costs and prices, at the sacrifice of providing some services?" That’s a tension and trade-off for any country where the government is the main or the only payer. It becomes a political decision how much you cover. I think it’s probably the safest road for him to take -- to punt on that, and not come out with a particular view -- but I can understand how people who are skeptical or critical would try to call him out.
Sanders has also called for making college tuition free for any American student. Clinton opposes this idea. What do you think about making education completely free?
I'm not in favor of free tuition at universities. I think imposing at least some minimal cost is something that’s bearable for most people, even for people with low incomes. It's also an unneeded subsidy to upper middle class and affluent families.
In Sweden and Denmark, parents pay for child care. It's not free. It's just that the cost is capped at around 10 percent of income. That kind of approach seems to me a little smarter and more reasonable than just making it free to everybody.
Another point of disagreement between Sanders and Clinton is the minimum wage, which Sanders has said should be raised to $15 an hour. What do you think about the minimum wage?
Fifteen dollars is higher than I would go in the contemporary United States. It's not a matter of principle. I worry a lot that pushing the minimum wage that high will reduce employment at the low end of the labor market -- not in Manhattan or San Francisco, but in a lot of other places around the country. We just don’t have any evidence here in the United States about whether there would be adverse employment effects.
I'm more inclined to say, go for a modest minimum wage, supplement it with a more generous Earned Income Tax Credit, surround it with a variety of other public transfers and services, and that's how in the medium term in the United States you get to a decent living standard and quality of life for people at the low end.