Lecture 10.2

U.S. Exceptionalism

Emmanuel Teitelbaum

The Effects of Globalization

Three Theories

• Race to the bottom hypothesis
  • Globalization induces states to drastically reduce publicly provided benefits and services
• Embedded liberalism hypothesis
  • Globalization induces states to spend more on benefits and services to cushion workers from increased labor market risks
• Convergence
  • Globalization forces states to provide similar levels and types of benefits and services

Education Spending in Three Worlds

Notes: Data are from World Bank Development Indicators. Social democratic countries include Denmark, Finland, Netherlands, Norway, and Sweden; Corporatist countries include Austria, France, Germany and Italy; Liberal countries include Australia, Canada, Ireland, Japan, New Zealand, the UK, and the U.S.

Health Spending in Three Worlds

Notes: Data are from the World Bank Development Indicators. Social democratic countries include Denmark, Finland, Netherlands, Norway, and Sweden; Corporatist countries include Austria, France, Germany and Italy; Liberal countreis include Australia, Canada, Ireland, Japan, New Zealand, the UK, and the U.S.

Reasons for Persistence

• Trade openness—induces countries to spend more to cushion workers (embedded liberalism)
• Partisan politics—Christian democratic and social Democratic parties favor welfare state (but different kinds)
• Electoral politics (voters like programs)
• Bureaucratic inertia (vested interests)
• Economic coordination (next week)

Effects of Some Int’l and Domestic Factors

Source: Swank, “Globalization, the Welfare State and Inequality”

How Do We Get to Denmark?

Barriers to a European Welfare State in U.S. (Alesina et. al.)

• Electoral systems

• Federalism

• Courts

• Ethnic diversity

• What is the strongest factor? Missing factors?

Should We Go to Denmark?

• Video

• What is your vision of the “American Dream”?

• Can “democratic socialism” work in the United States?

  • Is it the American dream “for real”?
  • Is it affordable?