Lane Kenworthy’s “Social Democratic America”
In Social Democratic America, Lane Kenworthy lays out an optimistic vision of an American future in which social democratic institutions have finally taken root. Like many on the left, Kenworthy identifies as problematic the amount of poverty, inequality, unequal opportunity, and economic insecurity that exists in America. He believes that these problems are best addressed by adopting economic institutions that have successfully kept those problems at bay in many western and northern European countries. He also believes that America’s movement toward this model is very likely, if not a total historical inevitability.
Kenworthy’s Theory of History
In the Communist Manifesto, Karl Marx wrote that “the history of all hitherto existing society is the history of class struggles.” This idea was core to his historical materialist theory of history. Kenworthy’s theory of history, at least as it is applied to economic institutions, is similarly materialist in its orientation. For Kenworthy, the history of all hitherto industrial society is the history of countries expanding social insurance as they get richer. Kenworthy does not delve deeply into the precise mechanism that causes this (organized interest groups and political movements one presumes), but he notes it as a basically universal trend among all rich, industrialized nations.
Although America has lagged other countries somewhat, it has also followed this historical path. One hundred years ago, we did not have Social Security, Medicare, Medicaid, the Child Tax Credit, the Earned Income Tax Credit, food stamps, or really any of the programs that comprise the modern welfare state. Moreover, with the exception of the elimination of Aid to Families with Dependent Children, the American welfare state has marched almost exclusively in the direction of expanding social insurance, never significantly scaling it back.
Kenworthy is optimistic that this trend will continue. Although it is very difficult to get done, from time to time a new social insurance initiative will get through all the veto points of the federal legislature, and once through, it will never go away. So piece by piece, a social democratic future will, according to Kenworthy, be built.
Kenworthy’s Policy Agenda
Although Kenworthy’s theory of history suggests that reforms will come piecemeal and not in one big slate, he does provide one of the most complete descriptions of what a future social democratic America could look like. Among other things, he proposes the following:
- Universal health insurance
- Universal system of one year of paid parental leave
- Universal early education
- Increased Child Tax Credit
- Universal sickness insurance
- Eased eligibility criteria for unemployment insurance
- Wage insurance for unexpected drops in income
- State-run supplemental defined-contribution pension plans with automatic enrollment
- Extensive, personalized job search and (re)training support
- Government as employer of last resort
- Minimum wage increased modestly and indexed to inflation
- Earned Income Tax Credit extended farther up the income ladder and indexed to average wages or GDP per capita
- Higher benefit level for social assistance (i.e. TANF-like programs)
- Reduced incarceration of low-level drug offenders
- Affirmative action shifted to focus on family background rather than race
- Expanded government investment in infrastructure and public spaces
- More paid holidays and vacation time
Kenworthy estimates that financing his various reforms would require the government to increase revenues by 10 percent of GDP, which is a considerable hike, but would still leave American tax levels below many of those already in place in western and northern Europe. There are many ways to get this kind of revenue, but Kenworthy favors the following:
- Value Added Tax of 12% (5.0% of GDP)
- Return to 2000 federal income tax rates (2.0% of GDP)
- New tax brackets at the top of the income distribution (0.7%)
- Elimination of the mortgage interest tax deduction (0.6%)
- Carbon tax (0.7%)
- Financial transactions tax of 0.5% on trades (0.5%)
- Increase the payroll tax cap so that it covers 90% of earnings (0.2%)
- Increase the payroll tax by 1 percentage point (0.3%)
In addition to providing his optimistic theory of history and his program, Kenworthy details, using his exhaustive empirical approach, the full extent of our economic justice problems. He also spends a considerable amount of time ably responding to dozens of objections and alternatives to his particular policy agenda.
As with all Kenworthy products, this is a book worth buying and reading if you are interested in a very accessible, but highly rigorous, treatment of the state of economic well-being in America and how it can be dramatically improved. In the world of left-liberal wonkery, Lane Kenworthy has no equal.