"A discourse on neo-socialism" or "A blue-print to economic reform"

This afternoon I listened to a very interesting lecture in my European Union class, and it sparked some ideas in my head. They are jumbled and I haven't had a lot of time to digest them myself, but let's see how coherently I can get them down on (digital) paper. For those of you just looking for updates on my adventures in Spain, you may want to skip ahead to the next post.



This all started from a lecture intended to show the differences between the economic structures of Europe and the United States. One thing my professor pointed out, and I think is good to note here, is the difference between a few terms. In order to be a member of the European Union, you must be an Estado de Bienestar. This most literally translates to English as a "welfare state." However, Spain and other countries here are far from what we would consider a welfare state--and what we call “welfare” most literally translates back into Spanish as subsidios, which in turn translates literally back into English as “subsidies.” Oh the subtleties of language!

The best way to explain the difference is with the medical care system--the welfare system in the US is designed to help poorer people get basic medical care they couldn't otherwise afford. This leads to the reality that in the US the best medical facilities are private (and consequently expensive, thus unavailable to the lower class). In most of Europe, the estado de bienestar insures a more equal treatment to all citizens, rich and poor alike. For example, a homeless person could walk into any medical facility in the country and receive the same medical care (paid for by the state) as a middle- or upper-class person could. Consequently, the best medical care and most advanced medical research in Europe is done in public facilities. This system is expensive, but effective.

Now for the fun stuff.

My professor offered a description of how Switzerland implemented this estado de bienestar (since I don't know of an accurate translation for this term, I will refer to it in Spanish) after their elections of 1945. Based on that, I scribbled some general notes on how I think a country like the US could implement a similar system. Keep in mind I have only been "developing" this for about...three hours now, so I don't claim it to be anything more than a rough sketch.

STEP 1
We would need to implement a slightly revised tax system. The main changes would be made to the taxation of businesses--I propose a flat tax on all revenue. For the sake of argument, let's just say this rate is 15%.

STEP 2
Begin a government-enforced wage-floor. Basically, this would be a complex version of minimum wage. Let's pretend that we could achieve a system where for 10 years, the wages paid for every job would remain at a constant level.

STEP 3
This is where the government really steps in. Each year, the government adds a new program. Let's say in year 1, the government begins universal health-care (not the type of government-funded healthcare we have now). I'm talking a legitimate healthcare system that would require complete de-privatization of all healthcare entities (from pharmaceutical companies to hospitals) and all healthcare would be made equally available to any American citizen, regardless of social or economic status.

Let's pretend that Family A makes $100 a month. Out of that money, they usually spend $30 on healthcare, $20 on transportation, and $20 on education-related expenses. At this point, their buying power is $30. But, after year 1, they no longer have to spend money out-of-pocket for healthcare, so their buying power has just increased from $30 to $60. What do they do with this money? They spend it--and remember the flat-tax on revenue I proposed? Yep, that means the government is going to see an increase in tax revenue in year 2.

So, in year 2 the government adds another social program--this time they add cheap public transportation. After year 2, public transportation is more widely available, so Family A's transportation-related spending decreases from $20 to $5, thus their buying power increases from $60 to $75.

Now, the government is making more money so they can de-privatize and universalize education et cetera and et cetera. You can see where I'm going with all of this, I think.

BUT WHERE DOES THE MONEY COME FROM?
As I roughly illustrated, the system could potentially be fairly self-sustainable. And, if done correctly would greatly stimulate the economy as well. But, when it comes down to it, Americans would have to get used to the idea of having significantly higher taxes that what we have now. The typical European is taxed roughly 1/3 of their income (very rough estimate, but accurate). However, look at what they get back--extremely efficient public transportation, free (good) healthcare, free education, and a number of other benefits. You get what you pay for.

I would also like to point out that all of the countries in the European Union--27 of them--combined spend less than half of what the US spends on military-related endeavors. Perhaps sometime I'll write a discourse on the disgusting abuse of tax-payer money to promote an agenda of fear, terror and failed attempts to force democracy (a paradox, I know) on the third world. But I think most people reading this already know how I feel about that, so I'll stay away from it right now. But what I'm basically saying is that we stand to gain so much if even a portion of that money could be utilized at home to promote a system like what I am talking about here.

Another point: I think any country that has the ability to, in the matter of one week, make $700,000,000,000--yes, that's billions with a "B"--appear as if out of nowhere (and by nowhere I actually mean our grand-children’s pockets) to stop an imminent collapse of our own pseudo-free-market economy, then I think we could probably scratch up some funds to begin a proactive economic reform rather than a reactive bail-out of white-collar industries.

*sigh* Go get a glass of water or something. We are almost there.

THIS COULDN'T ACTUALLY WORK, RIGHT?
Who knows if it actually could work? No...no...wait...I think...yeah that's right! There are actually 27 countries already operating on this system, or something very similar. I'm not saying anything new here, I'm just going one step further than my high school world geography book that called the European Union "a collection of welfare states" and France "an economy based on the principles of Marxism and socialism" and stopped there.

And, speaking of those 27 countries, the biggest economic crisis they are going through right now is merely international fallout from the US's sub-prime follies. Bravo, corporate America!

NOW, TO WRAP THINGS UP…
I wrote a paper for English class in high school right before I graduated (the biggest paper I had written at that point) about Communism. Very broad topic for a paper, I know. But, I constantly caught myself saying “heck, this could actually work” especially when I was researching the economic intentions of a communist-style government. Now, to call myself a communist would be a complete lie, as I think having a free-market element to the economy is not just a good thing, but entirely necessary. But what about socialism? In a nutshell, it’s just a diluted version of communism. Even pure socialism virtually eliminates the concept of a free market, but what about something in the middle? Europe has already made it work. They have a very free market supplemented by government-controlled basic entities that ensure at least the basic needs of every citizen will be adequately provided.

I’ve seen the government, particularly mine, do some pretty disagreeable things. Actually, most of what they have done has been disagreeable. So, it’s not like I’m suggesting we just hand the reigns of a number of our largest private industries over to city hall, but it’s not like the private sector is doing a whole lot better with these reigns. Health care is not universal or adequate (especially at the lower income levels), low-priced public transportation is all but non-existent in most parts of the US, and education costs an arm and a leg (just take a look at my bill from Bethel). Something has to change, and life seems pretty peachy over here in Europe, so I say we take a few pages out of their book.

For the lack of anything other term, I will coin one here: neo-socialism. I am sure someone else already coined it, and I am also sure when I google it later tonight I will learn what it actually means in the mainstream, but for now that’s what I’m going to call this idea.

I plan to post this on my blog, on Facebook, and I may email it to some people separately. I welcome (and request) any comments you have about it on any of those media.