15 June, 2003Issue 2.3EconomicsEuropeNorth AmericaPolitics & SocietyWorld Politics

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Picking Teams

David Tannenbaum

Will Hutton
The World We’re In
Abacus Press, 2003
528 pages

In global politics there is only one cool kid, and that kid is the United States of America. Everyone knows ‘Old Europe’ is lame; but as European nations become more tightly integrated into their own club, the EU, we may be witnessing a revenge of the nerds. According to Will Hutton’s The World We’re In, the UK sits somewhere between these two groups. Hutton believes that the UK ought to behave more like a European geek; geeks are happier, healthier, and ultimately more successful than cool kids. The sooner the UK admits this and sheds ill-fitting American notions of how to build a just society, the sooner it can begin to enjoy the good life. Geek chic is in.

The problem is, geeks and cool kids have never gotten along. American foreign policy analyst Robert Kagan argues that ‘on major strategic and international questions today, Americans are from Mars and Europeans are from Venus: they agree on little and understand one another less and less’. A recent opinion poll by the Pew Research Centre found that pro-Americanism among the population of almost every Western European country has fallen by 4% to 17% since 2000. The one exception was France, which had the lowest favourable opinion to start with. Between half and three-quarters of the respondents in these countries felt that the spread of American ideas and customs was a bad thing.

Brits polled in these surveys have a more sanguine view of American policy than their continental counterparts, but they still express deep ambivalence. Hutton – former stockbroker, ex-editor in chief of The Observer, author of the bestselling 1995 The State We’re In, and currently head of a consultancy and think tank – argues that this ambivalence is justified by the poor performance of over-hyped American policy models, the underappreciated success of European capitalism, the UK’s historic sympathies with ‘European values’, and the positive global outcomes that would result from the EU counterbalancing US power.

Hutton challenges the notion that the US is ‘a paragon of all the virtues – rather than a country with some severe economic and social problems’, arguing that ‘The old world, contrary to the internationally accepted wisdom, has much to teach the new.’ Even though America has historically been a benign force in Europe, ‘It is evident that the terms of the pax Americana that has served the world so well since 1945 are changing significantly; as it overtly becomes more unilateralist, the US is no longer the trusted guardian of a world interest. The liberal order that was constructed after 1945 has been eroded by the growth of private corporate power and the failure of the international rules of the game to adjust to new realities and new demands for justice – whether over the environment, agriculture, debt, aid or trade.’

Hutton argues that the ‘conservatism’ dominating American domestic and foreign policy has not led to successful social outcomes in the US, let alone the rest of the world. By ‘conservatism’ Hutton means ‘neo-liberal’ economic policy, or ‘free market economics asserting the primacy of individualism’. This is an impossibly vague definition, and, as Hutton acknowledges, it doesn’t come close to capturing the wide range of ‘conservative thinking’ in the US.

Undeterred, Hutton marshals nearly every available criticism of the US economy. On the micro level, workers put in longer hours than in Europe without significant gains in productivity; a higher percentage of the US lives in poverty than any other country in the industrialized West; the poorest 10% of Americans are worse off than their counterparts in continental Europe; Americans shouldered massive debt in the 1990s that will plague them for years to come; and, compared to the top European and Scandinavian economies, the US has the lowest proportion of workers moving up the income ladder.

On the macro level, Hutton argues that the celebrated growth of the 1990s was largely funded by foreign investors and lenders, an unsustainable arrangement, and that the increasing centrality of the stock market renders the US economy less stable. Hutton laments the burgeoning power of stockholders that encourages a focus on short-term profits, ‘creative accounting’, and the neglect of the long-term health of corporations. Deregulation has disfigured a financial system that once efficiently built local business and minimized conflicts of interest. Meanwhile, the real drivers of growth – government-funded basic research, investment in physical infrastructure, and public education – have been underfunded by the conservative ideologues dominating American political discourse.

Pointing beyond the economy to a money-infused political system, a dumbed-down media, and an education system that is falling behind other industrialized countries, Hutton concludes, ‘The American dream is the pursuit of life, liberty and happiness; but the gap between dream and reality is lived out daily with increasing bitterness … This is hardly a desirable economic and social model within its own terms; to try to export it to the rest of the world is risible.’

Nothing Hutton says is particularly novel. Many of the same points have been made by American commentators across the political spectrum, from the Nobel prize-winning economist Joseph Stiglitz to Federal Reserve Chairman Alan Greenspan. And Hutton neglects many upsides to the American economy. At times Hutton’s rhetoric is so frenzied and his presentation so one-sided that he undermines the force of facts that largely speak for themselves.

But Hutton is not an academic. He is a public intellectual challenging an ideology whose influence has been overwhelming even in the face of criticism. According to Hutton, these ideas have dominated not because they are superior, but because America is powerful: ‘The American example, the scale of American power and its control of the means by which ideas are disseminated – from the financial markets to the great international institutions – have all combined to transform the political geography of the West.’ Hutton’s heavy hand neglects some of the complexities of economics, but in a sense he is meeting conservative ideologues on their own anti-intellectual terms.

Hutton is no socialist, and he argues that socialism has given some core European values, such as equality and protections for labour, a bad name. He argues that European styles of capitalism are better at nurturing long-term growth because they give less power to shareholders and more to managers who have a long-term stake in company growth. Hutton cites European examples such as Airbus, Michelin, Volkswagen and Nokia, who have all come to dominate their industries, despite their countries’ ‘inflexible’ labour policies and strong social safety nets.’

Hutton acknowledges that on some measures the European economy falls short of the US, but he believes these shortfalls are not inherent in its system. For example, he blames high unemployment rates on the strict inflationary spending limits imposed by the Maastricht Treaty to integrate the European Union, which held back US-style consumption and the accumulation of personal debt. Germany, traditionally one of Europe’s best performers, was further constrained by the transfer of 4.5% of its GDP to the former East Germany in each year of the 1990s. Hutton also argues that unemployment rates are not necessarily linked to social spending, pointing out that the Netherlands and Denmark have lower unemployment rates than the US, even with their much higher rates of taxation and social spending.

Hutton’s presentation is again one-sided. For example, he doesn’t take account of the effects of integrating many more immigrants into the US economy, and he doesn’t explain why the UK, which has more American-style markets, has weathered the recession better than Europe.

Even if the European economy is somewhat less efficient at producing national wealth, its social outcomes in terms of poverty and distribution of wealth are in many ways superior to the American system. Although Hutton doesn’t make this point, many social scientists, such as economist Richard Easterlin, have persuasively argued that relative wealth is more important than absolute wealth when it comes to maximizing subjective well-being. On this count Europe outperforms the US.

Hutton’s strongest point is that economic policy is a choice. The UK can try to achieve exceptional growth rates with US-style policies, or it can achieve more than adequate growth rates and better social outcomes with a European model. There is more than one way to skin this cat, and the European way seems to distribute the meat more equitably.

Some American conservatives may accept that Europe’s model leads to more equitable outcomes but insist that American ‘dynamism’ is intrinsically superior. Hutton’s response is that Brits, like Europeans, cannot square this belief with their culture and history. Hutton writes that Europeans have a broad conception of individual rights, including a presumptive right to healthcare, unemployment insurance, and fair treatment in the workplace. ‘As de Tocqueville remarked over a hundred and fifty years ago, American patriotism is not a patriotism that celebrates a common interest; it is a patriotism that celebrates a state that protects individual interests’. According to Hutton, Americans assume a nearly absolute right of property, whereas Europeans have inherited the idea that property holders have special social obligations from the doctrines of feudalism and social Catholicism, the concept of noblesse oblige, and the natural restrictions imposed by a more limited supply of land. The US values altruism, as indicated by its higher rates of charitable giving, but there is generally no social expectation that the rich must sacrifice for the poor.

Hutton believes that these European ideals are shared by the British public; one poll suggests that 63% of Brits would pay more taxes if they were spent on education, health and social benefits. ‘In trying to Americanise itself, Britain has lost its way. It is through the rediscovery of what it holds in common with Europe that it can heal its psychosis – looking to America while being European: a dislocation that enfeebles its effort to build a creative capitalism and a just society.’

There are a number of gaps in Hutton’s account. Apart from his one-sidedness, he completely ignores Asia as another potential counterbalance to US power and ideology. And students of neoliberal economics will have a field day with Hutton’s challenges to their new world order.

Many of the book’s initial reviewers labeled Hutton’s account ‘anti-American’. Anticipating this criticism, Hutton writes, ‘That I am critical of American conservatism and its impact on the US and the globe does not mean that I am anti-American. I have been careful to distinguish the American liberal and conservative traditions throughout’.

Pundits can argue endlessly about this, but they would be missing the point. Hutton’s book is important not because of its particular arguments, which are neither innovative nor particularly well-crafted, but because his general conclusions are gaining traction among the US allies. Critics who dismiss Hutton’s premises, or dismiss him as reflexively ‘anti-American’, must grapple with the fact that his book reached number three on Britain’s non-fiction bestseller list, one below Michael Moore’s Stupid White Men. The popularity of Hutton’s polemics tells us something about Europe’s growing discomfort with the hegemony of American ideas. Unless the lone superpower takes time to listen seriously to the gripes of its less commanding peers, it may become too cool for school.

David Tannenbaum is reading for an MPhil in Economic and Social History at Worcester College, Oxford. His thesis is on the history of free software.