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The Economist's Armchair: A Discussion of American Exceptionalism

Jacob Amos

"Everyone wants to live at the expense of the state. They forgot that the state lives at the expense of everyone." So posited economist Frederic Bastiat almost 200 years ago. While not credited with any innovative economic ideas that blazed the trail for the disci­pline's evolution, Bastiat was onto an idea novel even to so many mod­ern minds.


Indeed, Bastiat's definition of the state is one at which so many pol­iticians and economists, especially of the conservative variety, would begrudgingly agree: "The State is the great fiction through which everyone endeavours to live at the expense of everyone else" (Bastiat 1848).


It is far from an uncommon oc­currence that Americans, both citi­zens and leaders, bewail the taxes the commoners are forced to surren­der in the name of hoisting up an al­legedly inefficient and interruptive government. This is a popular no­tion among even the most brilliant economists: the government that governs least governs best.


However, in the same breath so many will decry the poor pay of public educators, of the need to sub­sidize the farming industry, to pave better roads, and so forth. It is as if there exists some world wherein opportunity costs become ethereal and nonexistent, where the neces­sary tax revenue is drawn from ei­ther some fantastical money tree or evil Wall Street banker who treats his millions like chump change.


As may be apparent already, it is not the goal of this contributor to segregate the political and eco­nomic spheres of public discourse. While political matters often ob­scure practical economics, insofar as it is necessary to employ political processes for economic policy, it is impossible to elude their hybrid.


November's election demon­strated most supremely this com­mon grievance over tax policy and its cultural con­tradictions. The two combatting sides were du­eling more over ideas regarding the proper size, scope, and role the government ought to play - particularly in the economy, though as well in the social sphere -than over specific policies and concrete ideas.


This was an unmistakably nec­essary argument for the American public to endure. "America needs a serious debate about the size and scope of government, and how to pay for it. .. it taxes itself like a small-government country, but spends like a big-government one" (Economist 2012). Perhaps Bastiat was on to something.


It is high time to rethink Amer­ica's paradoxical persuasion, to re­conceptualize the American excep­tionalism that allows its citizens to think that they can pay no taxes and still live at the expense of the state. More importantly, what implica­tions these considerations have for economic policy.


To do so requires a comparative analysis that places America in re­lation to the nation-states around it -not at center stage, but caught, as it is, in the wake of today's global economic challenge.

According to The National Interest:

[American Exceptionalism is] the widespread public belief ... that the United States is uniquely virtuous in word and deed. This axiom derives from our his­torical democratic perspective and overwhelming power since World War II. Today, it assumes that we are the greatest force for good in the world (Abramowitz 2012). 

Often one will hear that America is a "center-right" nation. From high school civics teach­ers to others parrot­ing the sentiment, it is a commonplace assumption. It is likely that most square with this on the basis of the understanding that America is fun­damentally different from the rest of the world. Though there is some truth to that sentiment, there are nu­ances not often understood. Indeed, America does enjoy her paradoxes.


For instance, social security has been in place for decades in many forms. However, there is a growing "grassroots" movement of constitu­tion-crying Tea Partiers that con­sider it all some big Ponzi scheme conspiracy. There may be some dis­connect here.


Medicare and Medicaid offer help to the elderly and the poor, re­spectively, so that they may have greater access to health care. How­ever, the second the Affordable Care Act was born, every resource has been heaved first at its legisla­tive dilution and then at its judicial repeal.


Getting beyond the idea that America is the greatest country on earth allows an insight into the rest of the world's take on these mat­ters and on how America handles them. American exceptional ism can mire its citizens in an inability to compare America to the rest of the world on the grounds that the Unit­ed States should be setting the ex­ample for others to follow.


That mindset becomes a problem. Take the healthcare example. Ac­cording to the World Health Organi­zation, America spends more of its GDP than any other country in the world but ranks 37th in health care. France comes in first. While France spends four international dollars per person on healthcare compared to America's one, its citizens proba­bly spare the hellfire-and-brimstone sentiments on taxes when the gov­ernment covers 77% of their med­ical bills (World Health Organiza­tion 2000).


France's culture is different, however, and carries its own prob­lems. Their new leader, Francois Hollande of the Socialist Party, cam­paigned to raise the top income tax rate to 75%. While "Hollande nev­er pretended that the 75% tax rate would raise much cash, but hailed it as a 'symbolic' measure," such a gesture can "bring lasting trouble" (Economist 2013). Entrepreneurs and businesses have threatened fleeing a country they now perceive as hostile to wealth generation. Departing business does not help France's struggling economy. 

On the other side of the Channel, England is not too far different from its grandchild. London is one of the world's financial centers precisely because of its tendency towards de­regulation of the financial industry. English citizens are not as tolerant of high tax rates as some may


These are valuable lessons. Deregulation and tax reductions can and do encourage business, which does stimulate the economy. The Occupy Wall Street  movement was cute but misguided in the sense that corporations and financial markets help hold up the economy. From job-creation to consumption multipliers, the suits of the world play their part.


Not every economic policy costs money. Trade is one area of econom­ics for which many Americans have an exceptionally self-centered, if not delusional understanding. There is a commonplace understanding, however inaccurate, that outsourc­ing, immigration, and buying from other countries inherently hurts the economy. To be clear, these assumptions are incorrect. 

First, outsourcing is not an insuf­ferable ill for the American econ­omy so much as it is an indicator that the national economy is pro­gressing, moving from manufactur­ing to more developed sectors, like services. Perceiving outsourcing as a grand theft of American employment sees the world from an ethno­centric perspective that fails to un­derstand that those jobs are not only being created for less developed economies that also need them, but that such outsourcing makes the do­mestic economy more efficient and creates different kinds of employ­ment.

Second, a growing pool of re­search has been indicating that im­migration is a practice with positive economic outcomes. "A change of political tune is badly needed. Evi­dence suggests that increased flows of people across borders could ig­nite global growth" (Economist 2012). There are several reasons, but at some point Americans must think twice before blaming immi­grants for poor economic growth and start to look inward for ways to maximize the potential wealth to be derived from other countries.


Finally, buying from other coun­tries does not do immediate harm to the American economy. This prac­tice not only stimulates growth in other nations, which comes back to America in a positive way, but it also encourages innovation and effi­ciency in the U.S. while supporting global growth through trade. Not to mention the fact that many Ameri­can firms have operations in other countries. That won't be counted in GDP, but it counts in both GNP and building a healthy, interconnected global economy. 

Were these global economic phenomena to in fact be imme­diately detrimental to the American economy, they aid in the long run by helping developing nations evolve. As the world is becoming more and more globalized, interconnected, and interdependent, in the long run a developing economy elsewhere will be in America's best interests.


For economic policies that do require capital, however, a popula­tion willing to provide that capital is necessary. Sweden's people exemplify a cit­izenry that is more un­derstanding of liberal tax codes. "For most Swedes paying high taxes is a benefit, not a problem" (Fouche 2008). While many Swedes do work in the public sphere, there also exists a greater trust in the government to handle the money well, simply because the Swedish government is more efficient.

Such a trust is virtually nowhere to be found in the United States, and for good reason. "A Swede pays tax more willingly than a Californian because he gets decent schools and free health care" (Economist 2013). Politicians use debt ceilings and phenomena like the "fiscal cliff' as means to help them play games of political chicken, as happened in the summer 2011 debt ceiling ne­gotiations. Such a problem exem­plifies another structural issue that implicates concerns for global eco­nomics.


America's two-party system is often taken for granted by its citi­zens. Though a considerable aid in providing simplicity to complex political matters, it overcorrects by blurring the nuances to discourse and brightening the imaginary lines between the aisles, making it easi­er to take sides. The system makes it easier to perceive "friends" and "enemies," which can have devastating results. 

For example, the 2011 govern­ment shutdown that came from political gridlock over raising the debt ceiling - which should have been a no-brainer - resulted in a downgrade of the U.S. credit rating and a resulting cascade of economic turmoil. Republicans had an incen­tive to slow negotiations because poor economic times are typical­ly blamed on the president, which would hurt President Obama's re­election prospects. Put in as basic of terms as possible, citizens' live­lihoods were used as political poker chips for political ends, and such games played no small part in the relapse of economic hardship.


The two-party system has be­come so familiar that other modes of operation seem, well, foreign. While they are indeed foreign, multi-party systems are not uncom­mon. Countries with more than two parties include France, Germany, the Netherlands, Norway, Italy, Ire­land, Portugal, and Sweden. Per­haps such a popular model is worth attempting.


As more people become disil­lusioned with mainstream politics, however, the opportunity arises for third parties to gain greater visibility and, in turn, potential to challenge two-party dominance and intro­duce a refreshing brand of moder­ation and iconoclasm. Americans may get so frustrated that structur­al change occurs. Such a departure from the present standard could move its bickering leaders away from the dysfunctional gridlock that has been plaguing the national and global economy.


America could also afford to learn from other countries in a mor­al sense. "Unlike some other West­ern countries, the United States re­mains an overwhelmingly religious society," (Land 2004) and that influ­ence carries a sense of morality that keeps society from falling into cha­os. There are, however, areas of so­cial and moral economics in which America could learn some things from its Western friends.


A religious demeanor carries its own paradoxes as well. The stereo­typical American conservative - that liberals just love to use as an ex­ample of their archenemy - loves God, guns, and above all, 'murica.' While this categorization is little more than a drastic oversimplifica­tion, there remain some inconsisten­cies that need to be addressed.


Especially between God and guns. That deserves reiteration. There is some inconsistency between the love of God and the love of guns. More than that, it is a truly American inconsistency. The Econ­omist summarized this point as apt­ly as is possible: 

     If America is ever to confront its obsession with guns, that time is now. America's murder

     rate is four times higher than Britain's and six times higher than Germany's Only an idiot,

     or an anti-American bigot prepared to maintain that Americans are four times more

     murderous than Britons, could possibly pretend that no connection exists be­tween those

     figures and the fact that 300m guns are "out there" in the United States, more than one for

     every adult (Economist 2013). 

Britain and Germany are not the only ones that could teach Amer­ica some lessons on social policy. Sweden embodies a juxtaposition with America in one of these more nuanced fields of economics, a social and moral domain: prosti­tution. Make no mistake, prostitu­tion's implications are not confined to studies of morality and ethics. Economics plays an unmistakable role both in its motivations and its outcome. And Sweden's model provides an example of how cre­ative policy can serve considerable social good.


Prostitution in the United States is illegal, with a few exceptions for select locations. Prostitution is also illegal in Sweden, but in a dif­ferent way. It is illegal to purchase prostitution, but selling it is legal. Put another way, the policy attacks the demand side of the equation while leaving the supply untouched, a brilliantly simplistic strategy that is proving effective.


This policy allows prostitutes an out. If they were forced into the profession unwillingly or have been beaten by either employer or client, they may go to the police without the fear of getting arrested. In America, prostitutes do not have that luxury (for the most part).


Sweden's policy also makes it so a prostitute is safe if caught, while a customer is not. Such a demand-fo­cused policy serves the moral pur­pose of slashing the prevalence of the act while not hurting those forced into it. From an empirical standpoint, the policy is actually reducing the preva­lence of prostitution.

Comparatively, America's policy - outright illegalization premised on moral outrage - becomes trag­ically myopic. This moral absolut­ism clouds an economic analysis that could take steps towards right­ing some of the ills posed by such perceived indiscriminate immorality.


This brand of economic morality has been controversial. In Freako­nomics, the authors employ severe economic analysis to show that Roe v. Wade, the Supreme Court decision making abortion legal, was re­sponsible for the seemingly inexpli­cable drop in the crime rate during the 1990s (Levitt and Dubner 2005). Peering at the world through the lens of economics is an easily despised practice, and rightfully so in many respects, but it can reveal some tell­ing and helpful information.


So many Americans would like to have their cake and eat it too, to ignore opportunity costs, to tax like a small country and spend like a big one, to maintain Christian morality and stop the sex trade. Such para­doxes are attractive, alluring, and easy, but any introductory economics class will be quick to point out that "there ain't no such thing as a free lunch." There are more factors to analyze than most are ready to accept.


In that same Freakonomics book, the authors discuss the value - or often lack thereof - of convention­al wisdom. Perhaps the most ubiqui­tous of wisdom in American culture is that the United States is excep­tional. Comparatively, though, there are certainly some lessons to learn that other countries, cultures, and worldviews offer. It is high time that American citizens expand their vision, and learn some lessons that the rest of the world may be keen to teach. 


Abramowitz, Morton. "Hot American Exceptionalism Dooms U.D. For­eign Policy." The National Interest, October 22, 2012.


Bastiat, Frederic. Selected Essays on Political Economy. Trans. Seymour Cain. Library of Economics and Liberty, 1848. 

Economist. "A. Bas Les Riches!" The Economist, January 5, 2013. Web.

Economist. "Another Fine Mess." The Economist, July 28, 2012. Web.

Economist. "Border Follies." The Economist, November 17, 2012. Web.


Economist. "Newton's Horror." The Economist, January 2, 2013. Web. 

Economist. "The Next Supermodel" The Economist,February 2, 2012. Web.


Fouche, Gwladys. "Where Tax Goes Up to 60 Per Cent, and Every­body's Happy Paying It." The Guardian, November 15, 2008. Web.


Land, Richard. "How Religion Defines America." BBC News. February 25, 2004. Web.


Levitt, Steven, and Stephen Dubner. Freakonomics. New York: Harper Perennial, 2005. Print.


World Health Organization. The World Health Report. World Health Or­ganization, 2000. Web. 

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