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Saturday, December 30, 2017

Paid Leave: Egalitarianism On the Right

In 2010 I published a small book, Remaking America, about the Swedish welfare state and how it should function as a deterrent to further expansion of the American welfare state. In 2014, Gower (a label under Ashgate) published Industrial Poverty, where I explain how the welfare state helped pull Europe down into the Great Recession.

Two months ago, my latest book, The Rise of Big Government, was published. Here, I draw the ideological parallels between the Swedish and the American welfare states. I explain the authoritarian thinking that guided the fundamental transformation of the Swedish society - from a traditional Western nation comparable to Switzerland - into a full-blown "democratic" socialist welfare state. I also point to the connections between that Swedish ideological package and the ideas that shaped the War on Poverty here in the United States. 

The common denominator for these three books is a narrative about the welfare state that it increasingly rare among American conservatives and libertarians. Somehow, there is a creeping acceptance of the welfare state and its egalitarian project, even in what you would expect to be the most ardent libertarian circles in this country. The debate over paid family leave is a case in point. This major, new entitlement program was proposed by President Trump in his budget last spring and passionately advocated by his daughter and political adviser, Ivanka Trump. Even though the version the Trumps suggested would be a mild, "beta test" version of what Democrats want, it is nevertheless interesting to see how widespread the support is for this idea in the right side of the political spectrum.

It is, frankly, disturbing to see how think tanks like the Niskanen Center, American Action Forum and - most of them all - the American Enterprise Institute have so thoroughly embraced the idea of government-provided income security. 

They are not the only ones to advance this idea; already in 2014, the Cato Institute published a paper by Hillary Clinton's designated chief economist, Heather Boushey, with a strong argument for tax-paid family leave. In fairness to Cato, their policy analyst Vanessa Brown Calder has done a good job explaining the negative sides of this idea. Nevertheless, Calder is a notable exception in the debate; the farthest that the Heritage Foundation will go is to suggest that the paid-leave issue be left to the states to decide. 

Overall, the right-of-center intelligentsia is leaning in favor of the idea as such. As demonstrated by the lead proponent of paid leave, the American Enterprise Institute, the debate seems to be boiling down to technicalities of the reform. AEI resident scholar, Aparna Mathur, makes this very clear as she continues to propagate for Scandinavian-style tax-paid family leave. In October, she testified before the District of Columbia City Council, suggesting 
While it sounds reasonable that employers should be willing to (and often do) accommodate the needs of their employees at such times, the policy itself has engendered a lot of discussion and debate amongst policymakers. A critical point of contention is whether the private sector should be “mandated” or forced to provide such leave and to incur the costs of doing so, or whether the government can provide the benefit to employees in a manner that is less burdensome.
She also claimed that the "need for paid family and medical need [sic] is strongly supported by evidence." I resoundingly refute this suggestion in my policy paper on paid family leave: there are no positive, identifiable effects whatsoever of general income security - the broader term for paid family leave - on any relevant economic variable, anywhere. There is not a single argument, or single statistic, that merits the introduction of such a program at the federal level, here in the United States. 

If anything, available evidence suggests that paid family leave is a budget boondoggle and a low-wage trap for women.

Instead of recognizing the empirical side of the issue, Mathur and two of her fellow egalitarian travelers forge ahead with proposing a government-run program. Using the District of Columbia as their jurisdictional vehicle, they reject the idea of a more limited paid-leave model where employers are mandated to provide paid leave, i.e., the model that would be more closely in tune with limited-government principles and leave more application latitude at the level of implementation. Instead, they propose the full-blown, economically redistributive and tax-driving model that is so popular in Scandinavia. Explain Mathur et al:
paid-leave employer mandates were universally rejected by the AEI-Brookings Joint Working Group, a group that pulled together scholars on paid-leave policy from across a wide ideological spectrum and of which we are members. While social insurance broadly distributes the costs of providing leave, an employer mandate shifts all of the costs onto the individual firm, which could result in reduced wages, reduced hiring or discrimination.
In other words, the American Enterprise Institute supports a government-run income security program precisely because it is an instrument for economic redistribution.

Mathur continues her crusade for this new egalitarian entitlement program, criticizing the GOP tax reform for not doing nearly enough to support the idea, and the AEI itself continues to push the idea.

There are enormous fiscal and macroeconomic dangers associated with a continued expansion of the American welfare state. In my latest piece for the American Institute for Economic Research I outline a scenario under which the addition of three new entitlement programs, one of which is paid family leave in its general income-security form, can create a Greek-style fiscal crisis in the U.S. economy. The paid-leave program is only one component of that scenario - not its trigger - but it is nevertheless a component. 

Sadly, the American conservative and libertarian movement has decided to only play lukewarm defense as the left endeavors to complete the construction of the American welfare state. In line with the scenario I outlined in my book The Rise of Big Government, we can expect - in addition to paid family leave - a federally run, single-payer health care program and universal child care. All of these are on the Democrat agenda for their next presidency; to their support, the New York Times has published a disturbingly inaccurate "report" from Sweden where the paper tries to credit the welfare state for high wages and technological innovation. 

Their piece - better suited as a propaganda brief from the office of Senator Gillibrand (D-NY) than a newspaper article - is so full of misrepresentations and outright errors that it deserves its own rebuttal. For now, suffice it to note that Gillibrand and other welfare statists will meet little to no resistance from Republicans or right-of-center policy pundits. As a result, the ideological project that started with a big social-engineering project in Sweden in 1934, will soon see its completion in the one country that, we all hoped, would successfully resist that very same project.

Unless, of course, America's conservatives wake up and decided to take on the welfare state. If they do, they could start by asking the think tanks they donate to what their real agenda is when it comes to empirical political economy, public policy reform, the welfare state and philosophical principles. 

What America do conservatives want? Scandimerica or the Republic of the Founding Fathers?

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