Plenty of people talk these days about core American values, but a German professor of economics in Hamburg may ironically have written the best and most concise explanation of them in Der Spiegel this week. Thomas Straubhaar writes that the problem with the American economy is that it has stopped being very American, and instead has become a lot more European in its approach. Straubhaar warns Americans that this shift undermines our national identity along with our prosperity:
Both the behavior of the American government and the Federal Reserve makes one thing clear: They do not see the solution to the US’s economic woes in a return to traditional American virtues. Obama is not calling for the unleashing of market forces, as Ronald Reagan once did during an equally critical period in the early 1980s. On the contrary: Obama, driven by his own convictions and advised by economists who believe in government intervention, has taken a path that leads far away from those things that catapulted America to the top of the world in the past century.
The Obama administration’s current policies rely on more government rather than personal responsibility and self-determination. They are administering to the patient more, not less, of exactly those things that led to the crisis.
Straubhaar writes that the causes of the crisis were government interventions and cheap credit, the latter of which existed due to quasi-government interventions by the Fed. Instead of learning our lesson, we have adopted a hair-of-the-dog approach in pursuing ever more desperate interventions, which create the same bubbles that our previous interventions did — and the same crashes. Cash for Clunkers artificially reduced used-car inventory while not increasing medium-term sales of new cars at all, and resulted in taxpayers subsidizing an unnecessary hike in used-car prices while new car sales tumbled. Two supposedly stimulating homebuyer credits simply stole demand from the future, and their expiration preceded an entirely predictable crash in the housing markets and construction. And so on.
Those bubble deflations are bad enough, but Straubhaar says the damage will go deeper than just the economy if the US pursues its European adventure for much longer:
The settlers of the New World rejected everything, which included throwing out anything with a semblance of state authority. They fled Europe to find freedom. The sole shared goal of the settlers was to obtain individual freedom and live independently, which included the freedom to say what they wanted, believe what they wanted and write what they wanted. The state was seen as a way to facilitate this goal. The state should not interfere in people’s lives, aside from securing freedom, peace and security. Economic prosperity was seen as the responsibility of the individual.
If you take this belief away from Americans, you are destroying the binds which interlink America’s heterogeneous society. Removing this belief could lead to conflicts between different sections of society, clashes which have long bubbled beneath the surface.
The generally homogeneous societies in Europe are the reason the nanny-state model works there, Straubhaar insists, although whether it actually works is debatable. He uses Germany as an example of success in the present through government interventions, but Germany’s intervention was much more limited than that of the US. In fact, Barack Obama and Angela Merkel publicly disagreed over the extent of those interventions, with Merkel eventually advising Obama to mind his own business and let her mind the German crisis. The result? A quarter of annualized growth that hit 9%, while the US had to revise its performance to 1.6% and going in the wrong direction.
Nevertheless, Straubhaar’s point about homogeneous societies versus heterogeneous societies is worth considering. Our national motto, E Pluribus Unum (“Out of many, one”), envisioned a nation united not on ethnic, class, regional, or religious lines but in support of self-governance through only modest government that exists to secure the rights and liberties of its individuals. That approach allows E Pluribus Unum to succeed because it binds us at a level where considerations of physicality and pedigree are moot, giving us an aspirational unity to which all have equal membership when properly balanced. If the American dream is to be doled out from Washington on a means-tested basis, that eradicates everything that makes us American and exceptional, and reduces our shared national identity to nothing but accident of geography.