Social Capitalism in Europe – What America Can Learn

Interview with Steven Hill, You Don’t Have to Yell podcast, November 12, 2020

What if the mission of America’s economic engine was to elevate the quality of life for all, as opposed to simply grow profits and GDP? Author and political reformer Steven Hill discusses how this has worked in Europe, and how the choice we make between a stronger safety net and economic growth is a false one.

Interview by Dan Sally, host of the You Don’t Have to Yell podcast

Blog notes and summary of the show here

From host Dan Sally: A recurring theme in the last two presidential election cycles has been the concept of bringing America back to a former state of greatness that has since been lost. Whether in Trump’s “Make America Great Again” or Biden’s much less catchy “Build Back Better” (sorry – but Trump, for his faults, will never be beat in the branding department) there’s a notion that America is in some state of disrepair.

Steven Hill, author, journalist, cofounder of FairVote, and former director of the political reform program at New America, has dedicated much of his career towards studying the economic and political systems of Europe – a vast economic bloc that found itself in need of rebuilding in the aftermath of World War 2. In his book Europe’s Promise: Why the European Way is the Best Hope In An Insecure Age, Hill outlines how America can pull from the lessons of Europe to rebuild economic and political systems in a way that provides greater equity, and one that offers more stability than we’ve seen over the past few years.

I sat down with Hill for this week’s episode of YDHTY, where we discuss his book, his prior work on electoral reform, and how those looking to create meaningful change in America can get started. You can listen to the full episode below, on iTunesSpotify, or wherever else you get your podcasts.

In his book, Hill outlines three competing political-economic systems in the world:

  • American “Wall Street Capitalism”, typified by an aversion to taxes, regulation, and government spending in the interests if maximizing GDP growth and profitability.
  • China’s “State Capitalism”, where central planning and heavy government involvement provides domestic companies with a competitive edge.
  • European “Social Capitalism”, where a higher level of taxation and regulation are used with a focus on lifting the living standards of all citizens.

The common argument made against implementing a more European system in the United States is that it will come at the expense of economic growth and, by that, jobs. While some aspects of conducting business in America might be easier than abroad, the idea that it results in a better outcome economically fails under scrutiny.

As it stands, the European Union currently hosts more Global 500 companies than the United States, has a lower debt to GDP ratio (79.5% of GDP in Q1 2020 as opposed to 107% in the United States) and has seen relatively equal per capita GDP growth over the last 30 years. What’s more, citizens of many European countries pay much less out of pocket for healthcare, child care, education, and housing – four of the biggest “kitchen table issues” in the United States. 

In short, they’ve seen the same level of economic growth without 

Hill credits Europe’s ability to better provide for the welfare of its citizens with its system of governance. Unlike the United States, where the polarity created by our winner-take-all system of elections allows the two major parties to play off each other, Europe’s multi-partisan proportional system of elections allows for better representation across a wide array of voices, meaning parties have to be better at delivering policies voters want, as opposed to simply not being the other party. As Lee Drutman cited in an earlier episode, they’ve also proven to be more resilient against the current wave of populism sweeping the globe.

Of all the things to borrow from Europe, maybe this should be the first.

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