Myths About U.S. Capitalism

Economist Mark Weisbrot published a column, originally in the Guardian newspaper but distributed online by MRZine, challenging several “Myths about the U.S. Economic Model”:  

This month my CEPR colleagues John Schmitt and Nathan Lane showed that the United States is not the nation of small businesses that it is regularly dressed up to be for electoral campaign speeches and editorials.  If we look at what percentage of our overall labor force is self-employed, or what percentage of manufacturing workers or high-tech workers are employed in small businesses — well, the U.S. ranks at or near the bottom among high-income countries.

. . .

A number of other alleged advantages of America’s “economic dynamism” are also mythical.  Most people think that there is more economic mobility in America than in Europe.  Guess again: we’re also near the bottom of rich countries in this category, for example as measured by the percentage of low-income households that escape from this status each year.  The idea that the United States is more “internationally competitive” has been without economic foundation for decades, as measured by the most obvious indicator: our trade deficit, which peaked at 6 percent of GDP in 2006.  (It has fallen sharply from its peak during this recession but will rebound strongly when the economy recovers).  And of course the idea that our less regulated, more “market-friendly,” financial system was more innovative and efficient — widely held by our leading experts and policy-makers such as Alan Greenspan, until recently — collapsed along with our $8 trillion housing bubble.
On the other hand, most Americans pay a high price for the institutional arrangements that bring us these mythical successes.  We have the dubious honor of being the only “no-vacation nation,” i.e. no legally required paid time off and of course some weeks fewer actual days off per year than our European counterparts enjoy.  We have a broken health care system that costs about twice as much per capita as that of our peer nations and delivers worse outcomes, as measured by life expectancy or infant mortality.  We are near the top in terms of inequality among high-income countries; and at the bottom for parental leave policies and paid sick days.  The list is a long one.


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