Eurowelfare, Part 3: What is government's role?
Jean Hopfensperger / Staff WriterWhen Congress first approved a Family Leave Act to allow new mothers to stay home with their babies, President George Bush vetoed it because it was labeled government interference in private business.
When U.S. lawmakers proposed giving all Americans health insurance, the idea was branded as "socialized medicine."
And when President Bush signed the nation's first subsidized child-care legislation in 1990, opponents charged that it was government meddling in family affairs.
Yet these same programs have been a noncontroversial part of social safety nets across Europe -- and much of the world -- since World War II. More than 80 countries have "child allowances"; more than 100 countries offer paid maternity leaves; every major industrialized nation besides South Africa has national health insurance, and every country in Europe has or is planning preschool child care, according to studies by Prof. Sheila Kamerman, co-director of the Cross-National Studies Research Program at Columbia University.
Most European nations have a different attitude toward the role of government in people's lives. While social benefits in the United States often are viewed as an intrusion into families or business, or a step toward socialism, in Europe they are considered an investment in the future stability and well-being of a nation.
In Europe, family benefits have drawn bipartisan support: from conservatives because they encourage family growth and help mothers stay home; from liberals because they tend to distribute wealth and curb poverty, said Lee Rainwater, a Harvard sociology professor who lives part-time in France and has worked on numerous cross-cultural studies.
However, the broader social welfare system -- particularly generous health care and pension plans -- are drawing criticism because they've become a drain on the economy and international competitiveness.
"Our system is based on a social contract: The young people pay for the old people; the healthy pay for the sick; people with work help people without work," explained Jochen Schulz, who heads the employment division of the center-right Christian Democratic Union (CDU) party in Germany. "Whereas in the United States, politics is more involved than here.
"Like the United States, we believe in the principle of helping yourself. But we go one step further. We say the state has to create the prerequisites so that you are able to help yourself."
Response to war
European nations adopted many of their family and children's benefits after World War II to help rebuild nations destabilized by war and conflict. The rise of socialism on the continent, strong labor movements and a citizenry accustomed to government protection fueled the rise of social benefits.
Europeans didn't believe that unfettered economies would replace or make obsolete social protections. And they've been willing to pay taxes for the security of government aid.
"The French have very excessive trust in the government," said Jean Francois Lacronique, social affairs counselor at the French Embassy in Washington. "They want the government to take care of their education, their health, their culture.
"While in this country, you distrust the government. You have a strong attachment to [the] Jeffersonian attitude that the government should never intervene where private initiative could do better. In France, private initiative is always viewed as biased -- as a source of private enrichment."
Meanwhile the United States never suffered through a war or socialism next door, nor did it have the strong labor movement or the sense of "solidarity" that pervades much of Europe. It was a country that believed in rugged individualism and an unfettered economy, say social historians.
It was also a nation of immigrants without a shared history or culture, a nation of racial, ethnic and religious differences. Many Americans feared that more generous benefits, particularly family benefits, would encourage more poor or minorities to have children -- or that the benefits would disproportionately aid "them."
And today, the family policy and antipoverty debate is tied up with the highly-politicized issues of welfare dependency and family values. Conservative analysts say that Aid to Families With Dependent Children (AFDC) is responsible for the boom in teen pregnancy, out-of-wedlock births and a rise in the so-called underclass.
Mitch Pearlstein, executive director of the Center of the American Experiment, a conservative think tank in Minneapolis, explains: "The principal reason for child poverty in the U.S. has been the destruction of marriage. With about 30 percent of all American babies born out of wedlock, and about half of all marriages ending in divorce, I fear child poverty is an inevitable result."
Price and payoff
The U.S. and European systems each carry benefits and a price.
The United States leads Europe in job creation, low unemployment rates and worker productivity, according to Richard Freeman, director of the labor studies program at the National Bureau of Economic Research. The U.S. unemployment rate is 5.6 percent, compared with an average of 10.6 percent for the 15 members of the European Union, according to Eurostat, the research division of the European Commission. That includes 8.5 percent unemployment in Germany and 11 percent in France.
Unemployed U.S. workers are more likely to find another job quickly -- albeit often at lower wages and with fewer benefits -- than are those in many European nations. Only 6 percent of U.S. workers were unemployed longer than one year in 1991, compared with 46 percent in Europe, according to the Organization for Economic Cooperation and Development, a Paris-based economic research organization.
And the U.S. per capita income, adjusted for purchasing power, remains higher than Europe's -- although the gap is narrow, said Freeman. Likewise upper-income American children are the best off the world, according to the Luxembourg Income Study, a joint U.S.-European research project.
But the weakness of the U.S. system is that for millions of people without skills, education, health or personal wherewithal, there's little to prevent them from falling into poverty.
The U.S. child poverty rate is the highest in the industrialized world, and the gap between rich and poor workers is the widest. The United States also lags behind Europe in many basic social indicators, such as infant mortality, low birth weights and educational achievement.
Those problems ultimately cost the public money, say children's advocates. For example, a recent Carnegie Corporation report on America's children calculates that the total lifetime medical costs for a low-birth-weight baby averages $400,000. Other problems associated with growing poverty are child abuse and neglect, teen pregnancy, crime, welfare dependency and children's health problems, advocates say.
European systems also come with a big pricetag -- namely the enormous cost of cradle-to-grave security. The percentage of the GNP spent on social protection (pensions, health care, family benefits) averages about 30 percent among members of the European Union, according to Eurostat. That compares with about 12.5 percent in the United States, according to the Brookings Institute, a Washington research group.
Labor in Europe is so expensive that industry has cut back on hiring or is sending work to countries with cheaper labor.
"The average wage is around 25 marks [$17.50] an hour, just for the raw wage, but the figure comes up to 40 marks [$28] to 45 marks [$31] an hour because of the social package," said Ken Bremer, a German business promoter based in Chicago with the German Ministry of Economics. "What that means is German labor is really expensive. And that's at the heart of the whole debate over German competitiveness."
Also, high taxes mean less take-home pay for most Europeans. A European worker will receive a 20 percent to 25 percent lower hourly wage as a tradeoff for greater mandated social insurance benefits, said Freeman.
The strength of the European system lies with the health and well-being of its people.
Where to make the cuts
Both the United States and Europe are struggling to contain social welfare spending, which is soaring because of health and pension benefits. And both are eyeing the other's family benefit systems. Europe is starting to limit certain benefits to lower-income families; the United States is starting to offer more benefits to families who aren't on welfare, and is experimenting with more comprehensive strategies to solve social problems.
But no European nation is considering making the dramatic cuts in their social safety nets for families that are being proposed by Congress, say government officials in Germany and France.
"No one would ever dare to touch these family benefits in a large way," said Lacronique. "We would not see in France the same kind of thing happening in this country, where child care can be threatened and the benefits for children under the social security act [AFDC] can be cut.
"Besides, these are not our most costly problems. Medical expenses and retirement plans are. So if there are significant cuts to be made, they would be made in those areas -- not in benefits for children and families."