Sometimes the largest truths are the most obvious and overlooked. One is this: prosperous societies are profoundly conservative. The conservatism is not partisan or ideological. It is personal and psychological, as in: please, don’t disturb; let things stay as they are. We see this truth routinely confirmed. It is poorer societies such as China, India, Russia, Mexico that are striving, in fits and starts, to remake themselves. Meanwhile, the world’s enclaves of great prosperity–the United States, Europe and Japan–are mainly content with what they have. Standing pat has become a public philosophy, practiced by both left and right.
On the whole, this is probably good. It discourages waves of disruptive and probably fruitless experimentation. But the conservatism becomes self-defeating when it prevents countries from moving against undeniable problems. In the United States, Congress and the White House can’t ax unneeded programs (the latest example is the expensive farm bill). People feel entitled; someone might suffer. And Japan and Europe are even more tightly tied to “stand-patism.”
In Japan, the economy has performed so poorly that the last 10 years are now derided as “the lost decade.” In 1990, unemployment was 2.1 percent; now it’s edging toward 6 percent. Yet, the Japanese have mustered no enthusiasm for decisive actions (quick write-offs of bad bank loans, more competition in protected sectors–farming, construction, retailing, construction) that might ultimately improve economic growth. People support tradition; otherwise, someone might suffer.
“There is a striking disconnect between what the economic data say and how people live their daily lives,” writes Harvard political scientist Susan Pharr. Stores are jammed, and most people have jobs. “For most Japanese people, the lost decade has been surprisingly good–which may be why leaders and public alike have been so reluctant” to overhaul the economy.
Precisely. The story is similar in Europe, where widespread prosperity makes higher unemployment rates–now above 8 percent in the “euro area”–seem tolerable. Europeans have resisted major changes in policies that hinder job creation: high payroll taxes, which raise labor costs; and high minimum wages, which discourage the hiring of low-skilled workers.
On one level, it’s hard to complain. If the Japanese prefer more leisure and less competition to higher economic growth, that’s their choice. Similarly, most Europeans reject America’s market-based economic model. They want more social protections. Extra unemployment for 2 percent or 3 percent of workers, who get good jobless benefits, seems a small price for extra security for the remaining 90 percent plus. If these choices are democratic–reflecting popular desires–what’s wrong? Just this: The choices may be self-defeating, even suicidal.
Japan’s economy now depends on massive government deficits. But no country can continually increase its government debt faster than its income–precisely what Japan is doing. In 2002, total government debt will reach an estimated 142 percent of national income, or gross domestic product. In 1990, debt was 65 percent of GDP. The comparable U.S. figure for 2002 is 58 percent of GDP.
Unless Japan can generate faster economic growth–and end its debt dependence–there will someday be an immense crisis.
Europe’s policies are destructive because the extra unemployment is not evenly distributed. In France, unemployment among those 15 to 24 years old was 21 percent in 2000. In Italy, the figure was 32 percent.
Here is conservatism at its worst: an unwillingness to adapt to inevitable changes and obvious dangers. Americans should not feel smug, because our system suffers a similar paralysis. Prosperity becomes a narcotic, accustoming people to present pleasures and numbing them to future problems. What best exemplifies collective avoidance is the refusal to deal with aging populations and the costs of government retirement programs, which, in advanced societies, will ultimately become too expensive.
In the United States, political leaders won’t consider gradual and modest increases in the retirement age or benefit reductions for Social Security and Medicare. Huge changes ultimately will be unavoidable–someday.
But that day is not today. The instinct is to put off. Never mind that small changes and inconveniences now might avert large changes and disruptions later. We may all be conservatives now, and possibly fools, too.
