America's low savings rate

[Lawrence]

Gordon Fitch:
> However, let's say you're talking about the improved
> condition of working-class people which began to resemble
> that of the middle class in the period you mention.  I think
> this depended very much on the difficulties of the ruling
> classes of the period, whose misadministration of the world
> had led to one major catastrophe after another beginning in
> 1914 (or earlier than that, if you count the genocide in the
> Congo).  After screwing up mightily, liberalism / capitalism
> had to fight for its life against both external (Communist)
> and internal (fascist) enemies.  Hence, it had to keep the
> workers as happy as possible at home.  This meant not only
> high wages but the construction of Welfare systems and some
> tolerance of unions as long as the unions didn't question
> the leadership of capitalists.  But once the threats began to
> recede, the "gains" made by the lower orders began to be
> rescinded, often, because of clever divide-and-rule
> strategies, with their enthusiastic support.

Communism is gone and yet much of the West continues to have a large welfare
state. In no Western nation has state spending as a percentage of GNP
dropped below 150% of where it was in 1960. In Europe, in particular, strong
social safe guards remain in place. It is mostly the English speaking
countries of the world, with their strong libertarian streak, that have
moved away from the welfare state.

I don't mean to defend the welfare state. The amount spent on the poor and
sick is everywhere insufficient, and fundamental questions remain about
whether that is the best way to go anyway. But I doubt your analysis of why
strong unions were allowed to exist. In Germany, they still exist.

--lawrence