JP Grace: U.S. economy a hybrid of capitalism, socialism
This column is an updated version of one that ran one year ago this month, because the understandings conveyed here are important in order for the country to heal, post election, and for left and right to work together productively.
Our political realm -- which includes not only officeholders but also us as citizens and voters -- would gain greatly if we could all blink hard and acknowledge the following reality: Our nation currently operates, and truly has done so since its beginning, on neither a capitalistic nor a socialistic model but rather as a hybrid of the two.
In brief, the U.S.A. Is what has been termed "a mixed economy."
Both sides are indeed necessary and good if kept in balance with each other. Out of balance, either side can easily weaken or wreck our whole national enterprise. (We forget at our peril John D. Rockefeller's classic remark -- "The greatest enemy of capitalism is unfettered capitalism.")
Indisputably, we have free enterprise in America, hundreds of thousands of for-profit entities, large and small, that make and sell goods or provide services such as banking, insurance, healthcare.
We also have taxpayer-funded government services such as the military, the courts, the Veterans Administration, Social Security, the Post Office and regulatory agencies that safeguard the workplace, protect consumers against fraud and abuse, and limit contamination in the air we breathe, the water we drink and the food we consume.
Our own "mix" today may not necessarily be the ideal to ensure a vibrant economy. The United States, in fact, did better economically in the 1990s under President Bill Clinton and a higher tax rate on corporations and the wealthy (39 per cent versus 35 per cent now). Job creation was 10 times better than in the George W. Bush and Barack Obama years and unemployment was at historic lows.
Germany's model, known as "a social market economy," has a higher rate of economic growth, lower inflation, lower unemployment and arguably better conditions for workers than in America today.
The Germans (as well as the Japanese and the Chinese) have all done better than we have at upgrading and expanding their infrastructure (roads, bridges, rail lines, ports, etc.) over the past two decades.
We tend to think of "socialism" as something like "a government takeover of healthcare," whereas, in fact, the Affordable Care Act -- dubbed Obamacare by some -- sets up health insurance exchanges consisting of 100 percent private companies with no "public option" available. These exchanges will launch in 2014 and are quite similar to the Swiss model.
And Medicare, which is indeed socialized medicine, as it is run entirely by government agencies, federal and state, has often been misconstrued as part of the private sector. This misconception is amply demonstrated when Tea Party groups march with signs saying "Keep your government hands off my Medicare."
The challenge we all face is to strike the right balance between, on the one hand, capitalistic enterprise and freedom, and on the other hand, government spending on public entities and agencies that ensure our national defense, maintain order and provide necessary social services.
It is no small task.
John Patrick Grace formerly was a reporter, editor and foreign correspondent for The Associated Press. He also served as health care editor for The Greensboro (N.C.) News and Record. He is now a book editor and publisher and teaches the Life Writing Class.