7-26-06, 9:42 am
Sneak previews of a chapter from this volume reveal that, by comparison to the other 19 richest countries in the world, high productivity and per capita income rates in the US mask higher relative rates of income inequality, higher overall and child poverty rates, and the most expensive but least effective health care system. Additionally, elderly poverty, life expectancy, and infant mortality rank at or near the bottom of the most industrialized countries that make up the Organization of Economic Cooperation and Development (OECD).
In fact, when measured by these standards, the US economic model – few worker protections, huge subsidies for corporations, and non-existent or weak public services – is relatively less effective than its OECD counterparts in delivering a quality standard of living to its population, according to data provide by the EPI.
The area in which the US compares least favorably with other industrialized countries is health care. According to EPI's data, the US spends 15% of its GDP on health care, but 16% of the population in 2004 went without any health care coverage. By comparison, countries like Austria, Ireland and Finland spent at a relative rate of less than half the US, but covered their respective populations universally. Countries like Switzerland and Germany spent a little over 11% of their GDPs on health care (second and third on the OECD list) and covered their populations entirely as well. In other words, of the OECD countries, the US paid the most for health care and covered the fewest people.
Breaking these numbers down a little more reveals additional problems with the current health system in the US. Of that 15%, less than half (45%) were public dollars, but the programs funded by this spending covered only 25.3% of the population. The 55% of total US health care spending covers just a little more than half of the total population with mostly inadequate or partial health insurance. The private health care sector in the US alone costs relatively more than about half of the OECD countries.
While the other 19 OECD countries have health care systems that are both publicly and privately financed, the overwhelming majority of health care costs are paid for by public money and most of those countries provide complete or near-universal coverage. For example, Canada spends 6.9% of its GDP on public health care programs, which cover 100% of Canadians. In Japan, 84% of that country's health care spending comes from public sources that cover 100% of its population. In France, 99.9% of its population is covered by public services that cost about 7.7% of that country’s GDP.
Th US's ineffective health care system translates into a life expectancy rate tied for last place and an infant mortality rate at the very bottom of the list.
Apart from health care, income inequality and poverty rates in the US are near or at the very bottom of OECD countries. Despite having the second highest per capita income among the OECD countries in 2004, the US provided the worst living standards for low-income workers. Meanwhile, the richest households in the US garnered the largest share of the overall national income of any other OECD country.
Additionally, when adopting the internationally accepted method of measuring a country's poverty rate by counting all of the people who earn less than 50% of the median income as being poor, the US overall poverty rate is 17%, or more than 4 points higher than official US government statistics. This rate is the worst of the OECD countries and is more than twice the poverty rates, using the same method, of 9 other countries.
The child and elderly poverty rates ranked last or near the very bottom. Further analysis shows that the US is the worst at fighting child poverty. Social programs and tax credits aimed at pulling people out of poverty cuts child poverty in half in the other 19 OECD countries. Poorly funded and neglected anti-poverty programs in the US barely make a dent.
Defenders of the US economic model point to relatively higher rates of income per capita, higher productivity, and lower rates of unemployment as evidence of its worth. According to EPI, however, these ideologues and economists never consider issues of inequality, poverty, or health care in compiling their overall estimates of the quality of life produced in the US economy. But even by the standards of its proponents, the US model may not measure up.
Higher rates of per capita income in the US are at least in part caused by the fact that American workers simply work more hours than their OECD counterparts. In many European countries, workers view paid vacation time as central to a high standard of living. This is a factor that just isn't accounted for by proponents of the US economic model. Likewise, productivity rates and unemployment patterns may reflect other factors, such as the long-term impact of the devastation of World War II on OECD economies, rather than any inherent superiority of the US system.
The US economic model is the failed consequence of the rise of the ultra right since Reagan, which has sought primarily to erode the social democratic programs created by the New Deal and the 'war on poverty.' Privatization and elimination of popular public programs like Social Security, Medicare, public schools, public health care, anti-poverty programs, federal regulatory agencies, and the like are high on the right-wing agenda (as well as those 'moderate' voices that gravitate to the right).
Right-wing political movements in some European countries have tried to erode the social democratic model in favor of privatization and implementing some version of the US economic model. To the chagrin of economic elites, working people in countries like Luxembourg, the Netherlands, Greece, France and Italy have vigorously fought these changes. In France, workers’ demonstrations have essentially made its conservative government a lame duck. Italian voters sent right-wing billionaire Silvio Berlusconi packing.
For their part, US workers can stall this right-wing agenda by handing the Republican Party a defeat in the mid-term congressional elections on November 7th.
--Joel Wendland can be reached at
