Today the nation is currently embroiled in an economic struggle the likes of which has not been seen since the subprime mortgage crisis of 2008. The bull economy that has existed throughout the 2010s has now popped, and the population is reeling from the bear market that has reared its ugly head. In just the months of March and April alone, a total of 22.2 million jobs were lost, with only around 42% of those laid off finding new work. In many ways, the state of the economy is even worse than it was roughly a decade ago, which is why the direction our government takes in administering the economy during and after this recession is so crucial for the lives of millions of Americans. Bearing these ideas in mind, it is also important to look at how this collapse affects the working class and how in the future there could be better safety nets for those most vulnerable should another calamity of this magnitude or worse come around again.
In the past few decades, income inequality has rapidly grown, and as a result the middle class has begun to shrink after being the bastion of the American economy since the 1950s. This has been a result of industries changing, moving overseas or just dying out, and many families were not able to keep up with the changing times. Regions which once boasted strong middle-class neighborhoods supported by factory jobs are now struggling to keep up, and the people who live in places like the Rust Belt no longer have the opportunities that were once guaranteed to them. It is in these places that the impact of the recession will be hardest felt. There is little support from the government, which continues to fight over the relief bill that will leave the income gap wider. This makes it very apparent that the current system we have in place is not built to handle disasters such as this. It is for this very reason that the ideas behind social democracy come to occupy the forefront of American politics. In recent years, it has begun to gain traction with the candidacy of Bernie Sanders, who famously calls himself a democratic socialist, but many of his policies have their roots in the social democratic movement of the 21st century.
A social democracy is a political and economic ideology that is centered around the idea that in order for democracy and capitalism to be reconciled, there must be a strong safety net, or “welfare state,” in place to ensure the most vulnerable members of society do not jump to extremism. It is a school of thought that emerged in the 1930s amidst the turmoil of the Great Depression. It was a time where many leftist thinkers believed that capitalism was on the verge of collapse, and in many ways, they were correct. There were growing populist movements throughout Europe and America. In Germany, both communism and fascism were on the rise, and in Spain, a civil war broke out that signified the transition in many nations from democracy to tyranny. After World War II, many leaders of Europe were keen to avoid another disaster of that magnitude, and they had made a note of the Great Depression’s effect on the masses, particularly in countries like Germany that had already been unstable prior to the market crash.
It was with this relationship of economic hardship to extreme instability to tyranny in mind that these leaders turned to social democracy to keep the peace. This worked for most of the remaining half of the 20th century. However, in more recent decades, with the collapse of the Soviet Union and the Great Depression slowly leaving the minds of the masses, the support for social democracy waned. In spite of this, there are still several major European countries that have based their economy on this model. https://foreignpolicy.com/2020/01/15/social-democracy-save-world-again-socialism/
Today, the bastion of social democracy that many first think of is the Nordic countries. In fact, one of the most prevalent forms of social democracy comes from there and is known as the Nordic Model. These nations are also amongst the oldest adopters and pioneers of social democracy, with their system going back to the 1930s. Their model has created some of the most robust social welfare systems in the world. Nations such as Denmark, Norway and Sweden consistently rank amongst the happiest nations in most indexes measuring such. Their system gives citizens a wide range of benefits, from universal healthcare to paid maternity and paternity leave, as well as subsidized housing and generous support for those who are unemployed. This allows the population to be secure in the knowledge that no matter what calamities may occur in their lives, they will still be able to recover financially should they need assistance. This has become even more pressing in recent months with the economic crisis resulting from the coronavirus pandemic, as many people who could not make the transition to working from home are now on unemployment and unable to find work. https://www.ineteconomics.org/perspectives/blog/the-economics-and-politics-of-social-democracy-a-reconsideration
The coronavirus continues to not only irreversibly damage lives but economies as well. The response from the United States and many nations in Europe has differed greatly due in large part to the different economic philosophies that have taken hold of each region. In the coming years, the effectiveness of each response will be measured by how quickly their respective economies return to normal. In large part, people will come out of this crisis worse off, as many simply lack the resources on their own to cope with this pandemic. This will most likely give many Americans cause to rethink our government’s role in our economy as they attempt to handle their own personal situations amidst this recession.
Ethan Shaw is a fourth-year criminal justice major. ES939828@wcupa.edu