But try telling American workers that the American automobile industry has got to give way to other things. Auto workers would never go along with such a move. For American workers, losing a job is a recipe for financial ruin--inadequate unemployment compensation, no re-training and lost health insurance. Thus, they resist adjustment, innovation and dynamism.
The Swedish shipbuilders, on the other hand, are confident that the natural workings of a market system will not leave them exposed to ruin. Thus, they are more willing to allow the system to do its productive thing.
As of 1982, there were five countries in the world with a higher per capita Gross Domestic Product--the best indicator of national prosperity--than the U.S. Four of those countries, Sweden, Norway, Denmark and West Germany, are, in varying degrees, social democracies. The fifth, Japan, succeeds because it has the sort of interventionist industrial policy that conservatives loathe.
America's best effort at social welfare provision is its programs for the elderly. Social Security and Medicare are two of the largest items in the federal budget. But compare the U.S. to Sweden. In the U.S., about one in eight elderly persons are poor. In Sweden, the figure is a little less than one in 1000.
And that's America's best effort at fighting poverty. When you start comparing figures for children in poverty, the disparities are positively scandalous.
And what sort of loss of efficiency have the Swedes had to suffer for all this equity? For starters, they have suffered unemployment of a whopping 1.6 percent and an economy that has grown 17 out of the last 19 years.
Of course, not all is perfect in the Northern European social democracies. Job growth is weak, and even Sweden is attempting some supply-side tax cuts and welfare state streamlining. But few Swedes question the fundamental proposition that government should protect people from the vagaries of the market.
And of course, not everything is bad in the U.S. Our recent record of growth and job-creation should not be dismissed, although it should be viewed with some skepticism until we make our fiscal balances sustainable.
But for all of its successes, the American model is not the inspiration for economic reform in Eastern Europe.
Nor should it be. Not while one-fifth of American children live in poverty. Not while 37 million Americans are shunted out of the medical care market for lack of insurance. Warren Brookes and National Review notwithstanding, East Europeans look to America for blue jeans and rock music, not an economic model.
In the words of an old Polish proverb, "Under capitalism man exploits man, whereas under communism, the reverse is true." The solution for Eastern Europe lies somewhere in between, in a system with private ownership of capital, private capital markets, active labor markets, social security and government by the people. In other words, the answer is social democracy.