Dean Baker Talks Foreign Economic Policy

Question: Should we follow the European economic model?

Dean Baker: Well, I don’t know if there’s a single model we want to learn from. I think you want to take bits and pieces from a number of different models. But if you look to Europe some of the things you could say pretty much across the board and I’m thinking of Western Europe obviously, countries that are closest to US in living standards, that they do work many fewer hours. And that is something that people there value. I know many Europeans and I think many of them don’t even believe me when I say that people here don’t have vacations. Obviously a lot of people do but there are many, tens of millions of people that don’t and there’s certainly no guarantee of a vacation. So paid time off [is very valuable] where people know they could get four or five weeks vacation, which is absolutely standard in Europe. Denmark has 6 weeks. So I think that’s something that’s very valuable, giving people time off.

And parental leave: Conservatives like to see women stay home with their kids. I don’t care whether its women or men but the idea that people have that option, I think that’s very good because it’s a real strain for people to juggle a job and work. So that makes a big difference.

On energy use across Europe, average energy use and greenhouse gas emissions are about half of what they are in the United States. So even though they have very comparable living standards, they use much, much less energy. Part of that is that there is more mass transit. Part of it is that it is more concentrated, people live closer together. People wrongly say the United States [is less concentrated] because we’re such a big country. That’s really not the case. Obviously we are a big country but that’s not why we’re so spread out. We have land use policies that basically promote sprawl and in Europe they’ve quite consciously designed policies that have been intended to fight sprawl. I think it would make sense for the United States to do that as well. Make it easier for people to live in the cities. Make nearer suburbs rather than build out 90 miles and have people commute an hour and a half each way each day. So there are a number of different practices that we could take from across Europe. And again, I don’t think there is any single country we would want to hold up as a model but I think there are common practices that take different forms. We could look to Europe, and Canada also. It’s not just Europe. We really are the outlier among the wealthy countries in a wide range of areas.

Question: Is the World Bank a force for good?

Dean Baker: Well, the World Bank has often played a fairly pernicious role over the last few decades, really supporting a lot of bad development projects. A great example here is building an oil pipeline in Chad where everyone knew that the government of Chad was corrupt. The World Bank made a big point of insisting that they were going to have all these safeguards to ensure that the money from the pipeline went to helping the poor people in Chad, one of the poorest countries in the world. And lo and behold, what happened was the money went to the government that used it to buy arms. That’s just an example. It had things like that all over the world.

They’ve also promoted privatization in a wide range of areas. I think it was often inappropriate. One I am most familiar with is the social security in Latin-America where they’ve gotten almost every country in Latin-America, Brazil is the big exception, to either wholly or partially privatize the social security system. And almost invariably it’s led to very high cost, poor coverage rates—really not very good outcomes. And they’ve done it with water systems. So they very much promoted an agenda which certainly serves a lot of corporate interest but often has not served the people who they are suppose to serve, which is the poor of the world. So in principle the World Bank’s mission, if you go into the building, it’s really kind of remarkable because it’s a very opulent building. No one objects to people having nice offices but it’s really quite opulent with this big fountain and big atrium and up on the wall, it says, “Our dream is a world free of poverty.” It’s amazing they did that. There’s no sense of irony to that? Anyhow their mission’s a very noble one. Unfortunately, I just don’t see them having done very much to advance it over the years.

Recorded on: April 28 2009

 

The economist on Europe, immigration and the World Bank.

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