Tuesday, August 02, 2005

Economic Freedom As A Bulwark Against Extremism

Economic Freedom As A Bulwark Against Extremism
A fascinating post by Richard Posner on how the European model for capitalism actually encourages more Islamic extremism than the American model. Essentially, because the European model acts to preserve the status quo, it inhibits assimilation by new immigrants. In contrast, the more "heartless" model of American capitalism encourages assimilation rather than ghettoization:

"Krugman's failure to relate the European model to Europe's Muslim problem is telling. To point to the upside of Europe's social model without mentioning the most serious downside is to provide bad advice to our own policymakers. The assimilation of immigrants by the United States, compared to the inability of the European nations to assimilate them--with potentially catastrophic results for those nations--is not unrelated to the differences between economic regulation in the United States and Europe. Because the U.S. does not have a generous safety net--because it is still a nation in which the risk of economic failure is significant--it tends to attract immigrants who have values conducive to upward economic mobility, including a willingness to conform to the customs and attitudes of their new country. And because the U.S. does not have employment laws that discourage new hiring or restrict labor mobility (geographical or occupational), immigrants can compete for jobs on terms of substantial equality with the existing population. Given the highly competitive character of the U.S. economy, in contrast to the economies of Europe, employers cannot afford to discriminate against able workers merely because they are foreign and perhaps do not yet have a good command of English. By the second generation, most immigrant families are fully assimilated, whatever their religious beliefs or ethnic origins.

In contrast, even in a country such as France that has a declared policy of requiring all immigrants to assimilate, immigrants from alien cultures, such as that of the Islamic world, tend to be marginalized and isolated, even in the second and later generations. European unfriendliness to immigrants might be thought a cultural rather than an economic phenomenon, but the paper by Alesina, Glaeser, and Sacerdote on which Krugman relies argues that the European preference for leisure, also supposedly cultural, rests on policy, specifically the employment laws. So too in all likelihood is the difficulty European nations have in assimilating immigrants. The less fluid, less competitive, less market-oriented, and indeed less materialistic (the only color important to businessmen is green) a national economy is, the less opportunity it will provide to alien entrants.

Advocates of the European model point to the pockets of poverty in the United States, but may not realize that poverty cannot be abolished without recourse to measures that produce the social pathologies that we observe in Europe. Social mobility implies the opportunity to fail. If society protects jobs, the employment opportunities of ambitious newcomers are reduced and they may end up at the embittered margin of society. Thus, it is not poverty that breeds extremism; it is social policies intended in part to eradicate poverty that do so, by obstructing exit from minority subcultures. If Muslims in European societies do not feel a part of those societies because public policy does not enable them to compete for the jobs held by non-Muslims--if instead, excluded from identifying with the culture of the nation in which they reside they perforce identify with the worldwide Muslim culture--some of them are bound to adopt the extremist views that are common in that culture. The resulting danger to Europe and to the world is not offset by long vacations."

1 comment:

Ben Casnocha said...

i was going to blog this too but thought it would be too much Posner ass kissing in one week. He makes a good point, but punts on Krugman's point that the French way of living is "better" from a more time for family perspective. He rather makes a new point, that the European model may induce extremism.