The welfare state is dead. Long live the welfare state!
It's getting hard to keep track of which countries aren't Greece anymore.
First, Ireland wasn't Greece. Then it kind of was. Then it was Portugal's turn to not be Greece. Then it was Portugal's turn to be Greece. Next, Spain wasn't Greece. But now it might be. At the very least it's Ireland. Although Uganda looks like it's in the clear. It's not Spain, which could be Greece. That's better than Cyprus can say. They're pretty much Greece. And, of course, Greece is almost certainly Greece. That goes without saying.
But there's one country that definitely isn't Greece. That's the United States.
Let's step back. What makes a country "Greece"? It's become shorthand for wild government overspending -- especially on entitlements. Paul Ryan says we don't have long to avoid the same fate. Neither does the terrifyingly successful investor Michael Burry. They think that absent drastic reform -- read: cuts -- to the social safety net, we'll end up in penury like the Greeks.
It's a scary story. But it's just a scare story. Yes, we have a long-term healthcare spending problem. But that doesn't make us Greece. Heck, Greece isn't even Greece. At least not the "Greece" that's become such a political football. The evidence -- or lack thereof -- is in the chart below. It compares each country's average social spending since 1999, via the OECD, against its current borrowing costs. See the pattern?
There is none. Europe's biggest social spenders don't have any problems. And Europe's biggest problem countries don't spend that much on social programs. The death knell of the welfare state this is not.
Here's the dirty little secret of the euro debt crisis. There is no euro debt crisis. There is a euro crisis. The debt is a symptom of the crisis of the common currency.* Europe's bailed out countries all saw piles of capital pour in during the boom, only to pour out during the bust. They were left with inflated, uncompetitive wages -- and that's sent them into deep slumps. That's been despite lower social spending than their northern euro neighbors. Germany, Austria, Finland, Finland, the Netherlands, Belgium and -- at least for now -- France have all been able to sustain more generous safety nets thanks to the magic of competitive wages.
It's the same story for Europe's non-euro nations. Sweden, Denmark, Norway, Switzerland and the Czech Republic are all lucky enough to not be passengers on the Titantic members of the common currency. (Denmark has pegged its krone to the euro, but they still have their own central bank). Most of them spend more on social programs than the so-called PIIGS, but all of them can borrow for almost nothing. Investors are actually paying the Swiss and Danish governments for the privilege of lending to them short-term. Think about that. What's going on? Well, if things ever get rough, they can just print money or devalue their currencies. In other words, they can never run out of money.
But Greece can. Being in the euro means never being able to print your own money. And that turns each euro country into a bank. Imagine a bank run. Fear becomes self-fulfilling. Depositors try to pull their money out before everyone else because they're worried the bank will collapse -- which, of course, causes the bank's collapse. Very Oedipal -- minus the parent love. It's the same with Greece. Investors worry that Greece will run out of euros. That's a very rational fear right now. So they try to sell-off their bonds, which pushes up Greece's borrowing costs -- and makes it more likely that Greece will run out of euros. This kind of panic is why Italy -- which has a primary surplus! -- is flirting with trouble too. Only the ECB can stop this.
Notice that I didn't talk about debt at all in the previous paragraph. The PIIGS have too-high wages, too little growth, and face crippling crises of confidence. Austerity won't cure any of that. It'll make things worse. It has. It kneecaps growth. And investors are more worried about growth right now than they are deficits.
Also notice that none of this applies to the United States. We never have to worry about self-fulfilling prophesies of bankruptcy because we can never run out of dollars. As the Boomers retire, we'll spend more on entitlements. That's not the end of the world. Unless you think Sweden is the end of the world. Yes, we need to rein in healthcare inflation, and, yes, we need to raise some more revenue. The former might already be happening. The latter is a political choice. Neither makes us Greece.
So don't believe the rumors of the welfare state's death. They're greatly exaggerated.
* Caveat: Greece is sui generis. They really did just spend too much money. They're not pictured here, because their 10-year bond yield is -- wait for it -- off the chart. Fitting their 27 percent borrowing costs onto this graph makes it too hard to see anything else. But Greece's average social spending is only 21.4 percent of GDP.
In her new book No One Understands You and What To Do About It, Heidi Grant Halvorson tells readers a story about her friend, Tim. When Tim started a new job as a manager, one of his top priorities was communicating to his team that he valued each member’s input. So at team meetings, as each member spoke up about whatever project they were working on, Tim made sure he put on his “active-listening face” to signal that he cared about what each person was saying.
But after meeting with him a few times, Tim’s team got a very different message from the one he intended to send. “After a few weeks of meetings,” Halvorson explains, “one team member finally summoned up the courage to ask him the question that had been on everyone’s mind.” That question was: “Tim, are you angry with us right now?” When Tim explained that he wasn’t at all angry—that he was just putting on his “active-listening face”—his colleague gently explained that his active-listening face looked a lot like his angry face.
Leon Trotsky is not often invoked as a management guru, but a line frequently attributed to him would surely resonate with many business leaders today. “You may not be interested in war,” the Bolshevik revolutionary is said to have warned, “but war is interested in you.” War, or at least geopolitics, is figuring more and more prominently in the thinking and fortunes of large businesses.
Of course, multinational companies such as Shell and GE have long cultivated an expertise in geopolitics. But the intensity of concern over global instability is much higher now than in any recent period. In 2013, the private-equity colossus KKR named the retired general and CIA director David Petraeus as the chairman of its global institute, which informs the firm’s investment decisions. Earlier this year, Sir John Sawers, the former head of MI6, Britain’s CIA, became the chairman of Macro Advisory Partners, a firm that advises businesses and governments on geopolitics. Both appointments are high-profile examples of a much wider trend: an increasing number of corporations are hiring political scientists, starting their board meetings with geopolitical briefings, and seeking the advice of former diplomats, spymasters, and military leaders.“The last three years have definitely been a wake-up call for business on geopolitics,” Dominic Barton, the managing director of McKinsey, told me. “I’ve not seen anything like it. Since the Second World War, I don’t think you’ve seen such volatility.” Most businesses haven’t pulled back meaningfully from globalized operation, Barton said. “But they are thinking, Gosh, what’s next?”
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
The editors of Smithsonian magazine have announced the winners of their 12th annual photo contest, selected from more than 26,500 entries. The winning photographs from from the competition's six categories are published below: The Natural World, Travel, People, Americana, Altered Images and Mobile. Also, a few finalists have been included as well. Captions were written by the photographers. Be sure to visit the contest page at Smithsonian.com to see all the winners and finalists.
When healthcare is at its best, hospitals are four-star hotels, and nurses, personal butlers at the ready—at least, that’s how many hospitals seem to interpret a government mandate.
When Department of Health and Human Services administrators decided to base 30 percent of hospitals’ Medicare reimbursement on patient satisfaction survey scores, they likely figured that transparency and accountability would improve healthcare. The Centers for Medicare and Medicaid Services (CMS) officials wrote, rather reasonably, “Delivery of high-quality, patient-centered care requires us to carefully consider the patient’s experience in the hospital inpatient setting.” They probably had no idea that their methods could end up indirectly harming patients.
This month, many of the nation's best and brightest high school seniors will receive thick envelopes in the mail announcing their admission to the college of their dreams. According to a 2011 survey, about 60 percent of them will go to their first-choice schools. For many of them, going away to college will be like crossing the Rubicon. They will leave their families -- their homes -- and probably not return for many years, if at all.
That was journalist Rod Dreher's path. Dreher grew up in the small southern community of Starhill, Louisiana, 35 miles northwest of Baton Rouge. His family goes back five generations there. His father was a part-time farmer and sanitarian; his mother drove a school bus. His younger sister Ruthie loved hunting and fishing, even as a little girl.
One of the most shocking parts of watching Kurt Cobain: Montage of Heck is finding out that the god of grunge was once a really cute kid. Director Brett Morgen peppers his documentary with Super 8 clips in which the future Nirvana singer can be seen as an infant, toddler, and grade-schooler, blowing out birthday candles, carrying around a stuffed panda, and sending kisses to the camera. Towheaded and cheery-eyed, wearing tiny suit jackets and cardigans, lil Cobain could have been in a Normal Rockwell painting. That he was the iconic all-America boy helps explain his later rebellion, making him an avatar for how traditional domestic life begat counterculture, and …
... oh, wait. I’m mythologizing, aren’t I? Assuming causes and effects that can’t ever be known, turning a human being into an abstraction:Montage of Heck, in some theaters now and airing on HBO on May 4, was created specifically to ward against this sort of thing. In 2007, Courtney Love gave Morgen access to a trove of previously unexamined recordings, notes, and artwork relating to her late husband, with one bit of instruction that would take the director eight years to carry out. “It was time to examine this person and humanize him and decanonize these values that he allegedly stood for—the lack of ambition and these ridiculous myths that had been built up around him,” Love told The New York Times.
Somehow after enough yoga, sitting perfectly erect and also appearing at ease become no longer mutually exclusive. That’s how instructors Elizabeth Glover and Lara Atella sat in the foyer of their studio on H Street in Washington, D.C. this week, where they explained to me the draw of very hot yoga, as a group of soaking wet, barely clad people poured out of their 105-degree Fahrenheit noon Bikram class. Posture is contagious, like yawning or hepatitis, but with your spine. I tried to nonchalantly pull my shoulders back and stick out my chest as we talked.
If these two yoga instructors seemed especially erect and at ease, it may be because the yoga they practice is an especially intense and especially hot form of yoga. Actually, the neon sign on the brick facade still says “Bikram Yoga Capitol Hill,” but the studio is now called Hot Yoga Capitol Hill. Glover, the founder and director, declines to comment on whether the name change is a position statement—but it’s at least coincidental that, in the wake of multiple recent rape allegations against the guru who created the Bikram yoga method, Bikram Choudhury, some studios are distancing themselves from his name.
The Dr. Oz Show provides critics with ample material: séances, energy healing, miracle diet products. Once a media darling, Oz has been subjected to a steady stream of public humiliations, from his shaming in front of a Senate subcommittee to an April 15 letter that a group of doctors wrote to Columbia University, urging his dismissal from the faculty, accusing him of promoting “quack treatments and cures in the interest of personal financial gain”—to which Dr. Oz responded with an ad hominem attack on the letter-writers and a defense of free speech. But despite numerous subsequent think pieces about the man behind the curtain, a crucial question stands out: Why call for Dr. Oz’s dismissal, when many medical schools and hospitals endorse the most outlandish of his claims?
“I think it’s just gonna be us.” The voice came from one of the grizzled sports reporters gathered in a nearly empty Manhattan hotel ballroom on a cold Friday evening in February. There was the reporter from NBA.com, the house organ of the National Basketball Association; there was the travel/sports/entertainment writer for the Queens Chronicle; and there was a guy who had a lot to say about the New Jersey Devils.
We were there, the four of us, for a mid-season press conference organized by the National Basketball Players Association to coincide with the league’s All-Star festivities. Professional sports unions, dedicated as they are to the cause of helping millionaire athletes make more money, have never been popular, but the nearly empty ballroom felt especially grim relative to the weekend’s other attractions. The All-Star Celebrity Game—pitting the 5-foot-4-inch comedian Kevin Hart against, among others, Mo’ne Davis, the 13-year-old girl who starred in last year’s Little League World Series—would tip off at Madison Square Garden later that night. That, at least, had news potential.