Is free-market Britain fair enough for all?
In a three-part series, the Monitor looks at how Britain, France, and Finland are adapting their social benefits models to the information age.
HAMPTON COURT, ENGLAND
"Just keep to the left," says the ticket seller at the Hampton Court palace maze. "There are a couple of dead ends but once you've got through those, you'll get out OK in the end."Skip to next paragraph
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If only it was as simple for European leaders, who will gather here Thursday to discuss adapting their fraying social benefits models to the information age. In the labyrinth of the globalized world, the 25 European Union member states look increasingly like a gaggle of tourists, arguing about how to negotiate the blind alleys.
Some, like the Scandinavian countries with their supergenerous state welfare, may be happy to "keep left." But others, particularly Britain with its center-right traditions, are warning that Europe won't be able to afford such largess and still compete in the global marketplace.
What some Britons have in mind is the kind of painful reform already pioneered in Britain in the 1980s under Margaret Thatcher, which cemented the "Anglo-Saxon" model and its emphasis on free markets, private enterprise, and smaller government.
At the time, Thatcherism was heresy to Jeremy Rix, a rebellious teenager with a flair for languages and art. He was so outraged by state cutbacks and miserly welfare that he joined street demonstrations, grew his hair long, and argued about politics with his father.
But now, as a 35-year-old company director with a family, Mr. Rix is far more appreciative of how social reform rejuvenated Britain and bequeathed his generation a country that is more dynamic than most in Europe.
"[Mrs. Thatcher] completely reinvented the UK in my view. We're still living with the legacy of that - free market, flexibility, greater wealth," says Rix, who runs his own market research and intelligence consultancy, Metro Research.
"As a teenager I was a bit of a hippie and went on the antiloans marches [protesting against government cuts to student loans]," he adds. But in retrospect, he sees the decade as one of "increasing wealth and freedom."
The upshot is that Britain, according to the World Bank, is the second-easiest European country (after Romania) in which to start a business. In addition, hiring and firing is relatively straightforward compared to countries like France and Germany. At a recent conference in Munich, Rix heard envious mutterings from continental associates who appreciated how free he is to operate. "There definitely is a flexibility in the UK market that you don't have elsewhere," says Rix.
All of this, he says, does not necessarily come at the expense of social protection. True, if you lose your job, the state will not pay you 80 percent of your salary for months as it does, expensively, in some parts of Europe. But a robust job market that enables you to find another post quickly provides a similar "safety net."
"If something awful happened to my business, I know I could go and get another pretty good job quite easily," says Rix.
While some conservatives in Europe say a hearty helping of Thatcherism would revive the Continent's flagging economies, most are still suspicious of the Anglo-Saxon model. Its relatively low taxes and stingy welfare payments have proven generally good for jobs and business, but have done little for poverty and equality. One current of European thought, which favors greater regulation and social protection, scoffingly portrays the Anglo-Saxon model as good only for free-market buccaneers. Another, popular in Scandinavia, is generally appalled by the neglect of the underclass.
Aware of Britain's poor record on social justice, Tony Blair has sought since he was elected in 1997 to remold various aspects of the British system to make it more compassionate, though not less dynamic. In this "Anglo-social" model, steadily increasing taxes fund health-service spending; tax revenues are channeled to poor families and to every newborn child; back-to-work programs help the unemployed; and a minimum wage gives greater succor to unskilled workers.
The Anglo-social model is "a hybrid between the dynamism and flexibility of the US and ... the egalitarianism of Norway and Sweden," says Mike Dixon, a researcher at the Institute for Public Policy Research in London, which spearheaded debate on the model. Its implementation, says Mr. Dixon, has reduced poverty, particularly child poverty, and halted the rise of inequality. The London-based New Policy Institute notes on its poverty.org.uk website that the number of British individuals living in low-income households has dropped to 12 million in 2004, from 14 million during Blair's tenure, though the poverty rate was still lower in the early 1980s. [Editor's note: The original version overstated the number of poor in Britain and the size of the reduction under Blair's government.]