How individualism shapes the US healthcare debate

Of all the activities I expected to be engaged in Saturday night, finding myself at a bar in Switzerland vociferously defending the right to name a child Adolf Hitler was not one of them. But as it happens, this curious discussion about European naming regulations gave way to a very interesting conversation about the healthcare hullabaloo in the US – a debate that has perplexed Europeans over the past eight months.

The two very different attitudes in the conversation about whether the government should get involved in the naming of a baby was symptomatic of a larger divide between the Anglo-Saxon English-speaking world and continental Europe. Being reminded of this vast difference helped me to put into perspective Americans’ huge resistance to increasing healthcare coverage.

Talking about the US, a German friend of mine who lives in Zurich said he thinks it's strange how Americans give their children crazy names like Apple Blossom or Stapler, and such a thing would never happen in Germany. Of course the most extreme example of a bizarre name, widely reported in Germany, was the case of the neo-Nazi man in Pennsylvania who complained when a local supermarket refused to write his son’s legal name (Adolf Hitler) on a birthday cake. In Germany, where it is illegal to use any of the imagery of the Nazi party, people couldn’t believe that the government would allow someone to give their child such a name in the first place.

France and Britain go to war over regulator

A war is looming between Britain and France, and Nicolas Sarkozy has his missiles pointed squarely at the City of London.

The French president made some unusually undiplomatic comments this week gloating over his Agriculture Minister, Michel Barnier, being appointed as European Commissioner for the internal market. That position is one of the most important in the EU, especially as the world recovers from the shock of the economic crisis.

He boldly and defiantly blamed the economic collapse on the “free-wheeling Anglo-Saxon” (aka British and American) economic model, saying, “I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism." He said the fact that a Frenchman had been appointed, while the EU had refused to even consider a Brit for the position - despite Gordon Brown’s pleading - reflected how discredited the Anglo-Saxon model has become. The bravado was an indication that Sarko intends to push Barnier hard to create a pan-EU financial regulator based on the continental European economic model that would have power over the City of London (London’s financial centre).

It was a remark seemingly calculated to elicit the most fury possible across the channel, and boy did it work. UK Chancellor Alistair Darling almost immediately put pen to paper to fire back in an editorial in the Times, saying:

"National supervisors, such as the FSA, must remain responsible for supervising individual companies…The reality is the real competition to Europe's financial centres comes from outside our borders. And that London, whether others like it or not, is New York's only rival as a truly global financial centre."

Darling signalled that he would go into Wednesday’s meeting of European finance ministers with an uncompromising stance against a pan-EU regulator that could supersede the British authorities. And thus the first Franco-British battle for economic reform commenced.

The first skirmish

The European Commission has drawn up plans for three new supervisory authorities to oversee banks, insurers and investment firms. In addition a separate body, the European Systemic Risk Board, would oversee the wider stability of the European financial system as a whole. Though the national regulators would be involved with it, it would be led by the European Central Bank. This last part would be highly controversial in Britain since it does not use the Euro and is currently not beholden to the bank in any way.

Yesterday’s meeting appears to have been a draw. Both Germany and France went in pushing hard for powerful EU supervisory bodies, but by all accounts Darling was equally fierce in his opposition to them. French finance minister Christine Legarde came out saying they had found a compromise, adding “Not everyone was on the same wavelength.”

Darling came out of the meeting insisting he had negotiated a guarantee that the EU regulator could not supersede national regulators, and it could not force states to pay up for taxpayer bailouts.

But in essence both his guarantees and Legarde’s calming words are premature. The ministers only agreed on the most general of outlines for the plan yesterday, and much still has to be worked out. The thought from some in parliament is that the big ‘macroeconomic’ authority and three ‘microeconomic’ groups are being split up as a purposeful distraction. Guy Verhofstadt, the leader of the Liberals in the parliament who favours a strong authority, indicated after the meeting that the parliament will attempt to bypass this “trick” by voting on both bodies as one. He said after the meeting:

"This "forced agreement" is difficult to understand. Member States are repeatedly saying they want a single market for financial services, but now that the time has come to agree on the basic principle of creating supra-national supervisory authorities, some of them appear totally reluctant". Moreover, by separating micro-prudential supervision from the macro-prudential one, Council tries to impose its own views and its own agenda. But the European Parliament as co-legislator will play its full role and has already decided to consider the proposals on micro and macro prudential supervision as a whole."

What comes out of this is anybody’s guess. A column in today’s Wall Street Journal suggested that the Square Mile was overreacting and taking Sarko’s bait, and the paper seems confident that in the end the city will not be regulated from Brussels. But if I were a betting man, I wouldn’t be putting my money on Britain winning this fight.

The UK already has dimished influence in Brussels because of its lack of engagement. And with a weakened government that will be preoccupied in the coming months with an election it is sure to lose, I don’t see them as being a very difficult foe to vanquish.

This is a shame really. As badly as financial reform is needed, Darling is correct to say that London is the leading financial centre of Europe and should have a significant say in new regulatory structures, regardless of the sins the city and its hedge funds have committed in the past to get us into this mess. One should keep in mind that Merkel and Sarko’s push for a strong EU financial regulator with power over the city is not entirely altruistic. Part of their motivation is a desire to scale down the city’s prominence in the European financial sector and give more power to Frankfurt and La Defense.

But as some commentators have pointed out, if the EU overegulates without some reform from its trading partners, there is a risk that financial services companies will flee Europe altogether. Rather than moving from Britain to France and Germany, they could be more likely to high tail it over to Switzerland.

And speaking of Switzerland, I’m about to get on a plane to fly there. My dad is having a belated Thanksgiving dinner. I’m wondering if the minaret ban vote will come up during the dinner conversation with his Swiss colleagues. It could be an interesting night!

The French Strawman

For decades, it's taken only one word to strike fear into the heart of Americans, and that word is France. Of course Americans aren't afraid of a new Napoleonic army invading the Western hemisphere, what they fear instead is the French economic model. In American political discourse, 'France' is often used not so much as a country but as an ideology; a boogey man representing a bloated welfare state with high taxation, widespread unemployment, overregulation and low productivity. It's a classic strawman argument.

Over the past two weeks, as debate has raged in the US over Barack Obama's revolutionary budget plan, the use of this anecdotal device has skyrocketed. Republicans are calling the proposed Budget the "final moves toward socialism," saying it will lead to the "Europeanization of America." Essentially, the proposed budget does three main things that have elicited this reaction:

-An introduction of higher taxes on the top 3% of income earners
-A funding mandate for definitive healthcare reform
-A massive expansion of the federal debt

David Leonhardt of The New York Times has called this budget, "nothing less than an attempt to end a three-decade era of economic policy dominated by the ideas of Ronald Reagan and his supporters. ... More than anything else, the proposals seek to reverse the rapid increase in economic inequality over the last 30 years." This editorial in the Wall Street Journal this week does a great job of breaking down the tax aspect of it.

Considering the changes afoot, it was only a matter of time before the F word started getting tossed around. On the March 2nd edition of Meet the Press, former McCain advisor Mike Murphy managed to work 'France' into the discussion over this budget a total of five times, no small feat for a short segment. According to Murphy, Obama can "hardly wait to turn us into France," and he is squandering his political capital on a "failed ideology." That ideology, a democratic social welfare state, is not only reviled by American conservatives but has also been deeply unpopular with Americans for decades, particularly after the Reagan revolution. Socialism in most Americans' minds is inseparable from Communism, which any American fifth grader can tell you was a failed ideology which the US triumphantly defeated in the cold war. So for some time the logic has been that if you can associate a policy with 'socialism,' or even better, with 'France,' you're going to have a pretty easy time making the policy unpopular with the American public (one only needs to look at the so-called "Death Tax" debate).

But in invoking the old France cliches, are Republicans missing the way the winds are currently blowing? Isn't it a bit odd that, at the same time that Republicans are trying to scare the American population by saying Obama wants to turn them into France, across the Atlantic Sarkozy is proclaiming the death of the Anglo-Saxon model of capitalism and the vindication of the European social model? If the French economic system translates to more regulation on banks and financial firms, more safety-net protections for people who lose their jobs, and more government action to protect the economy, what exactly is it in that image that would scare an American in 2009? Considering that the current crisis was largely the result of a lack of regulation in the US, 'Anglo-Saxon style capitalism run amok,' if you will, it seems almost absurd for Republicans in the US to still be using the French boogeyman tactic. They seem to be saying, "Look out America! Or else you could become like that country where everyone has healthcare, job security and pensions!" I'm oversimplifying of course, and I don't usually find myself in the position of being a strident defender of the French economic model, but it seems to me that Republicans don't have much of a leg to stand on here if they want to keep using the France-baiting.

I was curious to get the reaction of some of my French friends to this kind of talk. After all, they must have an opinion on the fact that their country still stands as the antithesis of America's self-image, the boogeyman in the closet children remain terrified of at bedtime. "I think it's funny," one French friend who works for the EC told me after seeing some of the comments being made in the US media. "In France we do the same thing with America if we want to scare people about Sarkozy. They say he is 'Sarko the American' and that he's trying to make France become America. That scares the French probably as much as Americans are scared to become France."

As we edge closer to a hammering out of the new "Bretton Woods 2" agreement that will reshape the world's economic structure, this France-America ideological labelling is likely to get even murkier. The ideal solution, as with most things, is probably a happy medium somewhere between the two.