OPINION
I Am Leaving A “Socialist” Country to Return To The US, And I’m Kinda Nervous About It
I wish Americans would embrace resource redistribution as much as the NFL does
Since the turn of the millennium, I’ve served sequential 7-year stints living and working in three of the most prosperous nations on Earth: first in the United States, then Singapore, and now wrapping up in the Netherlands.
All three are democracies. Business-friendly, each is a market economy fueled by capitalism and backed by a trustworthy rule of law. All three are prosperous: of countries with more than a million residents, on a GDP per capita basis Singapore is #4, US is #5 and the Netherlands is #11.
But what I find fascinating is not their similarities, but rather their differences. Beyond the obvious differences (currencies, capital markets, continents, cultures) are the social and structural differences in how these economic powerhouses operate within their own distinct social context.
The social context I’m referring to are the unique local norms and base line social foundations in which each country operates. For example, consider two cultural and structural dimensions:
- How strong are individual rights and freedoms? (low to high)
Specifically, consider how much society prioritizes and protects the rights of individuals relative to the group. For example, are individual freedoms provided even when the group potentially is put at risk? Or are individual freedoms withheld to preserve the wellbeing of the group?
2. Who funds social safety nets? (private vs public)
This second dimension gets at whether a society is optimized for the wellbeing of the individual or for the group. This dimension is not about individual freedoms, but rather what underlies the implicit social contract: how much everyone should carry their own weight, and subsequently how much collective resource is applied for the social welfare of the group. Specifically, how well funded are public “safety nets” and ultimately can citizens count on public services (education, health care, retirement, etc).
In assessing countries on along these two dimensions I’ve constructed a matrix with each country plotted within its own quadrant.
(Thank you for permitting sweeping generalizations to allow me to illustrate the point.)
The upper left quadrant is America. In “Autonomous Individualism” individual liberties are paramount, and self-reliance is the norm. Individual freedoms come first, whether or not there is harm to the group. California homeless live in public parks. Colorado gun owners open carry in public spaces without a permit. Economically, individuals and families are expected to pay their own way and take care of themselves, with minimal support from the collective. Social safety nets are limited as society eschews free-loaders and prides itself on its “hustle” culture that expects each person to carry their own weight.
The lower left is Singapore where people share a strong commitment to individual (and family) responsibility for self-sustenance. In “Autonomous Collectivism” citizens must provide for themselves, and free-market solutions are preferred over government intervention. If a citizen has an economic burden, family members are required to cover those. Meanwhile, the social harmony of the group is more important than any individual freedoms or rights. For example, compositions of social housing blocks and military units are engineered to ensure racial and religious integration to avoid homogeneity and ensure mixing of cultures in the interest of social harmony. Rules are strict to protect the wellbeing of the group, and individuals forfeit personal rights to deviate from the herd and express themselves as individuals. Singapore follows a more free-market-oriented economic system with limited government intervention in the economy. It has a relatively low level of social welfare compared to some other developed countries.
The upper right is the Netherlands. In “Social Individualism” individual freedoms are high, but the health of the group supersedes any individual. The famous Dutch “polder model” (consensus-based policy making) was established when social collaboration was required in society’s collective fight of man against the sea. Imagine a complex system of dams and dikes where a fault by a neighbor could flood out an entire community. Cooperation, therefore, became paramount, as reclaiming land that is below sea-level meant relying on collaborative systems and counting on each other in a way that no individual was more important than the well-being of the group. Despite the importance of the wellbeing of the group, individual freedoms are exceptionally high. Amsterdam has long been considered the most “liberal” city in the world — not the dogmatic meaning of the word liberal, but rather tolerance and accepting of individual rights. Freedom of whom to worship, whom to marry, whom to sleep with, and which drugs you put in your body. The Dutch “doe normaal” social mantra (“just act normal, because normal is crazy enough”) means individuals have full freedoms to do what they like, so long as one doesn’t go too far and mess things up for the group. The Netherlands has a mixed-market economy with a strong welfare state. It has a comprehensive social security system, universal healthcare, and a relatively high level of government intervention in various sectors. The Dutch government plays a significant role in providing social services and maintaining a social safety net.
Finally, to complete the matrix, China sits in the lower right quadrant. In “Social Collectivism” individual rights are low, and society has a high expectation that the collective will take care its people. Conformity matters. Collective resources are distributed to ensure no one is fully left behind. But I am in no position to talk about China. I’ve never lived there.
I know you want to, so let’s talk about taxes. What’s globally common, I can tell you from firsthand experience, is no matter when you work and live, no one likes paying taxes. What differs is the expectation and social contract that is expected with respect to how those taxes get spent.
In Singapore, income taxes are low. The third lowest in the G20 and higher only than Russia and Saudi Arabia whose oil and natural gas reserves pay the freight. Singapore, a country that is run like a company, considers its low tax rate as a point of competitive differentiation from other nations in the region. Citizens expect to pay low taxes, but they also accept commensurately lower levels of social services.
The chart indicates the United States federal income tax rate is lower than the average of its global peers. With approximately 20% of the federal budget spent on military defense and benefits for veterans, the remaining pool of resources for social services is relatively smaller compared to other countries. Half of the federal tax revenue goes into funding social security and public support for health care (Medicare and ACA subsidies), and yet these programs are piecemeal and only cover subsets of the full population. Parties fight over investment levels (Democrats wanting to expand social services, Republicans wanting to reduce them). Both sides feel let down. Americans feel their taxes are high and yet there isn’t a lot to show for it (though those military jet stadium fly-overs are pretty cool).
In the Netherlands, the progressive income tax rate reaches its full 52% at even relatively modest income levels. Citizens expect (and get) a lot. Modern infrastructure, predominantly free education, comprehensive health coverage, retirement benefits, public housing options. While the Dutch moan about the rates, they lack stress about covering basic services and even middle class and blue-collar workers enjoy predictable lifestyles with little worry of becoming destitute. The Dutch are well educated, capable, and competitive. Its ambitious colonial roots reveal an underlying cultural drive. (I’m not celebrating colonialism, but rather pointing out cultural intrinsic drive.) Yet individuals who chase wealth for wealth’s sake, and as a means to keep score, so common in the other two countries I’ve lived, is an outlier in Dutch culture. Locals credit the modest Calvinist ethos that is deeply embedded into a place where no one shuts their curtains (“I’ve got nothing to hide”). Displays of wealth are typically scorned (think eye-roll) rather than celebrated or admired.
The result in the Netherlands is a robust middle class and bell-curve of wealth distribution which is more analogous to American in the 1950s compared to today’s more “u” shaped curve with large numbers of very wealthy and very poor on either end and an evaporating middle-class in the middle.
But before I explain what I like about Social Individualism, let me first put on a layer of armor before the arrows come that are about to fly my way. I’m well off. Dutch people understandably bristle at my kind — a highly paid American corporate exec with incremental tax benefits over locals who drive up housing prices and live in an expat bubble. The worst kind.
My explanation (not excuse) typically falls on deaf ears. Americans spend our lives chasing money because we can only retire when we are confident enough that our stash of gold coins is big enough to fund our kids’ college, outlive us and survive uncertain but inevitable health calamities in the future. What explains our hustle culture and need to acquire assets starts with necessity (“will it be enough?”) which can easily drift into greed. Americans who get good at accumulating wealth double-down on it, and a culture of wealth and extravagance has insidiously formed around it.
Meanwhile, in the Netherlands with its strong social safety nets and widely distributed social security, there is little existential need to always be accumulating. With society covering the basics, individuals need only to produce enough to provide without the need to amass an uncertain amount of savings. My Dutch friends hope to earn enough every year to fund their lives and a couple of vacations, and then live comfortably on their Dutch state pension benefits once they reach retirement age (now 67). They don’t need a pile of gold coins to retire.
The resulting culture is one where people strive to have enough, but not necessarily more. And, this is the part that I really like about living in the Netherlands. People hustle, but only to a point. There is no social status premium put on being rich, and little incentive to do so as accumulated wealth gets taxed in the form of a wealth tax anyway. But capitalism prevails, and the economy hums along at its top 10 clip.
This is the part where conservatives start to feel antsy and begin hand-wringing about handouts and entitlements and anecdotes of lazy freeloaders grifting in their trailers day-drinking and watching TV all day. “Without the fear of being destitute, no one will work” they claim. “Socialism!” they protest.
The way the term “socialism” has become weaponized in the US triggers me. The leap to Marxism, the Communist Manifesto, and Lenin comes fast, conjuring images of failed states, human rights atrocities, authoritarianism, and deep poverty. People can’t even utter the word socialism itself let alone contemplate what social redistribution actually means in real life — ensuring a strong and healthy society through redistributing resources from the strong to help the weak for the collective benefit to all. Rebalancing is just plain smart. Like when a portfolio manager rebalances their investment portfolio, effectively selling high and buying low to mitigate risk and maximize returns.
So many Americans are terrified by the word socialism. I never tire of pointing out that the beloved NFL is socialist. The NFL is socialist. Let that sink in.
Socialist how? By structurally redistributing resources from the strong to the weak to the benefit of all. TV contract revenues are shared equally across all teams. Sales of licensed merchandise are shared equally across all teams. The profit from that Tom Brady jersey you bought for your uncle didn’t go to the Patriots or Buccaneers, but instead was split equally across all 32 teams. Salary caps and payroll limits ensure no team can win by simply outspending the rest. Probably the NFL’s most socialist feature of all is the annual player draft. Every year the worst team gets the first pick of the new players, while the best team chooses last. This redistribution of talent constantly re-levels the playing field, increasing parity in the quality of all teams, and in turn making every game and the sport at large more competitive. These redistribution measures work really really well. Fans are happy. Sponsors are happy. Owners are thrilled. The valuations of their teams have skyrocketed.
Still, Americans remain convinced that socialism is an evil scourge to be rooted out wherever it’s found. Despite socialism making the NFL more competitive, many Americans worry that socialism will make people less competitive. Less hungry. More entitled. Lazy.
Sure, there will always be examples and individuals who game the system. But from what I see in the Netherlands, the majority of humans generally want to work, want to feel productive, and want the autonomy and self-satisfaction of taking care of themselves if given the chance.
So, after living and working seven years in the Autonomous Collectivism of Singapore, and another seven years in the Social Individualism of the Netherlands, I find myself now returning to my roots back into the Autonomous Individualism of America.
And, I confess to feeling nervous.
Why nervous? I find myself worried about an American blind spot: exceptionalism. Americans are proud. Yet not everything is better in the States, despite protests to the contrary. America works for those who have succeeded, while leaving others behind. Society tolerates this “haves and have-nots” under the guise of ideals including freedom, meritocracy, and the “American Dream” which idealizes that everyone has a shot to pull themselves up by their bootstraps. The fiercely independent streak that empowers individuals in America is striking and unique — and works well for those it works well for — notably those individuals who can successfully compete in the free market.
Exceptionalism is a false narrative. I’ve also seen other systems work well, too. I think we can do better. We must become curious and humble enough to consider there are other ways.
Personally, I would like to see America invest further into safety nets. Consider the meaning of the term “safety net” itself. It is a net literally designed for circus acrobats to ensure it’s not game over when they slip and fall. A safety net doesn’t make a trapeze performer lazy. No, it gives her the courage and confidence to boldly attempt that double backflip. How can we expect Americans living on the edge of generational poverty to take a risk or make a move that can break them out of their slump, when with one false move they could lose it all? Not everyone has someone in their life who can catch them when they fall. Providing that for others is the duty of a civilized society.
I believe that a group is only as strong as its weakest link
Remember that diagram above? I’m not suggesting the US move into the quadrant alongside the Dutch. Rather, I’d settle for that flag drifting to the right within the quadrant we are in. Medicare for all would be a huge start. Subsidized university education for all is another. Maybe throw in a year of compulsory public service requirement for young adults (military, community service, teaching, land conservation, whatever).
To get to a healthier society as a group, we’ll need to become more connected and less divided. I believe we need to amplify and spotlight what we have in common instead of what divides us. Political polarization has splintered us and made us weak with infighting. Much of the rest of the world watches with schadenfreude. If we can find a way to bridge our differences, think less about our self-interest as individuals, and more about the health of the group, I believe we will all be better off. United we stand, divided we fall.
Just ask any of your NFL owner friends.
