behind his choice to back lobby near putin for president in two thousand and twelve is the prime minister's of greater popularity the interview to the russian media has sparked a debate about the country's political future. in the besieged libyan town of syria to the humanitarian situation remains critical people are dying because of a lack of vital medical supplies amid fears fighting between pro and anti coffee factions thousands have already fled the battle as of forces loyal to the interim government claiming they are slowly winning the fight. my colleague josh will be here in thirty minutes with a full look at your news but right now next on our t.v. the latest edition of our debate show cross talk season peter lavelle and guests exploring whether western social democracies are heading for a quick and painful death.

and you can see. below in welcome to cross talk on peter lavelle the life and slow death of social democracy in the west an idea once deemed to be part of the very foundation of democratic values and economic prosperity is not only question today but also scorned by some is the west entering an era of radical ideologies and policies.

and you can see the slow. to cross talk the condition of social democracy i'm joined by allan meltzer in pittsburgh he's a professor of political economy and public policy at carnegie mellon university in new york we have richard wolfe he's professor of economics americas university of massachusetts and hers and in chicago we cross the steve stanek he is a research fellow at the heartland institute all right gentlemen this is crosstalk that means you can jump in anytime you want i very much encourage it but first marcia this is not the first idea to be batted around exactly at a time when free market capitalism is coming undone and uncertainty as this pervasive as ever the political and economic discourse in the rich industrialized north. shifting rapidly the current crisis has exposed the flaws of rampant capitalism as well as political forces and power with the global economy is experiencing is not merely a recession it is

a none precedented post-war contraction when the developed world's governments first stepped in to socialize debts accrued by the financial markets the public sector was the first thing to suffer education health care public pensions full employment the basic provisions introduced as a bulwark against the precariousness of earlier decades were hardest hit what's really missing is that steady average rise of the real way where the fruits of productivity are shared broadly that stop we. brave new world of sort of milton friedman capitalism the great experiment of deregulation killed that natural progression that we had going since world war two at the same time however many pundits have sounded warnings of capitalism steps and some have even heralded the advent of the never before seen socialism in two thousand and nine the american newsweek magazine wrote we are all socialists now indeed continued financial

disintegration leave little choice for western governments but for their bank bailouts and this means government oversight on a scale that would send europe for example back into the one nine hundred fifty s. all the while generations of classical social democracy policies could be raised from the present and future the entire social democracy experience in the west has its origins in assuring that the rise of radical and democratic politics like fascism could not meant to societies again as this mindset and policy agenda decline it remains to be seen how the west will protect itself from the worst of ideological extremes to ponder there peter thank you very much for that richard if i go to you first in new york when you hear the term social democracy and i think that it's fair to say i think we all agree is that it's very much associated with the post war era i mean the end of the second world war up until somewhere around now but it's a lot of people are beginning to question it so what does it mean to you in two thousand and eleven the term social democracy. well i think it's

a leftover of the past it was mostly a reaction not so much to world war two as it was to the great depression the last time capitalism as a system collapsed it was a new policy regime forced on capitalist governments by the mass of people their suffering their anger their bitterness about inequality and it was put into effect over the objections of the business community and the conservatives for many many many years it lasted really well but capitalism in a sense cannot afford it right now is cutting back sometimes over a period of time that lasts for decades and now because of the latest great crisis of capitalism an acceleration in cutting it back but i expect and i think i already see the reaction there to the beginning of a new groundswell to reestablish

a last contract around social democracy it's already evident here in the united states and i think we'll be all watching that as it unfolds in the years ahead steve if i can go to you i mean richard covered a lot of ground there very interesting answer that there are right now when you get on the program before so you go first go ahead. i'm appalled at the nature of what you're proposing first of all capitalism is not dying and it is spreading all over the world look at what's going on in asia in china and lot in america al and we're not talking about jamal we're not talking about capitalism per se we're talking about social democracy that's something a little bit different and is richard pointed out here and you know pretty good record we had a pretty good record for a number of decades now it's a question that's how this program was introduced so we're talking about social democracy obviously capitalism is part of that go ahead alan. alan the five percent of g.d.p. is twenty five percent of g.d.p.

is spent by the government here forty five to fifty percent in europe that's hardly the end of social democracy i mean the germans have what they call social democracy and they like it and they keep it and it's their form of capitalism and there isn't the slightest sign that i can see that anything is going to erode it yes there will be cuts in the budget but those cuts are coming after a very very large increases over the last five to ten years so it isn't true i mean we've just passed the health care bill we have a government which is into the room i mean alan there's a lot of people are saying look if you look at the budget right now you can't afford these things steve what do you think about that because i mean there's it's easy to rule you can't afford to leave i want to go to steve i mean it's easy to praise social the social democracy experiment and it's easy to criticize it as well it's very interesting phenomena go ahead steve.

with professor meltzer. in the eighteen hundreds there was a french philosopher an economist named frederick boston who said government is the great fiction through which everybody and devers to live at the expense of everybody else and i think that's a very good description of these socialist governments that professor wolfe apparently believes are good the problem is that the fiction is dying it's dying because the reality of the bills are coming due governments all around the world at least in the united states north america. and europe and some and asia have been spending well beyond their means the idea that consumption can create prosperity to me is i think ludicrous consumption is not creation creation builds prosperity and as we have governments that redistribute income from

some and to others we have governments that. hinder creation they hinder innovation but statement steve it's not clear to me it's fair to say that actually. going to the same thing and taking and i just point out to everyone on the panel is that you know we have electorate voted for these kinds of programs for decades ok so don't say governments i mean if we're talking about people voting for politicians that say give me more and more and more and make other people pay for it later on maybe we can supply in some commonality there i agree with that i didn't like that i mean i don't really and. raise your. hand i want richard in new york to go ahead yes sure. let me let me just respond to one thing that this notion that governments act as if they are the origin of what they do governments are elected and under enormous pressure from their constituencies and to explain what governments do without and nat'l izing who's pushing them to do

what is a very strange logic here in the united states this statement that we can't afford social democracy forty years ago when we arguably began that program in the aftermath of the great the depression we had levels of taxation of corporations much higher than they are today relative to individuals we had income tax rates on the highest and richest americans far higher three times what they are today it's extraordinary that we can talk about this inability to afford social democracy without noticing that the government's so-called inability is because it no longer taxes corporations and rich people anything like it did before when this whole social democracy got under way of course if you stop dancing those who made it was a lot of pressure for then you can't do it as who is ignoring the issues. alan jumped in first i'm very appreciative you guys grows very very close here

arjan alan go ahead. we never recovered from the great depression by nine hundred thirty eight even members of the roosevelt cabinet was saying we failed the employment rate is still high we haven't been able to do much until the war the war made a great difference was because for the first time roosevelt had and coherent policy that people expected to continue and that was something that the public shared they don't share government nowadays is not. doing what its public wants it's doing what its interest groups want at the moment those interest groups are the labor unions and this president or big corporations who plays well ok labor unions are taking really makes an excellent go ahead steve and so much damage on what an extraordinary history of our belts amnesia here let's remember one simple fact right in the united states today in the private sector that dominates our economy

six point nine percent of workers are represented by a trade union ninety three and point one percent of our working class in the private sector has no union to explain government policy based on the union movement as tiny and powerless as this is a fantasy designed to obscure the issues when we all know that the distribution of wealth and income in the united states has become widely more already quoted richard let me jump in here standing resources and have everybody go to break and steve has no label asia band before we go to the break i had steve the national labor relations board right now is suing boeing to stop it from all planning a plant in south carolina even though that plant will not get rid of one union worker and will in fact create more jobs about forty percent of all government workers are in unions and they are a powerful constituency in this country when it comes to state local. and the

federal government tried this in the war you know obama administration to them by letting the ministry of foreign the issue one as you know it's labor relations and strike out in the way although not all americans laying laid off to the private sectors of a union in one state by moving to another which is against the law in the united states that's the issue it has not they had a little prize any money on you all right gentlemen. we're going to go to a break we're going to go to a break and after that short break we'll continue our discussion on social democracy state our team. came.

up. we'll. bring you the latest in science and technology from the realms. we've got the future covered. and. welcome back to cross talk i'm peter lawwell to remind you we're discussing if social democracy is dead. and you can.

ok alan if i go back to you in pittsburgh again i'd like to remind our audience why social democracy entire concept i mean called the welfare state or other kinds of isms that you want to add to it socialism whatever but we have to remember it is a in the aftermath of the rise of fascism in europe in the one nine hundred thirty s. and the great depression and it was a political agenda to make sure that people were inclusive into society where there was some modicum of education people would get a modicum of some kind of health care a modicum of maybe some kind of job but not absolute promises ok but inclusive thing it was a political agenda we see the ideas of social democracy falling apart in some parts of the world do you think that that's going to see the rise of radical politics again in europe in the united states. no i don't believe the people the well head of state remains it will be cut back it will be cut back

because it's that we've overspent because productivity is low and because when we transfer resources from bike to high taxes from corporations and the high income individuals to welfare programs we increase welfare programs but we lower productivity growth and when we do it with blodgett deficits we tell people look your taxes are going to go up in the future and that deters investment so that's really where we are and that's where the europeans are and what i see at the moment is a total failure of government to be able to reach agreements about how to solve these problems i don't see a major failure in the private sector i saw him i have been to you professor and i got to write i see only the day all right so instead you hear it richard you go because this is crosstalk i don't think you agree go ahead. no i don't think a greedy not even a little bit you know if we were all talking about a constant distribution of wealth and income this might be an argument that would

make sense but we have a period of time in the united states above all of a vastly growing inequality of wealth and income with money earned at the top while and disproportionate to anything that anyone else enjoys precisely because among other things of the destruction of our trade union movement that's why we have such a low number of people in the trade union movement by the cut on taxes on corporations by the cut of taxes on wealthy people if that was not done if that was undone now by a no new social democracy compact all of these situations would change and the capacity of the government to pay for these programs would be enhanced and in terms of the politics let's take a little look the elections over the last few weeks in denmark bringing in a red block committed to social democracy the complete the first time since one thousand nine hundred fifty eight that the french socialist took over the senate in that country is remarkable and here in new york city surprising so many americans

the upset of the european masses has arrived in the united states and we're seeing more and more demonstrations that are pinpointing the inequality in the united states that drives and funds government we have in this direction of destroying some of the not rizzi or i don't want to go to steve in chicago steve go ahead because and i just i just received what i don't know how energetic will these please i'd like to go to steve here again i'd like to point out is that the whole social democracy project was to cut down on the inequality ok rightly or wrongly for it was done the good way or a bad way and i was one of the reasons why they did so go ahead steve you could reply to what alan said and what richard just said go ahead sure right now in the united states virtually half the households pay no federal income tax. the largest tax fair by far are the very top income earners they pay disproportionately more of their income in taxes and fees

to the government and the lower quintiles do by many mar by many measures. he hasn't explained the new law only fact these things are happening we have unions when he talks about the decline of the union in the private sector that is because the unions have failed to adjust to changing economic conditions over the years the unions have not been crushed by governments the unions are losing out as an individual a reason to be has your size in the everyone and zones decide how to build your own words they do you can blame it on whatever you want but you can't then make the only a minute you lose in these guys and a little have a lot of help for a lot of them in the south a lot of power says people in government want good government unions do not the government you know that aren't in the neighborhood of the government you are in your well being but there are many of the reasons why it is generally only you are

right gentlemen we are all talking over each other here ok ok still right. that happens on this program i want to ask all of you is it and it would say that when we look at the crisis starting in two thousand a to the present you know we talk about what government should do what they should do but it's really the central banks everywhere very the ones that have called the shots and now i'll give an opinion out now we have socialism for the rich and we have capitalism for the working class and the poor what do you think about that alan. i'm opposed to the central banks bailing out banks i mean if people. objected to the eight hundred billion dollar bail out when the bush administration did it i did it on public television i was invited into the treasury too because they said well what would you do and i told him what i would do i told him the bank needs capital than the capital should be raised in the capital market half of it and then we'll give them

concession away if they do but if they don't raise the money in the in the capital markets they're dead and will take over the bank that's what i think the europeans should do i think the europeans are wasting money terribly to keep protect the bankers and to prevent the greeks from believing the euro i've written a paper column for the wall street journal which says that's a fool's policy we need to do much more timely and it's our right governments a failing all right richard if i know how do you happen to let me go this whole region let me down richard here because it's two against one it's all but actually it's not only it's two against one for this program gentlemen we have to be fair it's two again was this president we want to talk about i want our insured richard in a new york would you comment on that what most of what i said earlier about we have we have we have we have capitalism for the for the working class and the poor and we have socialism for the rich because the new social contract is to make sure the rich stay rich ok and they're happy with that we can they have their congresses in

their parliaments and their central banks in their pocket they have done very well here they like not go ahead richard then then i can be contradicted by other gas go ahead richard. yes i think that i go back to the under cutting of social welfare by the inequality of distribution of wealth and income over the last thirty years that also allows the rich to have much more influence as the corporations have that's what we call neo liberalism on shaping government policy and that includes central bank policy what we've had since two thousand and seven when this crisis hit is what we used to call trickle down economics the central bank together with the treasury or whatever the government agency is bails out those at the top the biggest banks the biggest insurance companies the biggest corporations and it hopes may be that it will trickle down to everybody else we now know as we enter year five of this ongoing capitalist crisis that the trickle down didn't happen as most

of us predicted it would not so now we confront the fact that we've wasted a lot of money bailing out the top keeping them in a place they could call recovery while everybody else suffers through this crisis and now they have the nerve to suggest that having failed in this critical down policy the solution is an austerity that is not just socialism for the rich it's the worst kind of capitalism for them as a see people and they're not going to tolerate steve jump in go ahead steve. i believe the central banks have been major players in causing the booms they were major players in causing the bus and i will agree with professor wolf that what the central banks have been doing now is is i think not just wrong it is immoral they are in effect stealing from millions of people all around the world to prop up banks the federal reserve's main client in this country anyway and i'm sure the

central banks in europe of the studio the same way are the banks they are supporting banks that should have failed and allan meltzer is exactly right they should have been allowed to go down millions of americans overwhelmingly opposed the tarp but our congress and then and let's remember this was a bush administration what henry paulson from former goldman sachs's got get of gave us a tarp that poll after poll showed was overwhelmingly opposed by americans it never should have been done we should all let chrysler and general motors go down and i have no doubt that if they had it happened they're good assets would have been bought by other automakers maybe some new automakers would or is it would have arisen i live near and what is can osha wisconsin and i was into no should just last weekend people in this country forget there used to be a big four automakers the big the fourth was american motors which used to be headquartered in include osha when kenosha went down part of that

company was bought by chrysler people forget that air merican motors used to own jeep i have no doubt if chrysler and if general motors have been allowed to fail other automakers would have bought good parts of those companies and we would be rolling along much faster than we are now all right now we're drilling in the end of january when asked everyone who. ran their budget is going to i should hear if i go to you when you were talking about social democracy is there a new social contract in the air now because of this crisis. the old social contract is still here look this raving about about the income distribution is foolish nonsense the reason it's foolish nonsense is because he's entitled to his opinion but he's not entitled to his facts the facts are that the reason there's a yards of research on the question of why the income distribution is spread the answer is because the failure of the education system we just have

a large number of people who are illiterate and richard richard i want to give you the last words in jerry second scripture the last last word go ahead blaming the education system is what we used to call blaming the victim this is absurd our education system is starved for money we are cutting back across all of our state universities to han's clinton is the only one tell me when it started paying money that we sat down education won't even touch the average occasion gentlemen gentlemen i want to thank you sincerely for a great conversation but we've run out of time to ask thanks to my guest today in pittsburgh new york and in chicago and thanks to our viewers for watching us here are to see you next time and remember cross talk rules. and.

backs against the wall street brutal crackdown on supporters for social and financial justice sparks accusations that u.s. democracy is just an illusion. athens prepares for the plunge as severe austerity fails to save the greek economy with the government admitting it won't be able to meet you dictated deficit deadlines for this year. russia's orbit ambitions grow as another satellite for its global tracking system launches into space to rival u.s. produced g.p.s. systems. am in the russian capital you're watching r t a marina joshie welcome to the program a wave of public discontent in the u.s. shows no sign of abating following saturday's protests were.