A Glimpse of the Future

From the Gray Lady:

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism. Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. “The Europe that protects” is a slogan of the European Union.

But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead. With low growth, low birthrates and longer life expectancies, Europe can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant changes. The countries are trying to reassure investors by cutting salaries, raising legal retirement ages, increasing work hours and reducing health benefits and pensions.

“We’re now in rescue mode,” said Carl Bildt, Sweden’s foreign minister.

It is interesting that we are sliding in this direction just as Europe, and especially Greece, is realize that this social and economic model is simply untenable.  It should be no surprise.  Congress gives themselves a raise pretty much every year.  As a people, we have realized that putting the right people in office can likewise increase our own government benefits on a regular basis.  A people who gives little to their country but demands every kind of cradle-to-grave benefit will only have some combination of tyranny, corruption, and poverty as their reward.

This is the shape of the “change” to come.  As Fareed Zakaria put it aptly,

In the long run, health-care costs will destroy the federal budget and with it the American economy. Interest rates will surely rise, which will force up the cost of servicing debt. New competitors emerge every year in every industry from other countries that are working hard to make themselves attractive to business.

Events have conspired to give America some breathing room. Leaders in Washington should take the current climate as a godsend and use it to start retooling the American economy. Everyone knows what needs to be done — restructure entitlements (including state pensions, which are the next catastrophe); force down health costs; reform immigration, taxes and regulation — and thus restore the country’s competitiveness. Or our leaders could sit around and put off all the hard decisions until America finally does look like Greece.

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6 thoughts on “A Glimpse of the Future”

  1. No.

    Much though it may tickle American conservatives to believe that Europe is in the economic shitter because we have the welfare state, there is this little secret they’re not telling: America is also in the economic shitter and doesn’t have a welfare state. Really, to have American commentators lecture us about financial profligacy at this stage is pretty darned hilarious.

    Actually, the world is in the economic shitter, countries both with welfare and without. The relationship between the welfare state and macroeconomic instability is not a simple one-to-one. The problem is not that we have chosen the wrong things to spend money on, the more pertinent problem – in both cases – is that we’ve spent money that we haven’t got.

    And even if there was such a relationship, the US-Europe difference is not just what works financially: there is an importance in culture. We don’t just look after the old, the infirm and the forgotten because we can afford to – we do it because it is what government is for.

  2. Oh, Simon. Thanks for stopping by. How to begin?

    “Yes,” I suppose. That’s a start. That’s a yes to my argument, not yours.

    We know our economy is in the dumps right now; that is no secret at all. The question is if we are in the dumps because free market practices or because we have moved away from them and towards a more European model. Many of us believe it is the latter; even, and especially, under Bush, spending was outrageous. Most American conservatives worth their salt know this.

    You pointed out that it’s not what the money is spent on, but how much. Well, yes and no. Certainly the prime issue is spending money that we don’t have; we have the ghost of Keynes to thank for the love of deficit spending in the modern liberal state. But all the more reason to ask what this magical money is being spent on…is it something necessary, or something else?

    It’s one thing to say the public should support health care for those who can’t afford it. It’s quite another to say that taxes should be raised so that people can retire at 53, as is the case in Greece.

    You say the difference is cultural, that “looking after” certain segments is what government “is for.”

    Perhaps, but that is a redefinition of the role of government that is quite new in the history of human societies. Most governments have existed to provide basic order and stability, and perhaps a few basic services. It is only fairly recently that the infrastructure even existed for the state to be involved in one’s life from the cradle to the grave. And as a Christian, I’d rather say that the caring for the least, the forgotten, etc. describes a significant measure of the church’s mission . I fully believe many segments of the church has forgotten this, though.

    The real issue with your comment is basic: it is not simply those nasty “American conservatives” who are drawing a link between European economic woes and the welfare state, it is the leadership of these countries themselves. You may consider reading the article I referenced in its entirety for more observations such as the following:

    “The easy days are over for countries like Greece, Portugal and Spain, but for us, too,” said Laurent Cohen-Tanugi, a French lawyer who did a study of Europe in the global economy for the French government. “A lot of Europeans would not like the issue cast in these terms, but that is the storm we’re facing. We can no longer afford the old social model, and there is a real need for structural reform.”

    Cheers.

  3. Pastor Mack,

    Thanks for stopping by Everyday Liturgy.

    I really like that Karly Barth quote in your sidebar. I am going to start using it!

    —Thom

  4. I try not to worry about things I have no control over. “I will lie down and sleep in peace, for you alone, O Lord, make me dwell in safety.” The only thing that makes me safe is God, God alone. Governments, health care systems, even my own body — all of these will let me down at some time.

    Mack, I appreciate your presence on CCBlogs. You add I point of view I see from no one else on the network. So thanks. And peace to you.

  5. Chris, thank you for stopping by as always. I suspect we don’t agree on everything, but you are always fair and charitable in your responses. I hope your ministry is bearing fruit, and that you are finding your calling affirmed.

    Thom – Thank you! The quote is from Barth’s ‘Dogmatics in Outline’.

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