The disastrous end of the welfare state 6

The following extracts are from an essay on the failure of the welfare state in Europe by James Roberts and J.D. Foster:

Europe’s socialist (or “social democratic”) welfare state is collapsing under the load of unsustainable debt. There is no chance European politicians will ever make good on the many costly and unfunded entitlements they have promised their citizens.

The fundamental problem in the European Union is a monetary policy failure. In conjunction with the debilitating effects of the social welfare state, this has led to a broad economic collapse among the lesser states — notably the PIIGS (Portugal, Ireland, Italy [though not really a a “lesser state” – JB] , Greece, and Spain), but also some of the EU’s newer members — and it threatens to envelop the greater states.

For years, this collapse among the lesser states was disguised by debt accumulation — countries would borrow (at de facto concessionary interest rates) to overcome their inability to generate adequate income by producing and selling. The lack of actual and prospective growth combined with growing debt burdens has led to a long-term solvency crisis, which has been bubbling up of late into a series of liquidity crises.

The monetary and fiscal situation in the EU is increasingly unmanageable, as the debt burdens grow and growth prospects diminish further. …

The vision of a “euro zone” was ill-conceived from the start. It is now increasingly acknowledged that Brussels’ lack of control over social spending, especially in the PIIGS, doomed it from the beginning. Agreements (e.g., the Maastricht Treaty) to stay within EU member government spending targets were routinely flouted, even by the largest EU countries. …

The strong got stronger, while others, like Italy and Greece, stood still or even retreated on policies that would have sustained their international competitiveness. …

Southern Europeans kept borrowing in low-interest-rate euros (which simultaneously inflated housing bubbles in their countries) until, in Margaret Thatcher’s words, their socialist governments “ran out of other peoples’ money!” As a result, some of Europe’s large private banks now hold toxic quantities of sovereign debt issued by the PIIGS and are threatened with extinction through serial defaults …

For decades now, one of the most tragic costs of the European welfare state has been Europe’s structural unemployment, especially among the young, combined with welfare payments that turned unemployment into an acceptable — even desirable — status, while stripping those affected of their dignity and sense of responsibility. The recent riots in the U.K. are an ominous reflection of this failure.

One of the key questions now is: How much longer will workers and taxpayers in Germany and other relatively more fiscally prudent countries in northern Europe be willing to work into their late 60s to subsidize (via eurozone bailouts and managed defaults) their neighbors in southern Europe so that the latter can retire early in their 50s on generous state-funded pensions and go to the beach? 

How many times does it have to be proved that socialism does not work?

Free-market economists – the giants among them, von Mises, Hayek, Milton Friedman – demonstrate in theory that socialist economics cannot work. Their reasoning is not hard to follow, and entirely convincing. We human beings can use our faculty of reason – unique to our species –  to save ourselves from having to try out risky ideas in reality. But millions among us want to keep trying out the failed redistributive policies of socialist economics, experimenting with real lives, courting disaster over and over again.

Roberts and Foster grimly point out:

For the U.S., Europe is the ultimate object lesson — a warning of what happens when government is allowed to run wild, with the resulting loss of liberty, and fiscal debt.

An object lesson. A warning. But Obama, his circle of advisers and appointees, and the millions who persist in voting for socialism – aka “stimulus”, “entitlements”, “taxing the rich”  – remain obstinately deaf and blind to it.

  • Canada heading in exactly the wrong direction:

    The disqus post first appeared with a picture of a large Muslim family. Then a moderator changed it and barred the commenter whose post it was (see featured comment). The moderator also went through deleting a lot of comments as well that related to this. I was quite shocked I thought disqus were pro free speech.

    I’m surprised to notice Canada has as many Muslims as the UK by
    percentage. The substitution of the picture seemed entirely

    • liz

      Yes, being disgusted with the government’s plan to create a huge, permanent welfare class out of ignorant, backwards, violence prone barbarians is a big racist, bigoted, islamophobic no-no. How dare they point out the obvious!

  • George

    As a rule, so many societies are not teaching self-reliance, self-responsibility, and a valued work ethic along with cultural pride and dignity.    Today, the name of the game is to promote the mentality of entitlement, victimhood, group think, and blaming everyone else for one’s failures in life.   Today the shouts in the streets are —— GIMMIE -GIMMIE- GIMMIE  and  VICTIM- VICTIM- VICTIM !
              Sadly the disastrous end of the welfare state is NOT coming anytime soon but the problem is  currently growing  worse. Apparently the new age liberal left wing pundits are waiting for the new modern socialist Messiah—-the second coming and ressurection of their beloved “icon”  Karl Marx.
                         The liberal atheists actually have Christians in America believing that all or most atheists are socialists or communists or admirers of that scumbag wacko  Karl Marx. Personally I have never met an atheist communist , but I have certainly met quite a number of liberal left wing Christians who staunchly embrace socialism but aren’t even aware of it because of their indoctrinated political brainwashing.

  • Liz

    What is so ironic is that while the Obama administration ignores the completely obvious UNsustainability of the European welfare farce, they continue lecturing us all on “Sustainability”- pushing the UN Agenda 21 formula for achieving the very same disaster that is happening in Europe before our eyes.

  • Frank

    There should be an AGREE icon to click in addition to a LIKE icon because I agree completely with the article and with Les.w(UK)’s comment. But I certainly don’t LIKE what’s happening in Europe or America.

  • Les.w(UK)

    Having lived in London for the last 35 years, I’ve watched England decline in inverse proportion to the rise of the welfare state. The 13 years of excessive borrowing and wasteful spending on a burgeoning public sector of the last Labour government – not to mention their political correctness, multiculturalism, and other madness – was disastrous for this country (and did the electorate learn after Labour’s first 5 year mess?…).  The attempts by our one year old Conservative government to reign in the overweening and unaffordable state is being hampered by both their coalition partners (the hopeless ‘Libdems’), and our largely useless civil servants and their unions. Add in an incompetent, corrupt, undemocratic and unbelievably wasteful EU (European Union) which overshadows and degrades everything, a faltering world economy and you have a recipe for… well, I don’t even want to think about it.  From here, the US under an Obama administration, and with crippling debt,  looks to be in an even more parlous state – and effectively bankrupt.