PrintApril 29, 2010
Greece, Portugal and Spain: It's Welfare Statism, Stupid
Sheer, breathtaking folly, thy name is Europe. America must beware.
The magnitude nine folly underway in Europe is about much more than the fiscal recklessness that has brought Greece, Portugal and Spain to their knees. It's more than Europe's - led by the Germans' - determination to bailout their hapless brethren.
The real folly is the conviction by Europeans that their welfare states can be financially patched back to good health (along with a nasty dose or two of austerity). The problem, in a nutshell, is Europe's welfare states.
Europe's ideologically blinkered leaders, its powerful interest groups and the people, who, in the main, are welfare state junkies, refuse to see that their long experiment in social democracy is unsustainable. Bailouts and belt-tightening will serve only to forestall catastrophe. Catastrophe isn't a matter of if, but when.
For Americans, what happens in far-off Europe may seem an abstraction, but it isn't. And that's not just because of the interrelationship of the American and European economies. Europe is an ill-omen, one that Americans will ignore at their peril.
Why? President Barack Obama is doing his level best to mimic Europe's welfare statism: exploding budgets and incurring huge debts and deficits; taking over industries and the enormous health care sector. Onerous higher taxes and heavier business-crippling regulations are in the offing, per the Obama Plan.
Greece, which is on the leading edge of the growing European crisis, may, in hindsight, prove to be the economic equivalent of the assassination of Austria's Archduke Ferdinand in obscure Serbia. The Archduke's murder precipitated the disaster of World War I. Greece has always been something of a backwater European economy; that Greece's collapse is the domino that makes all of Europe buckle holds similar irony.
If facts are stubborn things, beliefs are more stubborn. Parochial interests are thicker still. But in reality's game of cards, facts trump beliefs and narrow interests every time - sooner or later.
Europe is on the threshold of economic calamity. Ugly facts have begun to assert themselves, and will continue to do so with cold, gray relentlessness. It's the unfortunate and unnecessary price Europeans will pay for the folly of welfare statism. America, take heed.
