Monday, May 7, 2012

Endgame of the Welfare State

So the French decided to toss their "conservative" President Sarkozy for the Socialist Hollande.  And M. Hollande promises to end "austerity" with growth--in government spending.  In other words the French want to spend the Germans' money for them.

And the Greeks are turning to a neo-Nazi party.  Of course they are.  What do you do when socialism doesn't work?  You turn to national socialism.

Europe's Big Problem, and ours, is that politicians have promised the moon in entitlements to the voters and now the voters are mad that they aren't going to get the moon.  Or even much in the way of green cheese.  We've known this would end in tears; we've known it for decades.  But from the point of view of the welfare-state beneficiary, none of that matters.  If s/he can keep the gravy train going another five, or ten, or fifteen years, then to hell with nation, to hell with the economy, to hell with the grandchildren: just keep those monthly payments going.  Tax the rich, tax the corporations, print the money.  Just don't cut my benefits, 'cos I earned them.

Here's what is needed.  What is needed is for the left-wing parties to admit (privately) that they were wrong and reform their welfare state so that it runs itself without detailed government supervision.  Government can proudly preside over the economy and pretend that it is giving out all kinds of benefits, but in reality it lets the market economy run itself.  Government demands the most frightful payroll taxes from evil, greedy employers, but the money all goes into private accounts for the workers and the workers get whatever pensions and health care and unemployment and disability their contributions yield.

That, of course, is what the German Social Democratic Party started to do under Gerhard Schroeder. They relaxed employment regulation.  They lowered unemployment benefits.  They didn't do it because they wanted to. They did it because they had to, and the German voters immediately voted them out of office.  But it was the right thing to do, and now the Germans have the only healthy economy in Europe.  They have even cut their green energy subsidies.  And the Social Democrats will be back as soon as the Germans get fed up with Frau Merkel.

No doubt the French socialists will be forced to do the same thing, and probably sooner rather than later.  But not until they have got the French economy completely in the ditch.

You might ask: why put the French people through such a nightmare?  The answer is that it's the only way to convince the welfare-state beneficiaries to loosen their grip on the public purse.

People will only agree to take half a loaf when they can see, beyond a doubt, that there is no chance in hell that they are going to get the whole loaf.

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