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The Rooted Failure of the European Welfare Model That America Is So Intent On Copying
After 66 years of an unprecedented experiment in social-democratic welfare policies in the old continent of Europe, the realization that these policies are deeply flawed is beginning to sink in to these nations. But that realization is not being shared by the nation who pursued an exact opposite path of development so successfully that it became the envy of the world. To the contrary, now, that exact nation, America, is hell bent in repeating the failed policies of the European continent of high cost welfare, Government intervention in all aspects of the economy and civil life, and unprecedented borrowing to finance such programs.
As the European continent embarked in their failed approach in the post-war period, they didn't have the advantage of foresight from other industrialized advanced nations of the world. Communism, although never successful, was not yet the obvious failure until 35 years later. But America has today all the advantages of history and foresight. We have seen the results of the European social-democratic-welfare-interventionist model drag down the economic growth of these nations while keeping social costs increasingly high with a slow growth economy incapable of producing enough jobs to avoid high unemployment. Now we see the alley of no return where they have taken themselves. Their growth was sustained with borrowed resources. They consumed much more than they produced. They have reached their borrowing limits and the day of reckoning has arrived. Europeans have no choice but to engage the reverse gear to get out of the alley. They will have to become poorer before they become wealthier again by living within their means for the time necessary to allow organic growth to bring back increased wealth again.
Politicians in Europe have two choices in the short-run, cut down the entitlement society enough to sustain borrowing costs at present levels of production; or, increase taxes to sustain higher less painful welfare levels. The second choice sounds the more attractive, both politically and economically, and the most likely to be chosen. Unfortunately, it is exactly the wrong choice. Higher taxation will transfer, again, resources from the producers to the receivers; from the entrepreneurs to the bureaucrats; from the creators of jobs to the killers of jobs. In the long run it will reduce economic growth which in turn will exacerbate the lack of sufficient revenue and put pressure back again on deficits and debt.
This makes for a sad and dramatic tale of failure. Why is America so determined to follow this path? Why is it that we refuse to study the European experience and deduct easy lessons from it? America's hole or alley is not as deep as Europe's. We still have 30 to 40% better debt to GDP ratios than most European nations.
However, we are digging the hole at a faster pace in the last 4 years than our European friends and catching up fast. But still, for America, it is a relatively new malaise that can still be stopped. But we don't seem to realize it or be trying to stop it. The minority that realizes it is called "extremists". 44% of the American people still approve of the economic policies as represented by the economic performance of their President. What are these 44% thinking? The answer is that they are not... thinking. Few of these people have the wherewithal to analyze economic history with any accuracy, nor do their representatives in Congress, which is how democracy is supposed to work, by capable representation. And there is the problem. The problem is in the fact that Democracy demands the unobtainable; that the citizenry be not just educated enough, but educated to a level of sophistication and wisdom that no nation on earth has ever achieved; no, not even America. The citizenry of America is not even educated enough to know if their representatives in Congress are educated enough.
And there is the rub! Simplistic "one-man-one-vote" blind-universal-suffrage is the greatest failure of modern man. It cannot do the job.
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