Once upon a time the intellectual elites in Europe and the U.S. trumpeted the economic accomplishments of European social welfare state policies. Today the conclusion is nearly inescapable that this economic model simply doesn't work to create jobs, wealth or dynamism.But this is not a new story. The reason why Europeans are even talking about a common constitution is because they have known for a long time they can't compete with the US economically and something must be done to liberalize the European economy a little bit. The problem is that the nanny state mentality is so ingrained in the European psyche that (Old) European workers, mostly the ones working for the state, start striking on a slightest mention of any reform. Hence the rejection of the EU Constitution by the French. But although European elites do realize Europe is in trouble, their counterparts here in the US continue to insist we have to emulate the European model:
[...] the U.S. has substantially outperformed Old Europe in wealth and job creation. The economic growth rate of the European Union nations since 2003 has limped along at about half that of the U.S. In the 1980s and '90s the U.S. created about 40 million new jobs; Western Europe created some 10 million, well over half of which were in the public sector. If this divergence in economic performance continues for 40 years, the American worker will be roughly twice as wealthy as his European counterpart.
The Europeans have created a vast constellation of domestic policy interventions that are cloaked in the seductive rhetoric of compassion, fairness and cultural sophistication. These policies include highly generous welfare benefits for the unemployed; state ownership and subsidy of key industries (such as Airbus); rules that make it difficult to hire and fire workers; prohibitions against closing down plants; heavy protections of labor unions against competitive forces; mandatory worker benefit packages that include health insurance, child care allowances, paid parental leave, four to six weeks of vacation; shortened work weeks; and, alas, high taxes on business and labor to pay for these lavish benefits.
The frustrating irony is that, at the very moment in history when Europe's model is in disrepute, many U.S. politicians still want to emulate it. In Congress today there is some bill to provide virtually every social welfare benefit that Europe now offers. And the Congressional Budget Office predicts that if America's federal entitlement programs are not reined in, by 2030 government's share of the U.S. economy will close in on 50% of GDP, or even more than Europe's share today. The good news is that at least Washington has begun to debate how to reform these programs.If we don't want Chinese, Koreans, or Indian bloggers to repeat my words in 50 years writing about what went wrong in the US, we must resist those "well-meaning", "good" Christians. For it's not the size of the welfare state that indicates how prosperous a country is but the size of its economy and the number of people that economy can employ.
Europe is now paying a high price for this failed experiment with welfare state socialism. Today's populist revolt against economic integration in France and Germany suggests that these nations remain mysteriously impervious to the need for change. A bigger mystery is why some American politicians are so intent on repeating Europe's mistakes.
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