I’ve written before about the upcoming breakdown of the European welfare state, and my fingers are crossed that American policy makers will learn the right lessons and restrain the size and scope of government before we suffer from the social chaos and disarray that is sweeping through nations as varied as Greece and the United Kingdom.
Some defenders of big government claim that Europe will be okay, but a column in the New York Times by Desmond Lachman and Dalibor Rohac provides some sobering analysis. Some of their analysis focuses on the inherent instability of the common European currency, which certainly is a contributing factor, but the key takeaway is that many European nations are going to default. In the short run, the resulting economic instability will have a negative impact on the United States, but the long-run impact could be positive if American lawmakers undo the profligacy of the Bush-Obama years and put the U.S. back on a sound fiscal path.
…the European Central Bank president, Jean-Claude Trichet, now keeps asserting that Europe’s sovereign debt crisis does not pose a significant threat to the overall European economy, let alone to the global economy. American policymakers would do well to disregard Mr. Trichet’s sanguine remarks and brace themselves for a European economic tsunami that is all too likely to seriously derail the fragile U.S. economic recovery. …over the past decade countries in Europe’s periphery have consistently not managed their public finances according to the arrangement’s rules. As a result, outsized budget and balance-of-payment deficits do not now simply characterize the Greek, Irish and Portuguese economies. Rather, more ominously, they also characterize Spain, which is aptly being described on Wall Street as being too big to fail yet also too big to save. …European policymakers understand full well that a wave of sovereign debt defaults in Europe’s periphery would more than likely precipitate a full-blown European banking crisis, since European banks are the main holders of the $2 trillion in the periphery’s sovereign debt. This suggests that European policy makers in the north will not lightly turn off the financing spigot that presently keeps the periphery afloat. However, judging by the crushing defeat handed Ms. Merkel in the May 2010 Westphalia state election, electoral considerations will likely make it all but impossible to indefinitely continue such financing.
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Good call Ralph, I’ll put that to the BNP or EDL if they get in 🙂
@Dave “Native Brits” If you REALLY wanna pull that card then why not only allow those of Celtic heritage to stay in Britain and do away with all of those of Norman or Saxon heritage
@Douglas. You’ve obviously got no idea what your talking about. The immigrant’s were let in the UK by Labour, Against the wishes of the the vast majority of the UK.
When they came here, Employer’s were employing them and not us native Brit’s. We want to work but it’s the immigrant’s that get all the job’s. 500,000 vacancies and 433,000 went to Immigrant’s.
You are right about one thing, This country does need a civil war, The politician’s dont seem interested in the right’s of the native Brit’s anymore.
[…] of a protest against the “deep” and “savage” budget cuts of the Cameron government. This is not the first time the U.K. has endured riots. The welfare lobby, bureaucrats, and other recipients of taxpayer largesse are becoming […]
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[…] the “deep” and “savage” budget cuts of the Cameron government. This is not the first time the U.K. has endured riots. The welfare lobby, bureaucrats, and other recipients of taxpayer largesse are becoming […]
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Never mind riots- UK is heading for anarchy. For years, the Labour Party brought in immigrants to pay taxes, vote Labour, and prop up the welfare state. But now there are no jobs- so immigrants will be living on benefits- but who’s going to pay for these benefits?
And that’s not all. Labour forgot that the immigrants will start aging like the whites- so the British government will have to provide benefits for an army of aging whites, AND a new army of aging Asian and black immigrants. Thats when the whole pack of cards will come crashing down. I see chaos, maybe even civil war, who knows.
This is what happens when you have incompetent politicians running your country- the legal principle of “Parliamentary Sovereignty” has to be abolished in Britain- sovereignty should rest with voters, not with Labour politicans. British voters would have stopped all these unwanted social benefits junkies years ago. After all, thats what the immigrants are really after- a free ride courtesy of the British taxpayer.
Polish agencies are advertising immigration to Britain with the following slogan: “Come to Britain and Live off the Queen”.- this cannot last. It must collapse eventually.
Lazy British benefits junkies need to get off their fat backsides and start working again- if everyone does this, the UK economy will start growing again. Welfare state has to go eventually.
“…but the long-run impact could be positive if American lawmakers undo the profligacy of the Bush-Obama years and put the U.S. back on a sound fiscal path.”
WARNING! Depressing text follows. Do not read concurrently with other bad news!
I wish America the best, however, …
Americans seem to have already gone past the tipping point. The fact that Americans elected Obama to get them out of Bush’s mistakes, the fact that the worse things get, the more Democratic Californians vote, etc.… are all strong signs that Americans have finally pushed themselves past the gates of no return on their brief 200 year history of unique worldwide exceptionalism.
As I have said many times, Americans have taken many steps towards serfdom, mainly in the 1930’s. However, having been uniquely endowed with disproportional freedom at their nation’s creation, they still emerged from those pernicious periods ahead of the rest of the world. In other words, they did not quite use up all their unique individual freedom advantage. But now things are different. The freedom advantage margin that Americans now enjoy over the rest of the world is much thinner, as Americans first stalled on economic liberalization and lately perhaps even reversed course. More importantly, at the same time, 3+ billion people in the emerging world are finally partially free to compete with the West. The signs and warnings are everywhere and the decline precipitous, on a generational scale, yet too slow to seriously notice in daily life.
Americans are now firmly in Mitchell Law territory, just like James Hansen’s positive feedback climate warming models. Except that American descent into the worldwide average will happen long-long before the first polar bear ever needs a life jacket.
The next inflection point on the irreversible descent to serfdom is 2014. The first shoe dropped when American productivity got hit on the top as Obamacare taxation and uncertainty drove, and still drives at the margin, high value productive people into a less productive lifestyle (the…ain’t #$%@n worth it!…effect). The other shoe drops in 2014 when American productivity gets hit at the bottom as the subsidies entice lower income Americans (still in the top 20% by worldwide standards) into a more complacent lifestyle too (the …wow! look medical care paid by someone else, I can remain a gardener! #$%@n cool! …effect).
After 30 years of 1.5% annual growth, in a world that grows 4-5% on average, compassion will look mighty cruel. And while most people understand that, getting them to not push the “Withdraw Cash Now” button at the Ballot Box ATM is nearly impossible. That is what makes the path fundamentally irreversible.
But if Americans escape that fate, my hat is off to them. I will once again believe in American exceptionalism…