Free Markets, Free People

Chinese lecture Europe on the corrosive effect of the welfare state

Irony of ironies.  The Chinese lecturing the supposed capitalist West on economics and the welfare state.  Of course, as we’ve discussed many times, Crony Capitalism and/or Corporatism aren’t Capitalism.   At best the West has a mixed economy with various levels of intrusion and market distortion caused by governments.  In effect, what this gentleman is saying to Europe is the intrusion and distortion levels are such that they have caused a cultural malaise which is finally coming home to roost:

"If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack.

"Why should, for instance, within [the] eurozone some member’s people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair. The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard."

Jin Liqun, the supervising chairman of China’s sovereign wealth fund

Of course that just touches the surface of the problems Europe faces, but essentially Jin is saying that the system in Europe, i.e. state welfare, is not only unsustainable, but discourages hard work – a vicious and self-defeating cycle.

Go figure.   Most rational people understand that human beings respond to incentive.  And that a good portion will always choose the easy way.   Human nature 101.   So when given the option of hard work or being a slacker and getting paid to be one, those who tend to slack will always choose the latter if an incentive to do so is provided. 

His point about labor laws that require rules such as featherbedding for instance is true.  And, by dictating wages, etc., government intrudes on market dynamics which properly price labor.   Instead we see the distortion of labor’s worth, rules that cut into productivity and spiraling costs which kick up the price of goods and services beyond what a market would dictate.

And that’s just a very small part of the problem.  Europe decided decades ago that it could use a mixed economy to somehow pay for a large welfare state.  It thought it had it all figured out and then this crisis hit.  But it was clear to many that it isn’t this crisis that precipitated Europe’s current  financial problems, it just hastened them.  Much like the revenue shortfalls we see here for the trillions in unfunded obligations for Social Security, Medicare and Medicaid, Europe has seen those for years.  Its day of reckoning is at hand.

Greece was the weakest member of the Eurozone.  But Italy, Spain, Portugal and Ireland aren’t far behind.  What critics of the welfare state have said for decades can no longer be hidden.   And, unsurprisingly, the culture that sort of a state breeds is fighting tooth and nail to preserve it, even if they really know that’s not possible.

But the irony is unquestionable.  Lectures by communists on the dangers of the  welfare state.  Snowballs in hell are obviously possible.


Twitter: @McQandO

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7 Responses to Chinese lecture Europe on the corrosive effect of the welfare state

  • “And, unsurprisingly, the culture that sort of a state breeds is fighting tooth and nail to preserve it, even if they really know that’s not possible.”

    I’m good till you get to this fork in the road. They don’t understand it’s not possible, just like our mini-band of merry socialist/communist/dumbbunnyist miscreants occupying various metropolitan areas here don’t really understand how it all works. They really are cargo cult, they really DO think that wealth is zero sum, it’s magic, and someone is proposing to redirect what they are entitled to from the ‘Gods of Wealth” by virtue of their birth and continued existence back to the ‘rich’ who are acquiring it and hoarding it unjustly and unfairly.

    It’s pretty clear that some rather large measure of Greeks don’t understand what’s going on and I think that’s mirrored across the face of the globe. The Cheese isn’t just moved, it’s run out, and they don’t believe that could happen, so some nefarious forces must be behind it (and it doesn’t help that people like Obama TELL them that’s what’s happening, I’m sure he has his socialist parallel in every country in the EU). But it has nothing to do in their minds with spending more than they have, that’s too simple, too obvious, and too harsh a reality for them to deal with because it means they’re going to have to work, and provide for themselves, and as you observed that’s not the easy way they were led to believe was reality.

    So, until they are sitting in the ruins, with nothing to eat, they’re going to continue to believe the easy way is to set fire to some stuff, threaten some people, and re-distribute the wealth until there’s absolutely nothing left to re-distribute.

    • @looker You are undoubtedly right about a great many of these idiots. They actually really truly believe that it is possible to tax, spend, and borrow your way into prosperity. Yet they look down on us conservative/libertarian mouth breathers.

  • Well the only dichotomy here is that the China Communist party is one in name only. They threw off the intellectual baggage two decades ago and are now simply an authoritarian dictatorship with a fairly orderly process of regime change. And who would know better how bad socialism is than a bunch of ex socialists?

    Whether the western societies can throw off the welfare state before we are consumed by a mountain of debt remains to be seen.

    • @kyle8 I think we should be cautious about claims that the Chinese communist are not socialist anymore. They still have many dinosaurs in the party and Mao is making a big retro come back. The country has many state-run industries. All land belongs to the state, and can only be leased. Worker rights are very strongly enforced…for some companies. I also think that corruption makes it seem capitalistic, because there is a “profit” motive, but its not really.