Free Markets, Free People

Social Welfare states, democracy and political will

Megan McArdle hits some points that pretty much doom Europe and, if it is not already too late, the US.  They are contradictions and conditions that make recovery from all this fiscal irresponsibility almost impossible.  It involves social welfare, democracies and why that combination simply can’t find the necessary ability heal itself. 

When I was a young and naive economics writer, I used to write about developing countries a fair amount.  Time and again they would make these bizarre and pointless moves, like suddenly and for no apparent reason defaulting on a bunch of debt.  They would engage in obviously, stupidly unsustainable fiscal practices that caused recurring crises.  They would divert critical investment funds into social spending which was going to become unsustainable when underinvestment reduced government revenue.  And the other journalists and I would cluck our tongues and say "Why can’t they do the right thing when it’s so . . . bleeding . . . obvious?"

Then we had our own financial crisis and it became suddenly, vividly clear: democratic governments cannot do even obvious right things if the public will not tolerate it.  Even dictators have interest groups whose support they must buy.

This has come home to me forcefully several times over the last few years, but never more than now.  The leaders of the eurozone have a dual mandate to keep the euro intact, and to not do the things which could keep the euro intact.  They cannot fiscally integrate to the extent necessary because, as I wrote for the Daily the other day, the Greeks do not want to act like Germans, and the Germans do not want to share their credit rating with anyone who won’t.

It is a bit like the Ohio vote on unions.  In a heavily union state, those who benefit the most vote to continue the situation where they benefit.  In democracies like Europe where people’s property are up for re-distribution, those who benefit from such redistribution are always going to vote to continue the status quo.  And, of course, politicians who benefit from the vote of that constituency are going to try to find every way they can to accommodate that constituency.

So even when it is “so … bleeding … obvious”, to most economic observers as to what action must be taken, nothing happens or, in some cases, it gets worse. 

At some point, though, the bill comes due.  We’ve talked about the laws of economics and how unyielding they are.   Oh you can screw around and play some games that allow you to defy them for a while, but like gravity, it all will finally come tumbling down. 

We’re there.   We’re at the falling down stage if things don’t change drastically.

But there is seemingly no stomach for drastic change.

And that leaves us to try to figure out what the world will look like after the collapse of the Western social welfare system is complete.  Because it is seeming like its not a matter of “if”, but “when”.


Twitter: @McQandO

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14 Responses to Social Welfare states, democracy and political will

  • I guess you libertarians will all go to Galt’s Gulch to re-create the internet with tin cans and string while the rest of us forage for turnips in fields abandoned by Archer Midland.

    • Once we get the internet working again, we’ll be back to take your turnips, so, work hard, it’s for the good of the collective, and you have no rights beyond what your ‘government’ grants you, and since you’ll have no government, you’ll have no rights 🙂

      • @looker We’ll set up ambushes to pick off you libertarians one at a time.

        It’s your fatal weakness, like the bad guys in Chris Farley’s famous Ninja sketch.

        • @Bloop_Bloopington Heh, With turnips?

        • @looker @Bloop_Bloopington What turnips? Doubtful those brick-brains could figure out how to plant and harvest one.

        • @Sharpshooter @Bloop_Bloopington They’re counting on Archer Midland to leave something behind during the abandonment. Ever looking for a hand out in one way, or another it seems.

        • @looker @Sharpshooter A libertarian gets the joke. That’s funny.

        • @Bloop_Bloopington @Sharpshooter Ah, I don’t think it will come to that Bloop, so I joke about it, because we’re all Americans and while I may disagree with ya, I ain’t ready to send you to perdition for it. Cheers.

        • @looker @Sharpshooter Surprise, I DO agree with you, at least as far as the “won’t come to that” part.

          But, since when is foraging a handout? It was the top-paid occupation for about 200,000 years of human history.

        • @Bloop_Bloopington @Sharpshooter ah, yes, but, it depends on where one forages – example (humorously offered) Sherman’s Army foraged all the way through Georgia and South Carolina (full disclosure, I’m a Yankee)….as opposed to the Indian tribes of the central plains foraging on the fruits of natural selection as they moved north or south. In your example, the image is closer to Sherman’s army….them ain’t your turnips. Archer Midland planted em, fertilized them, and watered them, until they bailed on the project of harvesting Technically, they still belong to Archer Midland,

          You should have foraged wild rose hips and dandelion greens, maybe some wild turkey or Hoover hog. 🙂 I guess it’s not a hand out if you’re foraging a few years after old AM gave up the ghost though, by then the turnips are more nature than nurture.