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Back to Quack Off
Quack Off
by
Free Market
Duck
The
European Crisis
by Vedran Vuk
(Sep
15, 2011)
Washington, DC -- In many ways, the European crisis is
more than just a financial event; it's the death of the argument for a
European-style welfare state. This topic hasn't been discussed much in the
media, but as the crisis gets worse, this realization should become more
apparent to others.
From
justifying universal healthcare to unions, to public housing, Europe has
been the poster boy in American politics. "If Europeans can do it, so can
we" has been the rallying motto. Unfortunately for the Left in particular,
this argument is becoming less sensible by the day. With overspending as the
root cause of Europe's troubles, only a fool would suggest the same policies
here.
In the
US, the 2008 crisis has been called the "subprime crisis," and for good
reason. The main problem was injecting too much money into the system and
causing an unsustainable bubble. Unfortunately, many US and international
banks were holding these inflated junk mortgages and toxic assets - hence
our current predicament. If anyone was to blame, it was the world's central
banks - particularly the Federal Reserve.
However,
the current European crisis is much different. The problems of Greece,
Ireland, Italy, Portugal, and Spain are very clear. There are no fancy
derivatives or monetary policies behind their problems. These countries
overspent and didn't keep their fiscal houses in order. Now government bonds
are threatened with default, not subprime mortgages. With these governments
on the verge of default, the dream of a European welfare utopia is coming to
a close.
Furthermore, the defaults themselves aren't the only metrics of failure. The
unemployment rates in these countries are immense, with Ireland at 14.5%,
Greece at 16.6%, and Spain at 21.3%. Compared to these "utopian" European
states, the United States still looks like a land of opportunity with its
9.1% unemployment rate.
Think
about the arguments that are finally on their death bed. I've always heard,
"If America wasn't fighting numerous wars, then we could afford all those
European programs." I'm very sympathetic to reducing military spending, but
this idea is just flat-out wrong. Did Greece get into its current fiscal
mess with military spending? What about Ireland? Surely, their tank brigades
set them back horribly. And we all know that the Spanish were building their
second Armada, right? A country doesn't need extravagant military spending
to destroy it, a regular welfare state will do.
But
don't take this as praise of the US either. Europe is only revealing to us
our own future. A future that can't be avoided with some cuts here and
there. For example, the idea that cuts to the military budget will save us
is simply a false hope. Also, we can't just raise taxes on the rich and
magically pay for everyone's healthcare benefits. If the US doesn't cut the
military spending and many welfare
expenditures, we're on a straight shot to becoming the next Greece.
This
recent crisis has shown that the European welfare state is quite literally a
bankrupt idea. Unfortunately, with the US coming closer to the European
model and the wars still raging, the country is paddling double time to the
waterfall around the bend.
– FM Duck
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