Paul Krugman is rewriting history now that the eurozone, beloved by US liberals, is going down in flames By Nile Gardiner US politics Last updated: November 15th, 2011 http://blogs.telegraph.co.uk/news/n...loved-by-us-liberals-is-going-down-in-flames/ Paul Krugman is right about one thing, when he says: ânow, with Italy falling off a cliff, itâs hard to see how the euro can survive at allâ. But the rest of his analysis of the crisis in Europe, as well as the causes, is in the realm of pure fantasy. In his recent piece entitled âLegends of the Failâ, Krugman rejects the idea that âEuropeâs woes reflect the failure of welfare states in general, and that Europeâs crisis makes the case for immediate fiscal austerity in the United Statesâ. All of the European countries now in deep trouble in Europe have deeply entrenched welfare systems. The reality that Krugman refuses to accept is that Europe offers a glimpse of Americaâs future if it continues down the path of European-style big government. The root of Europeâs financial crisis lies in decades of over-spending and over-borrowing, largely to pay for overgrown and bloated welfare systems, vast public sectors, and incredibly generous pension plans. Europe has a huge entitlements disaster heading its way, with graying electorates unable to sustain the status quo. It is Europeâs lack of fiscal responsibility, economic freedom, and national sovereignty, that are at the heart of the current economic crisis, and the United States must do all it can to avoid European-style decline.
A democrat drives down the road when suddenly there is a loud thumping sound and the steering becomes unbearable. The democrat pulls and over and expects to find a flat on one or both of the front wheels. A republican drives down the road when suddenly there is a loud thumping sound and the steering becomes unbearable. The republican pulls over and immediately heads toward the back of the car fully expecting an illegal abortion going on in the trunk of the car.
You have to face the facts, man. The ideological and spiritual model of the democrats have all but collapsed. There is no welfare utopia.
Germany, the Nordic states, and the Netherlands, you know, the ones who aren't in crisis, have far far more generous dispensations than anything the US has ever contemplated, and have far more in common with the "peripheral" states and their welfare systems. There is no correlation between the generosity of a particular European state and its welfare system. The correlation is between export success and a particular European state, which is precisely the thing an independent currency addresses. In other words, an objective anaylsis would show that the ceding of sovereignty over the currency was, is, and remains the single problem of the eurozone. I never was able to figure out the economic logic of it, but that's because there wasn't any: it was a political, not an economic, project. If Europe wanted to unite under a single currency it was going to have to cede both monetary and fiscal authority to the EU. Paul Einzig pointed this out in 1970 in The Case Against Joining the Common Market. It's not like anyone didn't know. That's under the assumption a common currency is even a desirable thing economically, which it isn't.
Johnny Munkhammar, a Swedish member of parliament noted in a piece for The Wall Street Journal in January, Sweden owes its success not to welfare statism but to reforms that have increased economic freedom, including greater competitiveness in the provision of health care and other public services: "For many years, foreign policy-makers have pointed to Sweden as a positive model to follow, making Swedes like me proud. Too often, though, foreigners have drawn the wrong lessons from Sweden's success. For instance, whenever I give a lecture, anywhere in Europe, about economic reform, I always get the following response: "But you come from Sweden, which is socialist and successfulâwhy should we launch free-market policies?" "The simple truth is that Sweden is not socialist." According to the World Values Survey and other similar studies, Sweden combines one of the highest degrees of individualism in the world, solid trust in well-functioning institutions, and a high degree of social cohesion." "Even smarting from the financial crisis, Swedes turned the leftists down.. Stockholm has also cut property taxes and abolished the wealth tax, and instituted a new system of income-tax credits that lets working people with average incomes keep what amounts to an extra month of wages, after taxes, per year." http://online.wsj.com/article/SB10001424052748704698004576104023432243468.html
I think we should start linking to the CIA factbook when we mention a country: https://www.cia.gov/library/publications/the-world-factbook/geos/sw.html Click on the + signs and start reading. Very interesting. Another I find interesting https://www.cia.gov/library/publications/the-world-factbook/geos/no.html https://www.cia.gov/library/publications/the-world-factbook/geos/fi.html I think it is very possible to be a welfare capitalist economy/political system, IF, IF, IF you have a highly educated workforce. In other words, if you don't need it! The irony!!!!
Norway has tonnes of North Sea oil for a small population. As a country,It produces per capita the most oil after the Middle East. That being said, I do think that economic/social systems cannot be viewed in isolation, culture and social history makes a very big difference. Participation in the Euro aside, All these countries mentioned that have been least affected by the euro debacle(Nordic countries and Germany, Netherlands,etc) share a common heritage and ancestry. They have similarities in culture, in language and in social attitudes. Norwegian/Danish and Swedish are all north Germanic languages. Dutch is a West Germanic language. In cultures like these, there are very strong inclinations towards self-reliance, discipline, an obsession with perfection and great attention to detail. This kind of cultural attitude is not readily found in the rest of Europe. The other country that I can think of is Japan. It might have something to do with evolving to live in the cold environment.