The bell tolls for Greece and everyone else
This Robert Samuelson column is a must-read:
What we’re seeing in Greece is the death spiral of the welfare state. This isn’t Greece’s problem alone, and that’s why its crisis has rattled global stock markets and threatens economic recovery.
Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven’t fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies.
Americans dislike the term “welfare state” and substitute the bland word “entitlements.” The vocabulary doesn’t alter the reality. Countries cannot overspend and overborrow forever. By delaying hard decisions about spending and taxes, governments maneuver themselves into a cul de sac.
If only a few countries faced these problems, the solution would be easy. Unlucky countries would trim budgets and resume growth by exporting to healthier nations.
But developed countries represent about half the world economy; most have overcommitted welfare states. They might defuse the dangers by gradually trimming future benefits in a way that reassured financial markets.
In practice, they haven’t done that; indeed, President Obama’s health program expands benefits. What happens if all these countries are thrust into Greece’s situation? One answer — another worldwide economic collapse — explains why dawdling is so risky.
Samuelson needs to be careful. He might be tarred and feathered as a racist teabagger because what he’s talking about goes up against the entire foundation of the left-wing power base in Washington right now. Democrats’ (and, to be fair some Republicans) solution to every crisis and problem is spending more money and expanding the bureaucratic beast that is the Federal government. All of it financed on the backs of an increasingly smaller group of American taxpayers. That’s not a recipe for long-term growth or solvency.