The Second Version

22/11/11

Ending the Welfare State

Recently I've heard a number of Americans gloating over how the chickens are coming home to roost in Europe - out of metaphor, how the massive public debts caused by years of reckless spending and ever-growing state apparatus now are too big to be ignored and are requiring drastic action to be brought back under control.

And reducing the size of the state is something I fully agree with.

Yet, it's how to do it that's open to discussion.

I'll talk about Italy because it's the place I know best. There, the state apparatus and public debt grew in a rather slow fashion from the end of the 60's to today's unsustainable levels.

A large part of this debt is caused by the welfare state expenses - pensions, health care and public sector wages above all.

This means that millions of people depend on the State for their lives. Not in the sense that they sit there all day waiting for the benefit paycheck (some do, tho), but that they make a living working in the public sector, or receive the state pension, and use the public health service to treat their illnesses.

If all this spending were suddenly cut in a significant manner, there would be positive effects, yes, but also problems, big ones.

Millions of people would find themselves with no or gravely reduced income and without the possibility to pay for the medical treatment they need.

The oldest and most frail ones may simply die off; for the others there will be hard times. And for the whole of Italy: expect a massive drop of internal demand of good and services, with many business forced to close down for lack of customers.

Bank deposits would plummet as well, eaten up by the need to buy basic goods and services. Less money available for the banks to lend means credit crunch.

In short, an economic recession in a country with an already agonizing economy.

A reduction of the size of the state must occur, but gradually.

Or with a revolution, but often those leave the ground soaked in blood for too many years.

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2 Commenti:

  • The question of ending the welfare state in those countries lacking enormous mineral resources (like Australia, which a larger government is needed simply because ultra-intensive environmental protection is so crucial) is one which fascinates me.

    It is clear that in countries without vast resources of industrial minerals like coal, iron ore, bauxite and manganese, fertility rates are extremely low and show no signs of recovering. In Australia, aided by its relatively tiny welfare state and surfeit of minerals, the population is according to Tim Flannery already far beyond the very limited ecological capacity of its ancient soils (thirty thousand times older than those in other so-called developed nations) and minute water resources. This localised growth could well mean we have an ecological crisis even with global population decline, since under present climates. If Flannery’s assessment in The Future Eaters is accurate, Australia can support a maximum population of about five million - less than a seventh of its projected population in 2050. At the same time, countries with massively richer and less fragile soils will lose up to 100 million people and suffer economically from the selfishness of a majority that prefers to compete materialistically with Australia without realising that they have one utterly priceless natural resource - soils actually designed for intensive farming and deep-set community - that Australia can never have.

    Di Blogger jpbenney, Alle 14/1/12 15:06  

  • Sounds a bit like spam to me... but I have read Diamond's "Collapse", yes.

    Di Blogger Fabio, Alle 16/1/12 15:31  

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