The Welfare State of Decline
September 12, 2004
Recently, your columnists entered into a wholesome discussion concerning "the welfare state of decline." The result of that interesting dialogue is reported in this column.
R.L.H: The discussion of our allies deserves our attention in some future column. The growing split between the United States and Europe and how best to execute a strategy to enhance the safety and stability of the world evidences this.
M.A.B: The growing gap is more than foreign policy in origin, however the division between Europe and the US can also be explained in economic terms, which often affect the way we conduct business with our allies.
R.L.H: Fascinating! Does it not seem to you that the economic forces of Europe are driving them to more isolation and appeasement due to their own economic situation, while ours' continues to drive for trade expansion and even, confrontation.
M.A.B: It is interesting to note that a pair of economists did a relevant study, "The EU vs. USA," from the Swedish think tank Timbro. The economists were Fredrik Bergstrom and Robert Gildehag, and found some very telling results. In the United States, only Luxembourg, whose sample size and tax rates place it hugely above any other European nation in wealth, living standards and minimal poverty rate, challenges our economic situation. The study was done on a state by state basis on GDP per capita, which means the amount value produced by the US Economy per individual. That rate tells folks what the average American has available to spend.
R.L.H: Interesting! Would you than agree that man does not live by GDP alone; that "black market" forces, which are greater in Europe, are not included in any such statistical surveys for reason the data is hard to secure and quantify? So, if we were to take that into account, the GDP per capita as a reasonable barometer to measure standard of living. In fact, as you once mentioned, the study remarks that the US GDP per capita was an astounding 32% higher than the European GDP per capita, measured in 2000 as a base year. And, as you mentioned previously, economists agree that gap has only gotten larger and more immense.
M.A.B: The wealthiest state in the US according to the study was Delaware, whose GDP per capita was almost double that of Germany, France, Italy and Belgium. If Arkansas were an independent nation, its GDP per capita would be almost identical to these nations. Mississippi, one of the poorest states in the Union, ranks just a fraction below these Old European nations. More importantly, in terms of income, the higher GDP per capita in the U.S. relative to Europe accounts for about $9,700 more in disposable income for leisure, saving or investing.
R.L.H: So, are you saying that the European model has paled in comparison to the US, not only in military power, but also in economic power and influence? If that is the case, why is that? Why is Europe declining while the US seemingly is expanding handsomely?
M.A.B: Well the bankers who did the study claim this: "The expansion of the public sector into overripe welfare states in large parts of Europe is and remains the best guess as to why our continent cannot measure up to our nation in the west."
R.L.H: So how can anyone seek to emulate such policies of government expansion and free enterprise contraction?
M.A.B.: In short, our policies are and have emulated a free enterprise style solution to our economic and social ills.
BOTH IN CONCLUSION: The European model has grown into a welfare state which removes personal responsibility over their personal condition, and drains precious resources from the enterprises which create strength, wealth and opportunity. So, in the end, if the US continues to strive toward free enterprise as the only model that accomplishes these ends we will continue to outpace the world, especially Europe. And the US will continue this growth in terms of social, political, military and even more dramatically economic hegemony which will continue to attract the best and brightest from across the globe to American shores from everywhere else. So long as the US doesn't lose its free enterprise spirit, it will continue to be the best place in the history of the human experiment to live, work and raise a family. That is how we see it FROM OUR PERSPECTIVE.