The Repeated Myth of the Death of the European Social Model

So following on from the last post, it is important that Greeks and Germans communicate with other in an open way about the crisis and admit faults on both sides.  Sadly the only way out of this is austerity, so that Greek public spending is in line with taxes raised, and so that Greek private and public debt has some creditability with lenders, that is they can reasonably expect to get money back eventually.  This is the underlying problem. No one managed to run a successful economy without credit and debt, credibility of debt management is key t economic growth and is therefore key to raising the living standards of the poorest, and increased social spending.   A period of austerity, properly administered will benefit all Greeks including the poorest, and will benefit public services along with welfare systems.  The radical left in Greece and across Europe is taking the opportunity to loudly proclaim it’s all some conspiracy against not the Greek, but European welfare state and general provision of public services.  This is transparent nonsense.  Europe now spends more absolutely, and proportionately, on welfare and public services, than it did in the sixties.  In some countries public spending has gone down as a proportion of the economy since the 70s, but not everywhere, and even where it has, absolute levels of spending are far higher than in the 70s.  That is increased prosperity has allowed private wealth to outstrip rising public provision.  Of course those who proclaim the assassination of the European social model in the current crisis have already proclaimed it assassinated during the ‘Neoliberal’ phases of the 80s.  Their analysis was grossly misleading about the recent past and is so now; and their current analysis shows how wrong their past analysis was, because they claimed that the assassination had already taken place.

Personally I’d be happy to see a rethink of the European social model so that welfare was directed at the poorest only, and economies are deregulated.  Despite widespread mythology about market fundamentalism and jungle capitalism, markets are more regulated in Europe AND in the USA, than in the past.  Some measures of liberalisation with regard to capital flows and labour markets should not obscure the overall picture of increasing numbers of regulations, and the increasing economic impact of those regulations.  Of course this would be denounced by those who denounce the supposed repeated death of the European social model, as some kind of death worse than death, or whatever; but would leave better funded public services and protection for the  poor than impaired markets, and than  social welfare which is increasingly for people well above the lowest income brackets.

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