Monday, November 7, 2011

Who Will Bail Out Europe?

If states are the laboratories of public policy, then America should do as the red states are doing and to avoid what the blue states are doing.

Three blue states are in the most fiscal trouble: California, Illinois, and New York. Let’s call them the CIN states. CIN, because they reward sloth.

Among the states doing the best are red states like Florida, Louisiana, and Texas. They would then be the FLT states, states that are in flight.

Everyone knows that the CIN states are living on the precipice. They are choking on their public employee pension obligations, to say nothing of their bloated and overpaid bureaucracies and their job-killing high taxes.

Surely, the CIN states are most likely to come running to the federal government seeking bailouts.

If you are a liberal thinker, or even a liberal politician, you probably know enough not to try to persuade the nation that all of America should become like the CIN states.

But liberals are more clever than that. They will offer up a different role model: European social democracies.

If it doesn’t work here, at least it works over there.

Isn’t Europe a paragon of social justice, with its generous welfare, its mandated vacations, and its early retirement? In Europe governments remain prosperous and still take care of the people.

They are Paul Krugman’s wet dream.

In parts of Europe work is a four-letter word. There, people have perfected the art of enjoying life, with more varied pleasures and less stress. In some parts of Europe work feels like an interlude between vacations.

Wouldn’t you vote for that?

Of course, the laboratories for social democracy, Greece, Italy and Spain are now more or less bankrupt. Worse yet, the crisis is reverberating throughout the Western banking system, thus making it impossible for the media to cover it up.

It’s becoming more and more difficult for anyone to tout Europe as our role model.

This doesn’t mean that no one is trying. It takes a strange form of intellectual dishonesty, but Stefan Theil tries to explain Europe’s financial problems by drawing an analogy.

Since Europe is divided between the industrious and prosperous North and the leisurely and slothful South, Theil chooses to analogize Southern Europe with Southern America. One can only wonder why he did not choose South America.

In a specious analogy, Theil suggests that we can best understand what is happening in Europe if we think about what would happen if Florida, Louisiana, and Texas ran out of money and went scurrying to the Federal government for a bailout.

Everything is wrong with this picture. The notion that the FLT states would be running to the prosperous northern CIN states is risible on its face.

Since the southern red FLT states are doing much better than the northern blue CIN states, the analogy is absurd.

Theil is only offering analogy, but he is also promoting a fiction where the FLT states are draining the nation’s resources while the CIN states are industrious and prosperous. Of course, it's a lie, but what do they say about repeating a lie often enough....

He may fool a few Americans, but neither he, nor anyone else, has fooled the Chinese. They did not become the fastest growing economy in the world by perfecting the art of vacation. And they are not about to underwrite someone else’s slothful ways.

The London Telegraph reports this morning that China will refuse to bail out the Europeans. Apparently, the Chinese authorities bridle at the thought of throwing money at people who have no work ethic.

Here’s why: “... last night, the chairman of the supervisory board of China Investment Corporation, the country’s sovereign wealth fund, put further distance between China and the eurozone bail-out, saying that Europe’s bloated welfare state meant that people did not work hard enough.

“’I think if you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of their worn out welfare societies,’ Jin Liqun said in an interview with Al Jazeera television. ‘I think the labour laws are outdated – the labour laws induce sloth, indolence rather than hard working. The incentive system is totally out of whack.’

“Eurozone leaders had been hoping that China would use some of its trade surplus to back the bail-out fund.”

Think about it. The Chinese are better qualified than most to testify to the dangers of socialism.


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