Charles Krauthammer says that Obama wants to model the U.S. after Europe, and I suspect he is correct:
At the risk of oversimplification, the basic premise of the European model is that while it has more taxes and regulations that reduce dynamism and growth, it also ensures stability so that even those who lose their jobs in any downturn don't suffer too gravely with an elaborate social safety network in place. You can perhaps say that Europe is the tortoise to the American hare, slow but steady.
Business Week, however, notes that Europe doesn't seem to be weathering the economic storm much better than the U.S.:
Look at almost any European country with a population of over 10 million and you will find a lower per capita GDP -- a good measure of prosperity -- than the U.S. This can perhaps be justified if Europe enjoys greater stability than the U.S. and is more consistent. But if Europe enjoys less prosperity and still suffers the same economic travails as the U.S. then the case for its implemention would seem to fall apart.
Yet that seems to be the direction we are headed.
Obama sees the current economic crisis as an opportunity. He has said so openly. And now we know what opportunity he wants to seize. Just as the Depression created the political and psychological conditions for Franklin Roosevelt's transformation of America from laissez-faireism to the beginnings of the welfare state, the current crisis gives Obama the political space to move the still (relatively) modest American welfare state toward European-style social democracy.It therefore pays to think about what the European model is and what implications it may have for us.
At the risk of oversimplification, the basic premise of the European model is that while it has more taxes and regulations that reduce dynamism and growth, it also ensures stability so that even those who lose their jobs in any downturn don't suffer too gravely with an elaborate social safety network in place. You can perhaps say that Europe is the tortoise to the American hare, slow but steady.
Business Week, however, notes that Europe doesn't seem to be weathering the economic storm much better than the U.S.:
Not so long ago, Europeans thought they had dodged the worst of the financial meltdown. Now the region is suffering its first recession since the introduction of the euro a decade ago. In Spain and Ireland, corporate bankruptcies have doubled since 2007, and they're up 11% on the Continent as a whole. Across the European Union, unemployment hit 7.4% in December, vs. 6.8% a year earlier. And output in the euro zone countries could fall by 2% this year, the International Monetary Fund predicts—a bigger decline than the 1.6% contraction in the U.S. "No one, including us, expected the crisis to be so severe," says Siemens CEO Peter Löscher.Reuters, meanwhile, highlights signs of unrest across the continent.
Look at almost any European country with a population of over 10 million and you will find a lower per capita GDP -- a good measure of prosperity -- than the U.S. This can perhaps be justified if Europe enjoys greater stability than the U.S. and is more consistent. But if Europe enjoys less prosperity and still suffers the same economic travails as the U.S. then the case for its implemention would seem to fall apart.
Yet that seems to be the direction we are headed.
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