Riots and the European Welfare State

This one is from Chan Akya at Asia Times Online.  The impetus for this article is the recent rioting and looting in London and other British cities.  The focus, however, is on the European welfare state in general.  While undoubtedly polemical in tone, it’s an entertaining read and I came away with a few points that merit further rumination.

  • These riots have nothing in common with the Arab Spring uprisings.  While, in the Arab world, the masses agitated for a greater voice, in England, the rioters chose to snatch flat screen TVs and other social identifiers of a consumerist society.
  • The supply of free housing, healthcare and housing has served to spoil a large segment of the underclass (from which the rioters came) rather than just ensure a basic quality of life.  The social state has created a sense of entitlement, which has bred a resentment among those without the products in the ads that finally erupted in violent orgy of consumerism.
  • The riots are just the first among many.  Indeed, one might argue that these riots were not even the first.  I do recall car burnings and urban unrest in the banlieues of Paris a couple of years ago.
  • The welfare state is a critical factor, prima facie, behind the European fiscal crisis, in that it contributed to unsustainable debt dynamics.
  • Yet, perhaps symptomatic of how far the notion of social welfare has seeped into the European psyche, there has been no discussion of its pruning.  Instead, the policy discourse has been about technical details:  the size of the EFSF, the timing of the Greek default, the ECB rate policy etc.
  • The social welfare state is unsustainable.  There is no reason for rising Asian powers to continue paying for European social welfare through bond purchases.

In the abstract, a welfare system can be thought of as an institutionalized transfer mechanism from the wealthy to the poor.  The benefits to the poor are obvious.  The mechanism also benefits the rich, in that it co-opts the poor into the existing system of economic relations: the poor now feel that they too gain from the existing arrangements.  They are less likely to challenge the status quo.

The welfare state can then also be used as a stalking horse for other ideas to distract the poor.  For example, the immigration debate can be framed in non-racial and non-exclusionary terms.  Rather than use far right rhetoric, politicians of all stripes can now talk in economese: about how immigration is too expensive through its impact on the welfare state.  The argument is specious.  The basic problem is adverse demography.  There are too many people living on the public dole and too few people paying into the system.  The outflows into pension schemes, healthcare, unemployment benefits and education are much higher than tax inflows from workers.

As always, the article has some entertaining images:

A lazy and semi-educated Chinese man will probably not get married given the country’s ratio of males to females; and even if he did, life would be made hell by the curses of his mother-in-law. A lazy Indian is likely to decline in society to the point where all support systems fail him. leading to an early death or a violent one. There are no lazy Africans because they wouldn’t survive to adulthood.

A lazy European on the other hand, gets to sit at home and watch television while receiving benefits from his government.

The point is valid.

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