Krugman: No, It’s Not The Welfare State (as the cause of Europe's woes)

[pampango]

http://krugman.blogs.nytimes.com/2011/12/05/no-its-not-the-welfare-state/

Dean Baker takes on a favorite pet peeve of mine — the incessant claim that Europe’s woes are being caused by the burden of the welfare state.

This really isn’t hard to check. Take government spending as a percentage of GDP from the IMF Fiscal Monitor (I use 2009 for Ireland because 2010 is distorted by bank bailouts), and October 10-year interest rates from the ECB. Plot them, and here’s what you get:



There’s no relationship; some high-spending countries, notably Sweden and Denmark, have very low rates, while as Dean says, Spain was a relatively low spender.

Of course, like all the zombie concepts littering our discourse, this one will be impossible to kill.

[LeftishBrit]

1. k & huge R!

[Proud Liberal Dem]

2. That's the meme here as well

even though we don't have anything resembling the kind of "welfare state" of most European countries. Despite the amount of money spent on the Defense Department and other related largesse, Republicans would have you believe that Medicare, Medicaid, Social Security, funding for Planned Parenthood, etc. are the root causes of our deficit. :eyes: As usual, however, they are just using "concern" about the deficit for justification for gutting/privatizing these programs.

[xchrom]

3. recommend

[patrice]

4. Isn't it kind of interesting that the highest rates are in the middle of the spending range?

[patrice]

5. And the lowest rates are in the top of the spending range . . .

[SheilaT]

6. Read "Boomerang" by Michael Lewis.

The welfare state has absolutely nothing to do with the current financial crisis in Europe, and everything to do with truly stupid decisions on the part of people who got their hands on money they should never have gotten.

As someone else has already pointed out, our financial crisis has nothing to do with our very limited welfare state, and everything to do with unpaid for wars and lowering top tax rates under Bush II.