Capitol Ideas / The Gathering Storm
Bethell, Tom
The Gathering Storm by Tom Bethell W hile in England recently I had the opportunity to reflect on a hopeful portent: the increasing rustiness of the welfare state in Western Europe. Sometimes I...
...It was in 1890 that Beatrice Potter, soon to marry Sidney Webb, wrote in her diary, "I dimly see the tendency towards a socialist community in which there will be individual freedom and public property instead of class slavery and the private possession of the means of subsistence...
...Now, however, tax cutting is in great disrepute throughout Europe and it is not likely that governments will try it again soon...
...Bond markets have become too sophisticated...
...The budget deficit in Britain is now up to about $75 billion a year—far greater than its American equivalent, as a percentage of GDP...
...What, exactly, does it stand for...
...While I was in Britain, proposals to staunch this hemorrhage with palm-printed ID cards were met with the usual howls of rage...
...The underlying problem in Europe is that the recipient classes are now so vast and well organized, with so much leisure at their disposal—their "stress" and their "back problems" seem to abate sufficiently when it comes time to vote or organize a protest rally—that politicians are morefearful of them than of everybody else combined...
...The beneficiaries of that system had enough clout to prevent its reform, but not its collapse...
...Unemployment in Germany is expected to reach 6 million next year, a level of joblessness reached in the Weimar Republic...
...Then, without a great deal of warning, Communism collapsed...
...It's true she defeated theminers, who openly hankered after something closer to the Soviet model, but in so doing she merely kept the old system going...
...One-third of the disability inflow is because of psychological problems...
...When I was in England there was much talk of defense cuts, but John Major's chancellor of the exchequer took care to announce that welfare programs would be "safe from cuts...
...Therefore I do not see any easy resolution of the problem...
...And that does seem to be approaching...
...You just tell them you don't feel well," said Geerit Zalm, managing director of the Central Planning Bureau, a Dutch government agency...
...May we agree, first, that we have all been living through a socialist age...
...It could not deliver on its promises...
...The very high tax rates that were in effect throughout Europe in the early 1980s had introduced great inefficiencies into the finance of all governments, and it really was true that reducing those rates increased both tax revenues and the level of economic activity...
...But the similarities may be more important than the differences...
...It had been opposed by the semi-total state of the Western world, which permits elections and restricted private property, and allows people to retain about half the money they earn...
...At last I am a socialist...
...Chancellor Kohl recently referred to Germany as a "collective leisure park...
...Monsieur Delors, the architect of this soft-socialist absurdity, apparently does still believe that more government spending can drive economic growth in Keynesian fashion, but he may be the only person left in Europe who still thinks this...
...The politicians will go on resisting all attempts to cut back on their respective welfare states until a real crisis develops...
...In Germany, as elsewhere, the slightest talk of cutting back on benefit levels results in huge demonstrations by indignant members of the recipient classes...
...Horrors...
...Unemployment there is said to be about 23 percent...
...When I was in England the Conservatives, who resemble nothing so much as Bush Republicans, were planning to reduce the deficit by . . . raising taxes...
...Hayek says somewhere that false religions don't last much longer than that...
...Reviewing the Thatcher memoirs the other day, Henry Kissinger wrote that she "set out to demonstrate that the Conservatives could prosper while dismantling the role of the state...
...For decades Western intellectuals believed that state tyranny was more productive than voluntary labor (some probably still believe it but daren't say so openly) and as recently as the 1970s the CIA had statistics to prove that the Soviet system of tyranny, called central planning, would soon outproduce the system based on private property...
...Hardly anyone believes it should be taken more seriously than that...
...Confounding the stereotype of a nation of placid burghers, nearly a third of those recipients suffer from 'stress.'" In Spain, one person receives a state 16 The American Spectator January 1994 benefit payment for every one working...
...56 million), about 25 million people receive state benefits, including the unemployed, pensioners, and child-benefit recipients...
...Now, however, this is exactly what has come to pass, and it will be difficult to reform the system before it collapses...
...The result is that governments now find it very much more difficult to repudiate their debts by inflating the currency in the old, dishonorable fashion...
...And here we see another resemblance to Communism...
...In 1973, the ratio was only 52 to 100...
...A nother point worth noting is that supply-side tax cuts kept the game afloat in the 1980s, and it's not clear that this strategy can be repeated...
...11 The American Spectator January 1994 17...
...Lenders demand an inflation premium the moment they scent monetary expansion...
...Our semi-total state has internalized the same egalitarian ideals that animated the Communist ideology...
...We accept as a given the redistributive welfare state, the ubiquitous social worker, the endless obsession with equality, the tendency of almost all states to acquire limitless power, and the widespread intellectual support for these positions...
...How wonderful, though, to see those pathetic Progressive Tories thrown out in Canada...
...Well, she was wrong about the individual freedom, but the socialist community was duly cobbled together by intellectuals, and it has lasted about a hundred years now...
...Gorbachev knew that the Soviet system had to be changed, but he wasn't able to do it in time...
...Sometimes I think that the anti-Communist revolution of 198991 may turn out to have been merely the first phase of a more widespread and more general anti-socialist revolution...
...Provided they are granted a special exemption (in the form of a vigilantly guarded First Amendment), journalists today see no threat to individual liberty in the enlargement of state power—witness their enthusiastic reception of the Clintons' plan to socialize medicine in this country...
...The very idea that the recipient classes could be engaged in deceit was regarded as a slur upon the good name of victim-hood...
...Consequently, welfare programs are never cut and government spending does nothing but go up—always and everywhere...
...Since unemployment benefits are less generous, many workers who would otherwise be counted in the jobless rolls have managed to get on disability...
...Specifically, by imposing a VAT, or value-added tax, on fuel...
...I even dare hope that we are beginning to see signs of the next phase of this revolution, both in Western Europe and the United States...
...Despite its utter failure to do so, American liberals and their European counterparts blindly press on for the further expansion of state power wherever an opportunity presents itself...
...The voters try to bring about change by turfing out incumbents but this never seems to make any difference...
...In Britain (pop...
...Payouts to fraudulent claimants now run to about $7 billion a year...
...In 1991 Boris Yeltsin made the interesting complaint that Soviet Communism had been an "experiment" foisted on Russia by Westerners who might at least have had the decency to try it out first on a smaller scale...
...Since 1945 we have been so trained to think of the Communist World and the Free World as polar opposites that it is not so easy to see their underlying similarities...
...There has been talk of job-sharing in Germany—a four-day week accompanied by a 20 percent pay cut...
...It has been assumed that welfare states are stable, but now it is not so clear that they are...
...In Britain the Conservatives have managed to hang onto power, but only because Labour promised to raise taxes rather too candidly...
...Nineteenth-century economists, including Ricardo and John Stuart Mill, thought that if the recipients of taxpayer-provided benefits could vote they would be tempted to vote themselves ever-increasing amounts, which obviously could not be permitted...
...The Maastricht treaty took effect, but this is a mere charade of European union, a kind of tax-exempt plaything for the ruling classes, giving them the chance to play at Planning and occasionally levy important-sounding fines against violators of this or that mysterious edict...
...W hat's interesting about the present situation in Europe is that there is no easy way out...
...The VAT, now 17.5 percent in Britain, was greatly increased by Margaret the Dismantler...
...She didn't roll anything back...
...It's just that we tend to take its premises for' granted, and find Tom Bethell is The American Spectator's Washington correspondent...
...Look back to the past and you will see minor points hotly contested (the Wars of the Roses) and far more fundamental things taken for granted (the divine right of kings...
...No doubt the workers will get their four-day week—but with the same paycheck...
...There's a possibility that the Tories could soon go the way of their Canadian counterparts, because it's clear that they now stand for nothing at all...
...In Bonn, for example, 120,000 construction workers rallied recently to protest a planned phase-out of "bad weather" winter payments to workers...
...it hard to visualize life organized in any other way...
...Under her rule, the welfare state became more expansive (hence the growth of the underclass in Britain, as Charles Murray has pointed out), and the percentage of GNP captured by the state also increased...
...No such dismantling took place...
...An important reason for the impending crisis is that the inflationary escape route of recent decades is no longer available...
...The total state turned out to be unproductive...
...It's worth noting, incidentally, that, very much like the "Reagan revolution," the changes brought about by Margaret Thatcher have been greatly exaggerated on all sides...
...The New York Times updated this report a couple of months later, quoting an official at the Dutch Ministry for Social Affairs as saying that 912,000 people, "or about 18 percent of the workforce in the Netherlands, receive disability pay...
...In the twelve countries of the European Community, unemployment is now approaching 20 million, but some say this figure understates the true total because it does not include those who are so content with their disability benefits that they are no longer looking for a job...
...It's also clear that the progressive impulse has not been blunted by the collapse of Communism—a system based on the presumption that the state could create wealth...
...Counting retirees, 86 inactive Dutch citizens receive government support payments for every 100 workers...
...Here are a few examples...
...Perhaps you can see why talk of social upheaval is in the air...
...In a long article in the Washington Times in October, "Eurogloom Foreshadows Social Upheaval," Arnaud de Borchgrave pointed out that Italy "is the first advanced economy to reach the spine-snapping ratio of less than one employed contributor for one retired beneficiary: 20 million workers for 21 million beneficiaries...
...Socialism has been the dominant idea of the past century...
...This bailed the system out for a while...
...The good news is that it isn't working the way it used to...
...C ommunism, best thought of as the fundamentalist version of the socialist religion, was itself the brainchild of Western intellectuals...
...In any age people are more conscious of their factional disputes than of the ideas and institutions that almost all take for granted...
...In the U.S., the GOP should ponder the same lesson...
...But this is merely the polite fiction of the ruling class, who want us to think that there are real differences between modern political parties...
...The Washington Post reported earlier this year that, in Holland, about 15 percent of the potential workforce is collecting disability benefits under a generous system that has granted workers a net 80 percent of their take-home salaries for life—or at least until they reach retirement age—in the event of total disability...
...Another third is because of back problems...
Vol. 27 • January 1994 • No. 1
