Sunday, May 23, 2010

Break time is over.

The slow-motion death spiral of the Euro-zone has become so self-evident that the root causes can no longer be denied, even from the major dailies of this country.

This is what arrived on our door step this morning in the form of a San Diego Union Tribune front page story from the New York Times News Service.

Across Western Europe, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II.

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.

Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. “The Europe that protects” is a slogan of the European Union.

But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.

With low growth, low birthrates and longer life expectancies, Europe can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant changes. The countries are trying to reassure investors by cutting salaries, raising legal retirement ages, increasing work hours and reducing health benefits and pensions.

In case you were having problems reading between the lines, here is what the article was saying: Socialism is dead. Dead, dead, dead.

Margaret Thatcher's observation that the problem with socialism is that you eventually run out of other people's money is no longer a theoretical exercise. We're seeing it played out, real time, in Europe as we will over here if we do not radically alter our profligate spending and reform our entitlement programs.

Decades and decades of lavishing themselves generous pensions, universal health care and what not as we were doing the heavy lifting with respect to military spending has come to an end.

It was a nice "end of history" run, Europe. Now it's time to get off your ass and get back to work.