Greg Sheridan writes:
Europe’s present distress is our future. Everyone knows that part of Europe’s problem is excessive welfare. As Germany’s Chancellor Angela Merkel has remarked, Europe has 7 per cent of the world’s population, 25 per cent of global gross domestic product and 50 per cent of the world’s welfare payments.
Read more at ALP has spread Europe’s disease | The Australian.
Joe Weisenthal presents the following two charts to illustrate how government is coping with falling manufacturing wages:
You’ve probably seen this chart many times, which shows wages declining as a percent of GDP over the last few decades.
But things look a tad different when you look at wages PLUS government transfer payments (predominantly entitlement programs) as a share of GDP.
What the writer fails to recognize is that lifting government welfare payments is not a solution. It is part of the problem. Increasing transfer payments encourages welfare dependancy and hinders the adaptive process that allows capitalism to adjust to new challenges.
Eventually the tail begins to wag the dog, with welfare dependents voting themselves increases. Economic stagnation evolves into economic deterioration, hindering new capital formation with excessive red tape and a rising welfare burden.
…..The road to hell is paved with good intentions.
via Matt Busigin On Peak Capitalism – Business Insider.
