Lies Both Sides of the Atlantic

Among the biggest lies of the welfare states on both sides of the Atlantic is the notion that the government can supply the people with things they want but cannot afford. Since the government gets its resources from the people, if the people as a whole cannot afford something, neither can the government.

The source.

Comments

[Cheap Dunk]

This is an intriguing topic. I’m always looking for valuable resources to show clients and my coworkers, and your article is definitely worth sharing!

[Robert E]

Georg, I'm wondering what your take is on the situations in Latvia and Iceland after they took their bitter pills. From what I can tell by doing what they were told not to, they are better off.

[Georg Thomas]

Robert,

Thanks for your comment.

Germany fared best when the state lost its ability to interfere heavily with the economy. In 1945, the Germans had only themselves to improves things. Their personal efforts resulted in a resounding success. 10 years later, Germany was one of the richest countries in the world.

As far as Latvia and Iceland are concerned, I have not paid much attention to developments there, which I should certainly catch up on.

But generally, I believe two things tend to occur with great reliability, (1) the less intervention in the economy the sooner recovery and material advancement set in, and (2) even small steps in that direction show disproportionate positive effect.

Unfortunately, small steps tend to be small steps because the political system does not allow larger steps, and has a strong propensity to soon retract even those small steps.

We seem to be trapped in a cycle whereby state intervention leads to eventual collapse, out of which arise spontaneous forces that are very effective at creating wealth. This wealth fosters the state which grows larger and larger, working hard to bring about the next collapse.

And this cycle is first best. Second best is what happened to East Germany. The German idiom corresponding to "from the fire into the frying pan" is "from the rain into the eaves/cullis (vom Regen in die Traufe)." A cruder colloquial version is: "from the rain, bypassing the eaves, directly into the shit (vom Regen unter Umgehung der Regentraufe, direkt in die Scheiße." That's what happened in 1945 in East Germany.

[Robert E]

I thought it would make for a good article - I think you are a better person to explain it with your knowledge of economics and history as well as a front window view on Europe. I could use some good intellectual fodder for countering those who think ending deficits would plunge us into chaos.