For a long time, the US and Europe have thumbed their noses at each other … the US spends money inefficiently, and does not guarantee a cushy retirement for everyone, forcing people to actually work and save for retirement. In Europe the “nannystate” has been the standard for much of the continent since WWII.
A few months ago, I recall reading a broadly painted description of the European nannystate as being akin to a pyramid scheme … one in which the base is being severely depleted as nations see their populations age … and that was before the current global economic crisis hit.
Greece is the proverbial tip of the iceberg … mismanagement led to their nation being the first to go over, though much of Western Europe is staring at unthinkable major cuts to the benefits paid out to their citizens. Certainly not every nation will descend into mass chaos like Greece, but because such a large swath of the population is tied to the benefits dolled out by the government, cuts will affect a larger percent of the population at once. Perhaps most telling: some European countries pay cash bounties on newborns …. newborns after all are absolutely necessary to buoy up the “pyramidality” of the scheme. Now, some of those countries are thinking of stepping away from those bounties. Retirement ages (as low as 60 in some countries) are looking to edge up (by comparison, retirement from teaching with full benefits in Illinois I think just edged north of 65).
The question is: will Europe be able to hold together while its baby boom generation suckles from the ever thinning sow. If it can, there is a chance that Europe may be able to return to its fancy free lifestyle in a few decades.
Time will tell.