Europe gloated during the meltdown, claiming it would be left untouched. The claims return to haunt a failing Europe
European politicians will find this meltdown an even tougher challenge to manage than Barack Obama in the United States. For decades, European nations have boasted that their version of capitalism takes much better care of average citizens than the American model. There is no doubt that most European nations have more welfare schemes that benefit more citizens than in the US. Besides, state intervention has also resulted in European workers earning more per hour and working less number of hours. Then again, farmers in Europe are pampered and mollycoddled with hundreds of billions of dollars of subsidies (America also gives similar farm subsidies but most of it goes to ‘farm’ corporations!). Now, as the bad times come crashing down on Europe, this welfare state model will face an unprecedented challenge. From where will the European governments get the money to pay unemployment benefits, massive subsidies and artificially high wages to citizens? Once citizens realise that the jar of goodies is almost empty and freebies may be stopped, cities across the continent will erupt in protests and strikes. The only saving grace for Europe as compared to China: there is no danger of army tanks firing on the unarmed. Perhaps Europeans should console themselves with that!
European politicians will find this meltdown an even tougher challenge to manage than Barack Obama in the United States. For decades, European nations have boasted that their version of capitalism takes much better care of average citizens than the American model. There is no doubt that most European nations have more welfare schemes that benefit more citizens than in the US. Besides, state intervention has also resulted in European workers earning more per hour and working less number of hours. Then again, farmers in Europe are pampered and mollycoddled with hundreds of billions of dollars of subsidies (America also gives similar farm subsidies but most of it goes to ‘farm’ corporations!). Now, as the bad times come crashing down on Europe, this welfare state model will face an unprecedented challenge. From where will the European governments get the money to pay unemployment benefits, massive subsidies and artificially high wages to citizens? Once citizens realise that the jar of goodies is almost empty and freebies may be stopped, cities across the continent will erupt in protests and strikes. The only saving grace for Europe as compared to China: there is no danger of army tanks firing on the unarmed. Perhaps Europeans should console themselves with that!
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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