After America - Mark Steyn [58]
If you’re a German bank, to whom do you lend money? With age distribution on your home turf heading north relentlessly, you don’t have enough young people to grow your business. So you lend farther and farther afield. Not crazy farther, not Sudan or Rwanda. But far enough that you’re operating in markets where your traditional forms of risk analysis don’t apply, even if you were minded to apply them. To western bankers, Eastern Europe didn’t seem that different or dangerous, if you steered clear of the more psychotic oligarchs. Unfortunately, the post-Soviet east is even further down the demographic death spiral than you are. America? By some estimates, Germany’s Landesbanken could have to write off a trillion bucks’ worth of subprime crud from the U.S.
So, from the individual homeowner with no one to sell his home to, and the business that’s run out of domestic market, and the bank frantically loaning to jurisdictions it barely comprehends, nudge it up one last stage—to the state. In recessions, government is enjoined to spend—to go into deficit, ramp up the national debt in order to “stimulate” the economy. Adding to the national debt presupposes that there’ll be someone to pay it off. But what if there isn’t? And do the Chinese and the Saudis already know the answer to that question? The failures of British and German Treasury auctions (not to mention near misses in the U.S. prevented only by the Fed buying up Treasury securities) prefigure a world with too much debt and too few sugar daddies willing to cover it.
In 2003, the IMF conducted a study of Eurosclerosis and examined the impact on chronic unemployment and other woes if the Eurozone labor market were to be Americanized—increasing participation in the work force, reducing taxes, rolling back job-for-life security, and generally liberalizing the economy.38 They concluded that the changes would be tough, but over the long-term beneficial.
It’s interesting that it never occurred to the IMF that anyone would be loopy enough to try their study the other way around—to examine the impact on America of Europeanization. For that, we had to wait for the election of Barack Obama. You’ve probably heard liberal academics on NPR and the like drooling about “the European model,” and carelessly assumed they were referring to Carla Bruni. If only. Under the European model, state spending accounts for roughly 50 percent of GDP.39 Under the Swedish model, which isn’t half as much fun as it sounds, state spending accounts for 54 percent of GDP. In the United States, it’s already over 40 percent. Ten years ago, it was 34 percent. So we’re trending very Swede-like. And why stop there? In Wales, government spending accounts for just under 72 percent of the economy.40 Fortunately for what’s left of America’s private sector, “the Welsh model” doesn’t have quite the same beguiling ring as “the Swedish model.” But, even so, if Scandinavia really is the natural condition of an advanced democracy, then we’re all doomed.
That was the general thesis of America Alone—that the jig is up for much if not most of the western world. “Alarmist,” pronounced The Economist ,41 reflecting the general consensus of polite society in both Europe and North America. Polite society has spent the years since playing catch-up. So if you don’t want your fin de civilisation analysis from a frothing right-wing loon you can now get it from the house-trained chaps at the New York Times: “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 . . .‘The Europe that protects’ is a slogan of the European Union.”42
Protects from what? Right now, Europe mostly needs