My View: Euro-disaster worse than oil spill

 
 

There are some legitimate red flags raised by the oil spill in the Gulf of Mexico. As rare as it has been — this is the first of any size ever, even with nearly 4,000 rigs in the Gulf — it shows it can happen.

And if a slick of this size washed up on Sarasota beaches, it would be a short-term catastrophe for the tourism industry. That is the worst-case scenario — slim chances made more slim by what we learn from the spill.

Politically, it has taken any discussion of expanding oil drilling in the Gulf off the table for years to come. The scope of the spill is simply a red flag. Proceed with caution.

Bravo to Marco Rubio for avoiding the temptation to pander to the short-term populism that has been the response of most politicians, led by Panderer-in-Chief Charlie Crist, calling for making drilling off Florida waters illegal — when it already is illegal.

But while we are willing to look at the spill and ask what we should learn, there is a crisis of far more enormous implications across the Atlantic in which we seem completely unwilling to see even the tiniest red flag.

I’m referring to Greece. And Spain. And Portugal. And Italy. And the rest of Europe. We are looking at parallel educational opportunities. But the eyes of Washington leaders are closed to Europe’s warning signals.

The problems in Greece, Spain and elsewhere in Europe are that the socialist, welfare-heavy, big-government, cradle-to-grave systems they have instituted are collapsing under the weight of their own illogic.

In many ways, Greece is simply further down the road of a socialist welfare state than we are. But surprisingly, not much. (See chart.)

The Greeks have created absurdly generous benefits. For instance, for a lengthy list of “hazardous” jobs, the retirement age is 50 for women and 55 for men. That list is 580 categories long and includes legitimate ones such as coal mining, but also hairdressers (working with chemicals) musicians who play wind
instruments (the threat of esophageal reflux as they blow on their instruments) and radio and television personalities (the risk of bacteria on their microphones — which cannot be higher risk than grabbing that Wal-Mart shopping cart handle).

“Greece’s patchwork system of early retirement has contributed to the out-of-control state spending that has led to Europe’s sovereign debt crisis.” That is not a quote from some right-wing think tank. That is from a New York Times story. The problem is simply an unaffordable welfare state.

Greece requires shorter work weeks, more paid vacations, more maternity leave and national health care.
Like the rest of Europe, it has bought into lower and lower productivity while dishing out higher and higher benefits. Good for votes. Bad for national longevity.

Then, when Greece gets in trouble, it simply borrows more and more money. Its current debt is now 116% of national GDP and combined current and future debt obligations are 875% of GDP in 2004 dollars.

Sound familiar? It should. Our current debt is 84% of GDP and our combined current and future debt obligations are 500% of GDP — both of which are higher than the average of the European Union. And that is before our newly minted health-care system starts kicking in.

Because of the enormous growth in the government sectors, Greece and the rest of Europe have powerful government employee unions. So when government officials are left with no choice but to reduce benefits, the unions pull out the bricks and bats. Literally. The Greek riots you see on television are called by the unions. Government unions in Spain and elsewhere are threatening the same response to proposed cuts.

Again, sound familiar?

We are seeing the rise of the public sector union in this country. Union membership is now bigger in government than in the entire private sector. And President Obama is particularly obsequious to government unions such as the SEIU, which helped put him in office by spending $61 million, sending out 2.5 million pieces of mail and making 4.4 million phone calls. That is a lot of muscle, and the union expects payoff and is getting it.

If you don’t like looking across the Atlantic, just look at California. It is basically a failing Euro-state with massive public benefits and taxes and powerful, belligerent unions. It is heading for a showdown that may look Greek.

Unions can represent workers rights, influence elections (think the Sarasota teachers union that funded the effort to extend the local school tax) and destroy companies and countries. But they cannot defy math.

No country can guarantee endless expansions of government giveaways on the backs of diminishing numbers of productive workers in society. It’s not heartless. It’s math.

Yet at this very moment, when we are seeing the societally catastrophic impact of a crushing socialist system, our own government is embarking at lightning speed to turn the United States into a socialist welfare state. And gorilla-sized public unions are a driving force.

As the oil pouring out of the Gulf floor is a red flag for some, the slow-motion collapse of a system we are trying to imitate is a giant red flag being waved frantically in front of everyone. But does anyone see it?

Rod Thomson is executive editor of the
Gulf Coast Business Review. He can be reached at rthomson@review.net.

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Currently 1 Response

  • 1.
  • Excellent piece. Right on the money.
  •  
  • Milan Adrian
    Sun 6th Jun 2010
    at 2:14pm
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