Taking Note of Europe

Social benefits, long thought untouchable there, are now getting a second look. The combination of huge taxes with a financial crisis, makes that sort of spending unsustainable.

PARIS — From blanket health insurance to long vacations and early retirement, the cozy social benefits that have been a way of life in Western Europe since World War II increasingly appear to be luxuries the continent can no longer afford.

Particularly since the global economic crisis erupted in 2008, benefits have begun to stagnate or shrink in the face of exploding government deficits. In effect, the continent has reversed a half-century history of continual improvements that made Western Europe the envy of many and attracted millions of immigrants from less fortunate societies.

The envy of many only because it was made to look better than it was by borrowing from the next generation. Well, the next generation’s here, and it’s time to finally pay the bills.

In the new reality, workers have been forced to accept salary freezes, decreased hours, postponed retirements and health-care reductions. Employees at Fiat’s historic Mirafiori plant in Turin, rolling back a tradition of union privileges, even pledged to cut back on the number of workers who call in sick when the local soccer team has a match.

Unions have been a party to this deal with the devil, no doubt under the guise of "worker’s rights", including the right to watch soccer on company time.

Unlike in the United States, where conservatives are so resolved to cut spending that they threatened a government shutdown, Western Europe’s generous welfare programs had generally been embraced by the right as well as the left. Against that background, the new wave of cutbacks seems to signal a dramatic shift in attitude toward benefits that many Europeans had come to see as a birthright and that politicians of any stripe could challenge only at the risk of their careers.

Apparently, "conservatives" over there found, too, how easy it was to buy votes with promises of wealth redistribution. The politician who robs Peter to pay Paul can count on Paul’s vote.

The social welfare system no longer plays its role, said Claude Bernard, a union organizer at Renault’s struggling car factory in Sandouville, a suburb of Le Havre in western France. The very system of redistributing wealth through taxes and welfare programs has been called into question.

In a measure of the shift, Manuel Valls, a presidential hopeful in France’s Socialist Party, challenged party doctrine recently by declaring that it should not make an issue of preserving the 35-hour workweek if French factories have to compete with Chinese factories where the workweek starts at 60 hours and goes up from there. In Denmark, Prime Minister Lars Loekke Rasmussen rattled many in that icon of Scandinavian cradle-to-grave welfare by suggesting Danes should work longer before retiring, to peel back the deficit by $2.8 billion.

Britain’s Conservative-led government decided in the fall to attack deficits by cutting more than $130 billion over the next five years, hitting welfare benefits hard and setting off protests by raising university fees.

But deficit pressures have forced leftist governments to seek savings as well. Some of the most painful cuts — pensions reduced, wages stalled and retirements pushed back — have been imposed by two Socialist prime ministers, George Papandreou in Greece and Jose Luis Rodriguez Zapatero in Spain.

If even socialists are calling their founding principles into question, why, then, are we trying to run off the same cliff, and at one of the worst possible financial moments in our history? Let’s learn from their mistakes instead of repeating their failed history.

Filed under: Economics • Government

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