SMM2, March 3: as we all know, almost all the economies around the world are borrowing like crazy, and since the collapse of the Bretton Woods system in the 1970s and the complete departure of the gold standard from the historical stage, central banks have stopped hiding. The so-called eight immortals cross the sea to show their powers, how much money printing ability has been shown to the people of the world. Among them, all countries have their own uses for borrowing. For example, the United States has borrowed a lot of wars, militarism, setting up military bases all over the world, being mired in the war in Afghanistan, and so on. China's borrowing is more about developing its domestic economy, and Europeans are also borrowing. And a lot of debt.
Of course, Europe has conditions for high welfare. Europe is the birthplace of modern industrial revolution, the capitalist system is very perfect, and European countries have long completed the transformation from an extensive economy to an intensive economy. As a result, it is possible to enter the list of developed countries, but also provides the possibility of high welfare. So Mr. Shi Hanbing says that in the final analysis, the welfare state is the product of an intensive economy. There is no doubt about that.
Unfortunately, welfare was originally intended to improve the well-being of the people, but in the end, it was not too much to say that the welfare system had become the most direct cause of restricting economic development, idling the enthusiasm of the people, and even causing the European debt crisis. Although the level of welfare varies from country to country, citizens are generally given free medical care, unemployment benefits, old-age benefits, long holidays and other benefits.
However, too much, high welfare beyond the hard fiscal constraints, will be in great trouble, which is the direct cause of Greece's European debt crisis.
Greece's high welfare was too high for its finances to bear before the crisis. Greeks have an average retirement age of 53, second to none in the developed world, and public servants can retire after the age of 40. Since the 1980s, politicians have made high welfare promises to come to power, and people are more willing to vote for candidates who promise high welfare. In this cycle, the level of welfare is naturally getting higher and higher. A big problem, however, is that the level of welfare in the third is out of proportion to the international competitiveness of 96. In order to solve the problem of unemployment, the Greek government has greatly expanded the number of public servants, using finance to raise more people, and then falling into a more serious dead cycle. Because high welfare means high taxes, high taxes will inevitably lead to reduced corporate profits, companies unable to expand, fewer jobs, the government to expand the public sector, and ultimately need more taxes to feed. Finally, in October 2009, the Greek government suddenly announced that the fiscal deficit was as high as 12.7 per cent, well above the EU limit of 3 per cent, and the public debt ratio reached 113 per cent of GDP, also significantly exceeding the 60 per cent ceiling, thus opening the prelude to the European debt crisis. Then the Irish debt crisis broke out, and so did the debt crises in Spain and Portugal. It is unthinkable that a country's welfare spending can be as high as 1 / 2 / 2 / 3 of the total government expenditure.
Many problems have arisen under the high welfare system, including the decline in the enthusiasm of the people for production, the voluntary unemployment and comfort of young people, the insufficient profits of enterprises, the decline in investment, the slow upgrading of technology, the slowdown in economic development, and so on. Including the decline in the fertility rate of young people and the severity of aging have something to do with high welfare. One unthinkable thing is that if Europeans are as diligent as the Chinese, then with European technology, the speed of economic development should be able to increase significantly, but the fact is that the unemployment rate of young people in Europe is eye-popping!
The picture above shows the unemployment rate of 2018 young people in some countries, and the average unemployment rate in the euro zone is close to 20%. Greece, Spain and Italy are far ahead. About one in three young people is unemployed. What hope does such a country have? Do you want to rely on the old man if you don't rely on young people for economic development?
Europe's high welfare system does not change, the European economy will not have a future, life should not enjoy comfort in the age of struggle!