In January 2011 I wrote ”A very European Road to Perdition’, which I posted on the ‘dark side’. The article was taken from the ‘Daily Reckoning’ web site. As this site gives out financial advice, my inherent cynicism of human sincerity and merit clouded my views on its veracity. At the time there was a critical comment on my view that contributors to the site were ‘snake oil salesmen’. I now think quite rightly so and withdraw, with some reservation, my comment about ‘snake oil salesmen’. However, I keep my view that politicians are ‘snake oil salesmen’. I’m with Diogenes in the adage that “It takes a wise man to discover a wise man” , and await my epiphany.
Here is my dark side post – revisited. Bill Bonner writing from Paris for the ‘Daily Reckoning’ claimed that the US road to bankruptcy is running parallel to France. He stated that;
If you’re French you have to worry about the country going broke. There is no way they can continue to pay all those people who are retired. They seem to live forever…and they’re very expensive. France is going broke. In terms of debt and deficits the country that most resembles France is the United States of America. Both are going broke. But so are many other “European” nations…and eventually, probably all of them. The point is, most of them are going broke. Their model is exhausted. This was the social welfare model derived from Bismarck – take from workers; pay to non-workers. It was okay as long as the pool of workers was growing faster than the pool of non-workers. But that’s no longer the case.
He concluded that;
Curiously, the nation furthest along on the road to bankruptcy is a non-European nation that picked up the model early, Japan. Already, there are more people retiring in Japan than there are people entering the workforce. Overall, the population is falling, while the number of people over 65 increases at 3% per year. In 1990, there were more than 4 people working for every retiree. Now there are barely two. Practically all the European nations, and all the nations lived in predominantly by people from Europe…as well as Japan…are headed down this dead-end road.
It seems to me that the fundamental truth in all of this is that;
To take any proportion of the wealth generated by those ‘in work’ to pay for the support of those ‘not in work’, requires that those ‘in work’ are capable of creating and maintaining a surplus of national wealth to support such indigence.
Bonner may well be proved right. Nations are now competing in a scramble for growth, which translates into a competitive scramble for world resources to feed that growth. Further, this scramble for growth needs to increase the national wealth to enable a social welfare programme such as is found in a European model. The politico-economic solution that you buy into, in the belief that it is the cure that allows you to continue as before, may well be snake oil. Whatever solution you buy into, the medicine that you take and its efficacy may only give a respite that is an illusion. But by the time that you find this out, the ‘snake oil salesman’ will have left town.