France’s half-century spending spree is coming to an end

Run don’t walk to James Traub’s Foreign Policy’s piece, The Spectacle of the Society.  Sarkozy’s approval ratings are at 30 percent as he battles rioters.   There is a lot here, even for Americans:

The drama of rewriting the postwar social contract is taking place across Europe. Over the past generation, globalization has challenged Western economic dominance and forced wages downward throughout the industrialized world; the economic crisis that began in 2008 delivered the coup de grace. The crop of European leaders unlucky enough to hold office amid all this has been stuck with the unpopular job of offering solutions. British Prime Minister David Cameron has proposed a radical assault on the benefits of social democracy, including not just deep cuts in welfare spending, but the elimination of cherished middle-class subsidies. Cameron has also proposed raising the retirement age — to 66. Greece, where a wildly intrusive and inefficient government brought the country to within a hairsbreadth of bankruptcy, has been convulsed by popular resistance to Prime Minister George Papandreou’s proposed cuts. Germany is widely admired for having made painful changes to labor laws without endangering social peace, but the Social Democrats who drove those reforms were booted out of office in a spasm of public anger.

And a lesson for the U.S.,

Americans have no reason to feel smug on this issue. Experts in the United States have long agreed, as they have in France, that the social security system is unsustainable and will ultimately bankrupt the country. And yet both parties fall all over themselves to pander to voters on the protection of those benefits. I have recently been pelted with emails from a liberal, union-supported group called the Strengthen Social Security Campaign, which boasts that “over 135 members of Congress” have signed a letter to President Barack Obama opposing any cuts in benefits or any further increase in retirement age. Of course, all attempts to include serious cost-control measures in the health-care reform bill failed. Rewriting the social contract turns out to be very hard, no matter how obvious the need to do so.

And on the election,

You have to wonder how long this forbearance will last as countries throughout the West adjust to their diminished conditions. The one populist movement in the United States, the Tea Party, opposes the inheritance tax, the repeal of the Bush tax cuts for the rich, and most economic regulation. Its agenda can barely be distinguished from that of the American Bankers Association. What happens when finally the time comes to pay the piper — to reduce entitlement spending and increase taxes? Will the rich still enjoy their immunity? Not likely.



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