Tags: Robert | Samuelson | Greece | End | Welfare | State

Samuelson: Greece Signals End of Welfare State

By    |   Monday, 24 May 2010 10:51 AM

Greece’s financial meltdown represents the last gasp of the welfare state, says financial author Robert Samuelson.

The basic issue is governments’ promise of generous retirement and health packages without devising a viable way to pay for them.

“Virtually every advanced nation, including the United States, faces the same prospect,” Samuelson says.

“Aging populations have been promised huge health and retirement benefits, which countries haven't fully covered with taxes," he wrote in The Washington Post. "The reckoning has arrived in Greece, but it awaits most wealthy societies.”

In the United States, we’ve tried to hide our true state by using the word “entitlements” instead of "welfare state," Samuelson points out.

But “Vocabulary doesn't alter the reality,” he explains.

“Countries cannot overspend and over-borrow forever. By delaying hard decisions about spending and taxes, governments maneuver themselves into a cul-de-sac.”

The new healthcare law isn’t encouraging to anyone looking for spending restraint in the United States, Samuelson says.

And the ultimate outcome of governments’ profligate ways isn’t pretty, he notes.

“What happens if all these (developed) countries are thrust into Greece's situation?” Samuelson writes.

“One answer — another worldwide economic collapse — explains why dawdling is so risky.”

Star economist Nouriel Roubini also is concerned that Greece’s woes will spread.

"The recent problems faced by Greece are only the tip of a sovereign debt iceberg in many advanced economies,” he wrote in a report to subscribers at his firm’s RGE Monitor website.

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Greece s financial meltdown represents the last gasp of the welfare state, says financial author Robert Samuelson. The basic issue is governments promise of generous retirement and health packages without devising a viable way to pay for them. Virtually every advanced...
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2010-51-24
Monday, 24 May 2010 10:51 AM
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