THREE STRIKE RULE:

Nightmare of social Europe (Martin Walker, 4/24/05, UPI)

Social affairs has become the most controversial issue of public policy all across Europe. Having defined itself for a generation by the generosity of their welfare states and an insistence of "social solidarity" rather than a robust clash of interests between labor and capital, Europe is grappling with three separate threats to its future. Any one of them could well prove fatal to the EU's social model. Combined, they are devastating.

The first has been the sharpening of competition, with its consequent pressure on wages and on employment, which helps explain why France and Germany are grappling with double-digit unemployment. The competition has been made more ferocious by Europe's enlargement. The EU was joined last year by 10 new member states, mostly from low-wage Central and Eastern Europe, where salaries are one-third to one half those of Western Europe and taxes even lower. So the new Volkswagen and Peugeot factories in the Czech Republic and Slovakia represent growth for them, but unemployment back in France and Germany.

The second threat to Europe's social model is the demographic disaster. This is far more serious than America's concern with the future of Social Security as the baby boomers retire. Europeans are about to start dying out. By the end of this decade, the populations of Italy and Germany will start to shrink because Europeans have almost stopped breeding. The Russian population is already shrinking by more than a million a year. Without some dramatic changes in the birth rate, Europeans will become in this century an endangered species.

To maintain a constant population requires an average 2.1 children from each woman of child-bearing age. In today's EU, the average woman bears 1.3 children. In Italy and Lithuania (both overwhelmingly Roman Catholic countries) the figure is down to 1.1. The only countries close to replacing themselves are France and Britain, thanks in part to the higher birthrates of immigrant mothers.

So while Americans might face some discomfort in paying for Social Security after the 2040s, disaster hits Europe in the next 10-15 years. By 2020, on current trends, there will be one German worker for every pensioner. So already German pensioners are paying the price as neither the state nor young workers can afford to keep them in the style to which they have become accustomed. For example, the health insurance payments of German pensioners now rise the older they get. The long-term unemployed no longer get state payments in generous proportion to their last working salary, but a standard $450 a month plus their rent.

The third threat to the European social model is immigration, which is ironic, because immigration was supposed to be part of the solution to the demographic disaster. Were Europe's immigrants solely young Arabs and Asians seeking work, and paying taxes while they did so, that would help Europe's problem. But many of those young workers then bring their parents, and marry a young woman from their home country, who brings her own parents and so on. The result is that in Belgium, for example, more than half the immigrants over the age of 40 are unemployed and dependent on social security payments.

But the deeper problem with immigration is political. Europe's home-grown population resents it.

Socialism, secularism, and multiculturalism--the waves of the future...

Posted by Orrin Judd at April 25, 2005 11:01 PM