I like visiting Europe. The continent has a different flow and feel to life. Life seems to move a bit slower, and people tend to have lower expectations about the “stuff” in their lives.
On the flip side, it seems to be more expensive to live, which maybe feeds into the lower expectations on the stuff. Economic classes also seem to be more rigid, and upward mobility seems to be a far away dream for millions of inhabitants. Look a bit deeper and services like health care and education, while free, tends to be rationed fairly extensively.
So I like visiting Europe, but would I want to live there?
A read of the opinion pages across the political spectrum seem to converge on a similar theme with the current administrations budget plans. Krauthammer, Brooks, Krugman all seem to point to grand plans by the administration to address social engineering on a scale not seen since Roosevelt or Johnson. Others see similar impacts through the nationalization of the banking industry.
If you look at the current federal deficit as a percentage of GDP as well as the total federal outlays as a function of GDP, we seem to be approaching a federal budgetary perspective of Western Europe. In the last 10 years, US government expenditures has increased from 34% to 40% of GDP, rapidly approaching that of the European Union at 47%. As the fraction of direct government expenditures to GDP increases, more of the total services provided for everyday life will be directly supplied by the federal government. This will have dramatic consequences for future expectations of governmental services. In short, the more people that become dependent on government for services, the more they will expect and demand that those services continue, until the service itself becomes a right.
The current crisis certainly calls into question the rhetoric of smaller government. But we should not confuse the rhetoric with the facts of increasing governmental expenditures over the past decade. The growth in federal services over the last administration does not suggest that the Bush years were built on pinching pennies. Real (inflation-adjusted) governmental expenditures increased more than 24% from 2000 to 2008 (probably higher because I am not sure if the this Census Bureau has updated their figures for the TARP program). It has been suggested that California is our first looks at the results of continually growing government expenditures at the expense of a sane fiscal policy. One has only to review California’s 10.1% unemployment and $41 billion deficit to get a sense of what a “European-azation” of our federal budgetary policy may accomplish for the rest of the US.
Does this mean that we will drift towards a more European America? I hope not. When I think of Western Europe economies, I think of slow growth, high unemployment, and strongly regulated industries. This is not consistent with the ideals and work ethics of many Americans.
I want the ability to create a future for my family based on how hard I work and how well I make my choices. I would probably accept some restrictions and regulations for public safety and the infrastructure investments necessary for greater economic gains, i.e. a rising tide will raise all ships of opportunity. However, limit my abilities to generate a future for my family based upon my work ethic and intelligent choices, and I will have serious issues with the people in charge.
Such limitations can come from tax policy, regulation, or even energy regulation via a cap and trade system, for this is a hidden tax on economic activity (an expected $646 billion). Given the current leanings of the Congress and the Executive branch, some limitations will probably happen. If the net result of these new policies leads to anemic growth (~1-2%), persistent high unemployment (~8-10%) and high inflation (~3-5%), then our journey to a European America will be nearly complete.
