Well, I just lost a long post about the so-called Swedish model due to
my own stupid carelessness the combined malevolence of Windows XP and MS Word.
Anyway, the main point was to say that the article on the subject (free for non-subscribers) in last week’s issue of The Economist was really a dishonest hack job. And my critique went roughly like this :
The Czech press digest Fleet Sheet puts out a free email bulletin with blog-like observations on Czech culture, business and politics. Though it’s sometimes a bit off base, it’s worth looking at to get a sense of the scene in Prague. Today’s…
Why does Prague airport have expensive self-service parking machines, when the CR is a mecca for low wages?… It’s still possible to get shoes or a broken TV repaired in the CR, but the march toward the European welfare state will soon raise taxes and wage costs so high that it’ll be cheaper to throw out the old shoes and buy new ones. Premier Spidla told Frankfurter Allgemeine Zeitung that reconciling the costs of modernizing the welfare state and the impact on common people is a European-wide problem without a solution. If the European welfare model collapses, he said, so will the EU itself. Then Czechs could go back to minding the parking lot.
An interesting statement with wide implications, although I’m not exactly sure there’s such a strong connection between parking meters, broken televisions, and the European welfare state.
What harm does running a European-style high-spending welfare state do to a country’s GDP? The answer, surprisingly, turns out to be “none at all”. Peter Lindert’s paper, “Why the Welfare State Looks Like A Free Lunch”, shows that a welfare state doesn’t depress GDP in the way that conventional economic analyses predict. Why not? Over to Lindert…