Is the EU’s failure a macrocosm of America’s welfare state?
Everyone—except the Germans—are demanding Germany bail out the failed EU states. The problem is the citizens of the failed states are free-riding:
…protesters and all of Merkel’s other critics in Rome, Madrid, Nicosia and Athens agree on one thing: Germany should pay for the euro bailout, as much as possible and certainly more than it has paid so far.
They argue that Germany is a rich country that has benefited more than all others from the introduction of the euro, and that it has flooded other European countries with its exports, becoming more prosperous at their expense.
Except there’s the fundamental problem of the debtor nations analogous to individuals transferring their wealth to relatives and then declaring bankruptcy.
But there is also a second image of Germany, one that’s based on numbers, not emotions. The figures were obtained by the European Central Bank (ECB) and released last week. This image depicts a country whose households own less on average than those that are asking for its money.
In this ranking of assets, Cyprus is in second place Europe-wide, while Germany ranks much lower, even lower than two other crisis-ridden countries, Spain and Italy.
Of course, the issue of “Who pays (and why) and who rides free?” is one of fairness, as Dear Reader himself might offer.
The current [Germany pays the bill to save the EU] strategy is not only unfair, because it distributes the burden one-sidedly. It is also economically dangerous, because it could put too much of a burden on the donor countries. And if they began to falter, the monetary union would inevitably break apart.
At some point, don’t the hard-working (but not wealthy) who are supporting the free-riders rebel?
Maybe that’ll happen at the ballot box in 2014… in America, that is.
I’m not too sure about Germany except to say things that can’t continue forever won’t.