Of the Welfare State and Bankruptcy

When there is no money anymore, there is still money left!

There is nothing worse for our countries than the idea that any project, any social step can be financed anyhow. People expect always "more State". To the point that their behaviour seems to be the one of a teenager expecting to see his pocket money increase, because he believes it's his privilege.

Our countries' debts seem to frighten nobody. People who pretend to know something on this matter will answer you that USA's debt is much worse than ours, that every country is in debt and that doesn't matter at all.

One of the main reasons of this sense of irresponsibility is the fact that too many people pay no income taxes. Their logic is that a project which is free for them and pays back, can't be wrong and is a privilege, after all they voted for their representatives with that in mind! So people have a real tendency to vote for candidates who promise the most. The Welfare State!

Can this State go bankrupt? Noooo, are you kidding? State is eternal! The reality shows however that in this system, expenses become tremendous, and that our retirement funds are likely to serve as repayment.

But the most courageous and ethical politicians are labeled "anti-social" because they refuse to bail for such a system. And we can see that we are living a truly moral crisis directly linked to this financial crisis.

Now, there really is a risk of some of our countries going into bankruptcy! In this scenario, the bankrupt country would be managed by international organizations, its properties sold and such a country would loose its sovereignty.

Economists know that we are reaching a state of emergency. To get the debt resorted, people need to change their behaviour. We have to get rid of the citizen's selfishness which impoverishes the very people who try to take profit of the system!

The logic of the communicating vessels strongly contributed to the thought that it was always possible to find money to finance everything, usually giving someone an allowance by taking it from someone else's pocket. So What?

If a country spends 20 percent more than it "earns", then it must save this 20 percent. The goal is just the same as the one of a family which spends 20 percent more than its income. But, as it is the case in a family, there is a good debt and a bad debt.

The good one is when you borrow money to buy a house or some really needed good, like a car. You check that the monthly payment is affordable for you and, if it's the case, you can accept the debt.

Then there are bad debts. That's the sort our countries have accumulated these past 25 years or so. That's the "cricket" debt (see La Fontaine's Fable of the Ant and the Cricket), the debt you create when you borrow just for the sake of consuming, to get what you foolishly think you can't do without.

In our countries we used and abused these excuses to run into debt because social needs seemed to be so urgent. And it was so easy pretending to solve these social problems, distributing borrowed money instead of fighting their causes.

We have to understand that we have to begin reabsorbing the State debt RIGHT NOW. We have to understand that otherwise, our children will be the ones to pay for it. At least if they can! If it's not the case, the only solution will be decreasing retirement money.

Is it possible to better manage a country, spending 20 percent money less than now? YES! Countries like Canada or Sweden did it! How? Reforming our countries, beginning with a revaluation and hierarchization of their missions, auditing and arbitrating all the allowances distributed, in one word "restructuring" our countries.

- Filed on Articles in "The Economics and Monetary Dossier", cat. Economics -