The government bubble is ending.
Daniel Henninger at the Wall Street Journal is one of the more talented journalists and opinion writers left in the print media.Today he editorializes about Europe and its implications for US politics.
The state of Europe can be summed up in one word: stagnation. Jean-Claude Trichet, the European Central Bank president who just agreed to monetize the debt that Europeans can't or won't pay, noted in a 2006 speech that "over the period from 1996 to 2005, euro area output grew on average 1.3 percentage points less than in the U.S., and the gap appears to be persistent."
Angus Maddison, the eminent European historian of world economic development who died days before Europe's debt crisis, wrote in 2001: "The most disturbing aspect of West European performance since 1973 has been the staggering rise in unemployment. In 1994-8 the average level was nearly 11% of the labor force. This is higher than the depressed years of the 1930s."
Henninger believes the failure of the welfare state in Europe may be a wake-up call for America to change its course. Specifically, he views recent events as a way for the opposition to run as the "We're-not-Europe Party." As a political strategy, it would seem to be a winner. Whether the Republicans can convince the public that they are that party may be quite a different issue.
To me, the saddest part of what Henninger discusses is that it required the (coming) economic collapse of virtually an entire continent to awaken most of the US. Are we that economically illiterate? Unfortunately the answer is an easy "Yes." Our educational system and our "American-Idol" society have made most of us oblivious to anything beyond the latest Tiger Woods scandal.