What ails Europe?

OPINION | February 27, 2012
Op-Ed Columnist: What Ails Europe?
By PAUL KRUGMAN
The two common explanations - call it the Republican narrative and the German narrative - are just wrong.
Professor Krugman's column today is, as usual, contrarian in the sense that he takes issue with so-called "conventional wisdom."  Actually, he condemns two versions of conventional wisdom today: one he tags "the German narrative" on what accounts for the frightful state of Greece, Italy and a few other of the euro-zone economies; the other is easily recognized as familiar to Americans following the Republican nomination race.  Hence it is termed by PK as "the Republican narrative."  You will recognize its ties to Mitt Romney's indictment of Obama as wanting to abandon American exceptionalism and emulate European socialism.  The latter, in this narrative, is bad, bad, bad, because it commits the sins Charles Murray and his ilk see the federal government doing by "enabling" the Fishtown Poor.  In other words, it's the welfare state that has brought Greece and Italy to the edge of the economic abyss.  Except it's not.  When you look at welfare spending as a percentage of government outlays (or as a percent of GDP), the actual data tell a different story than either the  Republican or the German narrative.  Sweden, crown jewel of social democracy, was earlier cited as evidence that states with large social-welfare programs are doomed to economic ruin.  This was the conclusion of the Cato Institute years ago when the Swedish economy suffered through a recessionary dip.  And this is the oft-repeated litany of the new Republican orthodoxy: from Paul Ryan to Rand Paul to Mitt Romney, welfare states and entitlement programs doom their citizens to lazy moochers who live off the tax revenues that hard-working, self-reliant citizens with jobs pay only to learn that their industriousness is subsidizing the sloth of the Fishtown folks.  A very compelling story, except that it is not supported by any facts.  Check out Sweden's economic health now; and while you're at it, check the fractions of the Swedish population who are chronic consumers of the welfare benefits alloted year after year to the unemployed or disabled in that country.  So if a story persists in spite of facts that point to the contrary as reality, what is it that explains the American attraction to the yarn that it is exceptional and, as such, holds a special place in God's creation and is therefore obligated morally to cut off subsidies to those in its borders who are morally unfit?  Check out the post preceding this one by Mr. Nelson for one possibility.