Britain Shows The Way

Steven Greenhut: While surly overpaid French union workers riot and commit acts of violence, British officials are peacefully enacting major reforms that will slash public sector jobs by as many as 500,000 thus leading the way for post-welfare-state politics. The major Western welfare states are no longer sustainable. They have promised far more in benefits to a coddled class of employees. Even an economic recovery will not fix a problem that has grown too large for short-term fixes. Union members can riot all they want, but eventually reality will sink in. There are too many programs, too many government workers, too high of salaries in the public sector and an absurd level of benefits.

Eventually, France, Greece and California (not to mention the rest of the United States) will have to consider the drastic and refreshing steps taken by Britain. Per the Financial Times, “The UK’s Conservative-led coalition has announced the most drastic budget cuts in living memory, outstripping measures taken by other advanced economies which are also under pressure to sharply reduce public spending. … The UK cuts of £81bn ($128bn) over four years are the equivalent of 4.5 per cent of projected 2014-15 gross domestic product. Similar cuts in the US would require a cut in public spending of about $650bn, equal to the projected cost of Medicare in 2015.”

Orange County Treasurer Chriss Street called me today and said this is the biggest news since the end of the Cold War. He’s right. Government cannot keep growing. Governments cannot keep floating debt. The kick-the-can games being played in California and Washington, D.C. are going to have to end one way or another. The Brits are going to take charge of this whereas the French and Californians — regardless of which ne’er-do-well we elect as governor — are probably going to wait until their finances hit the wall.

Wrote Street:

“British liberals are not screaming “bloody murder” and rioting in the streets, like their counterparts in Europe. They have taken to religion regarding the dangers of deficit spending, after watching in horror as Ireland’s deficits spooked investors and drove interest rates up tremendously. With Ireland on the verge of a depression, British liberals understand deficit spending has consequences.

“With U.S. elections fast approaching and most analysts expecting the Republicans to control the House and the Democrats to control the Senate, American politicians will be forced to form a coalition government. After $3.5 trillion of deficit spending in the last two years and virtually no tangible benefits, the American people are demanding fiscal discipline. If British coalition government can successfully pull back from suffering the consequences of deficit spending, it is time for the new American coalition to adopt the British model before America suffers deficit spending consequences.”

But with a quasi-socialist president and a Republican Party already backpedaling from reform promises as it smells Nov. 2 victory, I expect that America will lumber along while the Brits move on by right-sizing government.

OCT. 20



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