Tuesday, May 11, 2010

A spectre is haunting Europe -- again

This time it isn't communism, it's capitalism. Capitalism in the form of iron economic laws, that is. Europe's decades long holiday from economic reality has ended.

Europe long ago (well, in the 70s) traded growth for a well developed set of social safety nets and is discovering that if you want to tax folks to the extent that such nets are possible, you'd better have a market economy capable of delivering the growth neccessary to keep things afloat. Insufficient growth means those carefully and lovingly crafted nets are quickly swamped by rising costs. This is exactly what is happening in Europe. They spend beyond their public finances and worry more about legislating the shape of bananas than ensuring they follow proper market rules.

This is socialism's second go round in Europe. And it will be its second failure. The reason is simple: capitalism triumphs over socialism. It's really that simple. Capitalism takes into account that Man is an economic animal. We strive for more resources and seek to better our families' lives, and we put our capital where it will offer us the best return. Socialism seeks to alter our economic nature. It wants to eliminate risk, to bring about the brotherhood of man, and to do away with competition. Most imoprtantly: it doesn't work.

So now Europe is up against it. Endless bailouts won't solve the underlying problems. Only a return to market based economics and sufficient belt tightening can save Europe.

Capitalism in the form of a rampant China, India, and Brazil is stalking Europe. And it means business.

Karl Marx must be turning over in his grave. To go from elegant economic theory to bankrupt philosophy twice in a hundred years is enough to disrupt anyone's eternal rest.

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