Paul Krugman on the superiority of the European welfare state: "On the one side, those strong safety nets have meant that the amount of sheer misery in Europe is considerably less than here....But in the United States, that has really meant incredible individual hardship. In Europe - even in the troubled economies, and very much so in the stronger economies like France or Germany - there just hasn't been - things have not been so terrible....in a lot of ways, Europe is weathering this crisis better, as a human process, then we are."
By
Clay Waters
January 27, 2011 - 1:43pm
National Public Radio's "Fresh Air [2]" welcomed Times columnist Paul Krugman on Tuesday, ostensibly to talk with host Terry Gross about his recent cover story on the Euroland for the NYT's magazine. But Krugman predictably touted the superiority of Europe's welfare state (Hat tip colleague Tim Graham). From the online transcript:
GROSS: Now, the Europeans have had a very strong safety net for people who are unemployed, health care benefits. There are countries like France that have very good benefits for new mothers. So there's a strong safety net there. But there's more and more people now who need that safety net because of unemployment. So how has that affected the economies in European countries? And I'm wondering also how that's affecting your thinking about strong safety nets and their pros and cons.
KRUGMAN: I think it cuts both ways. On the one side, those strong safety nets have meant that the amount of sheer misery in Europe is considerably less than here. You've actually had a roughly same depth of recession in terms of GDP, in terms of industrial production in Europe, as in the United States. But in the United States, that has really meant incredible individual hardship. In Europe - even in the troubled economies, and very much so in the stronger economies like France or Germany - there just hasn't been - things have not been so terrible.
Actually, unemployment hasn't risen as much in Europe as it has here because there are more - there's more regulation of hiring and firing, which has helped to sustain jobs. And those who do lose their jobs don't lose their health benefits. They have a lot more support. So in a lot of ways, Europe is weathering this crisis better, as a human process, then we are.
On the other hand, European budgets - because they have such a strong social safety net, European budgets are hit very hard when there is an economic slump. So some place like Spain, they moved from a budget surplus to a huge budget deficit in the face of the slump, and it's not because of anything - or not much because of anything the Spanish government did. It's just because, well, they had a lot of taxes, and the revenue has plunged, and they have a lot of benefits that have to be paid because of their system. They are, in some ways, more fiscally vulnerable to a slump than we are.