Samuelson: It’s the welfare state, stupid

By Robert J. Samuelson (Hat tip: John H. Detweiler) - If you doubt there’s an American welfare state, you should read the new study by demographer Nicholas Eberstadt, whose blizzard of numbers demonstrates otherwise. A welfare state transfers income from some people to other people to improve the recipients’ well-being. In 1935, these transfers were less than 3 percent of the economy; now they’re almost 20 percent. That’s $7,200 a year for every American, calculates Eberstadt. He says that nearly 40 percent of these transfers aim to relieve poverty (through Medicaid, food stamps, unemployment insurance and the like), while most of the rest goes to the elderly (mainly through Social Security and Medicare).

By all means, let’s avoid the “fiscal cliff”: the $500 billion in tax increases and federal spending cuts scheduled for early 2013 that, if they occurred, might trigger a recession. But let’s recognize that we still need to bring the budget into long-term balance. This can’t be done only by higher taxes on the rich, which seem inevitable. Nor can it be done by deep cuts in defense and domestic “discretionary” programs (from highways to schools), which are already happening. It requires controlling the welfare state. In 2011, “payments for individuals,” including health care, constituted 65 percent of federal spending, up from 21 percent in 1955. That’s the welfare state.

Yet, the subject is virtually taboo...  Read more at Washington Post Read More......

Samuelson: The world economy is adrift

WASHINGTON POST, 11/3/2011 by Robert J. Samuelson (Hat tip: John H. Detweiler)

[Excerpt] We are moving from Globalization 1.0 to Globalization 2.0. In Globalization 1.0, countries benefited from expanded trade and worldwide technology transfers. From 1980 to 2010, global trade volumes grew fourfold. Countless millions were lifted from poverty; new middle classes arose in Asia and Latin America. In Globalization 2.0, the economic interconnections among countries are breeding instability and nationalistic rivalries.

Time was when the United States automatically assumed the leadership role. Beginning in 1948, the Marshall Plan provided Europe with the equivalent of $850 billion — needed desperately to buy food, raw materials and machinery — to recover from World War II. In the 1980s, the United States took the lead in defusing the Latin American debt crisis; in the late 1990s, it did the same with the Asian financial crisis. The architecture of the postwar global economy was largely a product of U.S. leadership.

But under President Obama — possibly no one else could have done differently — America’s capacity and desire to lead have flagged. Read more at the Washington Post...

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