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Demise of Daddy State

THE world is changing. Sometimes these changes are painful - but they are inevitable.

The economic crisis which hit the world in 2008 has laid bare several fault lines in the socio-political-economic system, especially in the West.

When the new Dutch king, Willem-Alexander, opened his country’s parliament a few weeks ago after the summer recess, he enunciated a notion which flies in the face of decades of European continental thought.

He said that the system of public provisions “no longer measures up to the demands of the times”. Therefore, “this leads to the fact that the classic welfare state is slowly but surely changing into a participation society”.

Of course, the Netherlands being a constitutional democracy, this speech was written for the king by the cabinet, led by Premier Mark Rutte, a liberal. Nevertheless, it was one of the most commented on speeches of the year, since it heralds a new phase in the state’s postwar history.

The welfare state built up by several generations of social democratic parties has its roots in the late 19th century, when the rapidly widening income gap between the new middle class and the working class brought about considerable social upheaval.

The social democrats in Britain, Germany, the Netherlands and elsewhere demanded a decisive role for the state in providing a reasonable life for the underclasses.

Their real breakthrough came after the Second World War, when social democratic parties threw off the shackles of rigid obedience to Marxist ideology and gained governmental responsibility in various European countries.

And where the liberals or conservatives remained in power, they took over many social democratic policies to undermine these parties’ appeal to the poor.

Therefore, since the late 1940s a welfare system was progressively built up whereby the state looked after those in need from the cradle to the grave.

The middle class and rich were heavily taxed, and that income was used for lavish benefits ensuring that the unemployed would not starve, that the elderly would survive comfortably, that the sick would receive good care, etc.

This ensured an excellent lifestyle for several generations of Europeans who lived in ways their forebears hardly dared dream about. But as time moved on, drawbacks became apparent.

Firstly, the system was so costly that no European state could really afford it any more without taxing the economy to a standstill. This meant that year after year went by with budget deficits, which were financed by borrowing money.

This went on for several decades. Every year the state debt would creep higher, and every year additional amounts had to be borrowed in order to balance the budget.

State spend exceeds revenues

In the Netherlands this has reached the stage where the Minister of Finance, Jeroen Dijsselbloem, recently admitted that the state spent €25m more per day than its revenues. The interest on the state debt alone amounts to €11bn per year – and then the payments are not even included.

Another complicating factor is that European populations are getting older. In the first decade after the Second World War there was a baby boom.

After about 1955 the birth rate dropped, initially slowly but later with increasing speed. In some countries the birth rate is so low (in Germany it is about 1.6 children per woman of childbearing age) that the population is no longer replacing itself.

This means that a wave of baby boomers are now passing pension age. Ever more elderly people rely on the financial support of ever fewer people of working age. The number of pensioners needing medical care is skyrocketing.

In other words, the demands of the welfare system which were built up in previous years have become unaffordable.

That is the background of the speech in which the "classic welfare state” is being exchanged for a “participation society”. The participation society referred to here is basically one where people take responsibility for their own lives and participate as civil society, instead of relying on the state.

As may be expected, the idea is running into heavy opposition. Many people have become emotionally and psychologically dependent on “Father State” taking care of everything.

Many others have already begun to take charge of their own lives. And the young – well, the young are always full of energy and optimistm, and they welcome the idea of doing their own thing.

In South Africa, the ANC is officially still locked in a social democratic mode. (Except when they get a chance to become rich, of course.)

But they, too, will have to learn that however noble the ideas of the social democrats, they are now smashing their heads against the granite wall of reality.

Such is life.

 - Fin24

*Leopold Scholtz is Media24's correspondent in Europe.

 
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