For Richer, For Poorer: The Growing Marriage Gap


By JULIE HALPERT, The Fiscal Times
August 30, 2011

Many uneducated, lower-income men and women have yet another strike against them -- being single. A recent study from the Pew Research Center documents a growing and disturbing trend: while the overall marriage rate is declining, that decline has been much steeper for Americans without a four-year college degree. Less marriage for the less educated means a further widening of the gap between rich and poor.

"The trend for higher-income people to be more likely to marry contributes to [the wealth gap]," says Mariko Chang, an independent consultant for The Insight Center For Community Economic Development, a think tank based in Oakland, Calif., who sees this as a serious problem. Marriage has long been associated with greater wealth -- a 2005 study at Ohio State University found that someone who married and stayed married for 10 years had nearly four times more wealth than their single counterpart. And that gap is even wider when it comes to the median net worth (the difference between what the household owns and what it owes). According to Census data, the average median net worth of married households is seven times the wealth of unmarried households.

In 1970, about 88 percent of college-educated men were married, compared with 86 percent of those without a college degree, a 2 percent difference, according to Richard Fry, a senior economist with the Pew Research Center. By 2007 that gap had grown to 13 percent: 69 percent of college-educated men were married, while only 56 percent of those without a college degree married. Perhaps a better way to illustrate the shift is the growing number of single moms: In 2009 a whopping 41 percent of babies were born to single moms according to the National Vital Statistics Report. "Part of what's going on is that increasingly, the married couples are college-educated men and women who are better off financially," Fry said.

“Low-income youth aspire to marriage, but only when a certain economic bar is met.”

The growing marriage gap is particularly worrisome because the wealth gap between the college educated and those with only a high school degree or less has already been widening in the past 30 years. In the late 1970s, a young worker with a college degree earned 10 percent more than a young worker with a high school degree. By 2010, college-educated workers were earning about 50 percent more than those with just a high school education.

Karina Colin, age 30, and her boyfriend, David Garcia, age 33, exemplify the financial struggles some unmarried couples face. They've been living together for five years and have a three-year-old child. Colin, who didn't attend college, is an orthodontist assistant but gets no health care insurance, nor does her boyfriend, a part-time dental lab assistant. She says they haven’t tied the knot because she still needs to save up enough money to get a divorce from her first husband. She and Garcia take turns providing child care for their children while the other works. Colin earns $1,300 a month while Garcia makes $800, barely enough to cover their $1,100 in rent and other expenses. Colin says she is frugal, rarely uses credit cards and only buys clothes when the children really need them. She's trying to get another part-time job on the weekends to supplement the family's income. "It's hard," Colin says. "Every month I get paid, by the next day, my paycheck is gone."

Contrast that with Mike Sprouse, a 36-year-old chief marketing officer for a large internet marketing company in Chicago. He said finances were a greater struggle when he lived with an ex-girlfriend for two-and-half years. In September, 2010, he wed a teacher and children's book author. They were able to pool their resources to finance major home improvements, combine their 401Ks, which have both earned solid returns, and invest in technology stocks which have fared well. "We got married because we love each other, but the financial benefits of being married have been exceptional for us," he said.

One of the reasons lower-income individuals are nixing marriage is that women today have greater possibilities to earn their own income, says Stephanie Coontz, director of research and public education for the Council on Contemporary Families and author of Marriage, A History. A woman may be uninterested in sharing her income with a high school graduate who doesn't have high earning potential and is likely to be laid off or have periods of job insecurity. And there's also the fear of divorce, often associated with economic stress, which further depletes financial resources. The divorce rate for a high school graduate is 28.5 percent, compared with 17.6 percent for someone with a bachelor's degree and 10.3 percent for someone with a professional degree, according to the U.S. Census Bureau. In addition, there’s less stigma attached to having children out of wedlock, so many lower-income people choose to live with a partner without marrying them, says Chang.

"A marriage license is the best insurance policy you can get."

Another reason, according to Fry at Pew Research Center, is that less-educated young couples tend to wait until they’re financially “ready” to be married. “Low-income youth aspire to marriage, but only when a certain economic bar is met, including a large wedding that signifies the couple has ‘made it,’” he says. “The economic reality of their employment make it very difficult for them to surpass the economic bar, hence marriage remains elusive.” The growing cost of children also contributes to this. Many couples wait to wed until they want to have children, but never feel financially secure enough to do so.

That puts them at a financial disadvantage, though. "A marriage license is the best insurance policy you can get," says Richard W. Johnson with the Urban Institute. If one partner loses their job or becomes ill, they can fall back on a spouse's income. A study by the Urban Institute found that those married and experiencing a work- or health-related disability reduced household wealth by 16 percent, while that number was 42 percent for those who are single. Living together isn't as financially beneficial, since partners can't take advantage of each other's health insurance or retirement benefits or pool those resources. They also may not invest in long-range assets together because they're less confident the union will last, Coontz says.

While falling short of pushing his clients to tie the knot, Robert Henderson, a financial planner in Mystic, Connecticut, says he "clearly outlines some of the benefits to marriage," for those who are reluctant. In particular he'll discuss the economies of scale that two incomes provide, as well as the ability to take advantage of dual health and retirement benefits. But "telling poor people to get married won't solve the problem, because marriage is riskier for them," Coontz says.

Addressing marriage inequality is essential, says Robert Lerman, professor of Economics at American University. He says that children raised in lower-income, single-parent households face greater financial and emotional challenges, making them more likely to struggle as adults, thus reinforcing the cycle. He supports a federal program, the Healthy Marriage Initiative, that’s intended to increase the percentage of children who are raised by two parents in a healthy marriage. It provides grants for classes that teach skills about how to develop quality lasting relationships. Learning how to have a healthy marriage "is one of the most important things in life, yet we're very reluctant as a society to address it," he said.

[URL]http://www.thefiscaltimes.com/Articles/2011/08/30/For-Richer-For-Poorer-The-Growing-Marriage-Gap.aspx#page2[/URL]

Stupid the state should look after most of the children - free school meals, education, free housing for anyone with a family, free medicine.
Julie just writes how the US has got stupified up with drugs and she is an idiot.
When I was growing up everything essential for a family was free or nearly so - bread and potatoes were highly subsidized - free schools, free school dinners, free breakfasts, free libraries, free sports,
you could go and gather food without hinderance at 7 if you needed it.
Julie is surely a Capitalist PIG - marriage is not about saving the state money,.
When I was growing they used to forcibly extradite children including some of my friends to work camps in Australia if they didn't have a 'family' to support them or force them to join the Merchant Navy as near slaves working 70 - 80 hour weeks under very dangerous conditions.'
Why do you listen to such Fascists - children have rights even without parents.
Marriage is a human construct birth isn't!
It's not important - the rights of a child are!
S.




[QUOTE=Atabey]
For Richer, For Poorer: The Growing Marriage Gap


By JULIE HALPERT, The Fiscal Times
August 30, 2011

Many uneducated, lower-income men and women have yet another strike against them -- being single. A recent study from the Pew Research Center documents a growing and disturbing trend: while the overall marriage rate is declining, that decline has been much steeper for Americans without a four-year college degree. Less marriage for the less educated means a further widening of the gap between rich and poor.

"The trend for higher-income people to be more likely to marry contributes to [the wealth gap]," says Mariko Chang, an independent consultant for The Insight Center For Community Economic Development, a think tank based in Oakland, Calif., who sees this as a serious problem. Marriage has long been associated with greater wealth -- a 2005 study at Ohio State University found that someone who married and stayed married for 10 years had nearly four times more wealth than their single counterpart. And that gap is even wider when it comes to the median net worth (the difference between what the household owns and what it owes). According to Census data, the average median net worth of married households is seven times the wealth of unmarried households.

In 1970, about 88 percent of college-educated men were married, compared with 86 percent of those without a college degree, a 2 percent difference, according to Richard Fry, a senior economist with the Pew Research Center. By 2007 that gap had grown to 13 percent: 69 percent of college-educated men were married, while only 56 percent of those without a college degree married. Perhaps a better way to illustrate the shift is the growing number of single moms: In 2009 a whopping 41 percent of babies were born to single moms according to the National Vital Statistics Report. "Part of what's going on is that increasingly, the married couples are college-educated men and women who are better off financially," Fry said.

“Low-income youth aspire to marriage, but only when a certain economic bar is met.”

The growing marriage gap is particularly worrisome because the wealth gap between the college educated and those with only a high school degree or less has already been widening in the past 30 years. In the late 1970s, a young worker with a college degree earned 10 percent more than a young worker with a high school degree. By 2010, college-educated workers were earning about 50 percent more than those with just a high school education.

Karina Colin, age 30, and her boyfriend, David Garcia, age 33, exemplify the financial struggles some unmarried couples face. They've been living together for five years and have a three-year-old child. Colin, who didn't attend college, is an orthodontist assistant but gets no health care insurance, nor does her boyfriend, a part-time dental lab assistant. She says they haven’t tied the knot because she still needs to save up enough money to get a divorce from her first husband. She and Garcia take turns providing child care for their children while the other works. Colin earns $1,300 a month while Garcia makes $800, barely enough to cover their $1,100 in rent and other expenses. Colin says she is frugal, rarely uses credit cards and only buys clothes when the children really need them. She's trying to get another part-time job on the weekends to supplement the family's income. "It's hard," Colin says. "Every month I get paid, by the next day, my paycheck is gone."

Contrast that with Mike Sprouse, a 36-year-old chief marketing officer for a large internet marketing company in Chicago. He said finances were a greater struggle when he lived with an ex-girlfriend for two-and-half years. In September, 2010, he wed a teacher and children's book author. They were able to pool their resources to finance major home improvements, combine their 401Ks, which have both earned solid returns, and invest in technology stocks which have fared well. "We got married because we love each other, but the financial benefits of being married have been exceptional for us," he said.

One of the reasons lower-income individuals are nixing marriage is that women today have greater possibilities to earn their own income, says Stephanie Coontz, director of research and public education for the Council on Contemporary Families and author of Marriage, A History. A woman may be uninterested in sharing her income with a high school graduate who doesn't have high earning potential and is likely to be laid off or have periods of job insecurity. And there's also the fear of divorce, often associated with economic stress, which further depletes financial resources. The divorce rate for a high school graduate is 28.5 percent, compared with 17.6 percent for someone with a bachelor's degree and 10.3 percent for someone with a professional degree, according to the U.S. Census Bureau. In addition, there’s less stigma attached to having children out of wedlock, so many lower-income people choose to live with a partner without marrying them, says Chang.

"A marriage license is the best insurance policy you can get."

Another reason, according to Fry at Pew Research Center, is that less-educated young couples tend to wait until they’re financially “ready” to be married. “Low-income youth aspire to marriage, but only when a certain economic bar is met, including a large wedding that signifies the couple has ‘made it,’” he says. “The economic reality of their employment make it very difficult for them to surpass the economic bar, hence marriage remains elusive.” The growing cost of children also contributes to this. Many couples wait to wed until they want to have children, but never feel financially secure enough to do so.

That puts them at a financial disadvantage, though. "A marriage license is the best insurance policy you can get," says Richard W. Johnson with the Urban Institute. If one partner loses their job or becomes ill, they can fall back on a spouse's income. A study by the Urban Institute found that those married and experiencing a work- or health-related disability reduced household wealth by 16 percent, while that number was 42 percent for those who are single. Living together isn't as financially beneficial, since partners can't take advantage of each other's health insurance or retirement benefits or pool those resources. They also may not invest in long-range assets together because they're less confident the union will last, Coontz says.

While falling short of pushing his clients to tie the knot, Robert Henderson, a financial planner in Mystic, Connecticut, says he "clearly outlines some of the benefits to marriage," for those who are reluctant. In particular he'll discuss the economies of scale that two incomes provide, as well as the ability to take advantage of dual health and retirement benefits. But "telling poor people to get married won't solve the problem, because marriage is riskier for them," Coontz says.

Addressing marriage inequality is essential, says Robert Lerman, professor of Economics at American University. He says that children raised in lower-income, single-parent households face greater financial and emotional challenges, making them more likely to struggle as adults, thus reinforcing the cycle. He supports a federal program, the Healthy Marriage Initiative, that’s intended to increase the percentage of children who are raised by two parents in a healthy marriage. It provides grants for classes that teach skills about how to develop quality lasting relationships. Learning how to have a healthy marriage "is one of the most important things in life, yet we're very reluctant as a society to address it," he said.

[URL]http://www.thefiscaltimes.com/Articles/2011/08/30/For-Richer-For-Poorer-The-Growing-Marriage-Gap.aspx#page2[/URL]
[/QUOTE]

Stupid the state should look after most of the children - free school meals, education, free housing for anyone with a family, free medicine.

Julie just writes how the US has got stupified up with drugs and she is an idiot.

When I was growing up everything essential for a family was free or nearly so - bread and potatoes were highly subsidized - free schools, free school dinners, free breakfasts, free libraries, free sports,
you could go and gather food without hinderance at 7 if you needed it.

Julie is surely a Capitalist PIG - marriage is not about saving the state money,.

When I was growing they used to forcibly extradite children including some of my friends to work camps in Australia if they didn't have a 'family' to support them or force them to join the Merchant Navy as near slaves working 70 - 80 hour weeks under very dangerous conditions.'

Why do you listen to such Fascists - children have rights even without parents.

Marriage is a human construct birth isn't!

It's not important - the rights of a child are!
S.


Earth to ABC200, the world has changed and the freebies aren't there anymore!! Just look at the European states and the US!! See anything ABC? All those subsidies from afar are finally coming home to roost and we can't keep the subsidies going. The Epoch of living on the hog are largely over ABC200.

Certain business interests haven't gotten the memo.

the previous post is full of of falsehoods - many european have free meals for all poor children - they even take food o gypsy camps and to the houses of old people, and young children.
Housing in much of Europe is an absolute right as is education to 18 ( when I was growing up it used to be 15 )
The right to work or attend school exists in many sates to age 18 and a living allowance is paid in most states.
Right to comprehensive medical care is in place in many states.
Atabey lives in his imaginary world totally removed from reality.
Julie is still an idiot.
Fortunately most of the World's leading companies are centered in Europe and benefit from an educated, confident, and highly skilled, motivated workforce.
Agriculture in many fields is world leading.
One or two contracts back I used to deal with US employee of the same company.
Given the stupidity of the workforce there selfishly dreaming of their McMansions and 3 car families and their dis-inclination to do do anything approaching work its now wonder we see the rapid dereliction of the US - with a few exceptions.
Fortunately there are many americans with sufficient nounce to leave their crazed drug oriented society and set up elsewhere, for example the DR.

S.

Ataby is so stupid. Two my English friends are millionaires. Instead or pyaing a subscription to gym or going to restaurant serving imported food they work a small plot - an allotment - and grow food.
Some they eat at home - some they donate to the school fo its dinner program.
Many European states are setting up to be energy import fee and the number of car journies reduced by 50%.
Much of the infrastructure is in place , schools, huge modenn hospitals, high speed trains, housing estates full of modern goood houses, museums etc,.

I can tell you that outside his fantasy world no british person or recent immigrant person is going to leave a child malnourished on the streets or lacking education; or any family without a basic house, health care.

Nature has provided so much and it is so easy to satisfy basic human needs.

Even when the stupid americans were pronouncing independence so they could carry on keeping slaves King George !!! was pronouncing that every child in the Empire should be taught to read and write.

A boviously associates with one of the Bluth family - does he escoff bananas?

The Bluths were one of the richest, most powerful, most publicized families around. George Bluth, Sr. lorded over the Bluth Company, a mega-real-estate corporation that garnered a steady stream of cash, all of which was needed to accommodate the spending prowess of the family members.

However, all of that changed when the SEC cracked down on the Bluths; arresting George Sr. for fraud and other corporate chicanery. From rags to riches, all splayed over the evening news and tabloids, went the Bluth family; a splintered chorus of self-involved personalities all vying for some portion of a nest egg that doesn't exist. And only one man could hold them together.

• Michael Bluth (Jason Bateman, Teen Wolf Too)
Michael is the calm within the storm of quirks and insanity that is the Bluth family. A loyal and competent employee in the Bluth Company, he had hoped to assume control one day. But when his father awarded the Presidency to Michael's mother, that dream died. George's prompt arrest, and the disarray the Bluth family was thrown into, compelled Michael to stay and hold the family together.

• George Michael Bluth (Michael Cera)
One of the main reasons Michael opted to stick with the family. George Michael is Michael's son, a naïve, over-sensitive, hard-working boy who is just getting to know his family. He and his father are rebounding from his mother's death two years ago, so the sight of kin is inviting—especially his cousin Maebe, to whom he taken a guilt-inducing fancy.

• George Oscar ("Gob" Bluth Jr. (Will Arnett)
The eldest Bluth son is also one of the more clueless. A failed magician who yearns only for his father's approval, Gob (pronounced "Jobe" wiles away his time either lounging on the family yacht, scarfing free frozen bananas from the family's Frozen Banana stand, cavorting with sleazy women, or generally wallowing in utter self-involvement.

• Lindsay Bluth Fünke (Portia de Rossi, Ally McBeal)
Michael's twin sister. Lindsay moves in with Michael and George Michael, bringing her family with her. Lindsay is consumed with causes, often going overboard with her charitable work, even if it's not entirely clear what she's supporting. She has expensive tastes—which are hard to meet, considering her aversion to working.

• Tobias Fünke (David Cross, Mr. Show)
Lindsay's husband, Tobias, was once a renowned psychologist who lost his license due to an unfortunate CPR accident. He now floats along, siphoning off the wealth of the Bluth family while pursuing his newly-discovered dream of becoming an actor.

• Maeby Funke (Alia Shawkat)
Tobias and Lindsay's overly rebellious, underachieving daughter. Maeby often involves the gullible and smitten George Michael in her acting-out schemes.

• Byron "Buster" Bluth (Tony Hale)
he youngest of the Bluth offspring, Buster still lives under the strict auspices of his mother. (He spent 11 months in her womb; "there were claw marks on her uterus." Emotionally stunted and socially inept, Buster finds himself in awkward positions that he never asked to be in.

• Lucille Bluth (Jessica Walter, Play Misty For Me, The Flamingo Kid)
The family's controlling, selfish, conniving mother; Lucille is, in a word, diabolical.

• George Bluth Senior (Jeffrey Tambor)
The imprisoned patriarch still manages to pull strings from behind bars. Flaky and dishonest, sure; but George is also manipulative.

Season One's 22 episodes document the challenges of this crazy family as they try to deal with the prying eyes of the Federal government, the ludicrous circumstances in which they find themselves, and—mainly—each other.


Its a microcosm of the US?

S.

Earth to ABC.

Pigs don't fly

Europe's economic woes

The PIIGS that won't fly
A guide to the euro-zone's troubled economies

May 18th 2010

ON MAY 10th European finance ministers meeting in Brussels produced a three-year €750 billion rescue package for the euro zone, designed to convince financial markets that the weaker members of the single currency would not be abandoned. The scale of the response reflected growing fears among European leaders that financing for the most troubled euro-zone countries might suddenly stop. Although the package has bought the troubled currency area time, it does not resolve the underlying structural difficulties facing many of its members, particularly the five so-called PIIGS: Portugal, Ireland, Italy, Greece and Spain. These countries face many of the same economic challenges as well as the ability to cause headaches in Brussels (and Berlin). The interactive graphic below tells the story; click on the map for country-specific information and charts.

http://www.economist.com/node/15838029

23 August 2011 Last updated at 20:10 ET
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Greek economic crisis: Timeless values help villagers

Woman with bread Older villagers are used to a frugal existence


Roger Jinkinson, a British writer who lives in a remote village on the Greek island of Karpathos, reflects on how the profound economic crisis is affecting his small rural community more than 400km from Athens.

Although times are hard, he believes that a long tradition of thriftiness, a thriving barter economy and the return of young people to work on the land will help the village weather the crisis.

The older generation in the village are thrifty and hard working; they are used to a frugal existence and times of extreme hardship.

Hundreds of thousands of Greeks died of starvation and the complications of severe malnutrition during World War Two and the Civil War that followed.

Memories of those times can be seen etched in the faces of the old people and the habits handed down to their children.

Women are in charge of the home, a loaf of bread is kept until it is used and, if you could see the effort it takes to produce, you would understand why.

Hand-sowing wheat and barley, reaping, winnowing and grinding the grain is back-breaking work, and kneading dough for the huge loaves baked in outside wood ovens is not light work either, so it is easy to sympathise with the women as they carefully store a week-old loaf back in its bag.

In Britain we throw away millions of tonnes of food a year. In the village they throw away nothing.

Dwindling incomes

This is a small, isolated community on the edge of an often wild and turbulent sea.
Local woman making cheese Local women make cheese, some of which can last for up to two years

There are three main sources of income: crofting from the sea and the land, tourism, and money from the diaspora.

The last two have suffered adversely from the crisis in Western capitalism.

Tourism is in decline due to higher travel costs and the shortage of money in northern Europe.

The decline has been exacerbated by the trend away from small village hotels and tavernas towards all-inclusive holidays at globally-owned and funded mega-hotels.

International currency fluctuations also have an adverse impact.

Many of the older men in the village went to work in the US and Canada, where they paid their taxes and social security dues before returning to retire in Greece.
Continue reading the main story
“Start Quote

The return of the young is revitalising the village, strengthening family and community ties and reversing a century-long trend of depopulation ”

The US and Canadian governments keep their part of the contract and dutifully pay pensions into the local bank accounts of the returned workers.

But, despite all the furore and turmoil, the euro remains strong against the dollar - added to which inflation has eroded the value of these small pensions.

While bankers continue to make billions from playing the market, these retired builders and decorators, taxi drivers and cooks, lose 10% just to change their money from dollars to euros.

Wages in the village remain low. Plasterers and bricklayers earn 40 euros a day - if work is available. The few government jobs pay even less and, in this context, it is understandable that workers in Greece do not rush to pay their taxes, particularly when they see the ostentatious wealth of the upper decile.

Produce shared

Greek society is family-based, the public sector is over-bureaucratic and its economy unreformed.
Old man with bread Produce is shared in times of plenty

Next to the state, the Greek Orthodox Church is the largest land owner in Greece.

It has substantial holdings in Greek banks, many of its employees are funded by the state, and yet it pays very low taxes.

In less than 50 years, Athens has grown from the size of a small provincial town to an urban sprawl of five million, sucking the brightest and best from the rural community and unbalancing the economy.

Much of the trade in the village is done by barter and the villagers care little for the EU, the World Bank and the IMF.

Excess produce is shared in times of plenty. When times are hard, the proud people stay in their houses and go to bed early.

Among the old men in the local cafe there is a near unanimous view that it was a mistake to enter the eurozone, and a longing for a return to the drachma, which they believe was the world's longest running currency.

While they get by on very little, the dreams of their children and grandchildren are being destroyed.

Community ties
Local women dressed in traditional costume Local traditions have been strengthened as young people return

The only positive outcome of the crisis is the return of young people, including graduates, to the village.

There are plenty of empty houses here, no shortage of land, and good rains last winter have expanded the opportunities for new crops, as well as giving greater returns from old.

An attraction is that work on the land is mainly a winter activity, leaving the summer months free for fishing and beach parties.

The return of the young is revitalising the village, strengthening family and community ties and reversing a century-long trend of depopulation.

This is a village with strong traditions.

The young people will learn much from their parents and grandparents, and bread will be kept to the last slice.

Roger Jinkinson is the author of Tales from a Greek Island

http://www.bbc.co.uk/news/world-europe-14445979

European Debt Crisis Signals Collapse of Social Welfare State

Monday, August 22nd, 2011 | Filed under Economics,Europe,European Union,Latest Articles,World |

Flashing Red: European Debt Crisis Signals Collapse of Social Welfare State

By James Roberts and J.D. Foster, Ph.D.

The Heritage Foundation

Europe’s socialist (or “social democratic”) welfare state is collapsing under the load of unsustainable debt. There is no chance European politicians will ever make good on the many costly and unfunded entitlements they have promised their citizens.

The fundamental problem in the European Union is a monetary policy failure. In conjunction with the debilitating effects of the social welfare state, this has led to a broad economic collapse among the lesser states—notably the PIIGS (Portugal, Ireland, Italy, Greece, and Spain), but also some of the EU’s newer members—and it threatens to envelop the greater states.

For years, this collapse among the lesser states was disguised by debt accumulation—countries would borrow (at de facto concessionary interest rates) to overcome their inability to generate adequate income by producing and selling. The lack of actual and prospective growth combined with growing debt burdens has led to a long-term solvency crisis, which has been bubbling up of late into a series of liquidity crises.

The monetary and fiscal situation in the EU is increasingly unmanageable, as the debt burdens grow and growth prospects diminish further. To paraphrase an old saying: You can fool some of the credit markets all the time, and all the markets some of the time, but you cannot fool all the credit markets indefinitely.

The Ill-fated Euro Experiment

The vision of a “euro zone” was ill-conceived from the start. It is now increasingly acknowledged that Brussels’ lack of control over social spending, especially in the PIIGS, doomed it from the beginning. Agreements (e.g., the Maastricht Treaty)[1] to stay within EU member government spending targets were routinely flouted, even by the largest EU countries.

But the growing gap in competitiveness amongst EU members was far more important. Some, like Germany, tended to adopt policies like labor market reforms that built on their inherent economic strengths. The strong got stronger, while others, like Italy and Greece, stood still or even retreated on policies that would have sustained their international competitiveness. The focus today on shifting painfully to policies that can make these countries competitive is simply too little, too late.

And now, the instability is rapidly spreading to the pillars of Europe—first Spain, then Italy, and now apparently to France. Southern Europeans kept borrowing in low-interest-rate euros (which simultaneously inflated housing bubbles in their countries) until, in Margaret Thatcher’s words, their socialist governments “ran out of other peoples’ money!”[2] As a result, some of Europe’s large private banks now hold toxic quantities of sovereign debt issued by the PIIGS and are threatened with extinction through serial defaults—thus they are deemed “too big to fail.” Already there is growing worry over the solvency of France’s Societe General Bank because of this crisis, with several other major European banks likely to be in trouble if the situation is not resolved.

Social Results of the Welfare State

For decades now, one of the most tragic costs of the European welfare state has been Europe’s structural unemployment, especially among the young, combined with welfare payments that turned unemployment into an acceptable—even desirable—status, while stripping those affected of their dignity and sense of responsibility. The recent riots in the U.K. are an ominous reflection of this failure.

One of the key questions now is: How much longer will workers and taxpayers in Germany and other relatively more fiscally prudent countries in northern Europe be willing to work into their late 60s to subsidize (via eurozone bailouts and managed defaults) their neighbors in southern Europe so that the latter can retire early in their 50s on generous state-funded pensions and go to the beach?[3]

The Next Monetary Policy

The euro elites’ response to date has been to try to address the solvency crisis through fiscal policy, and the liquidity crisis through additional debt—ignoring the EU’s monetary policy failure because they have no politically acceptable solution. It is obvious where this will lead, as Heritage Foundation analysis has noted in the past.[4]

Maybe, instead, some of the PIIGS will decide to exit the euro. Or perhaps the northerners will leave the euro (and the euro-denominated sovereign debts of the PIIGS) behind and resuscitate the Deutschmark? One path or the other appears inevitable.

The European social welfare state has contributed mightily to this situation by making all of Europe less competitive relative to the rest of the world, which is why the U.K., though not subject to the monetary policy failure, cannot escape the growth consequences entirely. Meanwhile, Germany’s inherent strengths have allowed it to take advantage of its Euro-linked trading partners.

Lest there be any doubt, the underlying monetary policy failure is the euro. It is now quite clear that this policy was doomed, not solely because Europe failed to harmonize it with other policies, but because monetary union between fast-growth states and slow-growth states can only end in tragic monetary disintegration. The hope that it would cause slow-growth states to catch up was a pipe dream.

Will Europe’s elites succeed in making one more try to save the eurozone, perhaps by creating a central EU treasury that alone has the power to issue new debt for EU countries? This would guarantee that the PIIGS pay lower interest rates than their credit histories would mandate, while the north pays more.

French President Nicolas Sarkozy reportedly aims “to seize the Greek crisis to make a quantum leap in eurozone governance.”[5] The recent assertion by Berlin and Paris that a new eurobond is dead on arrival,[6] however, suggests Germany’s patience has just about run out—apparently, that quantum leap will have to be in a different direction.

For the U.S., Europe is the ultimate object lesson—a warning of what happens when government is allowed to run wild, with the resulting loss of liberty and fiscal deficits. Fortunately, though the United States has a single currency, it largely achieved the necessary conditions for such an arrangement to be successful long ago.

Rescuing Europe and Protecting the U.S.

It is almost certain that this crisis will produce something new out of Europe. The emergence, whether collectively or individually, of stronger European societies with durable financial and monetary regimes would certainly be in the best interest of the U.S. and the rest of the world.

As Ambrose Evans-Pritchard reports in The Telegraph (U.K.),[7] the likely short-term outcome is described by Daniel Gross from the Centre for European Policy Studies: “Germany and the other AAA states must agree to some sort of Eurobond regime. Otherwise the euro will implode.” However, as noted above, France, and especially Germany, have been stoutly opposed to a eurobond, and for very good reasons. Assuming Gross is correct in his assessment, and he most likely is, the future of the euro is bleak indeed.

Meanwhile, spending by the U.S. government—presently on track to consume one-third of the economy by the time today’s newborns graduate from college—must be reduced. Entitlements must be reined in and reformed; non-defense discretionary spending must be rolled back to 2008 levels.

To reduce federal spending and prevent economic collapse, U.S. policymakers should follow The Heritage Foundation’s plan in “Saving the American Dream.”[8]

James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics, and J. D. Foster, Ph.D., is Norman B. Ture Senior Fellow in the Economics of Fiscal Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

He's quoting stupid right wing hacks again. I knew whole villages in the area where I was brought up who were living off the land, including old people, who were living off the land. Modern techniques did not exist - but still enough potatoes were grown and pig salted, winter vegetables planted to lived decently through the winter.
I used to help with planting.
Indeed a glass of local honey mead was great.
With good modern bio-composing it is no problem of a family to live from 1 - 2 hectares.
Now nearly everyone has the potential of energy free modern housing - education then used to take place often in the open air with slateboards and tattered books that had been in children's sachels for 15 years or more.
So stuff Ataby and his rogue economists who are somehow brain defective. The welfare state was easy to organize - everyone had a paper card with a stamp on it. Some in agriculture were excused the stamp.
Local hospitals, ambulance sericie, police, etc. could call on volunteer reservists in emergency - e.g. a TB epidemic, bad winter.
Trains running slowly and economically were the main means of transport.
Now with huge infrastructure and huge advances in technology its time to say goodbye and good riddance to the stupid people Atabey quotes, design local economies that provide for happiness with minimum environmental impact.


A song banned throughout the US .....




http://www.youtube.com/watch?v=Q4KzGKnuUuc&feature=related
S.