The Dole Loses Its Job.(what the world will look like in 2012)(the European welfare state)(Brief Article)

Dateline: Stockholm, 2012. The welfare state died last night at home in bed; it was 66 years old. Born in London after World War II, its aim in life was to keep peace in a society with too many workers and too few jobs. For decades its pension, health and unemployment benefits kept most everyone happy, and found their most generous expression here in Sweden. But as early as 2002, doctors were warning that the welfare state was wholly unfit for the new Europe, which now had too few workers to support a rapidly growing senior population. The generous benefits had become a counterproductive form of life support, hurting the welfare state in economic competition with other states. By last night even the Swedes were ready to pull the plug. Cause of death: failure to change.

This obit has already been written, many times over. This past spring author Paul Hewitt predicted that the postwar welfare state would meet its "end" in a crisis that could make the early 21st century "every bit as tumultuous" as the period of the two world wars. A scholar at the Center for Strategic and International Studies in Washington, Hewitt argued that shrinking working-age populations will undermine growth from the United States to Japan, leading to a vicious cycle of falling demand, shrinking profits, collapsing stock prices--even "a global depression from which no welfare state will emerge intact."

Could it happen? The welfare state as we know it grew out of the "New Jerusalem" spirit in Britain after World War II. Born of the wartime thinking of Keynesian economist William Beveridge, and animated by fear of unemployment, such systems will find it difficult to adapt to the coming world of labor shortages. "The current welfare state was built on the image of risks facing our grandparents' generation," says Professor Gosta Esping-Anderson of Universitat Pompeu Fabra in Barcelona. But as the number of ...