Jornal de Negócios - Portugal | Wednesday, December 7, 2011
Michael Jay Boskin wants to reform Europe's social policy
The social welfare system in Europe and other places was conceived under economic and demographic circumstances that were very different to today's situation. Governments have promised people too much for too long, the US economist Michael Jay Boskin writes in the business paper Jornal de Negócios: "This fundamental problem has now manifested itself in these countries'unsustainable debt dynamics. Euro membership, which temporarily enabledmassive borrowing at low interest rates, merely aggravated it. Reforming social-welfare benefits is the only permanent solution toEurope's crisis. One hopes that, with the help of national governments,the European Central Bank, the International Monetary Fund, and theEuropean Financial Stability Facility, the holes in thesovereign-debt-funding dike will be temporarily plugged, and thatEuropean banks will be recapitalized. But this will work only ifstructural reforms make these economies far more competitive. They mustboth lower the tax burden and reduce bloated transfer payments. Too manypeople are collecting benefits relative to those working and paying taxes."
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