No, The Welfare State Did Not Cause Europe’s Decline

Bombed out Berlin.

One common thread throughout the conservative freakouts after President Obama’s reelection is that America is over; that it will “go the way of the Europe” as a consequence. This Fox News conversation, between Steve Doocy and Mark Steyn, perfectly encapsulates the meme:

DOOCY: So is our country in a cultural decline? How do we turn it around? Let’s talk to columnist Mark Steyn. … Mark, once upon a time, you were born in Canada. But you decided that you wanted to head south, young man, to the land of opportunity. Now as it turns out, we’re not just opportunity, we’re entitlement.

STEYN: Yeah, that’s right. I’d heard about thing called the American Dream. They don’t really have a Canadian Dream or Belgian Dream or a Greek Dream. [Doocy laughs]. There was an American dream. I wanted a piece of it. Just as I got here, the United States decided to adopt the policies that have brought the rest of the Western world to ruin. When the takers are able to outvote the makers, you are a nation in steep decline.

Watch it:

This narrative, pervasive though it might be, badly misconstrues American politics and European history. Even setting aside the absurd takers/makers frame, Obama simply has not instituted staple European policies like a maximum work week, direct public provision of health care along the lines of the British National Health Service, or taxing top earners at roughly 50 percent. Even Obama’s hated spending increases didn’t bring us closer to a Greece-like budget crisis: too-low taxes, rather than too-high spending, explain why some European countries are budgetarily worse off than others today.

But even if Obama had attempted to replicate the European welfare state to a T, it wouldn’t be relevant: neither Europe’s current crisis nor “decline” in international power (in terms of military strength) were caused by Europe’s social safety net. The central reason that Europe isn’t as powerful internationally as it once was is, quite simply, one Great Depression and two World Wars. By the end of World War II, European states were virtually leveled and hence unable to function as global powers. As one RAND institute paper puts it, “[there were] 39 million deaths in Europe alone. Large amounts of physical capital were destroyed as well through six years of constant ground battles and bombing. … Periods of hunger become more common even in relatively prosperous Western Europe.” These economic aftershocks, together with the push for self-determination from previously colonized people, meant European states couldn’t sustain their prior model for global power. Europe decided to instead partner with the United States and gradually refocus its military efforts on defense rather than global reach.

One way to confirm this is to look at European military spending. Were it the welfare state that collapsed Europe’s international military might, then military spending should have declined gradually over the course of the late 40s to 70s, when various European welfare states were being constructed. Instead, Europe’s aggregate defense spending remained at roughly 3.1 percent of GDP until collapse of the Soviet Union, which caused a steep decline to about 1.7 percent in 2008. Thus, the rise of the welfare state didn’t trade off with European military might — it was the lack of a threat worth spending money on.