The welfare state has failed. All western welfare states are on the verge of political and economic collapse. All are insolvent and incapable of meeting their obligations. As shown here, the mathematics cannot work without massive defaults.
Political leaders, almost universally, are unwilling to accept this reality. Power has aphrodisiac-like properties. Once attained, more is desired. It is rarely relinquished willingly. Dismantling the welfare state is relinquishing power. It is not likely to happen smoothly or before political and economic failure.
The world is at a dangerous juncture. A confluence of failures has never occurred before other than from world-wide plague, famine or far-reaching wars. Breakdowns in arguably the most civilized societies are going to occur. When they do, war and other apocalyptic outcomes are possible. Confusion and mayhem present opportunities for rogue nations and non nation-states.
The above is a simple description of the state of our world. As people, investors, taxpayers or whatever other roles we play, it is our reality.
How Did We Get Here?
The common cause in the impending sovereign disasters is the welfare state. Lord Acton pointed out the dangers of power in his universally-recognized quote “Power corrupts; absolute power corrupts absolutely.” This aphorism explains why both written and unwritten constraints on elected officials were considered important.
In order to acquire excessive power, these constraints had to be circumvented. Enter Otto von Bismarck who “invented” the welfare state. This relatively recent concept provided the vehicle for massive government expansion. As Bill Buckler succinctly described it:
… the welfare state is the mechanism which makes government depredations acceptable to the public.
The welfare state was sold as an improvement in citizen conditions. Promises were made that would improve everyone’s circumstances. The welfare state institutionalized what Bastiat warned about:
The State is the great fiction by which everyone seeks to live at the expense of everyone else.
Bastiat’s warning appeared over 150 years ago. It pre-dated Bismarck and provides a nearly perfect description of the modern welfare state.
The welfare state quickly became a Ponzi scheme. Whether that was Bismarck’s original intent is irrelevant. It was abused by the ruling class to buy votes and enhance power. As described