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 enabled massive borrowing at low interest rates, merely aggravated it. Reforming social-welfare benefits is the only permanent solution to Europe's crisis. One hopes that, with the help of national governments, the European Central Bank, the International Monetary Fund, and the European Financial Stability Facility, the holes in the sovereign-debt-funding dike will be temporarily plugged, and that European banks will be recapitalized. But this will work only if structural reforms make these economies far more competitive. They must both lower the tax burden and reduce bloated transfer payments. Too many people are collecting benefits relative to those working and paying taxes."

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