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European modeling

By Duncan Currie

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France has been convulsed by violent demonstrations against modest pension reforms. Britain is imposing a tough fiscal “austerity” regime to plug a cavernous budget gap. Crisis-torn Greece is struggling to avoid a sovereign-debt default. Ireland, Portugal, and Spain are grappling with their own major-league financial woes. Is it fair to say that the much-ballyhooed European model is crumbling?

That depends on which “European model” you’re referring to. Though Western Europe is often lazily portrayed as a monolithic bastion of welfare-state sclerosis, it is in fact robustly heterogeneous. France has a brittle pension system and rigid labor markets, but the Dutch, Swedish, and Swiss pension systems are considered to be among the soundest in the world, and Danish labor flexibility rivals that of the United States. The aggregate tax burden is punishingly heavy in France, Germany, Italy, and the Nordic countries, but it is relatively light in Ireland and Switzerland. As for health care, the government-run systems in Britain and Scandinavia are much different from the consumer-driven Swiss model and the market-friendly Dutch approach, not to mention the French and German schemes.

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