Overloaded Welfare Systems

Illustration: “Welfare Overload”, S R Galaen 2015

The immigration crisis describes the tragedy of people forced into refuge – but it also shows how the European people have been tricked by foolish policies.

The warfare in Iraq, Afghanistan, Libya, and Syria have to a large extent been the result of Western military intervention, as an alleged preventive solution for worse outcomes. This policy has been carried out from three big centers: Washington, London and Tel Aviv, whereby political leaders in Europe have been carried along. While the aforementioned centers are relatively shielded from destabilizing domino effects, it is the European countries with the most liberal welfare policies that take the heaviest toll.

Asylum policies do first and foremost define a system for helping humans recognized with refugee status, originally on a political basis. As no nation has infinite resources or infinite tax incomes, the debate necessarily arises: What is the best possible use of resources for solving the problem?

High-cost countries cause expensive domestic solutions. Their welfare systems and cost of living are based on a strong economy and a gradual development of infrastructure within predictable borders.

All Western countries experience a declining number of jobs and increased pension costs. This is due to offshoring industries, a growing mountain of debt and a somewhat top-heavy population pyramid. Mass immigration of people that need jobs, support, and places of residence, who in addition require considerable resources for integration, will, therefore, escalate the challenge.

Chief economist Kyrre M. Knudsen explains how asylum costs can be positive for the nation. It’s being pointed out that the spending is a stimulus to the national economy in regards to who receive the support, the money that is dispersed into society and new type of jobs that’s being created.

An economic argument claims that if a person breaks a shop window, the money paid to the glazier to repair the window will later be spent on buying goods within the local economy. From this view, breaking windows are thus believed to stimulate the economy. However, the French liberal economist Frédéric Bastiat explained the paradox which also is called “the broken window fallacy“. What isn’t taken into account is that the broken window has indebted the shop owner with a cost that otherwise could have been spent on productive or long term purposes.

Swedish professor of statistics, Hans Rossling, mentioned in a TV interview that it is 50 times as expensive to help the 5% that reach Europe compared to the local regions. Many of those who need to help the most remain in UN’s underfinanced refugee camps. Still, Rossling then uses these numbers as an argument for an even more liberal asylum policy in Europe, instead of increased aid to the local regions. [2019 comment: Look at Sweden’s immigration related problems now]

The costs inflicted upon the welfare systems and during crisis ends up being enforced upon ordinary people, that is, what some describe as the decreasing middle class or the poor working class. One can look to the financial crisis as an example. The US economist Paul Krugman gave the following critique in New York Times in 2013:

“Wall Street was bought out, while workers and house owners were left to themselves. Our so-called economic recoveries have done nothing for ordinary people, while incomes at the top have sky rocketed, where pretty much all progress between 2009 to 2012 has been at the top percentage” (from the appendix in the book “Debt – How the West fooled itself”).

Photo: voiceofdetroit.net

It’s doubtfully politicians, banking systems, corporations or the richest percentage that ends up paying for the situation occurring now either. Quite the contrary, as has been pointed out in a Norwegian newspaper, there are numerous private actors that have high earnings from the crisis: so-called “asylum barons”, hotels, airlines, taxi companies etc. In addition, the banking sector gets new debtors, perhaps a new form of subprime as it startet in the US.

But who can blame them – it’s just about supply and (explosive) demand in a high-cost country. This is an example of social democratic policies being forced to overpay private actors with public funds. Any critique can be disarmed by claiming it’s being done on the basis of good values – independently of how unfair or costly the solutions are.

Increased social expenses will cause other public tasks getting less funding, unless revenues increase proportionally – which they don’t.

In addition, today’s EU delivers neither safety nor economic progress, as Christian Anton Smedshaug writes in a column. Mass immigration will also force politicians to make unpopular cuts relatively soon, instead of the original hope of postponing it.

The capacity of welfare systems ought to have been clearly defined, and politicians should have a realistic picture of the longterm consequences of various loads. [Note: In 2017, a year after this article was written, the government requested this from the Central Bureau of Statistics and received a report stating the quite obvious yet, for the media, controversial]. Expenditure and resource management are not without significance for the many that need help nor for tomorrow’s society who will bear the costs.

At the same time, it seems like there is an ongoing destabilizing war against European economy, its currency, and welfare systems – while others domestically are getting wealthy in the process. A possible way out of this is to ensure the protection of national sovereignty and redesign welfare systems, asylum policies, and foreign aid policies in accordance with real problem-solving. Last but not least, European countries should break loose from neoconservative war policies, which is much of the reason for today’s problem.

[Norwegian article originally published here, January 2016]