"Over the past 50 years, we've been having a big debate over two rival economic systems. Conservatives have tended to favor the American model, with smaller government and lower taxes, but less social support. Liberals have supported programs that lead to the European model, with bigger government, more generous support and less inequality.
Europe may find itself locked into a vicious circle: an aging population means more public spending, which means higher taxes, which means lower growth, which means higher unemployment, which means more public spending, which means more taxes and even lower growth.
Which brings us to the current moment. In Europe, everybody is aware of the problem, but the remedies are so bad that most countries avoid them. Meanwhile, we in the United States are embarking on our own debate over the future of Social Security. Many liberals are claiming that we don't need to fundamentally revamp our system because there is no crisis. To the extent that's true, it is because we have not been taking their advice for the past 50 years.
We have stuck with a low-tax, high-growth economic model. This gives us the resources and the flexibility to deal with the problems caused by an aging population without having to face, at least for now, the horrific
choices that confront our friends across the Atlantic.
And a nice closing note...
The question is: Will we leave our children a system as flexible, dynamic and productive as the one that was, fortunately, left to us? Or, by doing nothing, will we succumb to the same ineluctable pressures that now afflict Europe, and find that we are immobilized at the exact moment China and India are passing us by?