Angela Merkel, in an interview for the Financial Times, suggests that Europe has to spend less on welfare to be competitive. “If Europe today accounts for just over 7 per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life.” She cites the problem of competition from other countries: “Other models have long since emerged: China, India, Japan, Brazil, and they will be joined by other countries that are working hard and proving to be innovative.”
She’s missing something important. All the countries she’s mentioned are committed to social support as well as economic development. Japan has long established networks of solidarity; China, Brazil and India have all been extending their systems of social protection. So have other countries she doesn’t mention, such as South Africa, Mexico and Indonesia. Developing security, reducing vulnerability and improving welfare is a large part of what prosperity is for.