there is diminishing support for institutions that generate wealth rather than redistribute it...both positive and negative values increasingly converge and agglutinate. This promotes substantial class differences. If one is blessed with responsible parents, intelligence, favorable genetics, health, presentable appearance, and the ability to defer gratification, she is exceeding likely to prosper--and to marry one with similar characteristics. However, everyone has one vote. The political calculus is obvious and on bold display; promising voters public largess brings victory and dependency.
Read the whole thing.
Another point I would make, related to the Juan Enriquez talk that I pointed to yesterday, is that we are acting as if we have a lot of fiscal slack. That is, all of a sudden everybody wants the government to provide bailouts and relief, and nobody cares about the deficits that might result.
In Europe, my guess is that they do not have the slack. At some point, their welfare states may be unsustainable, and lenders may start to worry about that. Here at home, I wonder how state and local governments will sustain spending--see New York state. At some point, world investors may decide that U.S. Treasury securities are no longer the risk-free asset.