ABSTRACT
This chapter explains the current crisis in Europe that has its roots in the large welfare state. In order to avoid future eruptions of economic crises of the same magnitude and persistence, Europe's governments must therefore include yet another goal in their efforts to bring their economies up to growth again. That goal is a permanent roll-back of the welfare state. As currently used, spending cuts in Europe have been designed to preserve the welfare state. Legislators have wanted to reduce its cost to fit a shrinking tax base, but since their policies have in turn reduced the tax base their quest becomes a bad case of Sisyphean labor: they cut spending to reduce the deficit and slim-fit the welfare state, only to see the deficit grow again as the tax base shrinks. By focusing on non-instructional functions, these cuts can, ideally, align a government operation with the operational principles of private businesses exposed to competition.
