The cruelty of compassion

Social cohesion is one of those values all decent Europeans can sign up to: less social conflict and less of the inequality that America and Britain put up with. What all European governments must grasp, though, is that many of the policies espoused in the name of social cohesion do not promote compassion over cruelty. Rather, they encourage decline, entrench divisions and thus threaten the harmony they pretend to nurture, says The Economist.
Two worrying common threads can be discerned in all this, says the Economist. One is that the natural desire for social cohesion is being abused to justify the protection of "insiders"-- those in permanent jobs, in trade unions or in privileged professions:

But the cost of protecting insiders falls largely on "outsiders" -- the unemployed and those in temporary work, especially young people and immigrants.

The gulf between insiders and outsiders destroys the very social cohesion that the policy is meant to preserve.

And in the long run it is bad for everyone, because employers do not train temporary workers -- a particular problem in economies like Italy and Spain, where new permanent contracts are rare.

This lack of training is one of the main reasons why Europe's productivity growth over the past two decades has persistently lagged behind America's.

The second common thread is that social cohesion has become a reason to defend the privileges and perks of the public sector, which is also now the last bastion of trade unions:

Across Europe many private-sector workers have seen their pay, pensions and other benefits frozen or cut by cash-strapped employers during the recession.

Yet most governments, even Britain's, have been reluctant to apply similar treatment to the public sector.

One result is that the state is taking a rising share of gross domestic product (GDP), which is sure to lead to heavier taxes.

Another is that public-sector pay and benefits have shot ahead as a cosseted caste extends its privileges.
Source: Editorial, "The cruelty of compassion," The Economist, January 28, 2010.

For text:
http://www.economist.com/opinion/displaystory.cfm?story_id=15393964

For more on Economic Issues:
http://www.ncpa.org/sub/dpd/index.php?Article_Category=17
First published by The National Center for Policy Analysis

Policy Bulletin / 16 February 2010