Wednesday, October 30, 2013

Branko Milanovic: Europe, democracy and the welfare state

Two recent articles by the World Bank economist Branko Milanovic are very illustrative of top level progressive thinking on the challenges that Europe faces.
In the article on democracy, inequality and capitalism, Milanovic raises the issue that Europe is not used to massive immigration in the way of the US or Australia. As a result of that and in conjunction with the economic and financial crisis, welfare states are threatened by the the loss of wealth and confidence of the middle classes, which historically have been key to sustain democracy. Europe remains the most attractive region to live, although it is not the most dynamic. It remains a factor of attraction for workers from other regions of the world, but its lack of growth conditions the reaction of local populations to immigration. Milanovic wonders if as a result of this dynamics, the coincidence of capitalism and democracy in Europe is an interlude, an exception limited to the second half of the twentieth century and the early years of the twenty-first. In his most recent article, Milanovic argues that to prevent economic decline, Europe should be ready to accept new immigration in a structured and ordered way. Immigration is inevitable, and it is desirable economically in a continent that is declining in terms of innovation and demographics.

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