Belgium: Lessons for the U.S.?

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Throughout the Greek economic crisis I have talked about it being a cautionary tale. However, there is a European nation that could be a more fitting example of what faces America under a system that funnels money from earners to pay for bloated government and the welfare of non-earners. There was an election in Belgium over the weekend that got scant coverage in America. First, as background on the nation, it has the largest comic book industry per capita in the world. A revolt against the Dutch brought independence in 1830 and a constitutional monarchy in 1831. Initially it was the southern part of the nation, Wallonia, which was the economic powerhouse.

Wallonia is French-speaking and was the source of industrialization. Over the years, things changed and Wallonia began sinking, much like the rust belt of the United States. Elite French-speakers didn't make the kinds of adjustments needed to keep up with new economic realities. However, their power in Brussels made it possible to subsidize failure and incompetence for years, and at the expense of their more conservative and hard working neighbors in Flanders. So while Flemish workers kept their noses to the grindstone, making life better and attracting people seeking prosperity, French-speakers in Wallonia joined unions and demanded greater transfers of money. Just as it is unlikely non-union workers in America will accept transferring their earnings to richer government workers who get to retire sooner, the folks in Flanders are just saying no.
Before elections this past Saturday, several polls were taken, including a poll of Flemish voters, by a leading newspaper.

As it turns out the party advocating for an orderly breakup of Belgium won the largest amount of parliamentary seats. With 27 seats, the New Flemish Alliance has bolted into the role of powerbroker. The party is separatist but its leader, Bart De Wever, seems open to greater self rule while he is staunchly against spending. He wants to mitigate months of political instability but is insisting the new government "curb runaway spending." This is going to be the real sticking point. As it stands, Belgium is a very socially liberal country that legalized euthanasia in 2002, gay marriages in 2003, and has the highest percentage of female ministers of any Western nation. This is a highbrow country that boasts one of the lowest ratios of McDonald's (NYSE:MCD) per inhabitant in the developed world (0.062 per 10,000 is 7 times less than U.S.A., 4 times less than Japan, and twice as few as France and Germany).

Still, those things aren't the issue. The issue is an untenable system where one group of people suck out money from another group of people.

The fact is, there is a tremendous amount of autonomy in both Flanders and Wallonia but the national government covers legal/justice, health, and social security. It is through the current social security system that the wealth is being redistributed. Flanders transfers billions of dollars to Wallonia and has no say over how it's spent. There are other resentments beyond money as language has become a huge impediment to cooperation. Although the official language of Belgium is Dutch, and a court ruled it must be spoken even in Brussels and surrounding areas, French-speakers have refused to adhere to the law. The French complain the Flemish are dour, money mad, xenophobes. Flemish citizens are incensed by the French-speakers' refusal to learn the language. It has been coming for years but it seems the 6.5 million Flemish aren't going to be able to share power with the 4.0 million French-speakers of Wallonia.

Although Belgium is home to 800 different kinds of beers, and 150 liters per person is consumed each year, the nation is beyond a teachable moment. Here's the rub:
40% of people in Wallonia work for the government and unemployment is 20%. It has become an arrogant welfare state that feels entitled. Maybe France will take them in.

Let's Stop Waffling

America is on its way to becoming Belgium. There are people in the nation that will not learn the language, and there are even more people in the country that believe they are entitled to money earned by others. Fewer and fewer Americans pay federal income tax, and those taxes are going higher. Over the weekend, the liberal Christian Democrat party in Belgium was handed a humiliating defeat. I don't know enough about Belgium to say whether it will be broken up but there is a universal theme that is loud and clear. Everyone has to carry their own weight and pro-markets are the best way to create prosperity for all. The big rally cry for the New Flemish Alliance was "Flemish First", but the fact is they were saying "Fiscal Responsibility First." Public debt as a percentage of GDP is 99% in Belgium and it's time for change. It's also time we wake up in America.

We must turn this around. We can't be complacent about all of this and simply think that our past greatness will guarantee future greatness.

Asking people to work to their potential and aim for ownership isn't leaving them on their own, it's empowering them to really be free.

Disclosure: none