Is Dynamic Capitalism Inconsistent With The Welfare State?

One of the common themes within, the GOP, is that the US has a more dynamic economic system than Europe. Therefore, it grows faster and has higher per capita GDP. The assumption is that the US economy benefits from free markets, and the European economy is held back by its investments in human welfare. The US favors markets over security and Europe favors social welfare at the expense of economic growth. One of the problems with this contention is that it is not true. The evidence for and against the claim is reviewed in the article. On the other hand, slower growth in the US and in Europe will make it more difficult to fund social welfare programs.

Social welfare programs in the US are primarily a problem of the rising cost of healthcare programs. Healthcare price inflation, and increasing demand from an aging society, has been a burden to government, but it is also a burden for households which pay higher premiums for their share of the increase in insurance premiums. Unfortunately, it is not possible in the US to deal with this problem rationally. Insurance companies and healthcare providers put their interests ahead of the social welfare. They have had more influence over healthcare reform than a poorly informed public.