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🌊 How Welfare Weakened Europe
Europe says it has to rearm. Can it afford to?
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By Max Frost
One of Trump’s favorite stories – he repeats it constantly in press conferences and at campaign events – plays out like this:
The NATO leaders are sitting around a table and Trump says to them they have to pay more for defense. As Trump has told it,“‘Everybody’s gonna pay.’ They said, ‘Well, if we don’t pay, are you still going to protect us?’ I said, ‘Absolutely not.’”
He ends the story, “You never saw more money pour in!”
He’s repeated that story every year since 2017. He’s doing it again now, having reiterated in recent weeks that the US would not defend NATO members who didn’t spend enough.
The question of whether NATO members spend enough has a surprising degree of agreement: When Trump said NATO wasn’t paying its fair share, even CNN’s fact-checker wrote, “We can’t verify whether the United States is getting ‘ripped off,’ but it’s clear that most NATO member countries are not spending what the alliance’s official guidelines require. Trump’s statement is true.”
When Trump first entered politics, only three NATO countries – including the US – hit the 2% of GDP minimum defense spend. Today, 23 of 31 do, but politicians across Europe and the US still say that’s not enough. Trump wants the countries to spend 5% of GDP on defense.
European governments spend far more than America’s – just not on defense. So what do they spend their money on instead? And what will it take for them to hit Trump’s new 5% target?
That’s the subject of today’s deep-dive.
In 2012, German Leader Angela Merkel noticed a tension at the heart of Europe: Despite having just 7% of the world’s population and 25% of its economy, it accounted for up to 50% of its welfare spending.
To protect that way of life, Merkel said, “All of us have to stop spending more than we earn.”
In total, the US federal government spends around 20% of GDP. The average EU government spends that amount on social protection – jobless benefits, paid family leave, etc. – alone.
This leads to tangible differences in how Europeans and Americans live.
Take retirement and pensions:
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Editor’s Note
Thanks for reading! We’d love to hear from you, especially our readers in Europe. Can European countries ratchet up defense spending without dealing a blow to the welfare system? What are your priorities for your country’s national budget? Let us know by replying to this email.
Catching up on our reports? Here are the latest:
A lot of emails to yesterday’s story on the blood plasma business in the US. We loved reading your replies — we’re sharing a handful below.
Elizabeth wrote:
Your story caught my eye as I was introduced to plasma selling a few years ago. It’s a very well known source of income for teachers. I’m not talking rural/low income areas, rather very middle class, successful school districts where teachers are still so underpaid after doing all the extras like coaching and Drivers-Ed, with two parents teaching, who still need to supplement their income to get ahead. I was shocked to learn they both donate regularly as a way to pay for their vacations and for supplies the schools do not provide.
Jerry wrote:
Wow! This story hit home with me. I’m a regular blood and/or plasma donor in Virginia and all I ever got was a free T-shirt. I donate at the American Red Cross Blood Donation Center and was under the impression all of my plasma was used locally for patients in need. What I’d like to know now is the economics of this business. Does the Red Cross sell my plasma to a hospital? Is the patient's insurance or Medicare/Medicaid billed for something I donated freely? Does the American Red Cross sell any overseas? If this is a $20B industry, who is profiting?
Please do a Part Two to this story!
And Luke wrote:
I did this throughout college, in a similarly depressed area - Toledo. I mostly blew the cash on beer and thankfully wasn't in as desperate of a position as many of the people there. I think its an easy way to make a few bucks, lay down and listen to a podcast/watch netflix & get paid, but it definitley feels a little dystopian. It'd be cool if the gov't could make these foreign companies pay a little more for the literal blood of the American people.
That’s all, see you back here tomorrow.
–Max and Max