Home
/
RELIGION & LIBERTY ONLINE
/
Debt, Welfare and the Road to Serfdom
Debt, Welfare and the Road to Serfdom
Jul 13, 2025 1:20 AM

Simon Johnson and Peter Boone wrote an interesting article the UK Telegraph Saturday called “The New Feudal Overlords of Europe will be the bankers of the ECB.”

Johnson is also the co-author along with James Kwak of a thoughtful and provocative book 13 Bankers as well as a blog on economics. Also on the ECB see my colleague Sam Gregg’s Piece at Public Discourse

Using Hayek’s famous phrase “The Road to Serfdom” Johnson and Boone argue the demise of Europe will not be the welfare state and the growth of government as Hayek predicted, but rather a “financial elite gone awry” They write:

Hayek had the sign and the destination right, but was wrong about the mechanism. Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests are what ended up undermining democracy both in North America and in Europe. All industrialised countries are at risk, but it’s the eurozone – with its vulnerable structures – that points most clearly to our potentially unpleasant collective futures.

As a result of the continuing euro crisis, the European Central Bank (ECB) now finds itself buying up the debt of all the weaker eurozone governments, making it the – perhaps unwittingly – feudal boss of Europe. In ing years, the ECB and the European Union will dictate policy. The policy elite who run these structures – along with their allies in the private sector – are your new overlords

It is arguable who exactly are the peasants, the vassals and the lords under this model – and what services will end up being exchanged, but there is no question we are seeing a sea change in the post-war system of property, power and prosperity across Western Europe, just as Hayek feared. An overwhelming debt burden will bring down even the proudest people.

The ECB-EU approach will not return countries to reasonable levels of growth – the debt overhang is simply too large. The southern and western periphery of the eurozone cannot grow out of their debts under these arrangements and so will stumble from stabilisation programme to stabilisation programme – as did Latin America in the 1980s. This is bound to lead to hostile politics, social unrest and more economic crises.

The debt crisis must be addressed and I don’t disagree with their assertion that corporate-government collusion is a serious problem (See my article on Davos Capitalism) though I am unclear on how “Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests” exactly go together, or what they mean by “unfettered free markets.” Since Johnson and Kwak argue in 13 Bankers that we’ve had a type of oligarchic capitalism and Johnson and Boone matter of factly talk about “welfare socialism” I assume they aren’t arguing that the Europe or the US have had laissez faire free markets over the last decades, so I am not exactly sure what they mean. But on to their main points.

Johnson and Boone argue that current debt levels and the lack of political will to do anything about it will end up wreaking havoc on EU countries and ultimately on the US and the world.

The UK and US need to prepare themselves for more storms. The United States will be in the pleasant position as the world’s safe haven, but this will only encourage America’s profligate politicians to spend more and build more debt.

The UK will bear much more pain from euro devaluation and financial dislocation, all exacerbated by its own large deficit and debts. We might well see one more invasion across the channel, this time by bond vigilantes who question Britain’s ability to rein in inflation as it builds too large debts.

At the end of this great tumult, Europe and the UK will have sound fiscal regimes. Debt will be defaulted on or inflated away, and nations will have dramatically cut spending.

Hayek’s predicted demise of western society as he knew it will prove correct, but welfare socialism will prove the victim, erased by a political and financial elite gone awry.

Interesting and worrying stuff and the article is well worth reading as is 13 Bankers. But one thing the authors seem to ignore in this piece is that while welfare socialism may be the victim of the collapse (not a bad thing in my estimation), it is fully a culprit as well.

It is precisely a massive welfare state that is a part of the problem. It not only requires outlandish and unsustainable spending on the parts of governments who are afraid to address the challenge lest they lose popular support. But it also encourages a culture of irresponsibility, and inculcates a sentiment in the population that you can maintain an pleasant middle class life indefinitely without actually having to produce goods and services that people want and need. They suggest several austere measures as a solution but doubt the political will to achieve it. What may be really needed is plete rethinking of the role of government and the whole idea of the current welfare state. That would not only require political courage, but cultural rejuvenation and this is something neither politicians nor bankers can provide.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Verse of the Day
  Hebrews 11:6 In-Context   4 By faith Abel brought God a better offering than Cain did. By faith he was commended as righteous, when God spoke well of his offerings. And by faith Abel still speaks, even though he is dead.   5 By faith Enoch was taken from this life, so that he did not experience death: He could not be...
Verse of the Day
  Commentary on Todays Verse   Complete Concise   Chapter Contents   Exhortations to obedience and faith. 1-6 To piety, and to improve afflictions. 7-12 To gain wisdom. 13-20 Guidance of Wisdom. 21-26 The wicked and the upright. 27-35   Commentary on Proverbs 3:1-6   Read Proverbs 3:1-6   In the way of believing obedience to God#39s commandments health and peace may commonly be enjoyed and though...
Verse of the Day
  1 Corinthians 3:18-20 In-Context   16 Don't you know that you yourselves are God's temple and that God's Spirit dwells in your midst?   17 If anyone destroys God's temple, God will destroy that person; for God's temple is sacred, and you together are that temple.   18 Do not deceive yourselves. If any of you think you are wise by the standards...
Verse of the Day
  Commentary on Todays Verse   Commentary on Proverbs 22:4   Read Proverbs 22:4   Where the fear of God is, there will be humility. And much is to be enjoyed by it spiritual riches, and eternal life at last.   Proverbs 22:4 In-Context   2 Rich and poor have this in common: The Lord is the Maker of them all.   3 The prudent see danger...
Verse of the Day
  Commentary on Todays Verse   Commentary on Psalm 90:12-17   Read Psalm 90:12-17   Those who would learn true wisdom, must pray for Divine instruction, must beg to be taught by the Holy Spirit and for comfort and joy in the returns of God#39s favour. They pray for the mercy of God, for they pretend not to plead any merit of their own....
Verse of the Day
  Galatians 2:20 In-Context   18 If I rebuild what I destroyed, then I really would be a lawbreaker.   19 For through the law I died to the law so that I might live for God.   20 I have been crucified with Christ and I no longer live, but Christ lives in me. The life I now live in the body, I...
Verse of the Day
  Commentary on Todays Verse   Commentary on Proverbs 15:4   Read Proverbs 15:4   A good tongue is healing to wounded consciences, by comforting them to sin-sick souls, by convincing them and it reconciles parties at variance.   Proverbs 15:4 In-Context   2 The tongue of the wise adorns knowledge, but the mouth of the fool gushes folly.   3 The eyes of the Lord are...
Verse of the Day
  Isaiah 61:7 In-Context   5 Strangers will shepherd your flocks foreigners will work your fields and vineyards.   6 And you will be called priests of the Lord, you will be named ministers of our God. You will feed on the wealth of nations, and in their riches you will boast.   7 Instead of your shame you will receive a double portion,...
Verse of the Day
  Commentary on Todays Verse   Commentary on Psalm 37:1-6   Read Psalm 37:1-6   When we look abroad we see the world full of evil-doers, that flourish and live in ease. So it was seen of old, therefore let us not marvel at the matter. We are tempted to fret at this, to think them the only happy people, and so we are...
Verse of the Day
  1 John 4:20 In-Context   18 There is no fear in love. But perfect love drives out fear, because fear has to do with punishment. The one who fears is not made perfect in love.   19 We love because he first loved us.   20 Whoever claims to love God yet hates a brother or sister is a liar. For whoever does...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved