Europe, 42 percent of income earned, compared to 37 percent in the OECD on average and 30 percent in the United States. No wonder so many Greek workers find it more profitable to retire or to evade taxes, another of Greece's problems.

Europe's other most troubled countries share many of Greece's characteristics. Italy and Spain have birth rates that have slipped as low as Greece's and shrinking labor working age populations. Yet early retirement is the norm. In Italy the average retirement age is 59, among the lowest in industrialized nations, and Spain is ranked only slightly higher. Only one-third of Italy's population aged 55-to-64 is in the workforce, and the average male worker in Italy will spend more than 25 years in retirement. In fact, with life expectancyincreasing, a growing chunk of European adults spend more of their [adult] life retired than working. But the costs are staggering. Italy now spends 15 percent of its GDP on pensions, the highest in the Europe.

Many Americans tend to associate the term "welfare state" with a regime of anti-poverty programs reminiscent of the Johnson administration's War on Poverty. But in Europe the welfare state generally refers to an extensive array of entitlements enjoyed by middle and upper-middle income citizens. That's one reason why efforts to reform (that is, reduce) these entitlements have met with so much resistance in Europe. Even in staid Austria workers have taken to the streets to protest changes in the country's pension system. Still, change is coming because the traditional European welfare state is