Textbook Case

A rapacious private sector (in this case that large part of it comprising the financial "industry") is unleashed from intelligent regulatory control. Over the course of a decade it artificially creates a massive amount of false wealth (for which it charges handsomely) that inevitably leads to an acute, worldwide economic crisis caused by the inevitable disappearance (or rather, realization of the non-existence) of that false wealth. Said crisis has a profound effect on the public finances of countries throughout the world - not solely due to severe drops in tax revenues (caused, again, by private sector mismanagement), but in part by the questionable practices of large financial players doing business with governments. In order to sanitize their budgets, governments must make substantial cuts in social spending, while increasing taxes where politically viable (read: social services, govt. employee salaries, etc.).

This then leads to an outpouring in the corporate media of questioning the viability of the "welfare state". Somehow, the evident failure of the "market" to properly and intelligently manage world finances is totally ignored, with the blame placed on public sector inefficiency (see the NY Times, http://roomfordebate.blogs.nytimes.com/2010/05/12/the-twilight-of-the-welfare-state/?scp=1&sq=welfare%20state&st=Search for a good example).

Clearly a textbook case of ideology (in this case, neo-liberalism) trumping reason and evidence.