Is Europe's Welfare State Sustainable?

In her new book, The Primary of Politics: Social Democracy and the Making of Europe’s Twentieth Century, Sheri Berman looks at the development of the European welfare state and speculates on its future. I haven't read the book, but apparently she concludes that the welfare state is there to stay. Tyler Cohen disagrees:

"If a country grows at two percent per annum, rather than one percent, the difference in wealth or welfare in a single year is relatively small. Over time the difference becomes very large. For instance, had America grown one percentage point less per year, between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990. Growth laggards fall behind..."

According to Cohen, high productivity in the western European countries masks policies that weed out low-skilled workers (such as UI), but

"...this will not sidestep the broader and persistent problem of shrinking populations. Most European birthrates are under the 1.5 mark and it is quite possible that many national populations will be cut in half by 2050...Since older populations also tend to be less productive, it is hard to see how Western Europe might reassume world economic leadership or even hold its current relative ground."

"...The bottom line: European social democracy will go down in history as a glorious moment in the sun. But its deep structural problems, most of all for delivering ongoing economic growth, mean that 21st century Europe will have to take a very different course."