I’ve heard talks and quips about a lot of European countries being prone to tax very heavily. I’m sure we’ve all heard the headlines about France’s super high taxes on the rich and the taxes that most Scandinavian countries impose. However, they are also seen as very forward thinking because it seems like you get a lot of bang for your buck when it comes to spending. I may be talking out of school, but it seems to me that there are a lot of failing countries in Europe and its hard to keep up with taking in more revenue than you spend. I’ve heard a lot from Friedman and Keynes circle-jerkers, but I’m turning to you dopers:
Is the socialist habit of spending and taxing that is prevalent in EU viable in the long term?
It was perfectly viable until the banks crashed the economy and tax revenues plunged, while at the same time we had to hand over untold billions to the banks to bail them out.
Yea but it also seems like they’re still having trouble getting everything together. I know the crash doesn’t have EVERYTHING to do with the socialist system, but is their spending and taxing justified?
Well, the tax generated by the rampant banking sector pretty well seduced most governments into turning a blind eye - sorry, endorsing ‘neo-liberalism’.
You could then argue the ‘European model’ has been undermined by untamed capitalist, there is certainly plenty of electoral support for the model - people generally understand and value the principles of a proper welfare state.
In this regard, as it is in most cases, the US provides an exception.
Yes. I want more taxes and spending like the Nordic models, a flatter income distribution curve and a whole lot less tax evasion by companies.
I also want anyone who earned a 5 figure salary in banking subject to 100% confiscation of their assets and the senior managers and directors, along with their neo-liberal politician enablers like Brown in the UK, jailed.
They have basically destroyed social democracy as a viable option across swathes of western europe.
None of this is going to happen, leaving most of us scraping along in the ruins while the bankers etc continue to make out like the bandits they are.
This misconception extends to both the right and left. The right wing see Scandinavians as being subject to massive overbearing government. The left wing see Scandinavia as a social democratic paradise whilst fiercely opposing the very measures that Sweden and Norway have implemented at home (e.g. private firms running hospitals in the UK’s NHS, school vouchers, private for-profit schools, etc.)
What does this actually add to the discussion? It’s just internet bravado.
I note with bemusement the very people who are now apoplectic at the bank bailouts were noticeably silent when City tax receipts, swelled by an influx of trade due to lax regulation in the UK, were bankrolling the country’s welfare state under Labour.
Yea, I’m not sure there’s really a “European Model”, Europe has a pretty wide variety of countries with a wide range of tax-rates and social services, and even for a single European country, such things change over time. To the extent that they’re similar to each other, they’re also similar to basically all the other industrialized countries outside Europe.
People in the US have a tendency to talk about how they do things in “Europe” when debating US policy issues, but usually just a policy that exists in one particular country in Europe.
There’s definitely no “European model”. Even things like minimum wage vary widely across Europe. The UK pays >£1000 a month in minimum wage. Germany doesn’t have one. The UK has a fully nationalised health service. Germany uses private companies to help run their service. France has just increased its top income tax bracket. The UK has just reduced theirs. Half of the Continent has just instituted a Tobin tax on financial trades. Britain and Sweden sat it out. Norwegians pay £10 for a pint of beer. In Britain and Ireland there would be a revolution if we had to do the same, and so on.
There’s too much variation to talk of a “European model”, except in extremely broad terms which apply to virtually all of the economic west.
I am not sure there is a “European model” for the purposes of this discussion. Things in Sweden is not that much like the UK, which is not much like Italy, France, Ireland, Iceland, or Greece. Their current issues are in large part the growing pains of trying to consolidate all of these disparate systems into one monetary system without sufficient forethought, policies, and institutions.
If your question is whether high tax states can work long term, I think they can so long as people feel they are benefiting more than they are getting hosed. But that is true for any system. That is largely circumstantial, and specific to each country and to the viable alternatives people in those situations have. But taxes and governments policy is rarely a one-size-fits-all solution. Although some things to work best (eg. free markets, lowish taxation, a moderate social safety net), that doesn’t mean what works in Hong Kong will work in Argentina, or Iran. As such, you can hardly say the “European model” will not work long term just based on a particular failure.
I think you are confused about a number of things…
First off, the countries that are doing badly in Europe are not the high taxes ones. It is Italy, Spain, Greece, Portugal, and Ireland. Countries that followed the US model of a sparse social safety net, low minimum wages, low taxes, and light banking regulations. And in many cases, borrowing to keep the national budget afloat. Although some, like Spain, ran without deficits.
The high tax countires, mostly in Northern Europe, seem to be doing well to exceptionally well.
Taxes are never unsustainable in a democracy as long as the people and businesses paying for them think they get their moneys worth.
Second, you’re using the word “socialism” I don’t think it means what you think it means.
What? Italy has a large social safety net and can hardly be said to have “low” taxes. Whilst it doesn’t have a national minimum wage it follows the pattern of the Germanic countries in that unions negotiate a minimum wage on a sector by sector basis.
Italy’s problems stem from a lack of liberalisation, not from too much of it. The employment market needs completely liberalising and the almost feudal guild-like unions need breaking. Most of all, however, they need to actually elect a government that’s interested in governing as opposed to changing the law to further their own ends and making a mockery of the country on the international stage.
As mentioned, the notion that the likes of Sweden, the UK and Netherlands have high taxes is relatively out of date.
Not going to argue on Berlusconi etc, and Italy was acually, reducing its deficits quite well when the crisis hit.
However, if you compare Italy social spending per person with other European countries, you’ll find it is quite low. About exactly the same as the US if I remember correctly. On the subject of unions, I doubt Italy is as unionized as the Northern Europeans. I suspect it is more a matter of how the unions function, much like in the USA.
You are right on taxes, though, Italy appears to be fairly middle of the range in European terms.
