On Europe's Unsustainable Welfare State

Tyler Durden's picture

Authored by Danielle Lacalle via The Mises Institute,

Angela Merkel used to say that “the European Union is about 5% of the world’s population, about 25% of its GDP, and about 50% of global welfare spending.”

The real data is more concerning.

The European Union is:

  • 7.2% of the World Population.
  • 23.8% of the World’s GDP.
  • 58% of the World’s Welfare Spending.

Something has to give.

The EU average tax burden on workers is 44.9%. The average worker in the EU spends half a year working for the tax man.

Taxation accounts for 41% of the euro area GDP.

Ease of doing business remains below the leading economies of the world.

Bureaucracy is asphyxiating. The EU approves on average 80 directives, 1,200 regulations and 700 decisions per year.

The main EU economies remain significantly below the leaders in economic freedom.

At the same time, despite massive tax burden and constant confiscation of wealth, the EU’s average debt to GDP is 90%. Continuously making science fiction estimates of tax evasion and calling to tax the rich as a mirage, has led to unsustainable levels of government burden on the real economy and hinders investment and capital investment as policies are increasingly aimed at taxing the productive to subsidize the unproductive.

Using unrealistic estimates of tax revenues made by politicians — that are always missed — for very real expenditures — which are consistently above budget — has made the EU miss its debt reduction expectations.

The cost of hyper-regulation and excessive taxes to job creation, investment, and innovation are evident. The EU has an unemployment rate that almost doubles the leading economic peers, and taxation hinders the growth of SMEs (small and medium enterprises), which shows a ratio of development to large companies that is half the same ratio in the US.

The EU has many positive things, as I explained here. But we cannot let bureaucracy and confiscatory taxation take over a worthy project. Because ignoring those risks, we would make the EU implode.

Unless the EU politicians change their mindset of a model built on massive taxation and bureaucracy and start putting at the forefront of policy cutting taxes, slashing red tape, more open business, more economic freedom, focusing on job creation and attraction of capital, the welfare state will implode.

The EU’s welfare state can only be protected by defending growth, investment, and job creation. However, it will likely be destroyed by the same ones that say they defend “the public sector.” By making it unsustainable.

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Haitian Snackout's picture

He was referring to his former band.

HRH Feant2's picture

Someone is waking up. Supposedly bringing in all those gimmigrants was going to help Germany, and Europe with workers. How has that worked out? The gimmigrants don't work. less than 3% of the new arrivals ever find work and the rest breed like rabbits.

Parallel cultures in Europe does not make Europe diverse. It makes Europe divided and unstable. That stability will increase in the coming years.

Good article because maybe some people will start to realize that moving people away from their home country is not a good idea.

BritBob's picture

Re Brexit

Fair to say that the majority of the people in Britain were happy to join an economic union with free trade, but not a political union. Who wants to be ruled by Brussels? And who wants uncontrolled immigration?

There is a trade imbalance in favour of the European Union so it is in the interest of the EU to make amicable arrangements with the United Kingdom. What's more, the UK can do its own trade deals on a one-to-one basis instead of having the EU to deal 27 member states before it makes a trade deal.

Hard or soft Brexit the road ahead might be a little bumpy especially when one country (or part of a country in Belgium re the Canada EU deal) can stall negotiations for so long. Spain could act in a similar fashion over Gibraltar and has the cheek to maintain its Gibraltar sovereignty claim. Claim?

Gibraltar - Some Relevant International Law: https://www.academia.edu/10575180/Gibraltar_-_Some_Relevant_Internationa...

 

So it could be a quick hasta luego !

OverTheHedge's picture

The bot seems to be getting more accurate with its posts, but the content is always the same. Can we get a text update ease? BritBot is a fine piece of software, but he needs an updated text to post, or we will all get very bored.

Vimes's picture

What? You didn't even mention the Falklands! What's up with that? Nah, just kidding. Autism is still a very little understood condition.

I never really understood why the UK wanted to join in the first place, obviously Brussels is unaware of the island mentality and fo all this financial wizardry.... well you can go to Hong Kong and find the same services apparently. Let the UK go and they can  decide to select English to be the official second language. With the British out, nobody can claim that they have an unfair advantage. Now that would help the EU trade a lot. (Which is why they will never succeed in doing so)

Overdrawn's picture

The welfare state would be sustainable if the politicians stopped giving our taxes to migrants and other foreigners who haven't paid a penny into the system.  It would also help if the politicians and fat cats stopped stealing our money in the guise of ridiculously high salaries, inflated pensions and other perks.  

Oh, and why are we giving out billions of our taxes in foreign aid when everybody knows that it never reaches the people we are told it is intended to help?  I wonder how much the politicians personally make from such generosity with the peoples money.  When was the last time you saw a poor politician in the West?

Until something is done to stop corruption amongst the political classes, nothing is going to improve.

Ms No's picture

Wouldn't you rather have a good working income and cheap prices so that you didn't have to depend on the government for survival?

Vimes's picture

I have seen people who mentality snapped after they were on the dole for a lot longer than they had expected. I would rather not go down that road. It was like they had given up on everything...

logicalman's picture

If we had real money without income tax (which is only required because of the banking system we suffer under), you would be able to save for your future as inflation would be almost non-existent.

As an example, imagine starting to work at 20, working 40 years and saving what now goes to income tax. At 60 you'd have enough saved to last until you were about 95, and if you didn't make it that far, your kids would get what's left.

Anyone who decided not to save would then be where most find themselves at present, but anyone with an ounce of sense would be better off.

Governments steal as much as they can then give just enough back as 'welfare' to keep the masses from revolting.

 

francis_the_wonder_hamster's picture

"The welfare state would be sustainable"

I could have stopped reading there, even though I agree with the rest of your points.  The welfare state will NEVER be sustainable.  That is the nature of both the state and of welfare.  

I trust no elaboration is needed on this site.

Haitian Snackout's picture

GDP is only a reflection of how badly their inmates are being hosed on everyday  prices. Not a barometer of actual goods and services.

Anon2017's picture

Legitimate comparisons use PPP (purchasing power parity) not GDP to compare countries. 

Comparisons for major cities using 2012 and 2011 data: http://www.citymayors.com/economics/usb-purchasing-power.html

hooligan2009's picture

here's how a libtard company rates the world's cities for those who can succesfully scam the welfare state

https://www.uk.mercer.com/newsroom/2015-quality-of-living-survey.html

Europe
Despite concerns about economic growth, the cities of Western Europe continue to offer a stable environment for employees and employers. Vienna (1) is followed by Zurich (2), Munich (4), Düsseldorf (6), and Frankfurt (7). With Geneva and Copenhagen in 8th and 9th places, respectively, Western European cities take seven places in the top 10.

so if you have money, europe is the place to be, globally Oz and NZ come out pretty well also.

of course, no mention of government debt.

remember fiscal defcits are stealing the future; debt is the cumulative ipact of stealing for decades; insolvency is when the interest rate on debt equals the amount of tax collected - in japan thats 1%, in europe, around 2%

the libatrd socialsit dogma has failed - act ccordingly

geno-econ's picture

Does this mean the U.S. with it's massive debt and printing machine is  is doing something right or better ?  Only difference I can discern is that Europe is spending more on social programs while U.S. is spending more on military and in meantime China is growing. Oh yes, Russia is also being squeezed and shrinking.

Ms No's picture

We spend tons on social programs.  We just also spend on war and corporate welfare.  You end up in the same spot regardless. 

Ms No's picture

Now that everybody is dependent on the government to eat and pay for highway robbery medical monopoly costs the banks will have them on their knees when the money for these things dries up.  There will be no real markets or jobs to replace it.  They call it Utopia and Karl Marx created his propaganda treatise to bring nations exactly to this condition.

Glyndwr will return's picture

Been a taxpayer my whole life. Never a tax taker. Every last man and woman I know in Wales is a tax taker to one degree or another. I even have a friend who got a bicycle from the council for free to go to work. He works 80 miles away and travels there daily. My sister brought up two kids married to the state. No man except for two nights. My mother buys expensive shoes with her govt allowances. She rarely worked . My neighbour has a new disability car for free but is as fit as me. Hard working people should leave.

researchfix's picture

So you live in Wales. Where do I find this place in Greece?

Glyndwr will return's picture

Your analogy is not without merit. As one of the UK regions we are proud of our ability to groom our children for a life of wealth extraction and sloth. We train them in all aspects of PC culture to the real detriment of their ability to do anything useful. We are especially proud that adults of all ages are able to afford cars their parents only dreamed of. It makes us all look cool. That aside, were fairly fucked when the dam actually breaks.

css1971's picture

Exactly the same in Scotland.

Everyone hoping to "screw the rich" and live off them... Turns out there aren't all that many rich people to screw and they're generally pretty picky about getting screwed.

silverer's picture

Hard working people WILL leave. It's coming.

83_vf_1100_c's picture

  They are running out of places to leave to.

waspwench's picture

Exactly!   Tell me where I can go.

Singelguy's picture

Correction. Hard working people are already leaving. In France, after Hollande raised the income tax and wealth tax on the rich, most of them have already left.

Old Europe's picture

Merkel expanded the European welfare systems to the whole world. Billions of people are now entitled to live in Germany on welfare for a lifetime without EVER contributing anything but crime, civil war and terror to Europe.

The welfare stabe might have been unsustainable before Merkel´s coup d´etat, but now it´s bound to explode big time.

GodSpeed_00's picture

Europe will be a Communist Prison Camp soon.

silverer's picture

That's why they were happy they recovered the stolen sign that said "Work sets you free".

Batman11's picture

The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living.

Purchasing power = wages – (taxes + the cost of living)

The US screws its population with taxes, housing costs, healthcare costs and student loan costs.

Purchasing power = 0

Actually it's negative and this is why they need Payday loan companies.

Probably why the young like Bernie Sanders.


 

Salzburg1756's picture

XR42Y?<ill every jew and then every non-white and every female who insists on getting involved in politics; problem solved.

Inthemix96's picture

Would that be just like the unsustainable bank bail owts, that just by happenschance bankrupted the fucking western world a few years ago then?

The fucking welfare state?  Socialise the losses, privitize the profits?  That cunting welfare state?

No money for those caused no harm, no loss, but ample wedge for the child raping fucking criminals that brought the western banking system to its very fucking knees.  The old, disabled, the impoverished, fend for yourselves, the middle class, fuck off and join them.

The very best though, the cunts that caused this shit, party on eh?

I have a hard time forgiving, I have an even harder time forgetting, and the mix is not an army of one.

Just-us, will be served.  Cause no harm, and cause no loss, no more, no less.

Cunts

;-)

OverTheHedge's picture

Haven't seen you post for...years? Good to see you back.

You seem to have mellowed in your old age.

Inthemix96's picture

I never left mate, I am always lurking about, just dont post much.

I do hope all is well with you and yours mind.

Best regards as always..

96

Miffed Microbiologist's picture

My speed scrolling came to a crashing halt at seeing your avatar. Missed your honest, in-your-face rants that said it all and spoke to those of us oppressed by the tyranny of the asshole globalists.

Glad you haven't disappeared into the ether.

Miffed;-)

south40_dreams's picture

This "Europe" place is nothing but trouble and bad news. Can we just nuke it and move on?

abgary1's picture

Smart move Britain!

Really Canada, is this the model you want to emulate?

(I am sure the dope smoking snow-board instructor turned politcian (Trudeau) would said yes to that question.)

css1971's picture

Socialised welfare, pensions and healthcare are all pyramid scams.

Only work with more people contributing annually than using. So, require exponential population growth.

silverer's picture

Pensions are a pyramid scheme? Heck. All along I thought they were a Ponzi scheme. Don't worry, I won't say anything. I'm excited I don't have one they can screw me out of.

waspwench's picture

A larger population is not the solution, in fact, it is part of the problem.   What is needed is a larger productive population.

The growth in the unproductive, dysfunctional population is the reason that the welfare programmes are unsustainable.

artichoke's picture

Certainly borders have to be controlled and immigration tilted to the strong.

But standards are going up.  All those expert truck drivers soon won't be able to make a living that way.

artichoke's picture

And not (!) if the population growth is from low-iq muslims who are perfectly happy to crash society if they don't get enough gimmes, or even if they do.

Anon2017's picture

In a few years, the whole welfare state business model will come crashing down. I am glad I could afford to take early retirement. The US income tax code is very biased against single people. 

Sudden Debt's picture

For every new tax Europe invents, the costs of implementing them are 34%!!

And that's when it's a succesfull tax!

And that's money that is sucked out of the economy and is not of value to the economy.

And the more taxes they need the more becomes worthless and so on and so on.

that's why the increase in taxes ends of a certain time as costs to implement them all outweigh the income stream.

And Europe is WAY BEYOND THAT POINT!! WAY WAY WAY BEYOND!

And when the tax increase fail because it cost more then the revenue, they crack down on the citizens to increase their profits. 

And that's what we're seeing now. Remember, it's no real crime to try to avoid all the extra taxes, it's a crime by the state to try to keep stealing more from the people.

The only cure is to spend less but the corruption  in governments prevents this because our politicians are stealing the money they get from taxes through shell companies where they have invested interests in that do the government jobs.

And that's also America's future, 1 to 2 years behind of Europe.

The problem with European and American people is that most are to dumb to see it and they only see it when they're told or when it happens to somebody else.

Nobody minds that they tax other people, they're just to dumb to realize that they're the once being taxes also at the same time through indirect ways.

and they wonder... why didn't anybody ever tell them they where going to be taxed also.... weird...

Those who are poor and destined to remain poor will never understand.

Those who get it and want to be rich, well they learn how to avoid those taxes.

Those who don't get it and are poor are angry at those who avoid the taxes.

And those who are poor are to dumb to understand that nobody should be forced to pay all those taxes but hey... they're to dumb to understand. 


gunzeon's picture

Work's optional in europe whereas taxation is not. Translated: if you want a little more than the average quality of life and you are of average talent endowment, you must work twice as hard as the next guy.

tyberious's picture

Albert Pike

The First World War must be brought about in order to permit the Illuminati to overthrow the power of the Czars in Russia and of making that country a fortress of atheistic Communism.

The Second World War must be fomented by taking advantage of the differences between the Fascists and the political Zionists.

The Third World War must be fomented by taking advantage of the differences caused by the 'agentur' of the 'Illuminati' between the political Zionists and the leaders of Islamic World.

 

Jewish oracle Elijah ben Shlomo Zalman is believed to have warned Jews to start preparing for the end of days when Russia captured Crimea shortly before his death in 1797.

That happened last year when Russian leader Vladimir Putin annexed the region from the Ukraine.

Zalman foretold Russia would then go to war with Turkey before the Russians would team up with Muslims for a final battle.

Vageling's picture

Yeah! Whatever. As I said before they pocket 990 billion EUR a year on corruption alone! The gimmegrant cost 300k a piece. Per Year. Their stealing and police costs not included! That shit is not on the budget. But we pay. 

Meanwhile this was to be a social safety net. Only accessible to peeps that had jobs and paid taxes. Now? Working is bad! 

That's fucking socialism! Steal from the productive and give it to the useless eaters. That's abuse of the social safety net! Fucking scum.

For what? Fuck the gimmegrants! Meanwhile homeless people of all ethics beg and beg. Annoying! Illegal too! But gimmegrants, eh? Fuck our own. 

Horse Pizzle's picture

Venezuela achieved peak welfare. 

silverer's picture

More helicopter money! (But you have to run through the rotating blades to get it).

Lucky Leprachaun's picture

Wait till we get another 100 million Africans to clothe, feed and house.

Pol Pot's picture

How much can a loincloth, a few dry roots, and some mud cost......

BlussMann's picture

The EU as a "worthy" project !!!  This "worthy" project seems to be the extermination of the European races by importing all the Shit Races of the Middle East and Africa - a Black Pill project that seems to be enjoying success. At any rate, the average European in the sick and dying Western nations have never had much freedom to speak of and are quite used to being manhandled financially  as well as politically as the Euro peoples appear to be taking their disposition and humiliation in stride.