On Europe's Unsustainable Welfare State

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.

Comments

Manthong Yukon Cornholius Sat, 07/15/2017 - 15:20 Permalink

  WTF.. Somebody does not understand the meaning of “sustainable” . Look it up on Google.. The return will be “Bazooka”… “Whatever it takes” … and “Merry, Merry Mario Money”. Geez, it is not like Hawking rocket science and the end of the earth in a few years.I thimk some banker understands that printing brown people in white Europe is a winning solution. ..oh.. gee..  that sounds so impolitic.For you kids out there, that was the word educated people used before "PC" was thrust upon us. 

In reply to by Yukon Cornholius

38BWD22 Sick Monkey Sat, 07/15/2017 - 17:55 Permalink

  We are now on our SIXTH night in a provincial city in France, staying in a Pedestrian Zone.  EVERY night it has been loud until at least 1:00 AM, and being Sat. night (almost midnight) here, it's going on strong (well, Saturday night , sure, that's excusable).  But SIX nights in a row?  And we're NOT on a main drag.Don't those people have jobs to go to?

In reply to by Sick Monkey

mathew913 louie1 Sun, 07/16/2017 - 07:44 Permalink

USA military strongest in world, its ghe previous obama admin that tried to ruin it. the EU is now a a migrant infested 3rd world urinal. europe even tolerates NO GO ZONES where citizens are warned to not enter - hint muslim occupied.

Europeans are FORBIDDEN to carry weapons! you are sll sheep for slaughter. you voted for the people who condemn you to being subjects and puppets.

where have your testicals gone?

In reply to by louie1

Creative_Destruct louie1 Sat, 07/15/2017 - 19:36 Permalink

"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."Yes, but it is likely to expand further until it implodes.... politicians will NEVER resist the temptation to promise MOAR free-shit to get re-elected.They will spend and spend, MOAR and more, whether or not they tax more or not. US: on more military AND more entitlements as the population ages; EUROPE: more and more on welfare and entitlements.Conclusion: all welfare states WILL implode.

In reply to by louie1

francis_the_wo… shocktherapy Sat, 07/15/2017 - 15:23 Permalink

That's far too simplistic.  A lot of the "reforms" were put in place far before the Great Depression, and a lot of them exacerbated that event.A better observation would be that many of those "reforms" played a big part in causing and prolonging the Great Depression.But history repeats itself and historians definitely repeat each other.  Prediction: within a decade, the same bureaucrats who imposed all of these Euro welfare programs will be first in line, begging for votes, so they can fix the mess that they caused, and the media, those unbiased arbiters of truth, will toe the party line and loudly espouse that story loudly and convingly enough that the layperson continues to vote for generational theft and the continuing wreckage of the ideals of Liberty......but I digress....

In reply to by shocktherapy

azusgm shocktherapy Sat, 07/15/2017 - 16:14 Permalink

Both of my grandfathers despised the New Deal and refused to participate. They both could have used some help but chose to be real men and soldiered forth.My paternal grandfather was an Iowa farmer. He saw destruction of foodstuffs by government intervention in order to prop up prices. At the same time, needy people were going hungry in the cities and the working men were having a hard time feeding their families. The FDR administration couldn't get out of its own way but somehow managed to propagandize their way to making FDR look like a savior of the American people.

In reply to by shocktherapy

RichardParker azusgm Sat, 07/15/2017 - 20:17 Permalink

FDR savior of the American people? From Antony Sutton's FDR and Wall Street: "Roosevelt was a creation of Wall Street, an integral part of the New York banking fraternity, and had the pecuniary interests of the financial establishment very much at heart. To be specific, Franklin D. Roosevelt was, at one time or another during the 1920s, a vice president of the Fidelity & Deposit Company (120 Broadway); the president of an industry trade association, the American Construction Council (28 West 44th Street); a partner in Roosevelt & O'Connor (120 Broadway); a partner in Marvin, Hooker & Roosevelt (52 Wall Street); the president of United European Investors, Ltd. (7 Pine Street); a director of International Germanic Trust, Inc. (in the Standard Oil Building at 26 Broadway); a director of Consolidated Automatic Merchandising Corporation, a paper organization; a trustee of Georgia Warm Springs Foundation (120 Broadway); a director of American Investigation Corporation (37-39 Pine Street); a director of Sanitary Postage Service Corporation (285 Madison Avenue); the chairman of the General Trust Company (15 Broad Street); a director of Photomaton (551 Fifth Avenue); a director of Mantacal Oil Corporation (Rock Springs, Wyoming); and an incorporator of the Federal International Investment Trust. The really notable Delano on Wall Street was FDR's "favorite uncle" (according to Elliott Roosevelt), Frederic Adrian Delano (1863-1953)...  In 1914 Woodrow Wilson appointed Uncle Fred to be a member of the Federal Reserve... Intimate Delano connections with the international banking fraternity are exemplified by a confidential letter from central banker Benjamin Strong to Fred Delano requesting confidential FRB data:16(Personal)December 11, 1916My Dear Fred: Would it be possible for you to send me in strict confidencethe figures obtained by the Comptroller as to holdings of foreign securitiesby national banks? I would be a good deal influenced in my opinion inregard the present situation if I could get hold of these figures, which wouldbe treated with such confidence as you suggest.If the time ever comes when you are able to slip away for a week or so for abit of a change and rest, why not take a look at Denver and incidentally payme a visit? There are a thousand things I would like to talk over with you.Faithfully yours,Benjamin StrongHon. F. A. DelanoFederal Reserve Board, Washington, D.C."

In reply to by azusgm

francis_the_wo… shocktherapy Sun, 07/16/2017 - 01:14 Permalink

Well I hope I didn't come across as being too critical, I just get my hackles up when FDR is given any sort of benevolent accolades (which is my interpretation of your use of the term "in response").  The man was a tyrant, a fascist in his own rights who was willing to sacrifice brave souls to goad the American public into accepting another World War, and he had zero respect for the Consitution or to Individual Liberty.That diatribe now ended (for now), I'll address the word in your post that raised said hackles.  You made the point that his policies were made in "response" to the Great Depression.  I disagree, as stated in my earlier post, as a lot of those policies helped cause and extend the Depression.  But it's worse than that, as a lot of those policies were floated, and rejected, by the Progressives earlier in the century (and many of those policies were stolen directly from fellow socialists/fascists like Hitler and Mussolini).  The old Progressive mantra of not letting a crisis go to waste very much applies.  Those bastards took advantage of a time of global strife to implement policies that would have never seen the light of day in "normal" times, and here we are, 3 generations later, footing the bill for this very vile, diabolical president.

In reply to by shocktherapy

logicalman Blue Balls (not verified) Sat, 07/15/2017 - 18:21 Permalink

Yep, the MIC, who are the biggest welfare recipients in the US, need those terrorists to keep the funds flowing.Shit, they even divert some of the funds they receive to keep the terrorists going and the money flowing.Awesome business plan for the few. Meanwhile America queitly disintegrates both physically and socially. 

In reply to by Blue Balls (not verified)

UselessEater Jubal Early (not verified) Sat, 07/15/2017 - 17:40 Permalink

jews just move the table or point to a chair and say that is the new tablehttps://www.amazon.com/You-Gentiles-Maurice-Samuel/dp/1366841948/ref=cm… Gentiles"Written in 1924, this shocking classic work of Jewish Supremacism maps out what the avowedly Zionist author saw as the cause of anti-Semitism through the ages: an irreconcilable difference between Jews and all Gentiles, but Europeans in particular. This difference, Samuel argued, was inherent and biological in origin.......The book goes on to discuss the main points of difference in behavior between Jews and Gentiles focusing on physical activity, religion, concepts of good and evil, loyalty, science, fair play, and discipline. Maurice spells out why Jews have different attitudes to all these moral and philosophical issues-and why these values are the opposite of those endorsed by Gentiles. Samuel then says that these inherent and unchangeable differences will always make the Jews out to be "destroyers" and the "subverters" of European culture and society."

In reply to by Jubal Early (not verified)

SubjectivObject UselessEater Sat, 07/15/2017 - 21:51 Permalink

A book review:ByCurt Beasleyon June 20, 2015Verified Purchasee textbook definition of the word "gentile" would be any person that is not a biological jew. (Nevermind the religious connotations because dont forget, if a gentile wants to worship the jew god he has to follow a different set of rules than a biological jew does.) But when you read this book you understand that when Mr Samuel uses the word gentile he is referring to people of white European stock only. What is striking about this subject is that 99% of white gentiles have no idea that there is an age old conflict-dare I say war-between jew and white gentile. It is remarkable that this truth has been concealed from us. On the other side though, practically all jews are aware of the conflict and not just jewish intellectuals like Mr Samuel. Common jews are aware of this and I can prove it to you. Do you not think that the average jew who makes $30,000 per year and drives a Ford Focus isnt at least a little concerned in the back of their mind that there could be another "Holocaust" at any moment if European antisemitism should flare up again? After all, it was in 20th century Christian Europe that the so-called "Holocaust" happened wasnt it? It wasnt in the Middle Ages.Although the degree of fear, paranoia and hatred of European gentiles varies and isnt always as intense and pathological as Mr Samuel's, it does exist with practically every jew on earth to some degree. Where does this hatred of white European gentiles come from? I will tell you where it comes from. When we Europeans think of Western civilization, we think of all the great things we brought to the world. Advanced civilization, art, literature, science, pragmatism, respect for women, civic virtue, complex systems of government. When jews think of the history of white Europe they dont see it that way. When jews think of the history of Europe down through the ages they think of when Rome sacked Jerusalem in 70AD and they think of the "Holocaust" in 1940s Germany and in between you had the Russian pogroms and you had the hundreds of times jews were expelled from European towns and villages and even entire countries. In other words, to jews white Europe has been the various faces of evil.One thing that really jumps out at you when you read this book is that when Mr Samuel is identifying the causes of antisemitism, jewish behavior doesnt even factor into the equation. This is true with pretty much all jews. They rationalize themselves and in their mind they have never done one thing wrong and never could. In their mind, antisemitism is not a reaction to jewish behavior, its some sort of genetic defect in the European genome. How convenient for the jews. As other reviewers have pointed out, at the end of the book Mr Samuel asks the question, 'can this eternal conflict ever be resolved?' and he answers that question. The only way jews will ever be happy(notice gentile happiness is of no concern) and feel secure is if Europe(and pan-European nations like the US) lose their racial homogeneity.For at least 100 years jewish intellectuals and jewish "philanthropists" and jewish activists and jewish thinkers have been working tirelessly and voraciously to do just that. They had a huge success in 1965 in the US to change the immigration policy and thus the racial demographic and they are doing the same thing in Europe. Have you looked lately at London? Its practically unrecognizable with all of the Pakistani and northern African and Arab invaders. Same thing in the US with all the mestizos. In 1960 the US was 90% white. Today it is about 60% white. What is happening in the US and Europe over the past few decades is not just something spontaneous. It has been carefully planned and executed by jewish intellectuals that are of the same mindset of Mr Samuel. Search one of the video hosting sites for Steve Gutow and you will see this jewish intellectual say that the number one issue for his organization is getting more mestizos into this country and giving the ones that are here illegally amnesty. Search one of the video hosting sites for Barbara Spectre and you will see that this time the jewish intellectual is set up in Sweden to carry out the plan. She admits everything I am telling you. Read Kevin Macdonald's The Culture Of Critique. He documents the history of this jewish plan to mongrelize and water down white countries. This idea, this plan, for wrecking white civilization with mass third world immigration was started by jewish thinkers like Mr Samuel a hundred years ago.

In reply to by UselessEater

Bludklot SubjectivObject Sun, 07/16/2017 - 15:36 Permalink

The Kalergi plan is now being implemented by the EU, with considerable push bach from Eastern European countries like Poland and Hungary, who have been overrun by multitudes in the past. Soros is doing his best to frustrate these small countries' desires to maintain their cultural history and language. This will ultimately destroy the EU.

In reply to by SubjectivObject

Sick Monkey foodstampbarry Sat, 07/15/2017 - 17:34 Permalink

Actually Canada is in a rather unique position. As the only nation on earth with no identity we can pretend to have a snobby British heritage or we can go full Mad Max Americana style. All depends on who has the most to dish out. Of course every once and a while we get slapped on the fingers for being such a slut but Uncle Sam always forgives us and gives us a big fat contract somewhere. Bad timing on the oil sands though. Even China left by the back door but I have a feeling Uncle Trump is going to work something out with BC leaf lickers. They need a new party. The dirty China money is paying for the welfare state right now but I have a funny feeling they're gonna look south soon for some of that QE infinite courtesy of whatever poor shmuk replaces Yellen. Let's call it "The Chinese railroad 2". If you thought homes are expensive now wait till that train wreck gobbles up your local bank. They do it very sly like. Bank managers all over America will start taking early retirement courtesy of your local laundry mat and bank by bank you start seeing more and more slanted eyes gleaming at you and your portfolio. Over time entire neighborhoods start to disappear and demolition crews rip the trailer parks and cheap motels out in the middle of the night as you sleep. Soon massive sink holes emerge in your back yard and your dog falls into a black pit never to be seen again. The RE will be all bought and paid for but not a soul lives in any of the homes with sloppy uncut lawns. Your city streets will be littered with people that don't speak English and old men will be forced to crawl on their hands and knees to get through the ginger ridden mob. In the end obscure extreme left parties emerge making the DNC look like girl guides and all is lost. Everyone is either enslaved to a sewing machine or buried somewhere in the desert.      

In reply to by foodstampbarry

ludwigvmises Sat, 07/15/2017 - 14:56 Permalink

Americans have labelled the European welfare system "unsustainable" in the 1950s. Since then, they have flourished. Food for thougth. Whenever we say some foreign country is "unustainable" you can bet it will last many decades longer than we think.

OverTheHedge Blue Balls (not verified) Sat, 07/15/2017 - 15:35 Permalink

At the risk of upsetting the applecart, don't forget that the taxation rate includes healthcare. I seem to remember figures which suggest that in the US, average taxation is 35%, and in Europe 50%, but how much do US citizens pay for healthcare? Is it more or less than 15%  Of gross income, on average? There numbers are from memory, and years old, so  If anyone has up-to-date numbers, I would be interested to know.

In reply to by Blue Balls (not verified)

ludwigvmises OverTheHedge Sat, 07/15/2017 - 16:37 Permalink

Correct. We point fingers at Europe for having "high taxes", but what is included in the 50% Germans, Dutch or Swedes pay? a) World-class free universitiesb) high quality high schools that beat ours in the PISA studiesc) free kindergardens and pre-schoold) free healthcare that is way better than ourse) high-quality public transport system which is available at rock bottom, government subsidized prices to everyoneToo many people here are saying "Oh but they pay 50% in taxes, that's bad. Case closed". It's not that easy, if you want to compare then compare apples to apples.

In reply to by OverTheHedge

Singelguy ludwigvmises Sat, 07/15/2017 - 21:20 Permalink

I live in the Netherlands and nothing is free. In addition to high taxes, everyone pays health insurance premiums and everyone pays a deductible, but the costs are much lower since the government regulates how much profit the insurance companies can make.
Universities are not free but they are much less expensive than in the USA.
The high schools and public schools are not that great anymore. They have been flooded with migrant children who do not speak the language and are slowing down the entire curriculum.
Public transport is very good but cars, gasoline and road taxes are expensive. In the USA I can drive a Mercedes for what it costs to drive a shit box here.
Your 50% number is low. When you add up all the taxes; income taxes (41%), sales tax (21%), wealth tax (1.4% of all assets over $22,000) road taxes, property taxes, sin taxes, etc., the average citizen pays 71% of their income to the government.

Having said that, you have to look at your individual circumstances. If you are married with children, you are better off in Europe when you net out the benefits that families receive against the taxes they pay. If you are single with no dependents you are better off in the USA.

In reply to by ludwigvmises

Déjà view Blue Balls (not verified) Sun, 07/16/2017 - 02:37 Permalink

Sustainable as below...

COUNTRY COMPARISON :: CURRENT ACCOUNT BALANCE
4/5 EYES RANK LAST...

196 AUSTRALIA -$33,200,000,000 2016 EST.
197 CANADA -$51,080,000,000 2016 EST.
198 UNITED KINGDOM -$114,500,000,000 2016 EST.
199 UNITED STATES -$481,200,000,000 2016 EST.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2…

In reply to by Blue Balls (not verified)

stacking12321 ludwigvmises Sat, 07/15/2017 - 15:30 Permalink

the european welfare system, while a terrible idea, was able to last a while back then, as europe in general and as a whole was an advanced, productive continent.

but introduce millions of non-productive refugees, and the strain on the system is too great to bear, especially given the "other" welfare recipients (euro banks), with their over-leveraged fraudulent "assets" needing to be propped up.

welfare state and open borders are completely incompatible, you have to get rid of one or the other, take your pick.

In reply to by ludwigvmises

researchfix stacking12321 Sat, 07/15/2017 - 15:49 Permalink

"welfare state and open borders are completely incompatible, you have to get rid of one or the other, take your pick."Simply true. We had a well tuned welfare state, and then- the big companies which evade taxes- the poor banks had to get refunded their casino money- the minimum wagers who cannot supply enough tax money- the refugees (who sent them? But we allowed our "friends" to create them)Now, there we are. Hard landing. But the fools will vote for Merkel again, and so the circle closes. 

In reply to by stacking12321