Varsity Blues (NEW CONCEPTS)

[Grant]

http://freakonomics.blogs.nytimes.com/2010/05/25/who-spends-more-on-social-welfare-the-united-states-or-sweden/

Interesting article here which shows that the difference between the US and Europe is actually not that great.

It's likely that every society has to devote about a quarter of its GDP on welfare of one sort or another.

[Ishmael]

[Mick Harper]

Of course, poppet, anything you say.

[Ishmael]

[Ishmael]

http://www.youtube.com/watch?v=psosLpDALuA

[nemesis8]

What a coincidence, I love Hayek..

http://www.youtube.com/watch?v=Rh0rut5Qv2U&list=QL&playnext=1&feature=bfnav

[Mick Harper]

You have no business loving anybody. Read, digest, move swiftly on.

[berniegreen]

[berniegreen]

[berniegreen]

Following up on Grant's post, I note two things:

Firstly, the referred article is comparing outcomes with respect to welfare payments in USA and Sweden, whereas we had been speaking of attitudes to taxation and attitudes to the money spent on welfare. If you google/bing/ixquick for "attitudes to taxation" you find that attitude surveys consistently report a much higher level of antagonism towards taxation in the USA than in most European countries.

Secondly, I suspect that there is an error in the argument by which Prof Fishback seeks to show that USA's spend on welfare in NET GDP ranks alongside the nordic countries. It is true that Sweden taxes welfare payments as income whereas USA does not. If you apply standard tax rates across the board to this then Fishback's arithmetic may well be correct. However if you take into account that welfare payments are skewed towards those who are below the tax threshold and those who are paying the lowest rates of tax, then Fishback's conclusions are probably far too optimistic in the USA's favour.

I previously suggested an underlying cause for the different attitudes which Ishmael (our resident non-adolescent!) rejects out of hand without any attempt to justify his sweeping contempt for the idea. If anybody has any other proposal to explain the facts I would be extremely interested to hear it.

[nemesis8]

Well, maybe the attitude, is in part because the US historically has favoured lefty progressive direct taxation. Europe finanaces its welfare much more through indirect taxation such as sales tax, and other stealth taxes.

I keep on making this point.

[Mick Harper]

One reason for the difference is not ideological but practical. The US (and Britain) have developed cultures where there is a relative lack of corruption and people tend to pay their taxes. Continental Europe, certainly southern Europe, has not historically been in this blessed position. So European governments have developed taxes that are difficult to evade rather than 'fair', 'non-regressive' and so forth. Value-Added-Tax is the great recent example of this (but has spawned wondrous criminal enterprises based on it nevertheless!).

[Mick Harper]

It might also be pointed out that 'stealth' taxes are good precisely because they are stealthy ie we don't know we are paying them. In this respect there might be a cultural difference between US and Britain. I couldn't help noticing that everytime I bought something in America I was forever being told told "plus sales tax" or whatever. I never heard this when we had a similar Purchase Tax even though the latter was far higher than the former. It's the same with VAT, a Mars Bar costs 50p because that's how much a Mars Bar ought to cost!

[berniegreen]

[berniegreen]

While on the point of stealth taxes you might like to know that New Caledonia is a really good place to live. France has applied the VAT rate as payable in metropolitan France and completely abolished income tax. And has so shifted a major portion of the tax burden onto the tourist. Ah Vive les crafty frogs!