Europe's Unsustainable Welfare State

in europe •  7 years ago  (edited)


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.

Source : ZeroHedge

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Let's not forget the ECB have been on a astonishingly huge money printing scheme. Also the is massive amounts of debt some countries have that will never be payed back . Things will definitely change going forward but it's not going to be what the people will want
Cheers mike

Totally agree on:
"taxation hinders the growth of SMEs (small and medium enterprises)"
In my opinion this particular area needs to grow and not be suffocated, if "ordinary folks" can't run their business, more people will end up on welfare. Moreover with trend of automation taking more and more workplaces out of big business, this can lead to serious trouble.

Either way, the data is concerning and way too much for them to sustain. The EU will fall as each country falls out of the EU.

The next big crash will probably originate from Europe.

thank you for enlightening people on the nanny state... loads of good info here. gonna tweet this out

The welfare state is what made them great.
Their self genocide is what did them in.

"58% of the World’s Welfare Spending" - does this 58% include corporate subsidies?

We don't need welfare if we provide tax deductions for spending on growth and infrastructure creating more well paying jobs. It starts with High Tax Rates though.

Bitcoin has created a new paradigm in the money services industry,

... but is still far removed from everyday use as payment for labor. Once that happens on a grand scale we will see just how secure it is from the "legal" paper currency creators, as we see in this post concerning alleged competition into the "Every-Day" physical realm.

Excerpt from my recent post on the Velocity of Money.

Regardless of the monitary unit we use, if it be bitcoin, metals or fiat cash, the economy runs on spending it. Just like any fluid system the infrastucture needs to be designed and the flow and pressures must be monitored and tweaked as needed to maintain a healthy and consistent velocity. We will always need to measure labor and talent and compensate it in an open and fair market; As population levels grow the need for accountable government grows with it.

https://steemit.com/economics/@adconner/the-velocity-of-money