If you’re a right-winger who wants to call the European social-welfare state “socialism,” so be it. Use whatever word you want for a system that provides housing and health care and education, helps poor people, and keeps the streets safe. I’ll take it.
Take the Netherlands, as Russell Shorto does in an excellent article in the New York Times Sunday Magazine.
In Holland there are still businesses and rich people. The Dutch are capitalists. Arguably, they invented the system. But they also believe that the collective power of the state has the ability, even the duty, to help those least able to help themselves. In the end, virtually everybody benefits. The Dutch system isn’t perfect, but it’s very good.
It’s not all good. In the Netherlands, like most of Europe, there’s a problem with immigration. The issues of immigrants in Holland (and generally all of Europe) make me proud to be an American.
And then there’s the Dutch weather. It’s horrible. The brilliant Dutch light that inspired so much beautiful painting is real. And it comes as a result of clouds and being so far north. It can be cold and rainy at any time of year. And it never gets hot. One summer I was there, summer never came. I couldn’t take the prospect of another dreary winter without a summer.
That’s the down side. But I imagine when Republicans complain about Obama being socialist, they’re not talking about the weather.
Along with doing police research in Amsterdam and working for time at my brother’s theater, I also started a non-profit boat club. It’s still there and whenever I can get back, I take out a lot of tourists on the beautiful canals.
Americans are constantly amazed that a city could be so livable and so beautiful (and pedestrian and bicycle friendly). I am always quick to tell them we could do that too, if we wanted to… and were willing to pay half our income in taxes.
Their collective approach could be the result of much of the country being below sea level. It could also be some strain of Calvinist Protestantism. The Dutch, contrary to public opinion, aren’t liberal. They’re tolerant. If anything, they’re amoral. And since morality generally does not make good public policy, things in the Netherlands generally work. And if they don’t, they spend money and fix them till they do.
I’ve lived in Amsterdam. My brother still does. He was first attracted by their permissive attitude toward legal marijuana. While partaking in that, he and a friend had the brilliant idea to open a business, a comedy theater.
He did. Amsterdam is now home for him now. Seventeen years later Boom Chicago is the fruits of his labor. Now that my brother is a business man, he frequently complains about Dutch labor policy. Like the fact you really can’t fire workers. Ever. Even bad ones. And then there’s a tendency for these workers–in what has to be one of the least stressful countries on earth–to go out on employer subsidized sick leave because of, you guessed it: “stress.”
And workers, and even the unemployed, get an extra month salary, “vacation money,” for their annual month of paid vacation. This is so hard for Americans to conceive of that I’ll say it again: Dutch workers get a month paid vacation and during that month, they get an extra month of salary. Otherwise, the thinking goes, how could you afford to go on vacation?
But because taxes in our country are considered socialist (or worse), we don’t. I lose close to 40 percent of my paycheck every other week. I would be happy to give up another 10 percent of my income for all the benefits the Dutch get from their taxes.
Anyway, read Shorto’s article. Especially if you’ve never been to Europe but instinctively nod in agreement whenever people criticize their economic policies.
Here’s a sample:
Then there are the features of European life that grate on an American sensibility, like the three-inch leeway that drivers deign to grant you on the highway, or the cling film you get from the supermarket, which clings only to itself. But such annoyances pale in comparison to one other. For the first few months I was haunted by a number: 52. It reverberated in my head; I felt myself a prisoner trying to escape its bars. For it represents the rate at which the income I earn, as a writer and as the director of an institute, is to be taxed. To be plain: more than half of my modest haul, I learned on arrival, was to be swallowed by the Dutch welfare state. Nothing in my time here has made me feel so much like an American as my reaction to this number. I am politically left of center in most ways, but from the time 52 entered my brain, I felt a chorus of voices rise up within my soul, none of which I knew I had internalized, each a ghostly simulacrum of a right-wing, supply-side icon: Ronald Reagan, Jack Kemp, Rush Limbaugh. The grim words this chorus chanted in defense of my hard-earned income I recognized as copied from Charlton Heston’s N.R.A. rallying cry about prying his gun from his cold, dead hands.
I think the issue is a lot more complex than that.
The Netherlands has a vastly different culture and political system than that of the US. Just because they succeeded, doesn’t mean that we will be able to replicate their results. If you are going to spend that money, you have to spend it on things that people want. Chryslers and GM’s don’t count.
They are also achieving those results on a much smaller scale than we would have to manage. If we ever get back to the days of true Federalsim, a state might be able to do the same. So far though, California has not fared so well.
They have been headed in the other direction slowly for quite a long time. Back in the 90’s, debt was running almost 69% of GDP. Now they are back under 50% and still running surpluses.
No one knows what the end game is on massive entitlement programs. Its either sustainable, or it will make this banking crisis look like a walk in the park.
Tax rates in the US can be deceptive. Maybe you have a Federal Income Tax rate in the low 30’s. Add in state tax. FICA. Medicare. Real estate tax. Sales tax.
Then figure the amount that is spent on “private” health care.
Lets say you have a really good year by normal peoples standards. You then get the alternative minimum tax.
However………
In Europe there are VAT’s in a lot of countries.
In addition, you see a lot of perks in lieu of salary. Good, cheap lunches. Company cars. People would rather get paid in non taxable perks than additional salary. These would be your more highly paid individuals, of course.
I’m counting the difference between my gross and net income (what my paycheck says I earn and what I actually get).
So that includes all my federal, state, and local (yes, local) income taxes (though I get a very small amount back in April). And also FICA and social security. But not real estate tax (which happens to be low in NYC) and not sales tax (which is much higher in Europe). And, because I have a government job, my health care benefits are pretty good and I don’t pay much more for that.
About Europe being sustainable… they’ve being providing these benefits for half a century. Their economy is just as sustainable as ours. It’s a question of values: do citizens have a right to housing, income, and health care. They say yes. We say no.
sustainability is a structural issue. Most people thought the housing market was sustainable because of its long record as well. Systemic risk should not be ignored. How large a change in benefits would it take to destroy their system? Europe has consistently excepted lower employment and growth rates in exchange for that security.
Europe has had varying degrees of success with these programs. I don’t think you can make a blanket statement that we just have to want to do it. Culture and systems play a reasonably large part of success or failure. If the European Union goes the way of the United States (Central power becoming greater and regional power decreasing), we could expect them to have an increasingly hard time maximizing return on these benefits. Tailoring a benefits program to 16 million people is a lot easier than to 300+. Federalism would give us a fighting chance.
I’m not denying the final argument. This fight has a lot to do with values. Some people feel that its an individual right to decide how you spend your money.