It’s a consistent complaint that those wondrous social democracies over in Europe get so much more from government, so why can’t we here in the U.S.? Some advocating this are even willing to make the (true) point that to get so much more from government, we’ll all have to pay so much more, as they do, in taxes.
Well, as long as people are willing to point out both sides of this, that we can only get “free” healthcare and college if we pay for it, then that’s fine. It becomes an argument over what is either efficient or fair as a method of delivering those things which we know we’re going to have, healthcare and college.
However, there’s something hugely important underneath this as well: the structure of the tax and spending system itself. No, not the size of it, the structure.
This part of the argument, American liberals and progressives have completely misunderstood.
I do actually have some sympathy with this in Salon:
In contemporary political discourse, any celebratory, or even nuanced, analysis of taxation would suffer a heretical inquisition. Even most liberals celebrate the nobility of “easing the tax burden” for working families, while leftists advocate escalating taxes on the rich, but refuse to acknowledge that, if America were to truly transform into a European-style social welfare state, middle-class income earners would also pay more in taxes, and rightly so.
Entirely and completely true. The tax burden on the rich isn’t so different in various places, it’s what the middle class pays which changes drastically.
Unlike citizens of Sweden or France, Americans feel that their taxes do not pay for much of anything, including civilized society.
Also largely true.
If Americans had larger political imagination and ambition, along with more comparative knowledge, they would insist on universal health care, affordable universities and complimentary childcare.
Well, that might be true. It could be that Americans, upon seeing the bill, would prefer not to. But if those liberals and progressives had more comparative knowledge they might – you know, possibly, maybe – understand how those other places work.
As an example, let us take those Nordics which are such a feature of the Bernie Bros and their delight in democratic socialism (they’re wrong with the name, "democratic socialism" is what Lenin did. What they mean is "social democracy"). These countries avail themselves of what I’ve previously called the Bjorn’s Beer Effect.
Yes, Sweden has a pretty good healthcare service. It’s paid for out of county, not country, taxes (Sweden’s a lot smaller than the U.S. but the size of a county isn’t far off that of one in the U.S.). The money is also spent within a county – it’s some reasonably small group of people taxing themselves to spend on themselves. The Norwegian national government gets a little under half the income tax revenue – local governments a little more than that.
In Denmark, that high tax country, the national income tax rate is 3.76 percent. The highest national income tax rate is 15 percent. The heavy tax bill comes at the level of the commune, something which can be as few as 10,000 people: Another 25 percent or so of income, as a useful average.
Imagine that there’s a Bjorn. The guy who both collects and allocates the tax money. In a system where the money is circulating around 10,000 people then it’s likely that you, the taxpayer or recipient, will know where he has his Friday night beer. He’ll also know that you’ll likely know. That fear that you’ll doorstep him to shout about it will mean a certain efficiency. That you can doorstep him, plus the manner in which you can see your tax money being spent on those around you, is going to lead to a willingness to pay higher taxes. Or perhaps less reluctance to do so.
Compare and contrast this with the progressive view of how the U.S. should work. Almost the money from 330 million people should go off to Washington, D.C., there to be allocated back out again. No wonder there’s a greater reluctance to buy things through government. The link between tax paid and goodies received has been attenuated to a breaking point.
Bjorn wouldn’t survive building vertical slums for the poor because he’d get tarred and feathered over his beer. HUD gets away with it just fine because we’ve got no damn idea who they are nor where.
That, I insist, is a large part of the American peculiar institution, that adamant refusal to have the social democracy that much of the rest of the rich world does. I should point out that I’m not in favor of it myself either, but for very much more ideological reasons. The American exception is because hauling off 35 to 45 percent of everything people do, shipping it thousands of miles then handing it out again, just doesn’t work on a human level. A centralized taxation system for hundreds of millions just doesn’t work. In order to have, as liberals insist must happen, all that government, the taxation and the spending must be done much, much, more locally than that.
Or, as we might put it, if you want Nordic social democracy then you’ve got to do what makes Nordic social democracy work, a major part of which is taxing and then spending at something akin to the U.S. county level – even most states are too large – or even perhaps a step below that. For that is what the Nordics do.
Progressive America won’t work because of the progressive insistence that it must be the federal government which taxes and pays for progressive America. That’s just too far from Bjorn and his beer for people to put up with it.
Tim Worstall (@worstall) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.
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