Sunday, February 20, 2005

Is the EU an exercise in Socialism?

I don’t claim to be an economist or even play one on the internet but let me pose a question for all, is the European Union an exercise in socialism? Europe is split upon two distinct lines, the old socialism leaning countries with their sky-rocketing unemployment and enormous social programs and the new capitalist countries with growing economies and bright futures. Before we get into the details, let me define socialism for all those on the short bus.


1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a : a system of society or group living in which there is no private property b : a system or condition of society in which the means of production are owned and controlled by the state
3 : a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done.

The future of Europe is faced with two paths and soon the people of Europe will have to choose one to follow. The EU states on it’s website that it is not intended to supersede the individual countries sovereignty but as the EU brings on more countries as members the groundwork is laid for a centralization of power. The EU was first conceived by the French in 1950 as a defense against the march of communism. What first started as a mutual trade and economic group has morphed in to something much more.

The EU has stated as some of its goals that it would like to be a political and economic power to serve as a counter to the United States. Well, I hate to burst their bubble but the latest economic information show that not only do they have a long way to go but much of the rest of the world is passing them in economic terms. Recently the weak economies in Germany, the Netherlands and Italy ate away at the progress the rest of the EU has made. The gains made by the recent members in their capitalist economies like Poland, Spain, the Czech Republic and Greece has done little to offset the sliding economies of “Old Europe”.

No greater illustration of the demarcation line between the members of the EU is the tax burden that member nations levy on their citizens. It is generally accepted that the tax-to-GDP ratio is a very accurate measure of the tax burden of a countries citizens so that will be the measure I use. The lowest tax-to-GDP ratio of the EU25 is 28.7% for Lithuania. The EU25 is defined as the following countries: Belgium, the Czech Republic, Denmark, Germany, Estonia, Greece, Spain, France, Ireland, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Slovenia, Slovakia, Finland, Sweden and the United Kingdom. The highest tax-to-GDP ratio belongs to Sweden at 51.4%. My goodness at that rate how can Ikea make stuff so cheap with all those taxes? In fact if one removes the nations that recently joined the EU, the overall tax-to-GDP ratio for the entire EU rises to an average of 41.8%. The United States tax-to-GDP ratio was 26.4%. All of the numbers are for 2002 and the US ratio comes from here.

Now if one takes an every closer look at the numbers, you will find that most of the lower tax burden countries are ones that have joined recently or have system of capitalism in place with low unemployment. As the unemployment figures in “Old Europe” continue to stay high, such as France and Germany which stand at 9.6% and 9.8% respectively. Gee, that makes our 5.5% look just grand doesn’t it? Especially since our unemployment has been dropping for over two years now, could it be because of our lower tax burden? The answer is yes for those who are slow or are subscribing to the lies of the left. The lower the tax burden on a society, the more money that society has to spend on goods, invest in businesses, create jobs.

Now by this point you might be asking how does this prove or even suggest that the EU is socialist group of countries. It does not. This post stems from a conversation I had recently with a co-worker and friend. I had originally thought that the EU was blatant socialism starting to run amok across Europe, and then I did some research through the miracle of the internet. The fact is that the EU nations stand on the edge of a great downfall and must make a hard choice. Early in the 90’s one of the stated goals of the EU was to surpass the United States as an economic power and thus put us in our place while returning Europe to a status in the world that it has not enjoyed since the late 1800’s.

While the United States has had 2 periods of economic downturns in recent years, we also have had extended periods of prosperity. Europe in contrast has been on a slide ever since the dot com boom of the late 90’s. The downturns I refer to are the economic slowdown in 92/93 after the Bush-41 tax hike which according to most economists laid the foundation for the rapid expansion of the Clinton years, and the recession brought on by the 9/11 attacks and the Clinton policies of his 2nd term. Take a look at these numbers again; notice how the U.S. tax burden spikes around the Clinton years and then declines once “W” took office. Once again something that is not widely reported in the MSM, lower taxes promoting economic growth.

The EU is not a collection of Socialist states just yet but it could be on its way. If the French and Germans are allowed by other members to continually have unemployment rates above 9% with GDP growth rates under 1% then sooner or later they will use their political clout to force EU member to subsidize the massive social programs that they already have in place. I wonder if the newness of capitalism played a part in many of the former Warsaw Pact nations tripping over themselves to join the pseudo-socialists in the EU. Maybe that and the inherent lack of faith in humanity that was ingrained during the years of Soviet rule are why those nations lined up to help pay for the rest of the continent’s mistakes.

Folks it comes down to the simple truth that while not perfect, capitalism is the best game in town and those on the left who bitch and moan about how bad it is should take a hard look at the numbers and then decide once and for all if they have faith in their fellow citizens. Just one more then for those on the left (short bus), life is not fair and if you’re not willing to work for it then you don’t deserve a damn thing. I have just finished “Atlas Shrugged” by Ayn Rand for the 3rd time. That book was published in 1957 and its message is truer today then ever before. Those who can't produce simply loot from those who do, and that amazingly enough describes most of Europe and the American left. Let me leave you with one last phrase for those in Europe who don’t wish to end up in a Socialist conglomerate or even those in this country who follow the dictates of the left, think on these words: I swear by my life and my love of it that I will never live for the sake of another man, nor ask another man to live for mine.”

Cross-posted at Wide Awakes

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