Guest Post by Willis Eschenbach
I’ve been wondering how the Europeans can possibly afford to pay for all of the public benefits as well as putting big money into all kinds of renewable schemes. Where are the megabucks for the renewables coming from?
Today I came across an interesting article entitled “The Death Of Europe” written by a Swede. In it he commented that in Sweden, “Average workers pay (a higher percentage of) taxes than you do if you make $400,000 here in the United States.”
I looked at that and said “Really?” That just didn’t seem possible.
So as is my habit, I went and got the information and to my great surprise …
… he’s right!
Makes me proud to be an American. Now we just gotta cut spending … and please, read the link above about how Europe died. Wise folks learn from the mistakes of other countries …
In any case, speaking of other countries (you like the segue?), on Tuesday I’m flying to Brisbane, Australia. One week on a farm north of there with old friends. Then on the 19th, from there to two weeks in Pacific Harbour in Fiji, lovely Fiji where I lived and worked for nine years. Hey, the waves aren’t going to surf themselves!
Then at the start of April it’s onward for a week in the Solomon Islands, where I lived and worked for eight years. Likely spend most of my time in Gizo, Western Province. Population of maybe 8,000, third largest city in the Solos … it’s a sleepy country.
And where is Gizo when it’s at home, you may ask? Here are the three stops on my bon voyage—Brisbane, Fiji, and Gizo in the Solomon Islands.
Solomons is malaria city. I had it four times. Zero stars, would not recommend. Take the preventative medicine, sleep under the net, use mosquito repellent, hope for the best …
If you’re a climate scientist in one of those areas, whether amateur or professional, gimme a shout.
Then back home again. During my peregrinations I’ll likely post sporadically on my blog, “Skating Under The Ice“. And in the meantime, leave the weapons at the door, play fair, no eye gouging, and remember:
When you comment, please quote the exact words you’re referring to.
Best to each and to all,
w.
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
‘I’ve been wondering how the Europeans can possibly afford to pay for all of the public benefits as well as putting big money into all kinds of renewable schemes.’
Well, for one thing, they can rely on Uncle Sucker for their home defense. And, at least until recently, they’ve avoided the urge to ‘seek monsters abroad’ to vanquish.
Sweden is currently paying 2.2% of GDP for defense, expected to increase to 2.4% this year.
NATO members (most of Europe and others) are expected to spend at least 2% of their GDP on defence.
Currently, several countries are spending more than 2% of their GDP on defence, with Poland spending more than 4% of its GDP on defence.
and historically they rarely did. It was really in Trumps first Admin, and now the Ukraine war that has them revamping their policies.
It is not an apples to apples comparison.
Europeans don’t have to worry about retirement or health care costs. That’s a significant chunk of the “social spending”.
So it is not just how much you are taxed – it is what you get for it.
We Americans get taxed A LOT for what little we receive. Take away Social Security from the equation and it gets really ugly.
The more you are taxed that more that is stolen from you to give to special interest groups who help keep the racket going.
I live in the socialist paradise that is Canada. Can’t defend itself, waiting lines for procedures that are serious and life threatening – that is if you can even get a doctor, euthanasia is recommended on health help lines (saves money, don’cha know?), and ! won’t be able to survive on the Canada Pension and Old Age Security because the idiot in charge who just retired/quit/cried caused the worst bought of inflation since his father was in power.
Simples, we can’t, and we’re bankrupting ourselves trying.
The process goes even faster when lots of refugees pile over the border to get on the gravy train 🙂
Today, policymakers setting “green” policies are oblivious to the reality that so-called “renewables, ONLY generate electricity but CANNOT make anything.
In addition, everything that NEEDS Electricity is made with petrochemicals manufactured from crude oil, coal, or natural gas.
Oil and gas are too valuable as a transportation fuel to be used for power generation. I would limit gas usage to peaking power applications since it can be ramped up quickly. Coal, hydroelectric and nuclear should be our main source of power for electricity generation.
Also oil and gas are used for heating and they are not easily replaced unless electric power becomes less expensive.
It looks like cutting government spending is the road to recession here in the US, stock markets are down since the election after reversing an initial surge.
The tariff uncertainty is driving much of the decline. The financial markets hate uncertainty.
I think another factor for the future, if not happening already, will be a decline in GDP due to reduced government spending. In 2023 federal gov’t spending was 34.4% according to a website tradingeconomics.com. If that gets cut significantly it will affect GDP.
Federal government has been driving growth the last 4 years both in economy and jobs. I had wondered about reports half of all job growth was in government then DOGE hit. Reading a report one of the agencies cut 6k jobs after the cut the number of employees was still 6k more then 2019 level of employees. One agency added 12k jobs in 4 years, amazing.
George,
why is government spending counted in the GDP?
Any such spending is on the debit side of the balance sheet as it is non productive.
Also government spending is taxation income sourced from the tax payers some of whose products will already be a part of that GDP.
It doesn’t seem a sound evaluation of financial health?
It’s a basic formula used by economists (probably from a keynsian background but not sure on that one). I believe the thought process was based on the keynsian theory of the money multiplier, but that has never been shown to be greater than one, as that economic school holds, so in my thinking it’s a parlor trick.
https://www.investopedia.com/terms/g/gdp.asp
It is not a valid method in my opinion because all government spending is either from taxation (which simply reduces the other categories, or debt financing which then adds an interest burden that does not show).
That’s the Keynesian model – print money that mainly benefits the bureaucracy and their well-to-do cronies, then haul the inflated economy back in with a hard recession that mainly leaves the bureaucracy and their cronies unscathed. I’m hoping that this time around, the bureaucracy experiences their first real recession in my lifetime, while deregulation pulls the rug out from under the cronies and cushions the blow to the rest of us.
What would have to happen to others before the bureaucracy experiences their first real recession in my lifetime?
Dunno, but the words ‘hell’ and ‘freezes’ come to mind.
As in “The road to Hell is paved with good ice.”?
to be fair, Keynes original theory had the government banking surpluses to spend in leaner years. Debt financing blows the whole thing out of the water.
There’s also the slowdown after a splurge of tariff-free buying between election and inauguration.
Typical alarmist. One data point is all that is needed to prove a theory.
You might want to look at the trade deficit in recent years within the GDP accounting statements. Govt spending in those quarterly GDP reports is actually somewhat volatile because of defense spending patterns. Beyond that, you don’t really believe private sector spending and investment takes a back seat to govt spending do you?
Well, it is possible that Canada could pull the U.S. into a temporary down quarter by their more rapid rate of contraction. You don’t need a lot of math skills to see that in the trade imbalance favoring Canada in recent quarters.
Don’t you know that all government spending is tax payer cash or dept? Only in your fantasy land can you spend your way to wealth.
I don’t think you know what a recession is. The stock market bouncing back and forth between 42k and 45k isn’t a recession or anything like it. But thanks for sharing. It’s fun to watch leftists panic. It means the right things are happening.
Where’s the recession?
When you cut waste and fraud in government and reduce how much the government sucks out of the economy, you stimulate economic growth in the private sector and jobs that contribute to economic growth. Government jobs don’t stimulate the economy. They are a drag on the economy. Basic economics for today. You’re welcome.
Plenty of government jobs simulate the economy. Exactly how much do you think the economy would grow without roads for example?
So you account for <4% of total government spending, I believe.
By your logic the titanic should have gone even faster and it would have cut right thru the iceberg. The government debt is out of control.
The R word. Not that one, the “revision” one. Over the last four years, take a look at the government financial and labor) statistics when announced, and then look at the revisions after the news died down. Things have not been good for several years.
There was a recession during the Biden years, by standard definition (two consecutive quarters with negative growth), but they managed to ignore that one as well.
Stock markets been at almost record valuations for a while. Both the CAPE index and the “Buffett Index” have been in highly overvalued territory for a long time. Buffett has been selling for a couple years and has record level of cash and T-bills on hand for buying post-correction. The FED has been propping up the markets since little Timmy and Hanky Panky bailed out their banker cronies in 2008/2009.
US markets have been in bubble land for several years.
Reminds me a little of the late ’70s – the glorious (sarc – gas lines, turn down the heat and “put on a sweater”) Carter years – followed by Reagan and Volker doing the hard things to get back to a healthier economy. 🙂 The days of 16% interest rates and corresponding mortgage rates; you could earn double-digit returns in a money market fund. The financial tough love started paying off by the mid-80s, arguably sooner. A major difference today is the much higher level of debt, along with shameless levels of corruption/grift/graft. We do live in interesting times. Time will tell whether it’s fixable or leads to a more extreme series of events.
We are overdue for a real correction, in the 20% down range, maybe 30%. NASDAQ is about halfway there, and SP500 is only about a third of the way. It always reverts to the mean.
Sounds like you lived through the Reagan fixes! Also glad to see you recognized the big problems began in 08 with the way the Fed propped up the market after the obama election, and has been ever since.
You may or may not be correct, but I am willing to trade a possible recession for stopping illegals from killing our citizens, raping our women, and trafficking our
children.
Most of the illegals are fleeing countries where drug gangs, fueled by US drug use, have taken over their countries.
Unfortunately Canada is following the European model.
Pension funds are the latest target for green investments in Canada with our politicians leading the charge. The lifetime savings of the many to line the pockets of a few. But heck we are saving the planet.
I read the linked article, an easy read being short and to the point. It made me wonder if this is true for all of Europe. The historically western Europe does seem to be failing, trapped in policies of economic stagnation. But is the same true for the former Warsaw Pact nations? Did their experience with Soviet communism keep them off the path of the western nations?
Having lived there for almost 6 years and having been a frequent business visitor for 25, it is universally true for Western Europe. Less so for Eastern Europe, for example Hungary and the Czech Republic, both of which I have visited.
I have recently returned from the Balkans. The old capital cities are thriving and beautiful, the coastal cities rival the best of the Med, the country areas are devastated, the young people have left.
Going to “free money and easy living” in urban areas where politicians promise to provide?
We simply cannot as the money is running out.
Especially now that the European governments have been forced to gain a set, and are now having to start paying for their own defence. After been so dependent on the USA doing much of the spending for them.
“That’s the problem with socialism. Eventually you run out of other people’s money.”
Lady Thatcher
Good luck, and enjoy re-living the old. 🙂
The Europeans also tax the hell out of motor fuels.
Enjoy. Your travels I mean, of course. God is good. He just loves the truths coming from you. Europe is a mess because of renewable energy.
Bureaucrats’ incentive is to grow their bureaucracy. Free markets and competition keep them in check, but governments replace competition with politicians whose incentive is more votes, bought with targeted benefits, paid from generic taxes.
What politicians hate more than anything is people telling them NO, especially individuals thinking for themselves. Thus everything they do is geared towards replacing personal responsibility with collective irresponsibility.
Thus unions, labor laws, public schools, truancy laws, and every one-size-fits-nobody regulation they can think of.
Trump is paying lip service to rolling back some of this, but it doesn’t matter how much he actually believes in it. His net effect on the general trend will be less than Reagan’s. In 50 years, there won’t be any more trace of Trump left than there is now of Reagan.
Except for military graves in what’s Ukraine today.
Depends on what you mean by trace. Reagan caused the fall of the Berlin Wall, the end of the Cold War, and the disintegration of the USSR. Those are significant enduring ‘traces’. 45 got the USMCA, the Space Force, and started a NATO reset. 47 is only 6 weeks in. Let’s see what happens.
Your Reagan accomplishments had nothing to do with government bureaucracy.
The USMCA is little different from NAFTA in any significant way. The Space Force is a bookkeeping change of no importance. The NATO reset is no such thing yet, and nothing to do with government bureaucracy.
Apparently abusing the memory of Reagan and the future memory of Trump is worthy of downvotes. So be it.
What I meant by “trace” is their effect on government bureaucracy. However much or little Reagan did change it, or Trump will change it in this term, no one can point to any remnant of Reagan’s changes by now, nor will Trump’s changes remain in 50 years.
About the biggest change any President has made is implementing the Civil Service, Grover Cleveland in the 1880s, I think, and I’ll eat my words if Trump manages to undo that, or get rid of government employee unions. Even that won’t really slow down the growth of government bureaucracy.
I agree. Unless there is a prolonged succession of Trump-like administrations, the swamp will engorge itself once more. As much responsibility must be returned to individual states.
An aside: I was thinking about the much maligned health system in the US, what is stopping any state from introducing its own national health system? 🤔
The best hope I can see for delaying the swamp’s return is for things to go so well that the 2026 midterms remain GOP contrary to history, and JD Vance takes the opportunity, and Trump allows him the opportunity, to shine as his own man and win 2028 and 2032. I don’t expect it; too many chances to screw it up. But the Dems seem so fixated on doubling down on woke that they just might hand 2026 to the GOP. Their reflexive hatred of Trump is the GOP’s best and worst enemy.
ObamaCare might not allow being replaced by a state system, in which case state residents would end up paying for both.
Not sure of Cleveland being bigger than LBJ. The great Society programs and removing the gold cover on money supply were essentially a heroin drip to the US bureaucracy,
A couple of refinements could be made for the nitpickers.
Many US states have an income tax, although these tend to be highly progressive as well. I just did the taxes for an immigrant woman in Calfornia. On an income of $35,000, she paid $2000 in federal income taxes and $500 in state income taxes. So still much lower than the Swedish case.
Then there is sales tax (“value-added tax” in Sweden). Sales taxes in US states are always less than 10%, and food is exempted in (virtually?) all states. In Sweden VAT is generally 25%, with food at 12%.
In the states I am familiar with, sales taxes are higher than 10%, food is only exempted in one (out of 3) states, and only for certain foods. One state exempts necessary clothing. Most states I have been in seem to have both local and state sales taxes, and the local taxes might be the higher percentages.
Not sure where you live but I am at 6% food and clothing exempt, one state over its 0
MD?
It isn’t only Sweden. And it isn’t only income taxes.
From the linked article we have
And it’s true but I think far too many people believe they have bank accounts with billions and billions just sitting there earning interest. The fact is that the vast, vast majority of their wealth is the value of the companies they own and, in many cases, run.
Those wealthy people couldn’t pay billions in tax unless they continually sold ownership of the companies they built. Income is typically spent expanding their business empires and that means employing people. Sure they get to live lives that people only dream of but it’s not at the expense of those people.
When people want to tax the rich, they need to be very careful about who they really mean.
“When people want to tax the rich, they need to be very careful about who they really mean.”
That’s easy! “The rich” are anyone who has more than I could expect to earn!
Yes, malaria city indeed. I remember very well working on the weather coast of Guadalcanal in the 1970’s that everytime we came back to Honiara they would spray the mosquitos around town every night…with DDT! They knew what they were doing. Never got it but was heavy on the daily chloroquine.
BTW, where’s Honiara on your map?? Have the Chinese disappeared the capital? Would love to have your thoughts on the Chinese takeover of the Solomons and wider Pacific when you’re there…are they mining the nickel deposits they stole yet?
Malaria: My uncle was a Navy Seabee in WWII somewhere in the Solomon’s until he contracted malaria; hospital in Brisbane; then hospital/discharge in California, USA. Malaria revisited him occasionally the rest of his life.
I thought “modern” monetary theory allowed you to print all the money you needed.
/s
Printing more money is needed to pay for all the inflation it causes. See?
yes With interest too
Nah, it’s to replace in circulation all of the interest that the “obscenely rich” are passively churning unseen in the background. /s
Governments don’t even need to print it any more. The minting step can be bypassed except for pop machines and car washes which will soon be tap cards anyway. The government just guarantees the $1million mortgage or $1 billion project and the bank opens an account for the borrower that says “opening balance $1million or $1 billion” without worry…where the day before there was nothing.
A little later the bank bundles it into a “mortgage backed security” and sells it to investors or the government who get to call it an “asset” on their books to make it look like they have tons of cash available. Everybody owes everybody else. Turtles all the way down. As long as everyone believes they will get paid back…no problem…that’s MMT…if the system fails you just convince everyone that they owe it to themselves so still no problem.
It’s sort of like bucket brigade to put out a fire by continually filling the next guy’s bucket with water you just got from the last guy’s bucket. All good until everyone has concerns that maybe it’s the pump house that is on fire.
Let’s print all the money needed to repay the national debt (some $36 trillion). It would cause a short-lived disruption, but it would solve most of our problems.
“disruption” as in quickly destroy the economy and start over?
Seems legit.
The chart shows only federal taxes. A proper comparison should include state and local taxes. Also, any local taxes in Sweden.
In Georgia, state income tax is 7% of the federal tax. Sales tax is split between 3.5% for state and 2.5 – 4.5% for the county. Then there are property taxes…
It may be relevant to post this here – Robert Bryce has posted a transcript of Energy Secretary Chris Wright’s address at CERAWeek by S&P Global conference in Houston.
So much sense being delivered by the new administration in the US.
https://robertbryce.substack.com/p/chris-wright-we-need-more-energy?
and of course –
story tip
Good piece, Willis.
For all the years he’s been a CBS, ABC, Fox, and Reason reporter and contributor, and all the years since then when he’s been on his own video platforms, all the while a libertarian commentator, I never knew John Stossel was a Swede. Always thought he was a German-American guy from Illinois. Something new every day!
https://en.wikipedia.org/wiki/John_Stossel
He does have some good sources in Denmark and Sweden. Economists Larson, Norberg and Lomborg being a few of them.
Safe and sunny travels!
Please do NOT be too proud of the low US taxes.
If one considers ALL taxes paid in the USA and Sweden, the difference turns out to be pretty small: 55% in Sweden versus 49% in the USA, for a $400,000 income. Use your favorite AI to get the analysis. Most of the difference comes from the VAT, while property taxes in Sweden are far smaller than in the USA.
This differs a bit from state to state, of course.
VAT is a most insidious tax infecting every step of economic process. It is the embodiment of a bureaucratic tax engorging itself as it rolls through.
As a retiree who does not have to pay any tax on pension income, this is a constant irritation to me. Fortunately, in my main country of residence, it’s only 10%, and fuel duty is about half of European ones.
The economy is almost the least of our problems in the UK/Europe. I conflate the two because Brexit was deliberately and maliciously sabotaged, and whilst in some ways we are out, in other ways we are still in, and Starmer is trying to embed us again.
When JD Vance gave his now infamous speech and mentioned the UK erosion of freedom of speech, he barely scratched the surface. There are hundreds of people prosecuted every year for social media posts that even hint at the wrong thing.
We also have something called a Non Crime Hate Incident (NCHI) – yep, really. It’s a response to an accusation made about you that requires no evidence (yes, I’m serious) assuming it conforms to some sort of ‘hateful’ speech or action. It can literally be anything someone doesn’t like about what you say, do, or look like. Say a man can’t be a woman, that’s a NCHI. You will likely get a cop at your door, taking you away in handcuffs for an interview at the station.
Thereafter, irrespective of the outcome of that interview, the NCHI is recorded on a centralised, government run Disclosure and barring Service database (DBS) which can be accessed and checked by any employer to determine if you have a criminal record. But an NCHI, as its name suggests, is not a criminal record because you are never tried or convicted of anything. Nevertheless, it is included.
What’s worse is, you may never be told that your details have been entered for a NCHI, the police can just do it without informing you there has been a complaint made about you. It can wreck the prospect of employment for people who don’t even know they have been accused of something.
Now, on a slightly different note, as we should all recognise, Europe has been the playground of choice for US neocons since 1945 which has, of course, spilled over into the Middle East.
Ukraine has exposed Europe as a simpering bureaucracy with no talent for anything but attempting to keep the war going, because if it doesn’t Trump is keen to get the US off the continent leaving Western Europe defenceless.
The fact is, it hasn’t made sense for the US to be in Europe since the USSR collapsed. It makes no sense whatsoever to rely on the defence support of a nation 4,000 miles away, as they have no skin in the game. It makes much more sense were Europe to ally with Russia for a strategic defence partnership thereby balancing the world’s superpowers, which also includes China and surrounding nations and, to a lesser extent, India, and it’s nations of influence.
I think this is what will be at the core of discussions between Trump and Putin. A new strategic defence architecture for Europe and Russia, which I’m certain China is aware of and approves of. China and Russia have never been natural allies but have been driven together by the conflict in Ukraine. I suspect something like this will make both China and Russia feel much more comfortable, as Russia is a predominantly white, Christian nation, as is Europe.
In 2023 Xi of China announced that within five years the world will change more than it has in the last one hundred. I think this project has been underway for many years but would have been unacceptable to the Europeans unless forced into it and the Ukraine conflict, whilst unplanned, is the perfect opportunity to leave Europe with no choice but to take it.
Not any employer. Only for jobs involving vulnerable people, ie elderly or disabled people or children. Check out the Rehabilitation of Offenders act. Unlike most countries, most convictions almost never have to be declared.
There is no eligibility requirement for a basic DBS check. Any employer can request one.
Enhanced DBS checks include a wide range of jobs including taxi drivers, the legal profession, jobs in the public sector – Civil Service, policing, nursing, fire service, local authorities etc.
There is also a barred list check which can be requested for some jobs.
Willis,
A warm welcome to the Australia I love. Had you come to Melbourne I would have offered to meet you and show you around.
Brisbane, as you know, has had a lot of rain in the past week. Let us hope that it does not lessen your enjoyment.
Maybe you and Eric can make some public announcements while here, because irrespective of current national taxation levels, Australia is in an economic mess because of policies of the net zero carbon by 2050 type.
Bon voyage Geoff S
Thanks, Geoff. I love Oz as well, been there a couple times now.
w.
How far north of Brisbane are you coming? Like Geoff, I could show you around Rockhampton/ CQ if you get that far. Enjoy your trip.
Ken S
An hour and a half north, near Cedarton, QLD.
w.
Willis,
I’ve been to US and Canada numerous times over the decades and still dislike that long trip over the Pacific, it is so long and boring, but it is life.
My US experiences have been OK, a little better than the time I had in Iran a few months before the Shah was deposed, but the Iranian women tended to be rather beautiful. In Tehran I was taken hostage and held in a jail at gunpoint, which I would not expect in US, except in California. What keeps you there?
We hope that you report on your Aust experiences. Geoff S
I’m still in CA because a) I live in a gorgeous spot in a redwood forest, b) I live in a big old house I built myself, large enough to house me, my gorgeous ex-fiancee, daughter, son-in-law, and two young grandkids, and c) I bought my place 45 years ago. In CA there’s “Proposition 13” which keeps your taxes on the value of the house when you bought it.
So if I sell and buy new anywhere, my prop taxes will double.
w.
Welcome to Brisbane. You will arrive at the tail-end of TS Alfred. A bit of flooding, less than usual, some damage … might even be mopped up before you arrive. The usual misanthropicists from the ‘Climate Council’ shrilly bleating the tired old mantra, “this is climate change,” “it only gets worse,” etc, etc.
Sounds like you were reading the “Sydney Morning Herald” for a forecast. Over the top…..
US northeastern electricity from Canada to be turned off completely if more tariffs.
Ontario Premier Doug Ford at a press conference that he would move forward with a 25% surcharge on electricity exports to three US states starting Monday, warning that he will would TURN OFF access if the United States adds new tariffs on Canadian goods.
“If the United States escalates, I will not hesitate to shut the electricity off completely,” Ford told reporters. “Believe me when I say I do not want to do this, I feel terrible for the American people, because it’s not the American people who started this trade war. It’s one person who’s responsible. That’s President Trump.”
Ford on Monday said the 25% surcharge “will cost families and businesses” in New York, Minnesota and Michigan and add around “$100 per month to the bills of hardworking Americans.”
https://www.cnn.com/2025/03/10/business/canada-electricity-us-tariffs-doug-ford/index.html#openweb-convo
I take it that you don’t play poker.
I believe Canada is playing the hand it was dealt. They weren’t given much choice.
Plus they will boo the Star Spangled Banner.
he(Ford) backed down today.