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Posts Tagged ‘Europe’

Taxpayers don’t like coughing up big amounts of money so other people can choose not to work.

And they really get upset when welfare payments are so generous that newcomers are encouraged to climb in the wagon of government dependency.

This has an effect on the immigration debate in the United States. Most Americans presumably are sympathetic to migrants who will boost per-capita GDP, but there is legitimate concern about those who might become wards of the state.

Welfare migration also has become a big issue in Europe.

Reuters has a report on efforts by the U.K. government to limit and restrict the degree to which migrants from other E.U. nations can take advantage of redistribution programs.

Cameron says he needs a pact to curb benefits for new migrant workers from EU countries… Proposals to allow British authorities to withhold in-work benefits for up to four years from EU citizens moving to work in Britain are under intense scrutiny.

You can understand why Cameron feels pressure to address this issue when you read horror stories about foreigners coming to England and living comfortable lives at taxpayer expense.

This isn’t just a controversy in Britain.

The U.K.-based Guardian has a story on support for such measures in Austria.

The Austrian foreign minister, Sebastian Kurz,…would not only call on the chancellor, Werner Faymann, to vote in favour of Cameron’s “emergency brake” on migrants’ benefits, but also to adopt the measure in Austria as soon as possible. …”Those who don’t pay into the system will get fewer benefits or none at all,” Kurz told the newspaper Kronen Zeitung. “We should embrace that principle if we want to guarantee that our welfare state remains affordable and attractive for top talent.” …he also supported Cameron’s call for the UK to be allowed to stop paying child benefit to EU migrants whose children live abroad.

European politicians are right to be worried. There’s evidence even from Sweden that welfare programs lure migrants into dependency.

And studies of American data show that excessive levels of redistribution can be at least a partial magnet for welfare recipients.

Here are some of the findings from a 2005 scholarly article by Professor Martin Bailey of Georgetown University.

…the results also indicate that welfare benefits exert a nontrivial effect on state residential choice. …the welfare migration hypothesis does not require welfare to exert a dominant effect, only a real effect. And here, the results provide strong, robust indications that the effect is real. …the results imply that migration may discourage states from providing high welfare benefits because such generosity attracts and retains potential welfare recipients.

Professor Bailey then found in a 2007 academic study that states understandably impose some restraints on welfare spending because of concerns that excessive benefits will lure more dependents.

Whether states keep welfare benefits low in order to prevent in-migration of benefit-seeking individuals is one of the great questions in the study of federalism. …This article develops a model which…suggests that competition on redistributive programs does…constrain spending to be less than what the states would spend if migration were not a concern.

This makes sense, and it echoes the findings of a study I wrote about in 2012 by some German economists.

Simply stated, you get better policy when governments compete.

But that doesn’t mean Cameron and other European politicians are doing the right thing. Instead of limiting handouts just for migrants, they should be lowering redistribution payments for everybody, including natives.

After all, European nations (like many American states) have elaborate redistribution systems that often make dependency more attractive than work.

Indeed, the United Kingdom has a more generous package of handouts that almost every other European nation.

The bottom line is that it’s a bit hypocritical (and in some cases perhaps even racist) for Cameron and others to target welfare for migrants without also addressing the negative impact of similar payments for natives.

P.S. To give British politicians credit, there have been some recent positive steps to reduce welfare dependency by cutting back on handouts.

P.P.S. In any event, Americans shouldn’t throw stones because we live in a glass house based on our foolish laws that shower refugees with initiative-sapping handouts.

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I wrote last year about the moral vacuum that exists in Europe because gun control laws in nations like France make it very difficult for Jews to protect themselves from barbaric attacks.

But the principle applies more broadly. All law-abiding people should have the human right to protect themselves.

Politicians in Denmark don’t seem to understand this principle. Or maybe the do understand the principle, but they are so morally bankrupt that don’t care. Not only do they have gun control, they even have laws against pepper spray. And they are so fanatical in their desire to turn people into sheep that the government apparently will prosecute a girl who used pepper spray to save herself from rape.

Here are some excerpts from a report in the U.K.-based Daily Mail.

A Danish teenager who was sexually assaulted near a migrant asylum centre has been told she will be prosecuted after using pepper spray to fend off her attacker. …she managed to prevent the man from attacking her further by spraying the substance at him. …However, as it is illegal to use pepper spray, the teenage girl is set to face charges.

How disgusting.

And what makes the situation especially frustrating is that the criminals and terrorists in Europe obviously don’t have any problem obtaining firearms.

So the only practical effect of gun control (or bans on pepper spray) is to make life easier for the scum of society.

And the real insult to injury is that a teenage girl who should be hailed as a hero now faces the threat of punishment. Just like the unfortunate British woman who was persecuted for using a knife to deter some thugs.

And here’s some of what the BBC reported about

Italian hospitality for the visiting Iranian President Hassan Rouhani has stretched to covering up nude statues. Italy also chose not to serve wine at official meals

Pathetic. Particularly since the Italians bent over backwards for a truly heinous regime.

Kudos to President Hollande in France, by contrast. The Daily Mail notes that he held firm.

A lunch between the French and Iranian presidents in Paris was scrapped today because France refused to remove wine from the menu.

By the way, there clearly is a role for common courtesy and diplomatic protocol. It obviously would be gratuitously rude for a nation to serve pork at a dinner for officials from Israel or any Muslim nation, just as it would inappropriate and insensitive to serve beef for an event for officials from India.

Moreover, officials from one nation should not make over-the-top demands when visiting other countries. Just as it would be wrong for French officials to demand wine at state dinners in Iran, it’s also wrong for Iranian officials to demand the absence of wine at meals in France. After all, it’s not as if they would be expected to partake.

In the grand scheme of things, though, the kerfuffle about wine and statues doesn’t matter compared to the potentially life-and-death issue of whether Europeans should be allowed to defend themselves.

That’s why Europe isn’t merely in trouble because of fiscal bankruptcy, but also because of moral bankruptcy.

P.S. While having the ability to protect your life or to guard against rape isn’t a human right in most European nations, take a look at some of the things that are “rights.”

All this is amusing…in a very sad way.

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I periodically make comparisons of the United States and Europe that are not very flattering for our cousins across the Atlantic.

Though this isn’t because of any animus toward Europe. Indeed, I always enjoy my visits. And some of America’s best (albeit eroding) features, such as rule of law and dignity of the individual, are a cultural inheritance from that continent.

Nor am I trying to overstate America’s competitiveness, which actually has eroded considerably during this century.

Instead, I’m simply trying to make the narrow point that too much government is already causing serious problems in Europe, and I’m worried those problems are spreading to the United States.

Yet some of our statist friends, most notably Senator Bernie Sanders, think America should deliberately choose to be more like Europe.

They have this halcyon vision that the average European is more prosperous and they exclaim that this is proof that a big welfare state is benign. Or perhaps even beneficial.

So it was with great interest that I read a new article by Ryan McMaken of the Mises Institute. He takes a data-driven look at the America-v-Europe economic debate.

The battle over the assumed success of European socialism continues. Many European countries like Sweden have gained a reputation as being very wealthy in spite of their highly regulated and taxed economies. From there, many assume that the rest of Europe is more or less similar, even if slightly poorer. But if we look more closely at the data, a very different picture emerges.

Actually, I have a minor disagreement with the above passage.

Countries like Sweden and Denmark are highly taxed, but it’s not true that they’re highly regulated.

Or, to be more accurate, there almost surely is too much regulation in those nations, but since we’re discussing the relative economic performance of the United States and Europe, the relevant point is that there’s less government intervention in certain European countries (particularly Nordic nations) than there is in the United States.

The only reason that they generally lag behind the United States in the overall rankings is that they have very bad fiscal policy and that more than offsets the advantage they generally have over America in other categories.

But I’m digressing.

Let’s focus on the main point of the article, which is an effort to produce a neutral comparison of living standards in European nations and American states.

…if one is going to draw broad conclusions about poverty among various countries, GDP numbers are arguably not the best metric. For one, GDP per capita can be skewed upward by a small number of ultra-rich persons.  …I thought it might be helpful to use data that relies on median income data instead, so as to better account for inequalities in income and to get a better picture of what the median resident’s purchasing power.

McMaken uses OECD data to calculate relative levels of median income.

The nationwide median income for the US is in red. To the left of the red column are other OECD countries, and to the right of the red bar are individual US states. These national-level comparisons take into account taxes, and include social benefits (e.g., “welfare” and state-subsidized health care) as income. Purchasing power is adjusted to take differences in the cost of living in different countries into account. Since Sweden is held up as a sort of promised land by American socialists, let’s compare it first. We find that, if it were to join the US as a state, Sweden would be poorer than all but 12 states, with a median income of $27,167.

And here’s the chart he described (click to enlarge). Remember, this is a look at the income of the median (rather than mean) household, so the numbers are not distorted by the presence of people like Bill Gates.

Here’s some additional analysis based on his number-crunching.

With the exception of Luxembourg ($38,502), Norway ($35,528), and Switzerland ($35,083), all countries shown would fail to rank as high-income states were they to become part of the United States. In fact, most would fare worse than Mississippi, the poorest state. For example, Mississippi has a higher median income ($23,017) than 18 countries measured here. The Czech Republic, Estonia, Greece, Hungary, Ireland, Italy, Japan, Korea, Poland, Portugal, Slovenia, Spain, and the United Kingdom all have median income levels below $23,000 and are thus below every single US state. …Germany, Europe’s economic powerhouse, has a median income ($25,528) level below all but 9 US states.

We could stop at this point and declare that the United States was more economically prosperous than all European nations other that oil-rich Norway and the twin financial centers of Switzerland and Luxembourg.

This doesn’t bode well for Bernie Sanders’ claim that America should be more like Sweden and Denmark.

But McMaken expands upon his analysis and explains that the above numbers actually are too generous to Europeans.

We’ve already accounted for cost of living at the national level (using PPP data), but the US is so much larger than all  other countries compared here, we really need to consider the regional cost of living in the United States. Were we to calculate real incomes based on the cost of living in each state, we’d find that real purchasing power is even higher in many of the lower-income states than we see above. Using the BEA’s regional price parity index, we can take now account for the different cost of living in different states.

And he produces a new graph, once again featuring the United States average in red, with other developed nations to the left and numbers for various states to the right.

McMaken gives some added context to these new adjusted-for-cost-of-living numbers.

…there’s less variation in the median income levels among the US states. That makes sense because many states with low median incomes also have a very low cost of living. …This has had the effect of giving us a more realistic view of the purchasing power of the median household in US states. It is also more helpful in comparing individual states to OECD members, many of which have much higher costs of living than places like the American south and midwest.  Now that we recognize how inexpensive it is to live in places like Tennessee, Florida, and Kentucky, we find that residents in those states now have higher median incomes than Sweden (a place that’s 30% more expensive than the US) and most other OECD countries measured.

And here’s the most powerful data from his article.

Once purchasing power among the US states is taken into account, we find that Sweden’s median income ($27,167) is higher than only six states… We find something similar when we look at Germany, but in Germany’s case, every single US state shows a higher median income than Germany. …None of this analysis should really surprise us.

In other words, even when we limit the comparison to Europe’s more successful welfare states, the United States does better.

Not because America is a hyper-free market jurisdiction like Hong Kong or Singapore. Instead, the U.S. does better simply because European nations deviate even further from the right recipe for prosperity.

I commented on some of these issues in this interview with Dana Loesch of Blaze TV, specifically noting that living standards in Denmark and Sweden are below American levels.

I also recycled my assertion that Bernie Sanders isn’t even a real socialist, at least if we’re relying on the technical economic definition of having the government own the means of production.

P.S. In typically blunt yet analytically rigorous fashion, Thomas Sowell identifies where Obama belongs on the economic spectrum.

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Some issues never seem to get resolved. One would think, for instance, that leftists would be more cautious about pushing for a bigger welfare state given the fiscal crisis in Europe.

But we have folks like Bernie Sanders openly arguing we should be more like nations such as Denmark and Sweden.

To give some credit to the Vermont Senator, he’s at least smart enough to pick Scandinavian nations that compensate for the damaging impact of high taxes and excessive spending by being very market-oriented in all other respects.

Though I suspect he’d be horrified to know that he’s basically endorsing a laissez-faire approach to policies such as trade and regulation.

But let’s set aside the quirky candidacy of Bernie Sanders and focus on whether the United States, as a general rule, should be more like Europe.

To be sure, this is a very imprecise way to look at the issue since “Europe” includes very market-oriented countries such as Switzerland and the United Kingdom (both of which rank above the United States for overall economic freedom) as well as very statist nations such as Italy, France, and Greece.

But if you take the average of European nations, there’s no question that the continent would be further to the left than America on the statism spectrum.

So we should be able to learn some lessons by making general comparisons.

Let’s go to the other side of the world to get some insight on this issue. Oliver Hartwich is an economist with the New Zealand Initiative, and he looks at the negative consequences of the welfare state in his new publication, Why Europe Failed. He starts by sharing the grim data on how the burden of government spending has increased.

Government spending as a percentage of GDP increased dramatically across Europe all through the 20th century (Table 1). …Since the immediate post-World War II and reconstruction era, government spending has increased to unprecedented levels. The most extreme case is France where the state now accounts for well over half of the economy. …These spending rises have not been driven by the core areas of government spending of law and order, defence and certain public goods. …these European countries spent almost 30% of GDP on welfare alone, which is more than the total of government spending before World War II.

And here’s the Table he referenced.

Very similar to the data I shared back in 2013 for the simple reason that we’re both citing the superb work of Vito Tanzi.

Oliver adds some analysis, noting that Europe’s voters have sold themselves into dependency.

Bread and circuses – or panem et circenses in the Latin original – were the means of bribing the masses in ancient Rome. Modern Europe is witnessing a similar phenomenon. …Unfortunately, it is often overlooked that government can only bribe the people with their own money. …Buying European citizens’ loyalty for their mixed economy welfare states has effectively enslaved them.

He then shares lessons for New Zealand, but they’re also lessons for the United States.

…we have to make sure we do not repeat Europe’s mistakes. …be watchful of the rise of the welfare state. In Europe, the welfare state was a means of buying political power. Of course, the bribed electorate always paid for its own bribes. However, the arrangement worked for as long as new spending commitments could be financed through higher taxes, more debt, or indeed a combination of both. As government spending has now reached around 50% of GDP, and as the debt load stands at worrying levels, the European welfare state model has reached its limits. … we have the luxury of being three or four decades behind Europe’s demography curve. But this does not have to mean that we will be experiencing Europe’s problems 30 or 40 years later. It should mean that we have 30 or 40 years of finding ways to prevent a European replay by finding different answers to the challenges facing Europe today.

Here’s a short video of Hartwich discussing his work and its implications.

Now let’s look at another source of information. And we’ll actually deal with an argument being peddled by Bernie Sanders.

In an article for the Mises Institute, Ryan McMaken looks at the assertion that the United States has the highest poverty rate in the developed world.

Bernie Sanders claimed that the United States has the highest rate of childhood poverty. …UNICEF…is probably the source of Sanders’s factoid… Sanders probably doesn’t even know what he means by “major country”.

Though maybe the OECD is the source of Senator Sanders’ data. After all, as Ryan explains, some organizations are completely dishonest in that their supposed poverty data actually measures income distribution rather than poverty.

We get much more insight, though, once we have a look at what UNICEF means by “poverty rate.” In this case, UNICEF (and many other organizations) measure the poverty rate as a percentage of the national median household income. …The problem here, of course, is that…the median income in the US is much higher than the median income in much of Europe. So, even someone who earns under 60% of the median income in the US will, in many cases, have higher income than someone who earns the median income in, say, Portugal.

McMaken then crunches the data to see what actually happens if you compare the poverty level of income in the United States to overall income in other industrialized nations.

So what’s the bottom line from this data?

The answer is that it’s better to be a “poor” person in the United States than an average person in many European nations.

…a person at 60% of median  income in the US still has a larger income than the median household in Chile, Czech Rep., Greece, Hungary, Portugal, and several others. And the poverty income in the US is very close to matching the median income in Italy, Japan, Spain, and the UK.

In other words, Bernie Sanders is wrong, UNICEF is wrong, and the OECD is wrong.

Poverty in the United States is not high.

Indeed, experts who have looked at actual measures of deprivation have concluded that the real poverty rate in the United States is relatively low. Even when compared with the more market-oriented countries in Northern Europe.

Last but not least, let’s look at one more Europe-America comparison, just in case the aforementioned data wasn’t sufficiently compelling. Check out this map showing how many young adults still live with their parents (h/t: Paul Kirby).

As pointed out above, Europe is not monolithic. The Northern European economies lean more toward free markets than the Southern European economies, so this map presumably captures some of that difference (though I imagine culture plays a role as well).

But for purposes of today’s analysis, our message is more basic. Simply stated, the United States should not be more like Europe. Instead, we should seek to be more like Hong Kong and Singapore.

Assuming, of course, that the goal is to have policies that promote prosperity.

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Back in 2013, my colleagues at the Cato Institute, Michael Tanner and Charles Hughes, released a study looking at the value of welfare programs in various states.

The most shocking finding was that the overall package of welfare benefits was greater than the median salary in eight states!

And more than 80 percent of the median salary in half the states.

That sounds like a hammock, not a safety net. No wonder taxpayers feel like they’re getting ripped off.

This system has been bad for taxpayers and bad for poor people.

Now Mike and Charles have a new study that looks at excessive welfare handouts in Europe. They start with an elementary observation about how people can be trapped in dependency when government benefits are too high.

If welfare benefits become too generous, they can create a significant incentive that encourages recipients to remain “on the dole” rather than to seek employment. Benefits in European Union (EU) countries vary widely, but in many of them, benefits are high relative to what an individual could expect to earn from a low-wage or entry-level job.

And he highlights some of his main finding.

■ Welfare benefits in nine EU countries exceeded €15,000 ($18,200) per year. In six countries, benefits exceeded €20,000 ($24,300). Denmark offers the most generous benefit package, valued at €31,709 ($38,558).

■ In nine countries, welfare benefits exceeded the minimum wage in that country.

■ Benefits in 11 countries exceeded half of the net income for someone earning the average wage in that country, and in 6 countries it exceeded 60 percent of the net average wage income

Since poor people can be just as rational as rich people, think about the perverse incentive structure this creates. If you work, you give up leisure time and expose yourself to all sorts of additional costs, such as transportation, childcare, and taxes.

So why endure those headaches when you can relax on the dole?

Let’s look at some charts from the study. We’ll start with one on the overall fiscal burden of the welfare state.

As you can see, nations in Northern Europe generally have greater levels of income redistribution, measured as a share of GDP.

Very depressing numbers, particularly when you consider that European nations used to have small governments with very little redistribution.

But this data only tells us about the overall burden on taxpayers. It doesn’t give us much information about the incentives of poor people.

So now let’s look at a chart showing potential welfare benefits for a single parent with two children.

Wow, Denmark must be a paradise for slackers. No wonder “Lazy Robert” is so happy.

Though you have to wonder how long the system can survive. The number of people producing wealth has been stagnant while the number of people riding in the “party boat” has been climbing.

Sooner or alter, those trend lines will cause big problems.

You’ll notice that the United States also is included in the above chart and that handouts in America are not that different than they are on the other side of the Atlantic Ocean.

Indeed, the value of redistribution programs in the United States is greater than what’s provided in France and only slightly behind the value of such programs in Sweden.

The numbers are even more remarkable when you look at American states compared to European nations.

Wow, Lazy Robert should move to Hawaii!

But it’s not just Hawaii. Many other states, mostly from the northeast (and California of course), also provide excessive benefits.

No wonder a record number of Americans are trapped in poverty.

Let’s now shift gears and look at a very interesting finding from the Cato study. Mike and Charles uncovered an inverse relationship between handouts and labor regulations.

In looking at the relationship between welfare and work, one additional factor should be considered. There appears to be an inverse relationship between the generosity of welfare benefits and the rigidity of labor-market regulations. That is, those countries with high benefits tend to have more flexible labor markets, and vice versa. …Nordic countries, in addition to Germany, the Netherlands, and a few others, have chosen to pursue what is often referred to as the “Nordic,” “Danish,” or “flexicurity” model. That version of the welfare state combines a largely deregulated labor market, one that makes it easier to hire and fire workers, with a generous safety net to cushion workers from the consequences of those policies. …In contrast, in much of southern Europe, countries such as Italy, Portugal, and Spain have smaller safety nets but much more tightly regulated labor markets. They effectively shift much of the social cost to employers.

While these nations obviously have different approaches, the bottom line is still similar.

…in southern Europe, the welfare benefits may not deter work to the same extent, but finding a job may be more difficult. Then again, in countries with flexicurity, it might be easier to find a job, but benefits and effective marginal tax rates are high enough to discourage workers from doing so. The result in both models is that workers are more likely to remain on welfare and out of work for longer than they otherwise would.

P.S. I’m actually in Hawaii as I’m writing this, so the results from the last chart got me thinking. Hawaii is one of the worst states in the Moocher Index and it does have relatively high welfare benefits, so you won’t be shocked to learn there’s a very high tax burden. But a surprisingly small share of the population utilizes food stamps, and the number of welfare bureaucrats is amazingly low.

P.P.S. Left-wing international bureaucracies such as the Paris-based Organization for Economic Cooperation and Development fabricate deliberately dishonest numbers when advocating more welfare spending in the United States. But we’d be much better off if we learned from the success of welfare reform in the 1990s and got the federal government out of the business of income redistribution.

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Bernie Sanders, Vermont’s pseudo-socialist senator, thinks that America can learn from Europe.

He’s right.

But he’s also wrong. That’s because he thinks that Europe is a role model to emulate rather than a warning signal of mistakes to avoid. Needless to say, that’s borderline crazy.

Heck, even President Obama has pointed out that the United States out-performs our European counterparts.

In his Washington Post column, Robert Samuelson warns that it would be a mistake to follow the European model of more taxes and additional regulation. He starts with (what should be) an obvious point about businesses responding to incentives.

We can learn from Europe about job creation, but many Americans may reject the underlying lesson. It is: If you price labor too high — pay workers more than they produce — businesses will slow or stop hiring.

He then points out that bad incentives in Europe are leading to bad results.

Europe’s economy is in the doldrums. Growth in the eurozone (the 19 countries using the euro) is weak… Eurozone unemployment is 11.1 percent, barely down from the peak of about 12 percent. This contrasts with the United States, where the jobless rate has dropped from 10 percent in October 2009 to 5.3 percent now.

And what exactly are the bad incentives in Europe?

Simply stated, governments are imposing too many burdens on the economy’s productive sector.

In a fascinating article in the latest “Journal of Economic Perspectives,” economist Christian Thimann — a former top adviser at the European Central Bank and now at the French investment bank AXA — argues that Europe’s debt crisis and the weak recovery both stem from high wage and compensation costs. “Jobs fail to be created in a number of [eurozone] countries not because of a ‘lack of demand’ as often claimed,” Thimann writes,” but mainly because wage costs are high relative to productivity, social insurance and tax burdens are heavy, and the business environment is excessively burdensome.”

Which brings us back to the point Samuelson made earlier.

If the costs of new workers exceed the likely benefits in higher sales and profits, companies will hire less or not at all.

And just in case the implications aren’t obvious, he spells it out.

…we should not ignore the implications for the United States. …it’s tempting to load the costs of social policies onto business. …The Affordable Care Act (aka Obamacare) requires firms to provide health insurance for workers; a $15 minimum wage would raise labor costs sharply for many firms; and there are proposals mandating paid maternity and sick leave. All these seem worthy causes, but we need to be alert to unintended consequences. If we make hiring too expensive, there will be less hiring.

Amen. As I’ve already noted, businesses aren’t charities. They won’t hire new workers if that means lower profits!

But Europe has a lot of these policies, so unemployment is higher. And we have politicians in America who want to copy Europe’s mistakes.

The problem is not just that politicians are making it more expensive to hire workers. Bad government policy also is making it more expensive to do almost anything.

The U.K.-based Telegraph has a story looking at how some European governments are making other business activities needlessly costly and difficult.

…doing business in Portugal, Ireland, Italy, Greece and Spain is more difficult, expensive and slower than in stronger, neighbouring countries. …Looking at the average time it takes to get construction permits, electricity connected, contracts enforced and goods exported shows the disparity.

This chart shows that the problem is especially acute in Southern Europe.

Let’s close by making a very important point about differences within Europe. While it’s sometimes useful and interesting to look at big-picture comparisons (such as average unemployment in the EU vs US or average income in the EU vs US), it’s also important to realize that European nations (notwithstanding pressures for harmonization, centralization, and bureaucratization from the European Commission) still have considerable leeway to determine their own economic policies.

And if you peruse Economic Freedom of the World, you’ll see that Northern European nations such as Finland (#10), Denmark (#19), Germany (#28), and the Netherlands (#34) are all considered market-friendly, while Southern European countries such as Spain (#51), France (#58), Italy (#79), and Greece (#84) are much lower in the rankings.

The Nordic nations are especially interesting. They have large welfare states, but they have very pro-market policies in other areas. So to elaborate on what Senator Sanders asserted, we actually could learn some good lessons from Scandinavian nations in areas other than fiscal policy.

P.S. Since we picked on Bernie Sanders already, let’s create some balance by also mocking Hillary Clinton.

Here’s a clever satirical video about her email scandal.

And if that doesn’t satisfy your craving, click here for more Hillary humor.

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If you want to pinpoint the leading source of bad economic policy proposals, I would understand if someone suggested the Obama Administration.

But looking to Europe might be even more accurate.

For instance, I’d be hard pressed to identify a policy more misguided than continent-wide eurobonds, which I suggested would be akin to “co-signing a loan for your unemployed alcoholic cousin who has a gambling addiction.”

And now there’s another really foolish idea percolating on the other side of the Atlantic Ocean.

The U.K.-based Financial Times has a story about calls for greater European centralization from Italy.

Italy’s finance minister has called for deeper eurozone integration in the aftermath of the Greek crisis, saying a move “straight towards political union” is the only way to ensure the survival of the common currency. …Italy and France have traditionally been among the most forceful backers of deeper European integration but other countries are sceptical about supporting a greater degree of political convergence. …Italy is calling for a wide set of measures — including the swift completion of banking union, the establishment of a common eurozone budget and the launch of a common unemployment insurance scheme — to reinforce the common currency. He said an elected eurozone parliament alongside the existing European Parliament and a European finance minister should also be considered. “To have a full-fledged economic and monetary union, you need a fiscal union and you need a fiscal policy,” Mr Padoan said.

This is nonsense.

The United States has a monetary union and an economic union, yet our fiscal policy was very decentralized for much of our nation’s history.

And Switzerland has a monetary and economic union, and its fiscal policy is still very decentralized.

Heck, the evidence is very strong that decentralized fiscal systems lead to much better outcomes.

So why is Europe’s political elite so enamored with a fiscal union and so opposed to genuine federalism?

There’s an ideological reason and a practical reason for this bias.

The ideological reason is that statists strongly prefer one-size-fits-all systems because government has more power and there’s no jurisdictional competition (which they view as a “race to the bottom“).

The practical reason is that politicians from the weaker European nations see a fiscal union as a way of getting more transfers and redistribution from nations such as Germany, Finland, and the Netherlands.

In the case of Italy, both reasons probably apply. Government debt already is very high in Italy and growth is virtually nonexistent, so it’s presumably just a matter of time before the Italians will be looking for Greek-style bailouts.

But the Italian political elite also has a statist ideological perspective. And the best evidence for that is the fact that Signore Padoan used to be a senior bureaucrat at the Paris-based OECD.

The Italian finance minister…served as former chief economist of the OECD.

You won’t be surprised to learn that French politicians also have been urging a supranational government for the eurozone. And presumably for the same reasons of ideology and self-interest.

But here’s the man-bites-dog part of the story.

The German government also seems open to the idea, as reported by the U.K.-based Independent.

France and Germany have agreed a new plan for closer eurozone political unionThe new Franco-German agreement would see closer cooperation between the 19 countries.

Wow, don’t the politicians in Berlin know that a fiscal union is just a scheme to extract more money from German taxpayers?!?

As I wrote three years ago, this approach “would involve putting German taxpayers at risk for the reckless fiscal policies in nations such as Greece, Italy, and Spain.

But maybe the Germans aren’t completely insane. Writing for Bloomberg, Leonid Bershidsky explains that the current German position is to have a supranational authority with the power to reject national budgets.

The German perspective on a political and fiscal union is a little more cautious. Last year, German Finance Minister Wolfgang Schaeuble and a fellow high-ranking member of the CDU party, Karl Lamers, called for a euro zone parliament (not elected, but comprising European Parliament members from euro area countries) and a budget commissioner with the power to reject national budgets if they contravene a certain set of rules agreed by euro members.

And since the German approach is disliked by the Greeks, then it can’t be all bad.

Former Greek finance minister Yanis Varoufakis, Schaeuble’s most eloquent hater, pointed out in a recent article for Germany’s Die Zeit that, in the Schaeuble-Lamers plan, the budget commissioner is endowed only with “negative” powers, while a true federation — like Germany itself — elects a parliament and a government to formulate positive policies.

But “can’t be all bad” isn’t the same as good.

Simply stated, any sort of eurozone government almost surely will morph over time into a transfer union. And that means more handouts, more subsidies, more harmonization, more bailouts, more centralization, and more bureaucracy.

So you can see why Europe’s political elite may be even more foolish than their American counterparts.

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