Re: EMU and Social Models

[Dennis R Redmond <dredmond@xxxxxxxxxxxxxxxxxx>]

On Fri, 5 Jun 1998 tmurphy@xxxxxxxxxxxxxx wrote:

Social security taxes in France take 24% of a worker's brute. They take
another 56% from the employer. If you add in a 20% sales tax, you conclude
that taxes add nearly 100% to the cost of building a house. That burden
destroys employment opportunities. Seeking to reduce the taxation on
labor and consumption increases the opportunities for investment, private
and public, which generate higher employment and higher wages.
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Sales taxes are regressive, i.e. hit the poor much harder than the rich,
who spend more of their income on financial assets rather than consumer
goods. But since when does social security destroy employment? SS funds
are *saved wages*, no more, no less. You're assuming that if folks had the
money in their pockets, consumption would go up -- well, it would over the
short term; but then people would have nothing when they retired. Also,
European pension systems, even in nominally capitalistic Switzerland, are
very progressive, and tax the rich to support the poor. They do an
excellent job of lifting the elderly out of poverty and guaranteeing a
decent living to all. If you want to do the poor of Europe a favor, you're
going to have to tax those with the money -- namely, big capital -- not
ordinary workers.

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Murphy continues: Further, private pension funds will not be a Bruxelles's
invention, nor an invention of the right. Private saving is the result of
fear and anxiety; it is the consequence of 1) demographics 2) a pay as
you go system that is not capable of sustaining present levels of pay outs.
--------------

I'm sorry, but this is simply NOT TRUE. Pay as you go systems are
functioning just fine; the reason people pay more into the system nowadays
is that they get more back out of the system later on (the elderly use
more medical care than they used to, live longer, etc.). There is NO
fiscal crisis of social security, or of the welfare state; there IS a
crisis of taxation, mostly because the Eurorich have decided they don't
want to pay taxes anymore, just like their American analogues. Europe's
problem is not a scarcity of capital, as in 1945, but rather a
superabundance of such, which is increasingly funding the stock market or
credit bubbles. The money is there to pay the state's debts and banish
poverty, it's just a question of the political willpower to do this.

-- Dennis