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Having recently repatriated from the Netherlands, my takeaway about taxes and benefits are:

The tax brackets were basically 0%, 30%, 40% and filing taxes took all of 10 minutes because it is one A4 with pre-filled information. Taxes and income fall into one of three 'boxes' (e.g., ordinary income versus investments).

Having children in the Netherlands is very, very cheap: it cost us €200 per kid because they charged us for an optional ultrasound. Literally everything else was completely free (and very good). Maternity leave was generous and paid at 100% salary.

We got 85% of our daycare costs reimbursed and then 60% of our private school tuition deducted from our taxes, even though we were in the top tax bracket. Pediatricians are a free and provided by the government, so we paid nothing for checkups, vaccinations, eye exams, etc. Ditto for our GP, which was entirely covered by our very, very reasonable health insurance premiums (which are mandatory for people above the 0% tax bracket). Hospital visits were also free for me (biking accidents) and the kids (also biking accidents and once a flesh-eating bacteria).

There is tax on global assets that excludes your primary home plus the first €25,000 of savings. There is no tax on realized gains. (Which sucks as an expat because you have to file taxes in the US too.)

Local taxes were low—no income tax, but there were provincial property taxes and some city taxes. (But of course there is an 18% VAT on consumer goods, but that is national and is included in advertised prices by law.)

100% of our mortgage interest was deducted from our taxes.

Our taxes were nearly halved for the first 10 years we lived there because of a special tax incentive for 'knowledge migrants'. When it lapsed, we took a 15% hit to our household income, which was one of the reasons we decided to leave.

Our wages were numerically about 60% of what they are for the same jobs in the US. (Converting Euros to Dollars makes no sense because everything is denominated in Euros, you can't spend Dollars and somehow prices—including VAT—were almost always the same as the MSRP in Dollars for consumer goods).

Food is really, really, really cheap in the Netherlands. We fed a family of four for about €200 a week and we bought all organic, high-quality food and drank a lot of wine and scotch.

The two things I notice most, being back in the US, is that 1) money flies out of my bank account here because you have to pay for *everything*. So many little things in the Netherlands are either free or there is only a public version available that there is less to spend money on; and 2) I am accumulating stuff way faster here just because there is more stuff to buy and it is advertised *constantly and everywhere*. (Also owning a car is expensive!)

I like living in the American system *far* better, but I like the Dutch model better in principle and morally.

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"I like living in the American system *far* better, but I like the Dutch model better in principle and morally," seems like a good summary of the whole thing.

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I was born in the Netherlands and moved to the US at 25. I agree with all you said. If you are well educated salaries are much higher in the US. I also enjoy that there is far less social pressure to conform, which is another output of the social welfare system (if everyone pays for your hospital costs, there is pressure to eat healthy for example).

Even healthcare isn't so bad in the US as long as you have good insurance. The one cost that I find totally outrageous in the US is college. Also, I have been very disappointed how both the left (schools closed for 1.5 years) and the right (guns) really don't care about children in the US. That might lead us to move back eventually.

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Fully agree about the social pressure. My impression of Dutch culture is that there are "the rules" and then "The Rules"; when I first arrived, I was always getting in trouble for following the rules. It took many years to learn The Rules, because they are enforced by getting yelled at on the street and being disinvited from important meetings at work.

I was in the Protestant part of the country. Once, on a trip to Eindhoven, I was told that down there in the Catholic part things are totally different; they know how to have fun. For the life of me, I could not perceive any difference whatsoever. As a foreigner with only a functional level of Dutch, everything came across to me as a monoculture. However, my wife is French and she tells me that, despite her near-native level of English, she is constantly learning about the nuances of American culture by seeing me interact with the locals here.

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I always warned people visiting the US that the more polite people are acting, the more you are pissing them off; the sweet spot is mildly polite indifference. Dutch frankness is a bit jarring at first, but I grew to appreciate it.

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I've heard that the original Dutch influence is part of what gives NYC a bit more directness than, say, the Midwest.

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This could be testable - there are very large Dutch ethnic populations in Western Michigan and NW Iowa. Are those areas more blunt than others in their state?

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This is also a UK trait even if we are ruder than Americans

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Really? I worked with a bunch of Brits and I thought their business culture was really anti-confrontational. Maybe it was just that company. But meetings were infuriating because you couldn't just hash out your disagreements and get to the bottom of things in a meeting.

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also an NYC cultural influence :)

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I spent three years in the Netherlands back in the 90s. Miss it.

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"There is tax on global assets that excludes your primary home plus the first €25,000 of savings. There is no tax on realized gains. (Which sucks as an expat because you have to file taxes in the US too.)"

Wait, what? So not a capital gains tax, but just a straight up wealth tax? How are they able to measure that?

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They government assumes you make 5.69% annually on your investments (doesn’t matter whether you do or don’t), and you pay about 30% tax on these fictional gains.

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Self-reporting. You are supposed to list the value of all of your global assets as of Jan 1 of each year. Steep penalties if you are caught cheating, which is difficult to do for assets in the EU. But, you know, I definitely reported my Bitcoin holdings each year so I could pay taxes on them and then get taxed again when I sold them.

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Lol, the way you’re describing living in American to Europeans is almost exactly how I describe living in China to Americans.

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Which box does business/self-employment income fall into? That's really the only category of income that makes doing your taxes hard in the US.

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What I mean is that, morally I like the idea of a generous social welfare state, but because I do not make use of it, practically I like making and spending more money. I never saw homeless people where I lived and the few panhandlers spoke perfect English because they benefited from excellent public education.

Dutch culture is not at all the same as German culture. It's like comparing the US and Mexico. Dutch culture is all about 'tolerance', meaning you should tolerate what others do and they will return the favor. The Dutch polder model means that everything is debated constantly so everyone has input. The result is that rules and laws are really just suggestions and individual expression is paramount.

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The chronic homelessness problem in the US isn't primarily due to lack of social spending. It's that we stopped institutionalizing those that are so ill they can't care for themselves.

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Totally—and that is just one of the many facets of a "robust social welfare state". There is a constant drive in the Netherlands to remove the distinction between physical and mental illness and they are way ahead of the US in that regard. Even at the level of taking sick leave from work. It is incredibly common to get an auto-reply email saying that so-and-so is on burnout leave. I have no evidence to support this assertion, but I think it increases productivity overall because you don't have some fraction of workers mired in an emotional funk hating every minute of their job.

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And don't forget vakantiegeld. In the Netherlands you get a 13th month of pay in May to help pay for your summer vacation.

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Yup. And a bonus for Sinterklaas. Plus it is mandatory that you take a minimum of two contiguous weeks off of work each each.

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>>Most of US homelessness actually isn't a social inequity problem, it's a drug problem.<<

No. **Most** of US homelessness is an economic problem. (If you want to add the word "chronic" you'd be on firmer ground).

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There is no correlation between areas with homelessness problems and rates of institutionalization.

We stopped institutionalizing people as frequently because the institutions were (1) ridiculously expensive and (2) hell on earth. If you want to reduce homelessness, build more housing and provide regular mental health services.

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" (2) hell on earth"

We thought that. We didn't realize how harsh life on the street is in comparison.

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No, life on the street actually isn't necessarily worse: that's how bad the institutions were. It's just easy for you to pretend otherwise because you've never spent any time in an institution, so you can base your opinions entirely on which option annoys *you* more.

But in any event, it's a false choice because you generally don't have to institutionalize people to get them the necessary mental health services.

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I don't know why you're talking about drug addiction but that's a separate topic, even if there is a subset of people who have both conditions.

For mental illness, you need to put them in housing and provide them with mental health services. Obviously if you put them in housing and give them no mental health services, then that isn't going to have ideal results. But providing housing and mental health services together (1) works, (2) is cheaper than locking them up in a mental institution.

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The chronic homelessness problem in the US is that the shelters are housing all of the temporarily homeless people so there's not enough room for everybody, and it's the high price of housing that causes almost all temporary homelessness.

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I think the key difference is homogeneity. It is just a fundamentally different challenge to run a country in which most citizens can literally claim to have ancestry that predates agriculture. My father in-law is French and always will be French, no matter what any map or the French Constitution says. I cannot say the same thing about being American—my national identity is defined by what some maps and old parchments say.

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I think that what you describe is one of the reasons that the US can never have the kind of high-tax high-benefit regime of a European country.

My heritage is a bit different; we immigrated in the 20th Century and I grew up around relatives who spoke little if any English. So I am proud of that heritage—I'm even a dual citizen. I actually fell in with the Italian clique in the Netherlands because, it turns out, we have more in common than I do with someone from New York or Texas.

Your deep roots give you an equally valid ethnic identity as 'just' American. As do the decedents of Native Americans or first-generation Mexican immigrants. But a consequence of that heterogeneity is that every policy outcome is parsed differently by every group identity, making it nigh impossible to claim that a particular policy is good for 'us'. It just has a very different meaning when King Willem-Alexander appeals to the 'Dutch people' than when the President addresses the 'American people'.

I think you can see those dynamics most clearly in how European countries are failing to assimilate (largely Muslim) people from very different cultural backgrounds. It's just not a muscle their societies had to develop, and it shows.

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...tell one of your Dutch colleagues that a German stole your bike.

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All Dutch speak every language.

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I remember a time when Democrats were the only ones who said we should be like European counties. Then Republicans elected an American Berlusconi and started talking about how great Hungary is all the time.

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That's a very good article! There are two things that I would like to add.

1. To the best of my knowledge, European taxes are much more regressive than American ones, i.e., it's not only that taxes are a higher percentage of the GDP, but also that a higher percentage of the tax revenue comes from people with lower incomes. For example, there is no federal VAT/sales tax in the US, but in Europe that's the main mechanism that funds the EU itself. I think that there is a general agreement that sales taxes are more regressive than income taxes. Moreover, the example I frequently use when I want to explain to Americans how much higher European taxes are, is the price of an iPhone.

An iPhone 13 Pro in Germany costs 1149 euros: https://www.apple.com/de/shop/buy-iphone/iphone-13-pro

An iPhone 13 Pro in the US costs 999 dollars plus sales tax: https://www.apple.com/shop/buy-iphone/iphone-13-pro

As I'm writing this comment, 1 euro is 1.15 dollars. I don't believe there's anywhere in the US where the sales tax would make the American price close to the German price.

2. For historical reasons, European welfare states have been implemented at the member state level and not at the EU level. I think it's much easier to convince Germans to pay higher taxes to support other Germans. But when you had to convince them to support Portugal, Italy, Greece, and Spain, things got ugly quickly. I think that might be similar in the US, but I haven't lived here for enough years to really know. I can imagine that it's easier for California to say "We'll raise your taxes but you'll get healthcare." than to say "We'll raise your taxes and we'll send the money to Mississippi, where healthcare means counseling to talk people out of abortions.".

And a final point. Don't try too hard to become Europe! We came here from Europe because you're not Europe in the first place!

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California pays Mississippi's health care costs as is...

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And Mississippi is just as ungrateful and sour about the help, as Hungary and Poland are. Maybe there's a lesson there.

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You're confusing the EU with European countries. The EU is primarily funded through contributions from national governments, and most European nations have progressive income tax. It also has its "own resources" which are tariffs and a portion of the VAT collected by member states. And whilst the US doesn't have a federal sales tax it tends to have ones at a local level, ones that often tax a more regressive basket of services i.e including food but excluding services.

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Oh, wow, that thread went far while I was away! I'll respond here, and not all the way down to the last comment of the thread.

So, my bad, I wasn’t accurate, the VAT is the main tax the EU directly employs for the EU budget (if we want to be even more accurate, it is the adjusted VAT you get with some formula), but the majority of the EU budget comes from member state contributions (and member states in turn usually have their own VATs on top of the EU VAT and that extra VAT also goes towards satisfying member state obligations to the EU along with other member state taxes like income, property etc). Will is correct to point out that I misspoke. Oh, and I meant the EU budget, not the member state budgets.

However, it’s still true that the VAT is very central to the EU. To the best of my knowledge, you can be an EU member state without an income tax but not without a VAT. Moreover, there is no comparison between European VAT and American sales tax. I don’t know of any US jurisdiction of at least 9 million people with 27% sales tax, but that’s the case with Hungary. There are even jurisdictions with no sales tax in the US, which isn’t possible in the EU due to the EU treaties.

Fun fact, every time I go back home, a lot of my friends there ask me if I could bring them something they want from here, because it’s usually much cheaper in the US.

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Yeah the centrality of VAT is more due to a desire to prevent tax competition between member states I.e Netherlands tempts people in neighbouring countries to come buy things because the lack of a sales tax makes them cheaper. And a European-wide VAT needs uniformity so that the VAT chain can be extended across national borders

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Since that could apply equally well to income tax (Hello, Ireland, Double Irish, and Dutch Sandwich! And hi to every tennis player who's moved to Monaco!), do you have a source for this? I always thought that this happens because if you tax people like me too much, we'll move to the US, while the average worker back home doesn't have great options, so that's the person the government will hit harder.

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You mean corporation tax, and yeah Ireland's low tax rate has been a particular annoyance for decades. Note there there are limits with the Commission suing to force Ireland to charge the full amount of tax due rather than engage in sweetheart deals for particular multinationals. Dont know where you got the idea fear of a brain drain from - after all Western European income taxes are still very high, and when the EC was created both America and Western Europe taxed high incomes aggressively. No it was more that direct taxation was seen as something for the member states whereas tariffs, duties and VAT were legitimate areas of interest for the EC/EU.

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I don't think that PhD Student is confusing them. And they didn't say that European nations didn't have progressive income taxes, just that the overall tax burden is more regressive than the US.

Rich people just don't have that much money. If you want to pay for really expensive things, you need to tax the middle class, and that makes you more regressive compared to a society with a lower overall expenditure that they can make rich people mostly pay for.

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No he is. The EU has its "own resources" which are tariffs and a portion of VAT. Whatever he's read is referring to that.

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I think that you're overreading this one sentence:

"For example, there is no federal VAT/sales tax in the US, but in Europe that's the main mechanism that funds the EU itself."

Instead of "the EU itself" meaning, "The federal part of the EU government," I think that they intended it to mean, "The governmental parts of the EU nations, inclusive of both the federal part of the EU government, and the national parts of each EU nation."

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But that doesn't make sense. Most EU nations income and payroll taxes raise more than VAT

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I make no claim to deep knowledge here, but this is what I googled for France:

https://www.statista.com/statistics/463817/tax-revenue-france-by-type/

Which puts VAT as the extreme plurality of all tax revenue.

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I think the simplest reading is when someone talks about the EU being funded through VAT they are talking about the EU and have misunderstood the context of "own resources"

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But that is just a small fraction of the EUs overall budget let alone all government spending in Europe

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Also not all the difference between a US and German IPhone will be taxes. There's regulations and market price sensitivity to consider as well

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The flip side of the latter point is that at-home covid tests are €1 in the Netherlands and are available everywhere—large institutions like universities given them out for free. In the US (at least where I am) they're like $10 and sold out everywhere. The price difference is essentially entirely due to the inability to bypass regulations (that really should not apply in the first place) in the US, even in an emergency. The process in the Netherlands (and much of the EU) is streamlined.

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founding

Is this generally the case? My impression is that there's a bit more salary compression in Europe. That is, entry level jobs in the professions often pay somewhat better in Europe than in the United States, but very successful, and even moderately successful, people in professional careers can get much higher salaries in the United States as they advance.

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American lawyers make so much more that US firms' entry into even the London market, the highest-paying in Europe, was heavily destabilizing because they paid American market rate. Right now Kirkland & Ellis's London office pays about 1.5x the Magic Circle firms at entry level.

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And a teacher, construction worker, policeman, postal worker, train conductor, or firefighter would earn much, much more in Germany than in the USA. That's kind of the point of the more socialist aspects of their economies; there are fewer rich people and fewer poor people.

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At least for teachers, you're right about Germany, but many other European countries are less: https://data.oecd.org/chart/6wpa

Letter carriers seem similar between Germany and the US; I'm seeing $17-$19/hr in the US and $19/hr in Germany as of a few years ago at least (although apparently they were trying to push this lower a couple years ago, no idea if it went through in the end): https://www.handelsblatt.com/english/companies/deutsche-post-when-the-postman-rings-twice/23502410.html

Anyway, it's not so simple.

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This is a clarifying article. I've noticed two things talking to people about government spending and European welfare states:

1 They don't understand how taxes work or how much they pay. They also have no idea what a VAT tax is and how important it is in other countries.

2 They believe Europeans have the same material standard of living that we do. Outside of Norway and a couple other small countries, Europeans are poor by our standards. Americans are not actually ready to raise their kids in a 2 bedroom apartment, take the bus to work because they can't afford to own a car, and set the thermostat to 60 degrees in the winter because of carbon taxes. However, this is typical for the median European.

All decisions are about tradeoffs. I would say the Democrats should focus on removing money from the Pentagon budget to spend on their programs rather than raising taxes.

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> All decisions are about tradeoffs. I would say the Democrats should focus on removing money from the Pentagon budget to spend on their programs rather than raising taxes.

I used to think this as well but have since reconsidered the benefits of our military spending and would now favor higher taxes instead. I agree with the rest of your post.

Reasons:

* Military spending isn't really that big a piece of the budgetary pie - it looks large next to non-defense discretionary spending but the whole discretionary category is in the process of being squeezed out by health care and social security spending. Cutting military spending, even fairly dramatically, doesn't buy you all that much on the scale of the entitlement programs. (And it's even less impressive if we include tax expenditures as spending, which we should - https://www.cbpp.org/tax-expenditures-are-very-costly-3 )

* Much of that spending goes to salaries for people to join maybe the last remaining respected and non-partisan national institution. One that still provides opportunity, meaning, and improves human capital for people from everywhere in the country. We're getting some social benefits from those salary costs, relative to what military personnel would otherwise be doing with their lives if the military jobs didn't exist.

* Most of the rest of the spending goes to acquisition and R&D. While there are certainly boondoggles to be found in that spending, there are also projects that help fund science and technology development at a major scale, develop engineering talent, and employ people across every congressional district in the country (contractors make sure of that!). We get some overflow social benefits from that spending too, beyond direct military use of whatever tech gets developed.

* U.S. military dominance has coincided with the most peaceful period in world history. I'm not a big believer in the "Pax Americana" - but I know smart people who are, and I'm not willing to discount it entirely. If there's even a 10 or 20% chance that U.S. military spending is underwriting relative global peace, then the massive value of the peace dividend makes the cost-benefit analysis for U.S. military spending look pretty good. Even discounted for the low probability.

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Plenty of Europeans live in houses and have cars. You're conflating income levels with planning decisions based on being small, crowded countries and living in cities. My European in-laws, who live in a rural village, have a 4 bedroom bungalow and 2 cars, and their central heating is set to 20C. My friends in Paris have a 2 bedroom apartment and no car.

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You're confusing anecdote with data. Whether your inlaws live in an apartment, bungalow, or a spooky castle with ghosts, most europeans do not own a single family detached house. Please look up the data and share it with the Slow Boring community.

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But that's due mainly to much higher population density. If the US had the population density of the Netherlands we'd have almost 5 billion people. In a US with 5 billion people we wouldn't be living in single family detached houses either.

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Perhaps they couldn't all have single-family homes, but look at satellite images of the Netherlands. It's mostly farmland --- 54% apparently https://longreads.cbs.nl/the-netherlands-in-numbers-2020/how-do-we-use-our-land/ . They could have a *lot* more single-family homes than they do.

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And it's not like the open farm land is far from population centers. Here's what it looks like a whopping two miles from the central railroad station in Amsterdam: https://goo.gl/maps/6oqxSNXJNmJXPW93A

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They could, but that would mean destroying farmland, and preserving it by concentrating population is a deliberate strategy by Dutch governments. They believe it has other benefits, such as enabling the use of public transit and bicycles rather than private cars. Again, this is a planning choice. Suburban sprawl with single family homes (and it should be mentioned the Netherlands does have a decent number of attached homes, not just apartments) is not inherently desirable.

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I understand the difference. My example was meant to be illustrative, not data: see that I pointed out that my in-laws live rurally while my friends live in Paris, and consequently they have different lifestyles. The comment above is conflating income levels with lifestyle--i.e. more Europeans live in cities and European policy has been to encourage denser building and use of mass transit. Someone living in an apartment in a big city is not poor. A Manhattanite is not poor. Europe has different standards, yes, but that is not the same as poverty.

Australia and Canada, meanwhile, have higher levels of single family home ownership and lifestyles closer to that of Americans.

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Wait, it's almost like you're saying there's no free lunch?

How dare you...

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Most of my experience is in local politics, but these insights all resonate. I would say the current left strategy is to focus exclusively on the benefits of a more generous welfare state and practically ignore the costs. The thinking is that these benefits excite some people (probably true of your stereotypical young progressive), but the median voter appears to be much more risk averse and skeptical of a 'something for nothing' pitch. I think the prioritization solution is the right one and the only reason I can imagine it not being deployed is that every group threatens to walk if they're not on the laundry list of priorities, but I'm not sure why those threats are taken as credible given 1) where else you gonna go? and 2) the limited evidence that narrow issue-based groups can move votes.

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At national level, our system has so many veto points that most threats to walk are credible. Small groups or even individuals can and do shut down prospective legislation all the time. It's why we end up with gridlock punctuated by these occasional huge "christmas tree" bills - any time a bill might actually pass, everyone rushes to get their pet issues onto it.

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Well, these ideas worked much better when we were just going to print the money to pay for it all since there were no consequences.

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I think you're right that we in Northwestern Europe are just looking at this from different starting points. I don't want to be afraid of poverty and health costs and that sort of thing, but more generally I don't want to live in a society with food shortages and homelessness and all these things.

I earn a good salary and I do have to hand over about 70-75% of that to the government in various ways every year, but in return I don't have to feel too bad about keeping the 25-30%. I understand that the original big gross salary was largely the result of good fortune on my part, and that I am therefore obliged to share most of it with the less fortunate in my society.

Most Americans seem to have this profound belief that they completely 'earned = deserved' the pre-tax number on their paycheck, which makes little philosophical sense to me, especially for richer people. But within that framework it makes sense that someone who earns a small number on their paycheck deserves immiseration.

Obama spotted this early on, but given the reaction to his 'you didn't build that' remark, he obviously decided that a philosophical reckoning with America would have to wait...

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I don’t actually agree with your philosophy, but then… I’m an American, you wouldn’t expect me to.

But I do think you correctly diagnose its existence and effects.

The why, I suspect, has something to do with the incredible vacation from history we’ve enjoyed. Bad things simply haven’t happened here, by and large, and as such more of our founding ethos of “freedom and opportunity” has survived intact.

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In my case I live in a country where failing to maintain our collective infrastructure would lead to us all drowning sooner rather than later. That helps with perspective

I don't understand the US perspective either. My hourly pre-tax pay is 4x more than many other people. I am clearly not 4x more morally deserving than they are. It makes sense that *some* of the difference is used to incentivise me to do my economically valuable job diligently, but the rest of the difference should be, and is, redistributed

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Contextualizing job compensation as "morally deserving" is a completely alien concept to me, with the exception of setting a minimum wage.

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100% agree! Job compensation is about your economic worth, not your moral worth. This guy probably is actually 4X more valuable (economocally).

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I am definitely worth 4x, economically! People reliably pay me this kind of money, because my natural skill is 'organising large and complex entities to be more effective' , which is a rare and useful skill. If I'm 1% more effective that's - say - a $1m upside for a company and it makes economic sense to pay me a noticeable percentage of that.

But my skill could just as easily have been 'teaching 8th graders' history' or 'caring for seniors with dementia'. The economic value of being 10% better at that is much less. But the human value of it is quite likely much more...I find these thing difficult.

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First of all it sounds like you're worth more than 4x median salary and are probably underpaid!

But also, don't be so hasty to second-guess market outcomes in terms of what delivers human value. They're obviously not perfect, but "what people are willing to pay for" remains one of the best heuristics ever invented for what people value.

Humans aren't good at dealing with the scale of modern society, so delivering a large benefit to a single person (e.g. your examples) feels to us like it outweighs making a small contribution to an entity that provides a modest incremental benefit to thousands or millions. But our modern high quality of life is largely made up of the aggregation of all those modest incremental benefits.

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The problem there is that I'm sure there are millions of other people who have the innate ability to learn to do what I do, and likewise for you.

"The market" rewards a mix of innate ability and work ethic, the latter of which is within our control.

I am, again, entirely on-board with building a society in which no one who works suffers, because the great variation in innate ability really presents us with no other morally decent option. But beyond that, I'm willing to tolerate a higher degree of inequality than you describe, for both utilitarian and philosophical reasons.

I do firmly believe in keeping those at the very top of the heap on a short leash, though. Far too much of the economy at that level is dominated by influence-buying, rent-seeking, and regulatory capture for me to ever agree with the notion that the very rich earned their way there.

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Don't get me wrong, I'm on the left for an American and agree completely with regards to shared infrastructure and the basic duties a society owes its citizens... it's just that I don't see any way in which "morally deserving" comes into play.

I'm fine with the government crafting policy so that all work has dignity, and all who work (or are genuinely unable to) live decently. Even if that increases my tax rates and my cost of living.

But I've spent immense time and effort building a skill set that the market finds valuable to roughly the same extent as yours (3-4ish times the median individual income here). I worked my ass off and expect to keep some of the fruits of that labor. As a practical matter, if I don't get to, I won't bother to do this aggravating and relatively difficult job.

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"I worked my ass off and expect to keep some of the fruits of that labor. As a practical matter, if I don't get to, I won't bother to do this aggravating and relatively difficult job."

100% agreed

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Yep. It takes a village (or rather a province) to build *and maintain* a dike

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I deserve my salary because I negotiated with an independent third party to give me that salary in exchange for my work. They think I deserve it, and that the labor they receive is a fair value.

I achieved that salary by working hard AND smart. I spent 10 months studying for my CPA exam 15-20 hours a week while working full time. Then, I later when back to school (again while working full time) to get my MBA.

So instead of watching TV when coming home, I continued to work.

Not to mention, my wife and I moved in with my parents for a couple of years in their small 1000 SQ foot house, so we could pay off debt and save up for a down payment on a house.

Getting ahead is all about putting off consumption/enjoyment today for a bigger return later.

Working 40 hours a week won't be enough for most people, you've got to do WAY more

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“Working 40 hours a week won't be enough for most people, you've got to do WAY more”

If you want to, it’s fine. But it’s no way to build a livable society, making it basically mandatory for the bottom 60% to work 60-80 hours a week to make ends meet.

That’s how you end up with you and I strung up from lampposts for being petit bourgeoisie, and Zuck and Co in comfortable exile in Europe, where the working class isn’t motivated to overthrow capitalism.

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"But it’s no way to build a livable society, making it basically mandatory for the bottom 60% to work 60-80 hours a week to make ends meet."

BS. You don't have to work 60-80 hours a week to make ends meet. It's quite possible to work a lot less. If you don't desire to get ahead

There's plenty of people that just put in their 40 hours and enjoy their middle class lifestyle. And that's fine if that's what they want to do.

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I think the point is you want to incentivize people like me to work 70 hours a week. I have a colleague in France who also works his ass off, but he complains that he gets zero returns for it. I keep telling him to come to the US, and I think it's finally starting to sink in.

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Right, wherever you were born, you can "get ahead" of those around you of similar innate talents by scraping and scratching a little harder than they do. But fundamentally, you had nothing to do with the fact that you were born with a good brain or in a country and economy that enabled you to take advantage of it.

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I think that people want to compare countries which is horribly misleading when it comes to most European countries and the US. The Netherlands is more like a combination of New Jersey and Maryland or even just New Jersey than the US as a whole.

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Appreciated all the comments. Not going to disagree any, but I do align with MattY that it is obvious that if those with above average incomes believe that they have a moral right to their pre-tax incomes, then no, you're not going to be able to fund a state as thorough as US progressives claim to want.

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I can’t speak to any of the rest of those who replied to you, but I’ve never claimed to want such a thing.

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"I earn a good salary and I do have to hand over about 70-75% of that to the government in various ways every year, "

You're going to need to break that down for me.

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I just ran through and it's actually a bit less on an ongoing basis - nearer 60%

- 42% goes on income tax (that's *average* not marginal)

- 8% I'd estimate on average I pay on VAT

- 5% on other taxes (fuel, car, local taxes)

- 3% on wealth taxes

I have to spend very little on health care ($300 a month for the family), nothing on education, so that helps

I got stung for about 10% of income last year for a house transfer tax, but that was a one-off

-

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Hmm, that's a point.

I get that our European friends are "buying" more goods through public services, but... a typical household in the US is spending more than 30% of their pre-tax income on housing, transportation, food, and essential consumer goods, which I know the government is not "buying" on my behalf there.

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Late to the party. On a flight to Puerto Rico for work.

Real quick. I lived in Europe for 12 years and still

Work with Europeans.

I make more money. My health insurance is better than anything they have in Europe, and it’s cheap. My house is bigger. My cars are cooler. Everything Matt says is true.

Hell… we can even get decent beer now.

I do miss the culture and beauty of Europe. The history. Etc…

My son lives in Scotland and he likes its. My daughter tried to live there but came back to the US when she got pregnant. Didn’t want to raise kid in the UK.

I don’t know how to rationalize the trade offs. Small steps I guess.

On a side note. We have to get work Visas for the UK and it’s it’s hard and expensive. Seems dumb and a waste.

The UK and the US should have reciprocal work agreements.

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“…we can even get decent beer now.”

Now?! Michael Jackson wrote back in the 1990s that the United States was a world class producer of excellent beers.

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This post renewed my appreciation of Google.

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They also work 30% fewer hours...would you take 18% less salary for 30% fewer hours?

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Actually l. Hell yeah I would take 18% cut for 30% less hours. I’m working my ass off. I’d still be well within 6 figures with 18%. And 30% less work means an extra 60 days off a year.

I forgot to mention I am taking Furlough next year. A month without pay. So it’s effectively the same thing. I also get five weeks vacation.

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Average annual hours worked across Germany, Norway, Finland, Sweden, the Netherlands, Denmark, Belgium, Austria, and France: 1409 hours

Average annual hours worked in the United States: 1767 hours.

https://data.oecd.org/emp/hours-worked.htm

In other words, people in those northern/western European countries work more like 20% fewer hours than Americans.

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Actually maybe. My company had a seasonal option I am considering. My work life balance is off.

Funny enough, Europeans have less free some when it comes to work. Going contract or part time in the US is not rare and easy. I was just working with some Germans and there it’s all or nothing. And contract work is rare.

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I do contract work now for that very reason - the flexibility is more important to me than more pay.

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This depends on the country--in the UK contracting is fairly simple. The German labor market is known for being less flexible.

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reading you here often, you do sound like you work (and associated travel) quite a bit. But it also does sound like you really enjoy your job and the travel.

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Yeah. But I’m one of those weird people who generally likes life in general. So I would be positive no matter what. I just want to be positive at my hardly used cabin a bit more.

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Enjoy PR! - this is the time of year to visit (my in-laws live there so we often go at Christmas)

(Yes I know you have to work instead of just visit - but enjoy it anyway!)

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Ha. I’m staying there two nights. Working one day. Zero rental cars available today. I have to get one tomorrow morning. Drive to Ponce. Drive back. Then fly out Sunday. Hopefully I get some good food.

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Well, even after all the immigration hand-wringing the last 5 years, it is much, much easier to move from Europe to the US than vice versa. Most european countries make it very hard for non-EU citizens to get work visas.

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Not surprised at alll.

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Additionally, it will be interesting to see if Europe itself maintains high levels of social spending as they become ethnically diverse. There's a fair amount of evidence that people will be very generous with social expenditures in an ethnically homogenous place like Norway, but as more and more non-Norwegians move in, you get a backlash to that beyond the horrors of an Anders Breivik. It's often called "racism" in the US, but it can apply to Poles and Romanians living in Denmark just as easily.

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My guess is British woman of Pakistani descent, given the large South Asian diaspora in the UK. On that note, it seems like British South Asians aren't as politically homogeneous as American South Asians, with the latter group being mostly (90%+) Democrats but the former having more variety.

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Thanks for highlighting what I think is the most problematic and annoying aspect of progressive domestic policy. I would like a better social safety net, but I don't believe the lie that it can be accomplished by taxing a handful of rich people and corporations, particularly when progressives expect that same handful of rich people and corporations to pay for everything they want to do.

And especially considering we are already running huge fiscal deficits, which are only going to get worse considering demographic trends. Medicare and Social Security financing are probably going to have to be dealt with in the next decade and will require more funds from somewhere or yet more borrowing.

I would just expand on how countries are different a bit more. The Nordic countries are all small, are all largely homogenous, and are much less diverse. In short, all those factors result in societies that have a lot more social cohesion and a greater level of trust within the society. High social trust and cohesion are factors progressives tend to ignore when it comes to major national-level policy because, I think, they are too focused on materialist analysis and policy.

The main quibble I have is with this:

"Because the federal government has a uniquely low cost of funds, it’s generally profitable to sell bonds and use the proceeds to buy stock — essentially creating money from nothing. "

That's only marginally true so long as interest rates stay near zero. And even with those low interest rates, servicing the debt is $562 billion this year alone according to the Treasury department. If we look at a 10-year timeline and assume steady-state (not a good assumption), that's $5.6 trillion just in debt payments or about the amount that Sanders wanted the BBB reconciliation bill to be.

And interest rates are probably going to go up soon to fight inflation, which is going to increase borrowing because the debt is continually being rolled-over.

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I feel kind of bad for this comment because I think it's red meat for Slow Boring, but I think it is worthwhile to highlight that the left currently wants to do three different things and I think they work against each other:

1. Strengthen welfare spending/social net.

2. Tell a bunch of people that they aren't one culture and that various ethnic groups and people *ought* to be pissed off at one another.

3. Encourage very large levels of immigration.

(To be clear, I'm highly positive on 3, medium on 1, and negative on 2, so I'm not saying that's terrible, just that these things have tension with each other).

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Yes, I agree completely. That's one of the strange things about ideology and partisanship in America - so much of it is inconsistent or works at cross-purposes and that goes for the right as well.

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I would like to add another contradictory point: Encouraging only higher taxes on the rich/big Capital, while support policy or rhetoric that is largely anti-business. See: wanting to increase taxes on big Capital, while at the same time supporting policies and regulations that make them less effective - see Bernie Sander's position on NAFTA or the wider negative views of Amazon by nominally left groups.

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Yeah, the honest message is "sure, we can have M4A, but it's going to mean a substantial upper middle class tax increase".

Adults ups understand, discuss, and settle on tradeoffs. Do I think we would be more economically productive by taking healthcare off my (as an employer) expense sheet? Yes. Would we lower aggregate costs for healthcare? Probably, if we managed it well and were ok telling people "no, you can't have a drug that costs 1M to produce to extend your life by one week".

But let's be real - we aren't going to do those things. The best way to not get elected in the US is to tell people to do the economic equivalent of eating their vegetables. We are a selfish culture (left and right) for whom a substantial number watch news that is the equivalent of mainlining rage towards People That Aren't Like Me (not just Fox - after not watching CNN or MSNBC much for the past year... I can't watch that either without cringing).

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My view is that taxes will need to be increased across the board except on the bottom quintile.

I am skeptical, however, about the federal government managing health care well enough to lower aggregate costs, especially given that cost lowering will come out of someone's pocket.

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Yeah this is why I'm moreso a fan of Medicare (or Medicaid!) for All Who Want It.

Also the fact that putting Trump or Desantis or whoever in charge of a hypothetical Medicare for All is just asking for trouble

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OK you left this line in there without further comment, but it's a BIG DEAL isn't it? "In the highest tax states, America’s combined rates might be higher than in the lower-tax Germany states."

Right, AND when you pay that money in Germany you get Health Insurance included! So wait then, are rates really the problem? The thesis of the article unwinds a bit...

BTW, I knew a Canadian who moved to NYC a while back and said the taxes weren't very different, but now she was paying for healthcare on top of the taxes so it seemed like a bad deal.

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The highest tax rates in NYC and CA aren’t all that different than Germany, but the people they apply to are quite different than in the US. The 42% band in Germany kicks in at only €57k and the top 45% rate at €270k.

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It's not just the highest tax bracket that matters; on average everyone in Germany pays more taxes than people in the US. Just look at the government revenue as percentage of GDP [1]

Norway: 51.2%

Sweden: 49.1%

Germany: 46.9%

US: 30.3%

At the end of the day, as MY says, more resources have to be taken out the private sector and placed into the public sector. That involves more taxes on everyone.

[1] https://en.wikipedia.org/wiki/List_of_countries_by_government_spending_as_percentage_of_GDP

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"At the end of the day, as MY says, more resources have to be taken out the private sector and placed into the public sector. That involves more taxes on everyone"

Yep, if you want a larger safety net, everyone will have to pay more.

In fact, even if you want to just meet our entitlement commitments already made, everyone will have to pay more.

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well ok I guess, but those lower bands just don't have much income so it's pretty hard to squeeze tax revenue out of them: https://www.brookings.edu/?simplechart=the-top-20-of-households-get-more-than-half-of-all-pre-tax-income-and-pay-an-even-larger-share-of-all-federal-taxes

The top two income quintiles - households over $85,900 income - make 74% of all income. Seems like that's where you would go to get most of the added revenue, right?

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That's definitely where you would get the bulk of the revenue, but the issue is the Democrats have been unwilling to increase taxes on anyone making under $400k. It's one thing to have broad social programs funded mostly by the top 40% of the income distribution, it's quite another to claim it can be done taxing only to top 1%.

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Its both. If you put taxes on the bottom tiers you get much less revenue per person, but there are just a lot of them, so it aggregates to a significant amount.

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my point is the income in the bottom 3 tiers aggregates to just 26% of all income earned nationally... maybe we are arguing semantics about what "a significant amount" is... I mean it can help, but it's not like "oh I found out where we can get most of the money we would need"

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It's not different *for the rich*! For the 'middle class' it's a big difference. So a manager making $90k p.a. living in the biggest US state, CA, would pay about $25k in payroll, fed income and state income tax (minus al sorts of credits etc). The same gal with the same pay in Nordrhein-Westfalen, the biggest German state would pay around $31k with very few deduction possible. She would also be paying 20% on top of most things she bought as value added tax, and plenty of fuel duties etc. (I've left out medical insurance for both).

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In your example (trusting your numbers for the sake of argument) the Manager in CA saves $500 a month in taxes but has to buy medical coverage that would be free in Germany. I think it's reasonable to call that a worse deal, especially if this person has a family & therefore even higher medical costs.

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No, I assumed the German taxes without public health insurance, which would could be opted in to for about $300-400 a month (cheaper than in the US I think)

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apologies, I did not know that was even a German option! still, when you add in the healthcare costs, the monthly out-of-pocket to this hypothetical manager seems not so different - like Germany doesn't sound much more expensive.

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Yeah, it seems like America isn't spending money efficiently at all – between healthcare, defense spending, and infrastructure costs, we could be getting so much more for what we pay. Plus we're leaving money on the table by restricting immigration, trade, and housing development (which European countries also do, but in the US I think there's more public appetite in a good year for expanding at least immigration and trade)

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Universal health care is an easier sell politically than child allowances.

The fear of not being able to afford health care extends far up the income scale. If a bread winner gets sick and doesn’t recover in a couple of months, his family loses its insurance. Health care is so expensive that it can wipe out most peoples’ life savings. Inheritances can be diminished or destroyed if a parent or grandparent needs long term care. Even families whose net worth pushes seven figures are at risk of being wiped out by an expensive illness or long term care.

The constituency for child allowances is smaller. Professional families won’t feel much better off with an extra $300/month. I would derive much more security from knowing that I will have health care even if Im too sick to work and my inheritance won’t be wiped out if my mom gets Alzheimer’s than I would from an extra $300/month.

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Might well be true. In many ways there's a large benefit even to those who don't ever use health care. It's quite freeing to know you can quit your job, and if something bad happens to you, you will just be taken care of.

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Understanding full well this is not a Viable political plan to win the Iowa caucus, I wish dem politicos and some think tank could put together a manifesto on how to achieve the best version of an expansive American social welfare state with consideration for our unique political economy vis a vis Sweden. The Pete/O’Rourke M4AWWI plan is a great step but it feels like those will always be framed as doomed squish attempts vs Bernie’s plan which as written literally exists no where on earth. Health care politics lost the plot a long time ago but it feels so utterly useless for genuine improvements to get proposed, fought viciously over in primaries, only to die in the senate and wash rinse repeat.

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I was thinking along similar lines. We have tons of practical ideas to tackle problems and it sometimes works to get elected around those ideas. But it also seems like once these ideas meet the national stage, the politics around actualizing them devolves into everyone trying to look cool.

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founding

As Matt references in his piece those ideas do not *have* to meet the national stage. Implement these programs in CA and show they work. Democrats outnumber Republicans in the CA legislature by 3-1. Implement those "practical ideas" there. Be the laboratory of democracy, in the words of Louis Brandeis.

I've said in these comment sections before that the best thing for progressive policy would be for large cities and blue states to be governed effectively and deliver government programs cost efficiently. It would take the best arguments of (us) conservatives away. I know I would reduce my reluctance to large-scale government programs if I saw them working well in places like SF, NYC, Detroit, Chicago, CA, MA, VT, etc. first.

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For a bunch if reasons I don’t think it’s possible to achieve the nordic model at the city level. But at the state level this is so important. I genuinely question my whole political belief system because California kind of sucks despite Democrats having full control there to do all the stuff I think is great.

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My baseline assumption is that one-party rule is problematic for the same reason monopolies are problematic even if the party's ideology is perfectly fine.

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Small-c "conservative" has become such a discourse-poisoned word (frankly, so has "progressive"), but "What I have is alright, and change is scary, so you need prove the new idea works before you break the old one" is not a crazy radical concept. That's how normal people function.

The Very Online left is utterly unable to comprehend this sort of reticence, and that's why they always lose.

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The remaining less-than-Very Online Left is the impetus behind locally proving before nationally implementing. Certainly none of the conservatives (small or large C) are implementing anything. Although conservative think tanks have provided excellent ideas of how things might be implemented (e.g. Obamacare and Carbon Taxes)

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I favor many of the policies that progressives favor. I also live in Seattle and here the progressive wing has pretty much proved itself to be incompetent. The "Amazon tax" seemed motivated by "Amazon is paying people too much". (Yes, progressives were complaining that a company paid its workers too much.) Taxing people they didn't like seemed more important than actually fixing the many problems. In their minds, the rising cost of housing is caused by Amazon paying people too much, not that the city's population increased by 20% in the past 10 years and we haven't been building enough housing. Somehow taxing higher salaries is a bigger priority than actually figuring out what problems you want to solve and what the most effective way to solve them is.

I think police reform is necessary and a moral imperative, but we got dramatic cuts in the police budget, we lost a good police chief. The city council wanted to cut the number of officers. The contract with the police department means that if you lay off police officers, it's a last hired, first laid off policy. In recent years, the police department has been doing a better job at increasing diversity in the department, so that means that laying police off will make the department more white. City Council thought it would be a good idea to try to get around the labor contract.

In person schooling in Seattle was shut down until spring of 2021 and it only returned because the governor required all districts to provide a minimum number of in-person hours. The school shut down caused substantial learning loss that was most pronounced in low income students of color, but for the previous year, we'd been reassured that reopening schools was white supremacy.

I'm not even going to get into the inability to make any progress on the large number of people who are living on the streets or in public parks.

This is why we just elected a republican for city attorney. The progressives haven't made much of an effort to make the city run well and they don't seem to think that a decline in the quality of life and services in the city is a reason to maybe change their policies. Instead, the city's residents need to live with it.

I would actually like to see a progressive who wants to make the city run well and prioritizes stuff that actually works instead of mindless signalling.

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Interesting. I am a Conservative Republican. It seems clear to me, however, that a stronger social safety net is the moral thing to do and that it should be paid for by higher progressive taxes. I also find it interesting that my party seems unable to effectively govern cities and has conceded this ground almost universally to the Democrats. Democrats just seem better at governing, anyway.

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They do need some type of (partial?) national funding mechanism to work. That was how I read Matt's suggestion, as well. California obviously cannot raise taxes enough to implement these types of things because of the presence of adjacent states without increased taxes.

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Adjacent states aren’t really commuting distance from California. And if the policy is really so awesome then people would move to California in order to benefit from it.

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I think "squish attempts" by and large are easier to enact than pie-in-the-sky M4A proposals. I personally favor M4AWWI with automatic enrollment.

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Romneycare/Obamacare, after all, was fairly squishy policy for the party of FDR. It passed.

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I loved this article. Two things:

1) Since Matt was such a pro-MMT person something like 6 months ago, would be really great for him to do a post-mortem on where he went wrong.

2) Completely agree we don’t tax the middle class enough. I don’t know how we get there. This is the country that bases one of his founding stories on a tax on tea. But my parents (~$60k AGI combined) pay something like 8% income tax (in Florida, so no state tax).

I just don’t think people realize this — the standard deduction is $25k for married filed jointly, plus another $1350 if you’re over 65. Then the tax rate is only 12% up to $81k. Since the median household income is <$81k, *this is what most Americans pay*!!! And yet they are complaining about their taxes!!!

This is an unbelievably low rate compared to other countries, yet they constantly complain about their taxes.

Is it just education?

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Matt wasn't pro-MMT. He was just an inflation dove

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Ok fair point. He wrote some fairly positive articles (and I remember tweets), but was never a full throated endorser.

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No offence but I'm not sure you understand what MMT is. Its not primarily about whether inflation is something to worry about but whether you should use monetary or fiscal policy to control it i.e raise taxes rather than interest rates if you need to reduce inflation. I don't remember Matt ever endorsing that

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I was more referring to

To understand the significance of this, it’s helpful to invoke the briefly fashionable progressive idea that deficits don’t matter and the real constraint on fiscal policy is inflation. When that talking point was hottest, the United States was living through a prolonged period of very low inflation, so the people who said it mostly meant in practice “just don’t worry about spending too much.”

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Agreed, I definitely remember Matt being one of those "we should borrow money - it's basically free right now" people. I still think "we should borrow money" was better than the alternative, doesn't mean we set the level right.

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Yes but that isn't MMT

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So as to 1: Matt has made it clear that we have inflation now and we didn’t have it a year ago. He has also shown good evidence that inflation isn’t just a chip shortage because the inflation is lasting longer than a few months. There is beginning to be an expectation that prices will rise. We have had millions of Americans take early retirement. That means massive labor shortage so wages go up and prices go up. In other words we are actually constrained by what we can do not just deficit Hawks.

2: Middle class have to see the government providing for them. Or they won’t want to pay for it. Because of means tested programs and the administration burden many middle class do not take programs. And because they are means tested the brother in law on food stamps for 6 months will not brag about it. So no it isn’t just education it is the means tested vs universal debate.

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Minor nit - we still have a chip shortage and it will likely continue for a long time, as will its, admittedly minor, contribution to inflation.

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Matt was pro-MMT 6 months ago? That's news to me

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It feels like you're leaving out payroll and medicare taxes, which are another ~9% if you're not self-employed. And they definitely count, and I don't think the deduction applies to them.

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When we had low inflation MY was for policies that delivered good things and could lead to future inflation. Now that we have inflation, he no longer favors increased spending and wants to focus on other policies.

If your policy recommendations don't change based on current facts, you're not getting it right. A policy recommendation from 5 years ago doesn't become retroactively correct because monetary conditions today are different.

MY is not talking about this lately, but another point he used to talk about, is that in a fiscally constrained situation, Republicans have to actually decide whether tax cuts are worth cutting popular social programs. This is a huge advantage politically for the Democrats.

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In a weird way, I think this article confirms my intuitions that Republicans have won the tax cutting war. Democrats have gone so far as to add reinstatement of the SALT deduction in the BBB which is primarily aimed at the wealthy.

Any discussion of tax increases beyond the very top are basically non starters. On that point, Democrats have a tactical political advantage, but to me that also implies an incredibly strategic political weakness that the general public does not believe in the programs advocated sufficiently to pay for them themselves.

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Except that Austrian economics precedes libertarianism, at least in the modern sense.

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Part of the American lack of appetite for taxes is that, for the taxes we do pay, we provide very little in the way of public services to people who pay them, and have barely established that as something that actually can be done. We spend a ton of money blowing up the Middle East, and a ton of money on transfers to seniors, or to the poor. We spend very little, relatively speaking, on universal programs that provide immediate visible benefits to everyone, to the point where taxes are something that everyone feels are a net loss for them.

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"We spend a ton of money blowing up the Middle East"

It's a tiny amount in the social program world. Redirecting the entire US defense budget yearly won't pay the extra cost of a universal health care program.

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Absolutely. But it’s ~$2000 that provides zero “my life got better because of services paid for by taxes I paid”.

If the average American’s experience with taxes was “I paid $10,000 and received benefits I value at $12000”, it’s a lot easier to convince them that more taxes results in a positive exchange for them.

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Citation needed on that second one.

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Sanders' Medicare for all would cost somewhere in the neighborhood of $1.75T/yr (apparently his own campaign estimate: https://www.bbc.com/news/51662741) to $3.2T/yr (https://thehill.com/policy/healthcare/399715-new-study-ignites-debate-over-cost-of-medicare-for-all).

The defense budget for FY22 will be on the order of $0.75T/yr (https://www.defense.gov/News/Releases/Release/Article/2638711/the-department-of-defense-releases-the-presidents-fiscal-year-2022-defense-budg/)

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Let’s please not be this deliberately obtuse. Those figures are a replacement for all current outlays, not an addition.

Given that the US as a whole spends some $3.7 trillion in healthcare, and more than half of that is public sector spending, defense outlays would cover the additional cost if the federal government managed to beat even half of the rent-seeking out of the sector.

The notion that it would take a Pentagon over and above what it costs now, which is the spirit of the criticism, is frankly ludicrous.

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No, those are the additional costs. At least read the links after you ask people to google things for you? :(

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I’m aware of what’s being claimed.

The public sector in the US spends around $1.8 trillion in healthcare, between Medicare, Medicaid, Tricare, the ACA, and the various and sundry tax credits.

Another $2 trillion or so is mediated through private insurers or cash.

The $1.75 trillion figure essentially assumes all of that latter amount becomes the province of the federal government, without claiming any major cost savings.

Given that damn near half of American healthcare spending is the result of rent-seeking, obviously I expect a federal takeover of the entire mechanism of healthcare procurement to lead to savings, quite rapidly.

If we squeeze even half of that out, then the gap between current outlays and a hypothetical Medicare Service drops to a bit over $1 trillion, which is within shouting distance of US security spending ($800 billion or so all told).

Hence my shorthand claim.

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Didn't I just link you this yesterday? :) Again, the US spends more just on healthcare for the elderly than the entire military budget now, today- without adding in universality

https://www.cbo.gov/publication/57170

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The whole point of burning every existing healthcare procurement channel to the ground, hanging most of the middlemen, and nationalizing the shit-laden pile of ash that remains is to beat the damned rent-seeking out of the sector.

Do that and *current public outlays* will nearly suffice to provide healthcare for everyone.

The only bit of the whole system that’s even remotely good at getting value for money is Medicare.

If I were given the power to govern the sector by fiat I’d ban the rest of the insurance sector and dictate prices equal to 1.2x what all the same service providers charge Canada’s Medicare system. Let those who can’t tolerate lower-double-digit profit margins pack up shop entirely.

As with vaccine mandates, I suspect there will be very, very few who aren’t all talk.

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"Let those who can’t tolerate lower-double-digit profit margins pack up shop entirely"

No one's going to carry water for the political fallout that will follow. People don't like it when they can't find a doctor and their local hospital closes. Especially if they think they like their health insurance.

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Again, I suspect the vast majority of the sector will take its damned medicine.

But obviously, this isn’t going to happen. Did you not notice the “govern the sector by fiat” bit?

:)

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This gets back to the REAL debate and trade-off on this. Rising above the populism at the bottom and looking at from what economists debate, the real trade-off here is: What should America of the future be? Should it move to the already stagnant model of Europe - overall closed borders, with broad generous safety nets, or stay the course with a dynamic generally open immigrant (especially poor immigrant) economy with stingy safety nets? After all, open immigration is antithetical to generous safety nets. I choose the latter. History has clearly shown its more dynamic and on net a stronger alleviator of global poverty, even if relative inequality increases. Great post Matty!

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This is a false choice. Australia has double America's share of foreign born population. It also has paid parental leave and universal healthcare.

The US government isn't even that small. Australia's tax/GDP is lower than the US'. Americans just seem to prefer their money is spent on the army and imprisoning one another, relative to other countries, relative to priorities like healthcare and child poverty.

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The US spends more just on healthcare for the elderly than the entire military budget. Add Medicare & Medicaid together, that's 70% more than the military budget. Add in Social Security and you get 3-3.5x what we spend on the military.... The government does transparently post its spending online you know :)

https://www.cbo.gov/publication/57170

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OK I think I got your point now. I wasn't saying the US spends more on the army than healthcare. Relative to other Western countries, America spends 2x on the military, has 8x as many people in prison, has 50% more children in poverty, and has life expectancy 5 years lower. Lots of great things about America, but that set of facts seems bad.

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Many of these stats ignore the fact that the United States is mostly unique in the amount of LOW INCOME immigration that is let in. Most other industrialized countries either strongly limit immigration (Japan, Scandinavia, etc) or prefer highly educated immigrants (think Canada). The USA mostly stands alone in being a really rich country that lets in a large percentage of low income, low education immigrants (my ancestors). This is going to grossly skew those stats. It's not apples to apples.

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It seems clear you’re engaged in motivating reasoning to oppose immigration. You make unsupported assertions, when presented with refuting data you just make further unsupported assertions

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I think what Poncho is arguing is that the US is unique compared to Australia and Canada in that we allow far more lower income immigrants (or "unskilled" immigrants). The trade-off that allows us to do that is that we offer a far weaker social safety net, so voters don't feel like immigration will become as much of a burden.*

But if you consider some place like Australia or Canada, which has a stronger social safety net, there's a political incentive to only allow in immigrants who are perceived to not use that social safety net, which means favoring skilled immigration over unskilled immigration.

*this of course doesn't prevent Fox News from making it seem like all immigrants are living off Welfare

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Read my post more carefully. I'm actually arguing for MORE immigration. My argument from the first post is that the United States should stick with a more dynamic more immigration and low safety net model. I'm just able to think nuanced on this and able to see various trade offs. A difficult thing to do for many in today's politicized climate.

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GREAT article and great set of discussions. While I might not agree with MattY on everything, his writing is one of the few people I regularly read. What I like is that he is politically aware but not overtly political in his policy suggestions.

Besides, given the reality of the "rural bias" in the Senate, it makes total sense for the "progressives" to move their agenda to the state level. Heck, you can even have cross state compacts, not for everything, but many things. For example, CA, OR and WA could decide to have their version of "Universal healthcare" applicable only to residents of these states.

Finally, I do hope at least some "smart" politicians have MattY on speed dial. He makes a lot of sense....

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Only if they subscribe. Alas, this was one of those "for subscriber only" posts.

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