Taxes and Stress (USA vs Nordic Nations)
 

From The Big Picture:
How much of your income goes or went toward healthcare (including insurance), education (tuition and student loans), retirement savings and childcare (if applicable)? Add in your Federal, state, local and sales tax.

Does that leave you with more than 30% of your gross income?


For our Nordic members, does that 70% figure sound right for your total, all-in taxes? And does it cover the items listed?

Heck I went to Canada last weekend camped out and even there I noticed how things were so much different.

1) Auto insurance is Government run. I was surprised listening to somebody who got a ding on their 20 year old faded Honda and sure enough the government insurance was going to fix it. I was like no way even auto insurance is socialized in canada.

2) It was hot and I wanted to take a shower to clean up after sweating all day. Went to the local civic center. A shower cost a buck but the place was a pretty nice health club all government and community run.

3) Health insurance and medical care. A few weeks ago I had surgery on my knee to remove a loose chunk of meniscus. With my incredibly expensive insurance my out of pocket expense was still close to $1000. Without insurance I would have to remain partially handicap and If I didn’t have the co pay deductible money I still probably wouldn’t get it fixed. Talking to somebody there had the same surgery no wait and no out of pocket expense.

Eh, I have such low stress levels around taxes that I don't care much... (just burn whatever end up in the pocket and hope the house loan will stay in check) :)

Of the cost of my employer, about half end up in my pocket, of which 20% then goes to sales tax (then add other special taxes on gas etc).
I don't get it up to 70% but not far from it. It will most probably differ a bit how you do the math (I don't feel like I need to know :D).

Heck, my student loan of about $50k (living cost for 6 years of collage in the 90's, no extra fees) is something I only notice once per year when I get the payoff plan.

Doing the taxes once per year is done in 5 minutes and signed off on the web, by SMS or the old school way on paper (only needed if you have done things that is not automatically reported).

As long as the system is percieved as fair there is no problems with paying up and loosing some of your freedom (we can't even bear knifes in public ;)).
Nothing is perfect but the basic services actually works most of the time.
It's not as generous as it was in the 80's when the system was boosted by loans and inflation, but that's what we need to pay for today (we did most of it in the 90's and early 00's).

I could basically just +1 on what Niklas said...

Pay about 30% income tax. 25% sales tax on normal items, 12,5% on food.
So in my day to day life I`m taxed approx 50% and get "free" everything from my birth to my funeral.

What I see as the most positive is that I, like the rest of our normal middle class workers, do not have to worry about losing my job or getting sick. I might eventually, if I never get well or jobs never comes back, have to sell my house and get an appartment :jerkit: , but I will never have to worry about ending up on the street. And also be able to own my home, not rent.

In the US it seems like the only ones who have something to lose are ones like me with a mortgage and family. Everyone else is rich with no worrys or so poor that the taxpayers are already providing for them...

qft

The stress was more in terms of broader financial security than taxes, specifically.

That is along the lines of what the (American) author was getting at. In the USA, he broke down the socio-economic groups in to 6 parts, from the "Top .1%" at the top to the "Impoverished" (aka permanently broke) at the bottom. In between, you had the Working Poor, the Stressed Out Middle Class, the Comfortable Middle Class and the Wealthy.

The Stressed Out Middle Class might make a pretty good living but "are one major health event or divorce away from bankruptcy." I would add lawsuit to that mix.

I am estimating I pay about...
20% in effective Federal income tax (after deductions and exemptions)
5.5% in Federal Medicare and Social Security (OASDI) taxes (aka FICA)
1.2% in health premiums (health, dental, vision)

No state or city income taxes. My local sales tax is 6.5% but obviously not paid on 100% of my gross income. On the high side, I would call that 5% of my gross income per year.

Figure I save something on the order of 15% per year in my contributions toward long-term retirement savings. That does not count shorter term investments or savings or the contributions made on my behalf by my employer.

I paid cash for college tuition, so no loans. I think the total could be done for under $25k for a 4-year degree after looking up current in-state tuition, fees and misc expense values, but not counting room and board. I am not sure how to convert that in to a % of gross income, though.


There are lots of miscellaneous taxes (property and gas most prominent) and fees that are hard to pin down. I'd ballpark maybe 50% all-in on taxes and contributions to the items that might be covered by a Nordic style social safety net.

That makes me wonder: what does the Norse or Swedish state-provided pension look like?

The changed it a bit here some years ago (the demographics would have drained the older system). Now it's a three stage system with a basic level, a level based om how much you've worked (fixed %age) and then you can have extra saving systems on top.
Getting 65-70% of your salary when you retire is common without too much worries. At least that's my view of it (could be wrong, but I'm not stressed about it, at all).
The only stress is to have paid of the loans to reduce the living cost by then (to get some freedom and not have to change/move too much).

Do you guys have issues with freeloaders living off the system?

Here in West Virginia (one of the poorest states in the US) the sheer # of druggies and people who are just too lazy to work that live off welfare is mind boggling... and the welfare isn't even that good!

Freeloaders are perceived differently by different people.
I perceive the problem to be reasonable, and the activities to make things fair seems reasonable.
It's as with any insurance system, no one likes others to abuse the system you are part of but at the same time you would like to be able to get help without being violated to the extreme to prove that you are not abusing the system.

If I understand it, Norway's economy and people are subsidized to a large extent by their oil holdings. The income allows the government to offer generous health and welfare benefits over and above that which taxation only would allow.

The U.S. is in the process of closing down dozens of coal plants, has shut down large swaths of offshore drilling, slow-walks energy development of Federal land and hasn't allowed a new nuclear plant in decades. Perhaps if we were energy independent--as I believe Norway is--perhaps we'd see more dollars staying within our borders, and a commensurate increase in general welfare of the citizens.

Your premise assumes Norway. Sweden has little-to-no-oil reserves (Niklas), and unfortunately destroys your premise. Aka, the guy you are trying to make a point on isn't even from the country you are trying to argue with.

Sweden is making a big deal about being the world's first oil-free economy for a reason, Cordy.

Source: http://www.eia.gov/countries/country-data.cfm?fips=SW

Finland...

Source: http://www.eia.gov/countries/country...?fips=FI&trk=m

Same deal.

Iceland...

http://www.eia.gov/countries/country...?fips=IC&trk=m

Even worse.

Heck, let's take a look at Denmark.

http://www.eia.gov/countries/country...?fips=DA&trk=m

Even Denmark barely has an oil surplus, and their reserves are quickly depleting. Norway's oil reserves are an anomaly in the Nordic countries, and trying to argue that that particular anomaly is the cause of the system in all of them is a little bit silly IMNSHO.

That's kinda why I was only talking about Norway. If you wanted to talk Sweden, then maybe you could say that if the U.S. had a flatter tax base like Sweden, then we'd be in at least a fairer situation.

lolwut?

You really didn't just suggest that, did you? Sweden's tax rate, as Niklas noted, is somewhere around 70%. Actually, all the Nordic countries have very high tax rates, regardless of oil or not.

Secondly, Who Pays Taxes in America? | CTJReports

I'm getting the feeling, Cordy, that you are taking stances without background info on them here.

We do have a lot of oil and natural gas reserves as well as 92% of our energy consumption is generated by our own hydroplants. The last 8% is not green because we are part of a stupid energy-pool with some of the other neighbouring contries using gas\nuke\coal forcing us to sell our green energy cheap in the summer and buy back expensive coal\gas\nuke power in the winter when our reserves are low...

BUT; We don`t spend the incomes generated the oil production on our continental shelf. It is pumped into an investement fund currently worth about 600 billion USD which divided by a 5 million population creates a nice safety net for us, but no more than 4% of it`s value can be transferred to our gov budget each fiscal year. We pay our way with taxes like the other northern european countries. I will happily admit that we got a nice break with the oil and a big part of the private industry in Norway gets it`s jobs by supplying directly or indirectly to our oil industry.

The nordic model is under pressure though. Immigration from africa and the middle east, where the moral and understanding of contributing before receiving is weak to say the least, may push us to remove some of the benefits less fortunate can receive today.

Other than Norway, do the other Scandinavian countries run a large debt and deficit?

Do the future finances look unsustainable like the USA's Medicare?

No.

Source: EconoMonitor : Ed Dolan's Econ Blog » How Smart Fiscal Rules Keep Sweden’s Budget in Balance

No, I'm not suggesting Sweden's tax rate, but Sweden has a flatter tax base than the U.S. In other words, everyone is treated more equally in regards to taxes, although I don't approve or recommend their tax rate.

Rather than play "competing links", I'll simply say that I believe in equality of opportunity rather than equality of outcome. When 49% of Americans either don't pay Federal income tax or actually get money back, it does not bode well for the health of this country, nor does it reflect well on our core values.

Please understand that I'm not itching for a fight, just airing my views.

This has been proven factually incorrect numerous times on here, and my link from the post you quoted even completely debunks it.

Ya that's my point. Your link is complete junk and I have links to back it up. Want to go back and forth 20 times? Dumb.

Bigger questions--do you believe in equality of opportunity or equality of outcome? How much of what you or I make should we be able to keep?

My original post relates to energy. Why, after Jimmy Carter adopted the Department of Energy over 35 years ago, do we not have an energy policy that keeps energy costs low? This impacts the poor disproportionately, and yet liberals the apparent "champions of the poor" have done everything in their power to stifle energy independence. Perhaps we could disband the DOE and "re-redistribute" the nearly $30 billion dollars that they spend every year back to the people.

Your premise is fallacious and assumptions are incredibly ignorant.

The "Only 49% of people pay income tax" is one of the most self-serving and blatant lies I've seen recently.

"Only 49% of people pay a tax that composes one third of the total taxes paid" is more correct. And of those 49%, a large amount either do not pay into the (specific) remaining 2/3rds of the taxes, or do not contribute substantially (See: Social security, 104k income cap as an example). Do I get to start linking Social Security/FICA tax numbers? Because let me tell you, the 49% of people who pay so much into income tax don't contribute substantially to those taxes compared to everyone else's contributions! So, obviously, we need to raise their social security/FICA/other federal taxes, right? They either don't pay into them at all (!!!!) or barely contribute (!!!)! By the logic you are espousing, those guys need a massive tax increase!

You can dance around and play semantics all you want. But it doesn't change the fact that if you have read on the topic at all, you know it's a substantially distorted talking point - or what the common person would call a lie.

Blaen - You and Mr. Bundy have noted that there is an income phase-out after which a person's OASDI taxes are capped. If you think back to the original idea of Social Security as a "pay in, get paid back" concept, that tax cap makes some theoretical sense: because there is a maximum you can receive back in annual benefits.

It's also worth understanding the taxation of Social Security benefits for even modest income levels.

Blaen is incapable of having a conversation on any political topic without calling names and becoming hostile as evidenced by the posts he has made in this thread. I will refrain from entering this conversation for that reason. The discussion was polite and civil before he arrived in this thread.

Do enlighten me about the name calling, Six. Seriously, start quoting it. Statements about something being factually incorrect, fallacious, or ignorant have little to do with name calling.

That's not particularly relevant to Cordy's argument, Scrappy. Remember, he's trying to make an argument about raising taxes on the people who don't pay income tax (according to him), and I was pointing out that the people who don't pay income tax pay a great deal of other taxes. As a percentage of their income (See: various caps) typically a great deal more than the typical person who pays the majority of the income tax. So, as a result, if you accept Cordy's logic that because some people don't pay much in income taxes they need to pay more, then it also becomes equally valid to state that people who don't pay much in the other taxes need to pay more.

Or, shorthand. Saying someone pays no taxes or little taxes just because they pay no or little income tax and ignoring any other taxes is every bit as naive as I would imagine you would think it is - especially considering that, at least the last I checked, income tax only made up 1/3rd of the tax receipts for the government.

Cord phrased his statement in a specific way as to be correct when he talks about a significant percentage of the US population paying no Federal income tax or receiving net money back.

Maybe a more constructive way to route the conversation - instead of jumping at an "AHA! moment" - would be to discuss total Federal taxes as a percentage of income [Federal income + employee (sorry, Bob!) FICA] and then compare that to the levels paid by the Scandinavians.

That can also tie in to the conversation on the overly complex nature of the US personal tax code.

Any time you look at debt and (fiscal) deficits, you should also ask about current account or balance of payment deficits/surpluses. :)

Sweden presently and typically runs a significant current account surplus.

This is where I've been taking it, Scrappy, including sources that state total federal taxes as a percentage of income.

Trying to quote just one tax and ignoring every other tax (Read: total tax burden) and trying to draw conclusions from that is flat out silly IMO. Using his logic, one could make arguments about Social Security (as an example) that directly contradict what he is trying to say if he just uses a single tax. Even the analysis on the Nordic countries tax burden in this thread includes an analysis of all relevant taxes, not a single cherry-picked one.

Blaen the difference between FICA taxes and income taxes would be the fact that FICA taxes are suppose to serve as a direct benefit or pay in pay out type taxes so the percentage of income paid in to FICA doesn't really matter in this argument as they will receive a fixed level of benefit from these taxes (i.e. they operate like an insurance policy and investment fund, you directly benefit from what you pay in). The income tax is a blanket tax that goes to the general fund and can be used on practically anything. You benefit from income taxes by using the products and services they provide.

So you are arguing that because people of a lower income have to pay more as a percentage of their income for what is basically an insurance policy and retirement fund they should not have to pay for other services at all. The rich people on the other hand pay less as a percentage of income but no less then their benefits would normally require should have to pay more for other services then everyone else.

That is like saying poor people pay more as a percentage of income for food so they should not have to pay for gas. Rich people pay less as a percentage of income for food so they should not only pay for their own gas but also the gas of those less fortunate.

One has nothing to do with the other. Your argument is invalid.

Actually, Ryan, it's perfectly valid.

This is why: Are you arguing that people who make less should pay more in taxes (as a percentage of their income) than people who make more?

This is the ultimate form of the argument being made. The income tax is what gives us a progressive tax structure. The US has historically always had a progressive tax structure, with a slow descent over the years towards a more regressive tax structure (We've taxed the top bracket at 95% before!). If income tax is adjusted as Cord is advocating for, we lose what makes ours a progressive tax structure. I've already posted citations noting how our tax structure currently works relative to total taxes.

It doesn't matter who pays for what. What matters is how much any specific person pays (as a percentage of their income). What matters is the core of the argument and what will happen when it is executed.

Or are you suggesting to raise their income tax, and lower their FICA/SS/other taxes if you want to maintain a progressive tax system? As is, this is an either or statement. Either the lower income brackets pay more, and we lose our progressive taxation, or you have to lower their taxes somewhere else. This is precisely why I say Cordy is cherry-picking numbers and making a very foolish argument. By just looking at one tax people pay, you are ignoring the whole picture.

I believe there should be a progressive tax system and honestly am not even saying that those who do not pay income taxes should have to pay more. What I am saying is the way you argued for it is invalid.

The way someone debates a topic is important. Just because an idea is right does not mean you will convince anyone of its legitimacy if you are using an invalid argument to do so. I have heard a progressive tax system defended in much better ways then simply saying because they pay more as a percentage of their income for this other unrelated tax, even though they are receiving proportional benefits, they should have to pay less for this other tax. I find this especially funny coming from the left who claim to be for "fairness" when they do not follow this logic in their actual arguments.

Examples of a better argument I have heard, and I believe you have actually used this yourself, are how those who prosper make use of the government provided products and services around them. They more effectively utilize them and therefore find them of more value and should contribute more to develop and protect them. However, this argument has all sorts of other problems with it concerning specifics but atleast the logic is somewhat sound.

See! There you go again being argumentative. Why can't you just accept that others might be of a different opinion or even wrong about something without having to jump in and point it out? Statements about something being factually incorrect, fallacious, or ignorant have everything to do with name calling. Saying someone is flat out wrong about something fundamentally attacks their beliefs, understanding, and feelings about issues and that sort of discourse is hurtful and damaging to individuals. People don't need to be corrected on everything. It is harmful to their self esteem and is not constructive. Is it hurting someone that they mispronounce words or spell them wrong? Is it hurting someone that they think that a kitty is superior to a pony? Why bully them if they are wrong? Because you can? Shame on you Mr. Blaen for having the power to tell men they are wrong and actually using it. Embrace the diversity of thought and opinion and of beliefs other than your own. Be a kind and gentle Mr. Blaen. And if you have the power of facts over others, be kind and wield that power cautiously because your words might hurt them and hurting people is wrong.

So, we are in a thread about the Nordic tax system. We are discussing about overall tax rates. Explain to me what part of this is invalid, beyond Cordy cherry-picking a particular tax that has (granted, woefully skewed, but it's that way for a reason) little to do with the overall topic of the thread, i.e. comparing overall tax rates.

Annnd congratulations, we took a left turn at Albuquerque. Nowhere did I make any arguments in favor or against a progressive tax system. I'm wondering what you are reading Ryan - it's definitely not my post. I pointed out we've had a very long history of progressive taxation systems, that's it. Then I asked what the intent was with what Cordy was arguing. Then I asked for details in implementation.

With as much as you are whining about invalid and valid arguments, I'd think you would at least try to argue what I'm arguing, and not put words in my mouth.

Then, first, they shouldn't be arguing in a political forum. Secondly, they should do some basic research.

If someone can be corrected on something that takes nothing more than seconds with a single Google search and has an argument constructed on a both incorrect and flat out wrong premise, I'll correct them gently at first. See this very thread as reference. If they want to keep arguing, that's fine. They can prove me wrong (Notably, Scrappy and Joe have both done that with regularity) or I'll start making more and more fun of their argument (Their argument, mind you. Not them. I try to be very careful about personal attacks - anyone with the ability to cogently express political arguments is automatically in the top 99% of the political arena IMNSHO). I'm fine with either.

This is rich coming from a MT user. I'll be playing mouse in the corner watching you defend the next noob-bashing thread Six. One of the supposed hallmarks about posters here is a thick skin - if someone has a problem with me expressing the opinion that they have a silly argument? How the fuck did they get past the noob hazing?

I'm having trouble believing that I grammar nazi'd someone in any way but jest, unless the entire post is unreadable.

It is not - until they try to advocate that belief to other people. This is what you seem to be having a mental disconnect on. If you want to advocate a belief, that's fine and great - but you are expected to discuss and defend it on a place dedicated to discussion. Traditionally, I gently chide someone if I see substantial factual inaccuracy in something they post, and post a citation proving that. If they want to argue about it, I'm down - but....

I mean, are we reading the same thread? https://www.miataturbo.net/current-e...70/#post921943 - This is my first post in it. This follows my traditional posting style. If you don't want to argue, that's fine. Then don't argue.

Are you trolling me now, Six? This is a politics forum on a site that is supposed to be renowned for it's thick skin. Saying that I think someone's idea is silly and then explaining why I think it is silly is completely different then what you are alleging. In fact, it's absolutely tame compared to what you can see in day to day operation here.

If someone wants me to embrace their beliefs? Absolutely. Just show me factual evidence proving them. Scrappy, Joe, and several other posters have already caused me to do 180s on previous beliefs I have held.

After rereading your posts I find that you are correct. I misread your argument as an argument for progressive taxes when infact you were just arguing about the percentage of taxes an individual pays in total vs. income after a misleading figure was posted in reference to individuals paying no taxes as opposed to not paying a single tax. I concede that my earlier posts were incorrect.

So let's try to - constructively - bring this back to the original topic.

In post #6, I guesstimated that I might pay 50%, all-in, for the type of benefits of what I am imagining is a Nordic society. These are things like education (up to a public university degree), basic infrastructure, retirement benefits (including private savings plus Social Security and Medicare), etc.

We can argue over the relative merit of my education versus a Swedish or Norse college degree and the quality of roads in Orlando vs the quality of roads in Oslo, but is my thinking way off here?


Coming full circle to the stress part, I find the fact that the Norse systems' use of a defined benefit program (aka pension) very attractive versus a defined contribution program (aka 401k). That would certainly alleviate a lot of financial stress for most people. While we do have a type of pension in the Social Security program, because of the income caps and benefit maximums, it could never account for 65 - 70% of what I would expect my lifetime earnings average to be by retirement.

The max payout for 2012 is about $30,156. If you are married filing jointly with a "Combined Income" (separate from Adjusted Gross Income, Modified Adjusted Gross Income or Taxable Income) over $44k, up to 85% of that $30k is taxable.

Any Scandinavians still checking in and not run off yet, do you know if there is a cap for the state-run pensions? That is, if Persön A making $50k expected a 65 - 70% payout in retirement, would Persön B making $200k also expect a 65 - 70% payout? If so, I'm assuming it's because they have both been paying in about the same percentage of their incomes?

This is (roughly, don't hurt me because Sweden is an outlier please!) correct based on numbers published by the relative Nordic governments.

The rest makes my head hurt and I wave a white flag at.

Multi-tasking so apologies if I am less clear and concise than normal.

Assume I pay in - between my personal savings towards retirement and healthcare plus all applicable taxes like Federal income, state income, local sales, real estate, and payroll for Social Security and Medicare - about 50% of my income. Assume I hope to replace at least 65 - 70% of my final year's salary with income from my retirement savings + Social Security and be able to afford quality healthcare between savings and Medicare.

Assume I was retiring tomorrow and made $200k per year and had for many years. Social Security, the USA equivalent to a state-funded pension, would be maxed out for me at about $30k per year or only about 15% of that $200k. In order to make up the rest, I would be relying on investment returns through things like a 401k plan. Ask anyone who has approached retirement in the past decade without a pension and they will tell you retirement investments have probably been a big source of stress.


This goes back to the idea that the author in the first post talks about. If I had the choice of:

(A) losing half of my income to taxes and having all of those services provided for me, virtually guaranteed

OR

(B) losing half of my income to a combination of taxes and personal savings and having a high degree of uncertainty in the outcome of retirement and healthcare...


I am not sure which I would chose. [Edit: But, I would think I would have much less stress with option A.]

Let's suppose you do prefer option A.

This leads to this question, which I believe is the crux of the issue:

Is it morally acceptable that you should be able to not only trade your own freedom for some measure of security, but also to trade your neighbor's freedom (while offering him that same measure of security), regardless of his preference?

Restated:

Insurance policies and retirement plans are methods by which an individual can trade his current freedom (spending power) for future security (healthcare, paid retirement). If, absent outside control, your neighbor prefers his current freedom to future security, by what rights ought we to decide for him that he must trade his current freedom in exchange for some measure of future security, simply because many (or possibly most) of his neighbors would prefer it?

Sarcasm in my first post is lost in the internet. Illustrating absurdity by being absurd in my second post which was designed to be over the top was also misconstrued. Alas, I am dismayed.

I shall cover my body in honey, bind myself in duct tape, and roll around in fire ant piles in the front yard for my own amusement now.

As we`we had some changes regarding how the pensions are earned I`m not 100% sure as to what will be my pension, but just punching my numbers into a online calc and I should be receiving the same when I retire as I earn now. And I don`t have to add much my of my own monthly saving to increase that considerably.
Pensions are also made up by two parts, one which is gov funded and has a cap somewhere and the other half is a forced monthly contribution your employer makes on your behalf. This will differ from one company to the other and I consider this as part of my salary, although I won`t see physically it until I`m well past 60...
Point is, I expect to have the same economy when I retire as I do before retirement. I also plan to retire 50% at 62 and 100% at 65-67, 67 being the normal retirement age in Norway.
Short answer, YES, the guy making 200K, will get a 200K pension, but he will have paid for the difference from the gov max pension to his level himself.
Full payout is however not forever, and I believe after 15 years it will drop down quite a bit so best not get too old...

Don`t let me ruin the discussion again, but;
Why is the freedom to fuck up your life such a valued quality in the american society? Full personal freedom is not achieved until there are no laws restricting you, yet no one will accept anarchy.

I think that is the crux of the issue. I'll tie in lassi's post with that thought...

[Emphasis mine]

I love the way he phrased that, which is why I appreciate the "outside perspective." Going back to Mark's question, I guess that it boils down to a societal question and yes, there may be a tyranny of the masses if the majority of the society decides they like the social contract of paying more in taxes today for a greater level of security tomorrow.


I suppose you could look at the viability of the option: choosing option (A) higher taxes now with a pension and greater guaranteed healthcare benefits or (B) lower taxes now with a 401k style plan and less guaranteed healthcare benefits.

I'm not sure how that would work in theory or in practice. Would a lot of the people that are most likely to need the security of option A actually choose option B in order to pocket more spending money today (rather than investing that extra disposble income from the lower taxes)? Think: the "ant and the grasshopper" fable.

As a society, would we be better off if people had more portable healthcare and a greater level of retirement security (e.g. the ability to continue to contribute to consumer spending, pay their mortgage, help their children and grandchildren with gifts/education, etc).


[Edit] And tieing this back in to the original premise of the thread, would we as a society be generally much happier if we had that higher level of future security? I have no way of knowing how to answer that.[/Edit]

The other issue is the financial sustainability and efficiency of option A in post 36.
I still question how sustainable the Nordic SS systems are, in terms of future unfunded liabilities and payouts, and income.

In our (non oil lubed) pension system there are four levels of corrections to save the system from market and demographic changes. The pre 90s system was more generous but a sure path to broke due to demographics (system designed when life expectancy was just 5 years higher than the retirement age, not 20 as today).
So I'm pretty confident the system will survive, but it level out at around $100k (employer cost vise), where individual add-on systems start to get important (if you want to keep a high percentage of that income).

What level you place the base security at (between not being executed for sleeping on the air vent and living like a king) will affect the society at large.

The carrot and the stick can be used in different ways (including the stick in your eye and the carrot up your ass).

Genious question is genious.

But there are always answers.

Have you ever heard of idea called "The American dream"?

It's an idea which is incredibly well engrained within the contributing workforce of our society. The basic, no frills, premise of "The American Dream" is that "Anyone can become great on their own". The important part of this is not "Anyone can become great", but rather "on their own"

The framework for our country was founded on the belief that "all men are created equal", and as such, all men have rights which no man shall ever cross.

All men have a right to "life".
All men have a right to "liberty".
All men have a right to "pursue happiness".

Those rights are listed in order of importance.

"The American dream" has become almost a myth in today's world, but not completely. The principles behind it are still solid, and anyone can still become great on their own.

"Full personal freedom" is not something we seek to achieve, as by our very nature, we strongly support laws which protect people from each other. For instance, if I were to give someone the liberty to carelessly murder an innocent person, I will have violated the right of "life" to give someone the right of "liberty", and since life is more important than liberty, this can not be allowed to happen (which is a HUGE reason why gun laws are so controversial in the USA); however, In my biased American opinion, it should be a crime punishable by death, to propose a law which would protect me from myself, for if you pass such a law, you are infringing upon both my right to liberty, and my right to pursue my own happiness without positively affecting my right to "life" (or my right to die because I made unhealthy or uneconomic choices in my life - the right to "life" is only a right insofar as no other man may take your right to life, but it is misconstrued in modern times to suggest that "you are not allowed to die by your own choices"). I think Social Security Tax is unlawful, but I'm not willing to argue about why - it's just my opinion, and I don't have a good enough reason to fight an inefficient system which will one day (hopefully) supplement my much more significant retirement income.

My train of thought has crossed several switches, but I hope I got the point across.

It might be worth noting that Norway and Sweden both are autonomous issuers of free-floating currency. Denmark gave up autonomy by pegging to the euro and Finland is part of the European Monetary Union (thus also giving up monetary autonomy).

I want to preface this by saying that you, fooger, have been admirably consistent in being the most likely to be labeled an "Extreme Social Darwinist" in that, unless I am misconstruing your position, you would be in favor of letting someone who could not or chose not to afford health insurance die on the street after being hit by a car or struck by some freak accident (lightning strike). Likewise, a poor family that did not have enough to eat should either figure out how to make more money (legally), find a private institution for charitable handouts or be prepared to have family members die of starvation until their income can feed everyone. Not necessarily in your order of preference.


However, I have to disagree with your definition the American Dream. I don't know who coined that phrase, but America was not founded by an individual or a bunch of single families each living in cabins miles from the nearest neighbor. Maybe I am taking your phrase "on their own" too literally, but America - since the days of the Pilgrims - has always been about communities of people.

The pilgrims were seeking freedom from governmental control. Governmental control, and taxation, followed them as the colonies fell under increasing regulation as territory of England. This chain of overarching English control did not cease until the end of the Revolutionary War (and frankly, this territorial control did not cease to be contested by the British until the Treaty of Ghent was ratified in 1815). The control of a powerful central government over its citizens is the antithesis of the original American Dream.

I am not bothered at all that the Scandinavian countries and many others have cradle to grave guarantees within their system of government or that they choose to fund it as a priority. I also have no problem with some of my fellow Americans finding that same cradle to grave institutionalized government system enticing or attractive. I do, however, have a problem with them attempting to implement that system in our country against the rules on which our system of governance is based. I would encourage citizens that were attracted to that style of society to pursue it in the places where it already exists as opposed to dismantling or distorting the fundamentals of this society's design. There is no good reason to take the world's only society based upon self-determination and rugged individualism and change it to a government-dependent society when there are already so many of that sort already in existence. It defies logic.

You forgot the part about how the American Dreamers needed welfare handouts from the natives.

They more often killed and robbed the Indians than sought handouts from them. They were, after all, English, and the Indians were considered less than human.

Footnote: http://www.danielnpaul.com/TheRealThanksgiving.html

At least I'm consistent; you are absolutely correct in your labeling of my social views. I have a "death before entitlement" view on life, where I'd rather die a painful and unnatural death than take something I didn't earn with zero expectations that I'd pay it back. I also agree with you that my views are far too extremist to ever be implemented in modern society. My opinions are based on the idea that when given the choice between hard, repetitive, menial labor, and dying of starvation/freezing/sickness, the able bodied will do everything in their power to provide for themselves and their families, but when the basic requirements to sustain life are provided "free of charge", those same people have little to no motivation to produce anything for themselves.

Maybe I'm biased? My father drove a semi 80 hours/week so that I could grow up in a trailer park. He left every morning long before I woke up, and he often got home in the evenings well past my bedtime. After 25 years of driving a truck as an owner-operator, all he has to show for it is a bad back, but you will never hear him complain. Now, I get to hear his stories of guys coming in for an interview, and at the end of their interview, when he offers them a job, they tell him "I've still got a lot of unemployment time left, can I start in about 8 months?" At least he has paid into the social security pool all of his working life; that would probably be his "retirement", but I expect that he'll probably work until he dies; he doesn't know anything else.

So yes, maybe I'm biased, but I understand that my views are extremist and socially un-implementable. I willingly accept the fact that the majority will find my views offensive, and that I will probably never convince another soul to change their views to mirror my own (nor do I really care to), but thank you for understanding that my views on society are far different than yours, and not trying to convince me that I'm somehow "wrong", I really appreciate that.

This is a much more nuanced perspective that I can appreciate.

I suppose it goes back to trying to determine when was the height of American society and what were the things that made it great? Then, thinking about whether there is a way to take some of the best elements of other times and other places and incorporate them in to the USA.

For example, most of the Greatest Generation had corporate versions of what a Nord or Swede would receive from their government. You might also, upon further research, be surprised (as I was) at how de-centralized the Scandinavian "welfare states" are.

It's less a question of "how can we make the USA into Sweden/Norway/Germany/etc?" and more "is there something we can glean from those countries that might incrementally (or drastically) improve the USA?"

No worries. Like I said, admirably consistent and straight forward. :)

The myth here is that if gov't didn't do it, it wouldn't get done. That if gov't didn't have welfare, nobody would help the poor.

If you look at how inefficient the gov't is with welfare - what is it, 20c of every dollar collected, actually ends up with truly needy people - then to replace welfare, you'd only need to spend 20% the gov't did.

Again the same assumption. That society doesn't solve problems, only gov't does.

A wealthy society can well affort to take care of its poor, gov't welfare or not. In fact, I would argue that if gov't took less taxes, and meddled less in our lives, affairs, and business, that society as a whole would be much wealthier and thus be even more able to care of its poor.

Seems we even have stricter rules on receiving social benefits. There is a maximum of a year on unemploynment where you will have to register application for jobs and attend courses in forming job applications. The unemploynment office will also try to get you jobs and if you say no because you are to fancy to mop floors or pour concrete you will lose your benefits and your paynments will cease.
I`m not saying there are not people who have found their way to bend the rules and are fine with doing nothing, but we do try to make it hard for them and it is not socially acceptable living on welfare if you are able bodied. You will also be penalized for receiving when not entitled...

How would you pay for this private welfare system? Who would collect the money for it? And would they really be more effecient than the govt? Atleast the govt is not planning to make a profit on it.
I do not believe there will ever be a society populated by so many inherently good people that the poor could be cared for by non profit charity organizations. Few people actually do or give anything without expectiong something in return. Don`t forget the tax breaks you have for giving to charity.

One argument I would like to play is that by providing for those without jobs or not able to work they do not have to resort to crime to provide for themself. It also keeps the entire population more even, flattening the difference between the rich and the poor which I also think helps keep crime down.

I also think some americans try to make the social system we have look like a communist society where noody can excell at anything.
There is NOTHING in our society standing in your way if you want to pursue the "american dream" and become your own employer or just become incredibly rich and eat steaks every day...
(I think you can actually govt grants to get started as new jobs creates more tax revenue...)

This is a much more nuanced perspective that I can appreciate.

I suppose it goes back to trying to determine when was the height of American society and what were the things that made it great? Then, thinking about whether there is a way to take some of the best elements of other times and other places and incorporate them in to the USA.

For example, most of the Greatest Generation had corporate versions of what a Nord or Swede would receive from their government. You might also, upon further research, be surprised (as I was) at how de-centralized the Scandinavian "welfare states" are.

It's less a question of "how can we make the USA into Sweden/Norway/Germany/etc?" and more "is there something we can glean from those countries that might incrementally (or drastically) improve the USA?"

No worries. Like I said, admirably consistent and straight forward. :)

Just for fun?

http://www.ritholtz.com/blog/wp-cont...908_woc034.png

Firstly in the absence of gov't welfare, to protect against job loss or disability more people would:
1) keep a rainy day fund
2) purchase disability insurance, probably as part of life insurance
3) have more money to help family and friends out

You don't need a centralized welfare "system". The first line of defense against adversity should be family and friends. For example, when a friend lost her job, I let her stay in our spare room and borrow my spare car for several months while she got back on her feet. That cost me what, $100 per month? (I did this for 2 friends, at different times) If only gov't helped her, then she would have had to rent a room for $500 a month, rent a car for $200/month, and so on. In this example you can see how much more efficient family or friends would be compared to gov't.

Besides, as a friend, I am more likely to egg her to find a job, vs. a gov't bureaucrat handing out a check.

Also, this country has a history of community - people help each other out in neighborhoods and churches. In the 1920s, "mutual aid" societies were very popular. They were effectively wiped out by gov't:
Welfare before the Welfare State - Joshua Fulton - Mises Daily


If it's true the gov't's efficiency is anywhere near 20%, then yes, of course. The "efficiencies" of many large charities (e.g. Red Cross), are public information, and IIRC they are in the 80-92% range.

Charities aren't for profit, else they wouldn't be called charities.

If charity is 4x as efficient as gov't, then there would only need to be 1/4th as much dollars going to charity to match what gov't does now.

Also, you are falling for the myth that "people are inherently bad, gov't made of a few good individuals are needed to set them straight". The reality is backwards. Most people are inherently good, and the worst members of society rise to power. Tell me that you think the average politician is more morally upright than the average schmoe.

Besides, here's an example that shows how people behave in the absence of coercion: Tipping waiters. One can choose to never tip and never eat at the same restaurant twice. Yet most people tip even though they aren't forced by law or by threat of force.

Gov't is an entity whose rules are enforced by the barrel of a gun. It gets its legitimacy by the illusion that it produces a net positive effect. If people thought paying taxes did zero good, they would change the gov't at the ballot box. There is nothing with "expecting something in return". For example, in the arts and music, private donations far exceed public funding. When people donate to the arts, it's because they envision having more art in the city they live. Is anything wrong with that?

Again look at the behaviour of tipping.

What makes the poor richer is the free market.

That article was a great read. I also agree with the fact that most people are inherently good and will help those around them if they feel they need it. I myself have been housed by my ex's parents and fed for 3 years without any expectation of repayment because I was working and going to school and their home was much more convenient and economical for me to live at.

I do agree with the general point you are making, but i can`t help getting a feeling like you believe we all count on the govt to provide everything for us at the blink at at eye, whatever the cost. This is not the case and i think you would find that most households have a rainy day fund, disability\debt insurance, and still enough money left over to help out family and friends when needed. It`s not like I give away all my monies to the govt and receive an allowanse as they see fit.

In what way can you not combine a social system with a free market?

Genius article. I have always been of the opinion that the AMA is the most capitalistic organization on the planet, but I've never had any sort of evidence to support my opinion. I believe the AMA is so wildly successful because it has extorted the American public by blackmailing us with the threat of death. It's fantastic how easy it is to promote job security and growth when you can tell the people: "If this law isn't passed, you won't be able to afford medicine". I was actually thinking about this on the drive to my girlfriend's house yesterday. What they've done, with regard to health insurance, is akin to the US having only one auto manufacturer and zero importers, Well call them the American Motor Company. AMC produces 5 different vehicles, they are all passenger cars. They have models from base to luxury ranging in prices:
Base: $10,000
Sedan: $25,000
Family: $50,000
Touring: $100,000
Luxury: $500,000
One day, AMC, who has government backing as the official vehicle producing organization, decides that if EVERYONE bought only the Luxury car, they would be richer than their wildest dreams, so over the course of 25 years, they get laws passed through congress which slowly make the cars at the lower end of the spectrum illegal, because the base models are obviously less safe than the top of the line models. They concurrently launch an advertising campaign over the course of that 25 years which makes it socially unacceptable to not own a car if you are of legal driving age. At the end of their 25 year campaign, the only cars that are still legal to drive are the touring and luxury models, and as you might be able to see, very few 16 year olds can afford those cars, so they propose a new law which requires every person to pay a fixed percent of their income as a "lease tax", which passes by an overwhelming majority in a popular vote. The lease tax pays for every person in the country to own their very own Touring car. Per law, these cars will exist until they are ten years old, and will then be destroyed for a new car. Also, any new advancements in automotive technology will be paid for and installed in all of AMCs previous cars. The top 25% of drivers, based on driving habits recorded by the in-car black-box will be rewarded with Luxury cars, also paid for by the flat tax.

If you don't pay the full amount of the flat tax, the government has the legal right to seize all cars and assets owned by you and members of your family, and your registered friends.

The final legal stipulation is that the cars will all be sea-green.

Sounds fair to me... :)

On our side of the puddle, most Americans do *not* have a rainy day fund, disability/debt insurance, or money to help family/friends when needed. Most Americans live paycheck-to-paycheck, and a blown transmission is a significant financial hardship which could take many months to recover from. Here, it is socially acceptable to receive government money, and for some people, it's expected. There are far more Americans than you would think who "count on the government to provide everything for them at the blink of an eye".

Yesterday, I again hit my "emergency fund" savings goal of $15,000, it's taken a year to save up from about 3 or 4 consecutive and significant blows. I'm so incredibly thrilled by that feeling, I've told myself for the last year that I would reward myself by finally buying the FMIIR upgrade once I saved it - but there's no way in hell I'm pulling money out of that $15,000. A car upgrade doesn't count as "rainy day", so now I have to save up play-money to spend on the car.

If I only got to keep 30% of my earnings, i don't know how "stress free" i'd be. Just referring to the OP, not the rest of this convo.

Do you have anything to back that up? Or do you just have an overactive imagination?