Aka thanks for your kind words lol. Perhaps you missed the smiley after the youth comment, but I shall forgive you this time :) There is no doubt however that the idealism of youth, eventually turns to the more skeptical analysis of us older farts :)

The Economist of June 12th 2003, carries an analysis of Nordic countries, the problems they face etc and its not all roses I assure you. I can't give you a link, as its subscriber only, but some might have a copy or be subscribers.

The welfare states in those areas were formed along time ago now.
The global economy, more global people, global money etc, is all taking its toll. The mega rich simply park their money somewhere else, or Govts have to do to special deals with them to stay, so much for equality of taxation for the very rich.

Every third bottle of beer drunk in Sweden for instance, is bought outside of Sweden, so less tax for Sweden. The cash economy is very large, there is a larger incentive for it to become larger. In education and health clinics, private enterprise is increasing
once again. The Finns joke that" The Swedish welfare state is like a Volve without tyres; it is a great car, but it doesen't work"

All these things that Tristan is discussing have been tried before, there is no point in reinventing the wheel. The 35 hour week has been a disaster for France for instance. Perhaps he could subscribe to the Economist for a while, where these things are critically analysed in quite some detail

Tristan, it is reassuring you too are confident to quote the data of nationmaster.com.

However, we differ in this respect

The correlation I quoted, as to the negative impacts on life satisfaction of progressively higher rates of taxation was based on “ALL” the available data at the time.

Hence
Nation ................ Life
State Taxation% Satisfaction
Australia 23.10 7.30
Belgium 55.60 7.30
Canada 30.20 7.60
Denmark 44.20 8.00
Finland 45.90 7.50
France 48.30 6.60
Germany 50.70 7.10
Hungary 52.60 5.50
Iceland 25.70 7.80
Ireland 25.80 7.80
Italy 46.20 6.90
Japan 24.20 6.20
Luxembourg 33.90 7.60
Netherlands 42.30 7.60
New Zealand 19.60 7.40
Norway 37.00 7.40
Poland 42.90 5.90
Portugal 32.50 6.70
Slovakia 42.00 5.60
Spain 37.90 6.60
Sweden 48.60 7.50
Switzerland 29.50 8.00
Turkey 43.20 5.60
UK 29.70 7.20
USA 30.00 7.40

Correlation of Taxation Rate to Life Satisfaction Index -0.31868

(excuse the presentation, OLO posting system dislikes tabbed data)

Regarding your remark "The happiness survey, described at Nationmaster.com, has the people of Sweden third in the world, behind Iceland and the Netherlands."

So what! The tax data identifies Iceland as having a life satisfaction index of 7.8 (higher than both Sweden and the Netherlands) with a tax regime of 25.7% (lower than Sweden or the Netherlands), which, generally supports the observation that a higher taxing regime produces a lower life satisfaction index, which is what I stated in the first place.

I would suggest Tristan, if you want to use data, use all the data and don’t try to "cherry-pick" the bits which conform with your pet political fantasies.

Now “This means less money for health, infastructure, aged care and education.”

And “BTW - low tax regimes have led to one of the worst health systems in the developed world in America - and we are slowly but surely heading down the same path.”

All “deployments” for resources are faced with competitive demands from other deployments. The money for the services you suggest is merely deflected from private deployment choices to public deployment choices.

One reason I find the issue important is I was brought up in UK in the middle of the supposed “socialist nirvana” of the 1950/60s. The problem with public deployment is simple, the client has no direct say or influence. The public hospital patient cannot choose to go elsewhere. He or she cannot influence the quality performance of the service provider because of the layers of burgeoning bureaucracy between him and that provider.
Alternatively, the private patient can take up his bed and walk to another provider and get the service he or she expects. Same goes for schools and aged care. “Infrastructure” is an omnibus word which describes nothing. If you are referring to say public roads, they are financed by fuel taxes. If you are referring to government owned commercial enterprises, they should be generating sufficient funds to finance themselves, like the rest of commerce.

So the real question is “does the individual know better for themselves than the government”?

I for one, believe we do. Invariably, government considerations of “value” are diluted to issues of public popularity, political ideology and and other “third party” assessments and judgements to what is “good and (supposedly) virtuous”.

The individual, paying for a service can use their personal preferences to decide, for themselves what they want, what they are prepared to pay for and when they believe they have paid enough.

Simply put, because it is a “public / government service” does not guarantee it will be a good service (hospitals, schools or public transport), from personal experience, quite the opposite applies.

Robert, succinct as always. Great post.

Tristan,

A couple of points, one specific and one general.

1. You say that flat taxes are regressive. This is wrong; a leftie myth. Flat taxes are still progressive, just not as progressive as the tiered taxes we have currently.

2. If the government overly socialises the economy it becomes deadened. This is why communism didn't work: because it took away incentive from people to do things. Once this happens on a national level, you may as well kiss away the idea of comparative advantage with other national economies. That's the big driver for improvement in people's lifestyles/health/etc. So overly taxing the country is shooting onesself in the foot, particularly when other countries are becoming more competitive.

I agree with the idea of a Tobin (transactions) Tax though, but only if applied internationally. At least then the super-rich may pay more tax than they have in the past. If a version of a transactions tax is applied domestically, there'd be a lightning relocation of assets and investments overseas and Australia would lose out that way.

Many-people-can't-afford-private-hospitals.-What-'choice'-do-they have-when-the-public-system-is-underfunded?-Most-elderly-people- have-little-'choice'-by-the-time-they-end-up-in-nursing-homes.-The decisions-are-often-made-by-family members - not-all-of-whom-care about-the-welfare-of-the-relatives-concerned.Those-on-massive-waiting-lists-for-public-dental-care-also-have-little-'choice'. Dental-care-is expensive-those unable to afford care often simply go without.

You may want to criticise Sweden - but Finland and Denmark also enjoy very large welfare states - and they are the first and third most competitive economies in the world. Finland certainly hasn't lost 'comparative advantage' as a consequence of public provision of infrastructure and services.

Sweden, Finland, Denmark - are far more egalitarian societies than Australia. We kid ourselves that we are egalitarian in this country, but the reality is that that vast majority of wealth is in the hands of a minority while significant numbers continue to struggle in poverty without sufficient welfare support, or support in moving from welfare to work. And while you may think Australia's low tax status make us superior to Sweden with its comprehensive welfare state: in Australia the elderly often have to sell their house to receive a position in a nursing home where care is often substandard anyway. In Sweden aged care is free and of the highest quality.

Col Rouge criticises public health and education - but does not draw the natural conclusion that this might stem from underfunding rather than some intrinsic flaw with public provision of services. School infrastructure in Victoria has been underfunded for years, and only now are some upgrades being made at the expense of the privatisation of the Victorian govt's stake in Snowy Mountains hydro scheme.

Finally, if you lived in Victoria, you'd be aware by now that roads are being financed by 'Public Private Partnerships' that result in massive and regressive user-pays charges, and ultimately cost significantly more than the simple public provision of the same infrastructure.

If we don't pay for essential services publicly-we-end-up-paying-for them-privately. This kind of 'user pays' scenario IS definately regressive - with the same price being paid by rich and poor alike. Ultimately, residual public systems of care are marginalised as the middle class opts for the private choice in health and education and those unable to afford this are provided with substandard services

Col, thanks for your comments.

I'd really like some engagement from "the Left" (not the best term but it seems the easiest to understand in this debate) on alternative ways of thinking about concepts like social justice, obligation to society etc that appear to underpin much of their thinking regarding funding for public services/ welfare/infrastructure etc.

For the reasons I outlined earlier I find the use of terms like "justice" in relation to a primarily income based obligation system quite offensive. I don't feel that any justice is done when individual choice, circumstance, need etc are ignored in the equation.

I have put forward an alternate framework that I feel could form the basis for a discussion on the topic. Not a framework which addresses all the issues but one that at least provides a form of equity. There may be others frameworks out there which would do the job better, if so they should be looked at.

I'm tired of those who are unwilling to look at better ways of getting funding for societies needs and who think that the solution lies in slugging middle income earners even harder to pay for those underfunded services and infrastructure projects they care so deeply about. Real people are getting hurt by a callous disregard for the middle income earners and their needs and aspirations.

R0bert