The Death Of The "welfare State"

[Hjalmar]

Consider some facts:

[1] In today's global economy all nations will be forced to compete.

[2] For the first time in history governments will have no choice but to also compete when it comes to taxation.

[3] Society today is very mobile. Governments that charge more for their services than they are worth to the citizens of the country will lose their most productive, highly educated and desired citizens who will simply flee to more tax-friendly jurisdictions.

[4] This will leave no one left in the country to fund the welfare state but the welfare recipients themselves.

[5] Back in the 50's and 60's Sweden saw no end in sight for their generous social programs. Today for the first time they are taking a very different view and as of about 10 years ago have started a massive scaling back of their social welfare spending and privatizing many former government functions.

[Hjalmar]

Is Jack Layton yesterdays man???

[August1991]

As Margaret Thatcher said, socialist schemes eventually die because they run out of other people's money.

[falling leaf]

August 1991

Quote

______

As Margaret Thatcher said, socialist schemes eventually die because they run out of other people's money.

_____________________

I agree with what you have just said August 1991

[Hjalmar]

When governments start competing with one another from a tax standpoint, as is inevitable in a global economy, what will happen to the welfare state as we know it today? It has been rare in history to find governments truly constrained by competition. This new economic dynamic directly contradicts the desire of governments left over from the industrial era to impose

monopoly pricing for their services. But, like it or not, the

old system will be non-viable in the new competitive environment of the Information Age.

Any government that insists upon encumbering its citizens with heavy taxes that competitors do not pay will merely assure that profits and wealth gravitate someplace else. Therefore, the failure of the mature welfare states to curtail taxes over the long term will be self-correcting. Governments that tax too much will simply make residence anywhere within their power a bankrupting

liability.

[Hjalmar]

The Information Age will leave individuals far more responsible for themselves than what they had become accustomed to during the industrial period just past. It will reduce the unearned advantage in living standards that has been enjoyed by residents of advanced societies throughout the twentieth century... The capacity of

countries to redistribute income on a large scale will collapse... Information technology will facilitate increased competition between jurisdictions... Governments will no longer be able to charge more for their services than they are worth to the people that pay for them... This means that you will no longer be obliged to live in a high-tax jurisdiction in order to earn high income... In the future, when most wealth can be earned anywhere, governments that attempt to charge too much as the price of domicile will merely drive away their best customers... Therefore these countries will not survive in their present form... They will

quite simply lose their taxing powers as they will increasingly be forced to compete.

[cgarrett]

i have not seen such a load of brain washed crap in a post in some time! blah blah blah... what a bunch of empty sound bites!

first problem, the idea that globalization is an evolution to a higher form... and that we have no choice but to accept it! please tell me why globalization is good for you. be specific.

i'll tell you why it is being rammed down our throats. lets say you got into the widget market early and cornered the market. you have a widget factory, supply chains, the money is rolling in and things are great. theres just one problem though, the demand for widgets is fixed. people just don't seem to need more than one widget each and are only willing to pay so much for one. so how are you going to grow your profits? you need to cut costs! and labor is usually the most expensive cost.

so if you could just set up your factory in china... then boom, more profits! except for those damn pesky national borders! with those silly rules that tax imports to protect the natiions widget industry!

thats where globalization comes in... get rid of those pesky national borders. democracies are too difficult to control anyways... people keep voting to share the wealth of a nation! its bothersome!

of course, this is the short sited economics of business. after you've moved all those widget manufacturing jobs offshore then you find that your market has no money. all those people who have no jobs can no longer afford widgets!

and please, don't go on about sweden without stating some statistics. the fact is that most european countries and japan are very protective of their industries and its workers and are continuously rated as having a higher standard of living than the united states... the only globalization flag waver!

more homeless/welfare bashing... its tiresome seeing as how the amount of money spent on welfare is such a minute portion of the nations budget.

[MapleLeafMerc]

and please, don't go on about sweden without stating some statistics. the fact is that most european countries and japan are very protective of their industries and its workers and are continuously rated as having a higher standard of living than the united states... the only globalization flag waver!

cgarrett, the least you could do is PRETEND you have a passing familiarity with the facts... Why do you waste our time with your made-up rants? Most European countries are in fact BELOW the US in per capita income. In fact, there isn't a major world economy ABOVE the US!!! (Which drives all left wingers and US haters crazy)

www.worldbank.org/data/databytopic/GNIPC.pdf

Oh, I forgot- liberals don't need no stinkin' facts

[Black Dog]

cgarrett, the least you could do is PRETEND you have a passing familiarity with the facts... Why do you waste our time with your made-up rants? Most European countries are in fact BELOW the US in per capita income. In fact, there isn't a major world economy ABOVE the US!!! (Which drives all left wingers and US haters crazy)

Hey numbskull: he said "standard of living" not "per capita income" (which is merely an average). Standard of living includes health care, education, communications, infrastructure, freedom, governance, etc.

If anything the U.S per capita income is skewed simply because of the tiny proportions that earn astronomical sums (the 200,000 or so with an annual income of $1 million+) inflate the numbers. A study I read a while ago ranked the U.S. 27th worldwide for SL (IIRC).

But I guess for yer average right winger, your life is only worth the contents of your bank account.

[August1991]

i'll tell you why it is being rammed down our throats. lets say you got into the widget market early and cornered the market. you have a widget factory, supply chains, the money is rolling in and things are great. theres just one problem though, the demand for widgets is fixed. people just don't seem to need more than one widget each and are only willing to pay so much for one. so how are you going to grow your profits?

you need to cut costs! and labor is usually the most expensive cost.

so if you could just set up your factory in china... then boom, more profits! except for those damn pesky national borders! with those silly rules that tax imports to protect the natiions widget industry!

thats where globalization comes in... get rid of those pesky national borders. democracies are too difficult to control anyways... people keep voting to share the wealth of a nation! its bothersome!

Only someone thoroughly ignorant of business could write such nonsense. This is economics through the eyes of a Gap sales clerk.

"people just don't seem to need more than one widget each and are only willing to pay so much for one"

If this were true, we would not be posting on this forum, we would still be playing cards by candlelight. IOW, never underestimate people's ingenious ways to make a buck; and other people's endless desire to spend one.

"you need to cut costs! and labor is usually the most expensive cost.

so if you could just set up your factory in china... then boom, more profits!"

Is this bad? If Canadians can get widgets more easily by having them made in China, why shouldn't we? Keep in mind something very, very important. The Chinese will not send us widgets for nothing. We will have to send them something in return. What?

"except for those damn pesky national borders! with those silly rules that tax imports to protect the natiions widget industry!"

I see, you enjoy paying taxes. Then you'll be happy to pay mine.

[cgarrett]

actually, if you haven't read my other posts... i am an incorporated individual. i just send my receipts to my accountant and pay my 12% effective tax!

yes, thats 5% lower than the lowest tax bracket! so i'm getting pretty tired of screaming at you guys who are taxed at source... yes, slavery means being taxed at source.

but you guys don't appear interested in the fact that incorporated individuals like myself pay little in any tax at all. blanket tax relief is fine with you guys. when the conservatives get into power i get another tax break and everybody else's taxes go up. thats been the right wing model forever...

take the b.c. liberals for example. progressive tax relief accross the board. most of that money going to the wealthiest of british columbians. and then come the regressive taxes to make up for the loss of provincial income... a rise in sales tax, a rise in gas tax, a rise in medical premiums. and this year, progressive tax increases... but just for the middle classes.

[cgarrett]

Most European countries are in fact BELOW the US in per capita income. In fact, there isn't a major world economy ABOVE the US!!! (Which drives all left wingers and US haters crazy)

www.worldbank.org/data/databytopic/GNIPC.pdf

Oh, I forgot- liberals don't need no stinkin' facts

mapleleafmerc

thanks for the document link from the world bank. ..

actually, there are four european countries ahead of the united states under the atlas methodology list and two ahead in the ppp list. in fact, socialist capitalist democracies jam the tops of both columns!

what you should be thinking about is the fact that the citizens of these european countries and japan enjoy this per capita income without the overhead of private medical insurance. and enjoy free post secondary education, subsidized mass transit etc.... paid for by the wealth of their nation!

[August1991]

yes, thats 5% lower than the lowest tax bracket! so i'm getting pretty tired of screaming at you guys who are taxed at source... yes, slavery means being taxed at source.

Precisely, slavery means being taxed at source. And many people are very tired of it. They want in on the same deal you've got cgarett. The last thing they want is someone like you so willing to spend someone else's money on some grand scheme.

Do you see the great disconnect? Your own situation and what would happen if the whole world did as you say?

[cgarrett]

august1991

conservative and right wing policies are all geared towards concentrating wealth. the conservative party has already indicated that it is ready to further slash the corporate tax structure!

i've never called myself a liberal or a socialist in any of these posts. its others who do when i question how conservative policies are advantageous to the working canadian.

so anyone is welcome to explain to me:

- how does a tax system that takes a higher percentage of ones wages the less someone makes (flat tax) better for the average canadian?

- how is a two tiered or private system of health care better for the average canadian?

- how do laws that allow foreign companys the ability to buy up canadian industry better for the average canadian?

i have more questions... another post maybe.

[August1991]

how does a tax system that takes a higher percentage of ones wages the less someone makes (flat tax) better for the average canadian?

The "flat tax" as I understand it would mean that taxpayers would pay tax as a fixed percentage above a generous personal exemption. I don't see how this is "regressive". We almost have this now in Canada.

how is a two tiered or private system of health care better for the average canadian?

On the Mtl CBC this morning, it was reported that 25% of the city's population cannot find a family doctor. Walk-in clinics typically require a wait of about 5 hours. All of this will simply get worse. BTW, we already have a two-tier system: it's a combination of "contacts" and going to the US.

- how do laws that allow foreign companys the ability to buy up canadian industry better for the average canadian?

What possible difference is there if the shareholder is American, Chinese or Brazilian? Any owner would be wise to seek the best return on investment. Anything less and the business will soon be bankrupt.

BTW, the major problem with Canada's tax system is that people with low incomes are encouraged to non-report because of the high marginal rates they face on unearned income.

As to corporate taxes, this amounts to double taxation. Corporations avoid it by re-investing; this means shareholders receive a capital gain instead of dividends. One consequence is that forms are larger than they otherwise would be.

[cgarrett]

august1991

thanks for the intelligent post...

if the "flat tax" as advertised by the conservative party is as you say then it is still a progressive tax. it would be nice to see some details... have they published any?

a recent study at ubc determined that our health care system is far from "in trouble". either way, if japan, norway, france, germany, spain etc etc can have national health care systems that aren't "in trouble" then maybe we should be looking there instead of deciding to abandon it altogether.

who owns our industry makes all the difference! i can't stress this enough. as in other posts i have indicated that britain and the united states entertain 2-3% foreign ownership. japan is barely above 0%. canada is foreign owned to the tune of 30%! and mostly in the critical industries that our economy support like natural resources. the profits made are shipped across the border like huge vacuum cleaners of wealth out of the country. do some research on this important subject. an extreme example is say... honduras. home to some of the most productive agricultural land on the planet, the honduran people live in absolute poverty. three u.s. companies own just about every square inch of the place. the indigenous people see very little of this wealth.

[willy]

"a recent study at ubc determined that our health care system is far from "in trouble"."

This would be the only study in the last 15 years done in Canada to suggest that our health care system is sustainable.

Have a look at the Kirby Report, Mazinkowski Report, or the Romano Report. They all had different solutions but the same diagnosis. The health care system is sick.

The BC Liberals added $2 billion dollars to the provincial system in the last two years and the line ups grew. Health care currently takes 1/3 of the $33 billion budget and the cost is growing. (New technology, skilled labour shortage and an aging population)

Everyone want public health care but how can we pay for it?

What is wrong with public insurance and private delivery of service? If physicians or nurses work for government they still expect to profit. Can we not allow private companies to help with this enormous challenge? Where is the public good? Are we providing high paying union jobs or access to quality, timely health care?

[cgarrett]

well, if you think that health care is expensive now in a regulated environment i believe it will be a shock to see how much it costs when delivered by entities that seek to maximize a profit from it. look to the united states for an example.

i have done much work as an independent consultant to private companies that perform privatized services for government. the entire process has soured my whole concept of privatization. the focus of a company that performs this work is to make a profit. this desire for ever increasing profit is like a wedge that is slowly driven between the services delivered and the client. you would not believe how much money this company spent on consultants flown in from all over the world... just to study how to increase this wedge and increase profits. the business model was simple, pay as little as possible to deliver the services. when the service suffers and the client complains then show what ever cooked materials were required to prove to the client that not enough money was being paid by government to the contracted company to supply the services requested.

in the end i preferred to work with unionized public service employees. the vast majority were hard working individuals. the money they made was not sent south over the border. it was spent on goods and services in their own home towns.

[willy]

Please don't confuse my like for privately run companies as a need to diminish proper regulation. All industries need regulatory requirements and the government should then hold them accountable to meet the requirements. I don't trust the power of greed to regulate.

I do like the notion of accountability. A private company is beholden to the government to exist. If they gouged or don't produce you can tender the contract. In the public system you are stuck trying to motivate large bureaucratic beasts into efficiency.

[cgarrett]

willy,

good post! i agree entirely...

i hope other "conservatives" are listening...

[sir_springer]

- how does a tax system that takes a higher percentage of ones wages the less someone makes (flat tax) better for the average canadian?

Okay, let's assume that you're referring to a proposal put forward by the CA during the 2000 election.

Under that proposal, a family of 4 would pay no federal income tax on the first (from memory here) $30,000 of income to that household.

On every dollar earned over and above that $30,000, a single rate of tax would apply.

Thus, if you are married, with two children, and your gross combined income (yours and your spouse's) is $100,000, you would pay a single rate, for example, 20%, of federal income tax on $70,000, which equate to $14,000.

If your gross combined income is $50,000, then you would pay 20% on $20,000, equaling $4,000.

Now, you tell me how the richer family earning $100,000 is paying less tax than the family earning $50,000.

You know, this ain't rocket science. It's just plain old common sense and arithmatic. But apparently people prefer to defer to others to figure this stuff out for them than use their own GD brains...and then wonder why they always get jammed up the hoop on payday.

- how is a two tiered or private system of health care better for the average canadian?

Now here you go again. The Liberal Left has supplied you with a user-friendly label for something that you don't even begin to try and figure out for yourself.

Who is preaching "two-tier" health? Do you even actually know? Or are you merely parroting what the Liberal Left media and the Liberal government has pounded between your ears in order to scare you into voting for them as opposed to those other dreaded options?

Neither the CA nor Day nor Harper nor anyone from those ranks you can point to has EVER advocated "two-tier" heathcare. I defy you or anyone here to provide one single quote from Day or Harper or the CA policy manual to that effect. No, I don't want to hear what the Liberal Left media has said that someone else said that someone else interpreted from something Harper said in a highschool debate in 1978. I want facts.

It was the CA's policy, it was Day's policy, and it is Harper's policy that...and get this straight...private provision of services funded by universal healthcare (Medicare), where feasible, is an acceptable option.

What does this mean?

It means that, instead of the government putting up $20,000,000 of your taxes...or more commonly, borrowing it and then using your taxes to pay the interest on top of the principle...to build a medical facility, private investment provides the money. Cost to taxpayers, zip. They fees they charge to medicare for the service they provide in turn pays for the cost of the facility. It's part of their operating expense.

The cost to taxpayers is no more than the fees paid for services provided...the very same fees that would still be paid to a government owned hospital or facility for the same services.

Now, where the government can't find $20,000,000 to build a facility, private investment can.

Should we build the facility using private investment?

Or forget about it until another day when, hopefully, the government has some extra cash laying around, or the inclination to rack up some more public debt that never gets paid back, and thus goes for eternity sapping (6% x $20,000,000) $1,200,000 out of the public purse each and every year without ever paying down the principle so that your grandchildren will still be paying interest on a medical facility down the street that's about to be torn down because it's been condemned resulting from old age/obsolescence.

And, more importantly, if the private facility does a poor job of managing its affairs, then they will lose their investment by going broke. Their loss, not taxpayers.

On the other hand, if a government facility does a poor job of managing its affairs, no problemo: The government just pours more of taxpayers' money into it...and more, and more, and more, without the problems every getting seriously addressed.

Why don't they get seriously addressed?

Because there is no real pressing reason to, such as going broke or losing a $20,000,000 investment.

Because, when the government runs things, people don't want to hear about problems or failures. It's bad politics. So they pump money into problems until they go away, whatever the cost, does not matter. There's always more money where that came from. Etc, etc, etc, and on and on and on it goes...

Same old, same old.

Why is it always same old, same old?

Because people are such asinine suckers for government produced and promoted user-friendly labels (read, propaganda) like, f'rinstance: "two-tier healthcare".

- how do laws that allow foreign companys the ability to buy up canadian industry better for the average canadian?

What would you prefer?

#1) A foreign investor buying a factory or business and keeping it going?

Or closing the doors because a Canadian investor can't be found?

#2) Canadian investors who own a company accepting $100,000,000 from foreign investors?

Or accepting $50,000,000 from a Canadian investor because foreign investment is outlawed?

Who makes up for that other $50,000,000 to the shareholders? Shareholders such as the pension plan on which you are relying for your retirement? Oooops! Didn't think about that one, did you?

#3) Shutting the doors because foreign investment is outlawed?

Or pumping taxpayers' money into it to keep it afloat? And then more money, and more money, and still more money, until someone finally figures out that it's a toilet and closes the doors anyway...thereby writing off millions, maybe tens of millions, often hundreds of millions of taxpayers' dollars that could have been spent on...hmmmm...how about healthcare? Or a fleet of real helicopters to upgrade what has become "Crash and Burn Airlines" over at the DOD.

#4) Pumping hundreds of millions into companies just because?

This generally means, just because they in turn pump hundreds of thousands back into Liberal party coffers, as we are now learning. (e.g. see Bombardier)

#5) Getting the government involved in picking winners and losers, thereby tilting the playing field in the direction of whomever they feel like...which generally turns out to be whomever is making it worth their while, vote-wise.

#6) Getting a bunch of government bureaucrats involved in running industries of which they don't know the first GD thing about, and never have to anyway because the money-well of taxpayers' money is bottomless and will make up for their stupidity without anyone ever knowing what is going on in the first place...

That is, until an efficient Auditor General arrives on the scene and blows the whistle to tell Canadians that they just got sodomized for another couple billions dollars gone up in political smoke.

I could go on and on and on and on...

Read the book, "Tax Me, I'm Canadian"...

And then come back here and tell us what you've learned, and whether you still think government should be meddling in the affairs of enterprize and the marketplace.

[Michael Hardner]

Sir Springer:

Some of these ideas don't seem so bad, but I didn't hear the specifics of the Healthcare plan during the last election. I guess it could be the Liberal media covering it up, or maybe it was just a poor job of communicating the idea. There are counter examples, where a politically astute right-wing party "framed" an argument a certain way, so to speak, and won the election.

The party that succeeds in defining the issues their way wins the election. That's politics.

As for the tax plan, I'd like to know what the reduction in tax revenue would be and where the cuts would be made.

[Hjalmar]

The party that succeeds in defining the issues their way wins the election. That's politics.

That has become a huge issue here in Canada pertaining to health care. Everyone stands four-square in support of health care. But how do you change it to make it affordable? Politicians are afraid to suggest any changes for fear of the electoral fallout. But changes are required which is obvious and the premiers all seemed to agree on this at their last meeting. I doubt any federal leader will come out advocating any changes on the eve of an election call.

Here's something that might help:

A number of years ago Ian Smith, the leader of Rhodesia,

suggested changes to the voting system whereby votes could count anywhere from one to five points based on the intelligence of the voter. I think this system would be good for Canada ... would wipe out the NDP in this country foreeeeeeeeeeever

[Michael Hardner]

That has become a huge issue here in Canada pertaining to health care. Everyone stands four-square in support of health care. But how do you change it to make it affordable? Politicians are afraid to suggest any changes for fear of the electoral fallout. But changes are required which is obvious and the premiers all seemed to agree on this at their last meeting. I doubt any federal leader will come out advocating any changes on the eve of an election call.

You're incorrect. The Canadian Alliance has advocated for changes in health care, and the CPC will probably do the same. As for making it affordable, the current system is affordable. It could be managed better.

Here's something that might help:

A number of years ago Ian Smith, the leader of Rhodesia,suggested changes to the voting system whereby votes could count anywhere from one to five points based on the intelligence of the voter. I think this system would be good for Canada ... would wipe out the NDP in this country foreeeeeeeeeeever

That's a pretty arrogant attitude, and anti-democratic as well.

After Bob Rae, Mike Harris elected two back-to-back majorities in Ontario. Saskatchewan votes NDP.

Did Ontarians "get smarter" ? Are Ontarians are smarter than Saskatchewites ? (my word)

And - as has been pointed out, the universities have been hotbeds of leftism. I guess this means that stupid people go to university and smart ones don't.

You can see the traps that you fall into when you espouse that kind of thinking.

There are smart people on all sides of the political spectrum. I believe that political leanings are born out of one's experiences more than one's intelligence.

[cgarrett]

sir springer

well laid out arguments... aside from the usual hate accusations at the end of each point.

but there are some points where these ideas expose cracks, or at least we need more facts regarding them.

1) the tax plan

another post asked the most important question... what is the resulting change in government income under the tax plan that you outlined? also, what about corporate tax structure? is that going to drop to 6% as well? surely we cannot allow corporation to pay 17%?

having worked as a consultant with government and private industry for two decades now i find most people quite uneducated regarding the vast responsibilities that government, as a collective tool of a society, performs. in a huge fabric of federal, provincial and municipal levels we expect government to take care of roads, rail, airports, power generation, sewage and water, protective regulation and monitoring, economic planning, resource management, fire, police, national defense, health care, international trade and the list goes on and on... and its a great idea to centralize these mass services.

and none of us propose to say pay no tax at all do we? none of these services would exist without taxation right? so i put to you that this is an extremely important question. people are definitely going to have more money in there pockets (which they will probably spend on commodities not produced in canada). but does this mean that government will have absolutely no money? because let me tell you what happens when government has no money (and i am seeing this in b.c.). governments must resort to regressive taxation schemes and borrowing. everything you do will have a fee associated. and these fees will not be a percentage of your income, they will be set fees. here is a blatant example from the u.s.... i had to call the washington state government last year. it was $9.95 a minute to listen to mostly recorded messages. now $9.95 a minute is nothing for a millionaire but to someone who is not making great money it could easily put government services out of reach. so now government services (which everyone apparently pays for) are the domain of those who can afford them.

2) health care

actually, as in another post i said that i saw harper on tv and he was asked about tiered health care... and he simply repeated that the national health care system must be retained. he avoided answering the question directly. lets get something more definitive from him so we can all sleep at night.

the argument you provide supporting privatization of health care services, or any government services makes perfect common sense. but they would have to be associated with regulation of these private corporations that currently we do no have and would probably be hard pressed to implement given the current protective corporate climate. what i am talking about is exposing the books of private corporations to public inspection. this i propose will be like pulling teeth but unless it happens i propose that we cannot go ahead.

as i have indicated in previous posts my contracting to a private firm that was performing privatized services for government was indeed frightening. when given a choice whether canadians be paid say $30 per hour to perform these services or give a private firm $25 an hour ($10 of that going to a canadian employee and $15 going out of the country) then i think most people should wisely choose the first option.

again, if government cannot audit a private companies books and ask "how do you justify 300% profit on toilet paper" then things are not going to go well. and again, if these were canadian corporations with money going to canada then that might be fine. but... thats not the case. here in b.c. every major contract has gone to a foreign entity. washington state now has state regulation baring foreign entities from competing for the states tax dollars. a good idea!

3) foreign investment

i don't see alot of knowledge regarding national economics here. countries all over the world use tactics to build and support industry in their own backyards including support of canadian sales in canadian markets, tariffs on foreign competing producers and tax relief for markets that are emerging or floundering (provided that they provide a plan for innovation that will allow them to emerge from the situation). i can come up with a huge list of these situations in the u.s., the auto industry, the motorcycle industry etc,,,

and again, i will bring up japan because i go there twice a year and i am continuously amazed at the quality of their capitalism and democracy (with huge socialized benefits). don't believe the hype about how they are all in the poor house now, they are still one of the top two most powerful economies in the world. the japanese have loads of cash. and all because of extremely stringent controls on what they import (strictly what they do not have, raw materials) and what they export (everything!). imagine a country where low mortgage rates have been a 2% for thirty years! i will leave it to the reader to explore more on this matter.

sorry for the long post!