Thursday, November 17, 2011

Five Lessons for America from the European Fiscal Crisis

The five lessons she identifies are:

  1. Higher taxes lead to higher spending, not lower deficits. Miss Morandotti looks at the evidence from Europe and shows that politicians almost always claim that higher taxes will be used to reduce red ink, but the inevitable result is bigger government. This is a lesson that gullible Republicans need to learn – especially since some of them want to acquiesce to a tax hike as part of the “Supercommitee” negotiations.
  2. A value-added tax would be a disaster. This was music to my ears since I have repeatedly warned that the statists won’t be able to impose a European-style welfare state in the United States without first imposing this European-style money machine for big government.
  3. A welfare state cripples the human spirit. This was the point eloquently made by Hadley Heath of the Independent Women’s Forum in a recent video.
  4. Nations reach a point of no return when the number of people mooching off government exceeds the number of people producing. Indeed, Miss Morandotti drew these two cartoons showing how the welfare state inevitably leads to fiscal collapse.
  5. Bailouts don’t work. This also was a powerful lesson. Imagine how much better things would be in Europe if Greece never received an initial bailout. Much less money would have been flushed down the toilet and this tough-love approach would have sent a very positive message to nations such as Portugal, Italy, and Spain about the danger of continued excessive spending.
The only thing I think she left out is that the private sector needs to grow faster than government, which, sadly, hasn't happened for quite a while, and doesn't seem to be in the cards for the near term.  The current cast of characters seem hellbent on increasing the power and influence of government over individuals.

1 comment:

  1. This is a great video. I wish more college students understood economics as well as this girl from Milan.

    Most Americans don't realize how close we are to having a majority of the population receiving benefits. Already 53% percent of the people pay 97% of the taxes. And, this is happening rapidly.