Social Welfare Programs: Providing for 5.5 Million vs. 300 Million People

Over the last several years the debate about providing more social welfare programs (or as some call it a ‘social safety net’) has increased. Many of these debates often include an argument that stems from the use of social welfare programs in many European countries. Proponents often cite countries like Denmark when arguing the success these programs can have in shrinking the ‘wealth gap.’  But is this a fair comparison?  Can we truly compare the U.S. to Europe?  Sure, the two continents have similarities. So too do apples and watermelons, but they are not the same, and neither are the U.S. and Europe.  However, for the sake of argument let’s explore a few things.

First, let’s look at Denmark.  The current population of Denmark is 5.5 million people; compare that to the city of New York which is 8.4 million.  While it is a sovereign country, when comparing its structure and policies to the U.S. we must consider that here, Denmark is more akin to running a mid-sized city.  It is true that currently Demark has enjoyed a stable and growing economy that offers its citizens an array of social welfare programs.  That said, Denmark also has one of the highest tax rates in the world, with citizens paying an average of 44% of their income in taxes.  This means that if you made $30,000, you would net $16,800 after taxes.  ‘Not a bad deal if the government is providing many services’ some may say, but if you are going to look at a successful nation you must also look at the reverse.

This brings us to point number two.  You cannot have a discussion about European social welfare programs without talking about countries like Greece, Spain and Italy.  These three countries, along with several others, have been on the brink of economic collapse since the start of the recession.  While several factors contributed to the economic decline experienced by each of these nations, one major factor was the national debt each country accumulated.  The principal economic drain on these countries was the cost of their social welfare programs.   In Greece, despite having access to the welfare programs provided through taxes, the nation has one of the highest rates of tax evasion, meaning many are not paying into programs they use.  Though Germany has fared well in the Eurozone crisis, they spend 754 billion euros on welfare programs for a population of approximately 80 million (that’s over 1 trillion dollars for 25 percent of the US population).  As the population of Europe ages, their welfare programs will continue to be strained.  Birth rates have fallen all across Europe, meaning that there will eventually be more people relying on welfare, and fewer paying into the programs.  A similar pattern is developing in the U.S. with social security.

Last but not least, you cannot compare European programs to U.S. policies without discussing the physical and cultural differences.  We have already seen the difference in population in two countries and that pattern continues throughout the continent.  Europe, as a whole, is approximately one-third to one-half the size of the U.S.  Geography helps contribute to lifestyles.  While most Americans, even those classified by the government as ‘poor’ live in relatively comfortable homes or apartments complete with full kitchens, cable TV, internet, and all utilities, most Europeans live in small homes with tiny kitchens, and without central heating and air conditioning.  It is also important to remember that while people talk about social classes in the U.S., there have never been structured classes in this country.  The U.S. has always been a place where, regardless of your background, you can accomplish anything.  This has not always been the case in Europe, where at one time, birth made you more important.  While royal families are in decline, several European countries do still have monarchies, and hundreds of royal families still exist across the continent. In a place where some individuals are seen as special simply by name, it is easier to understand why the state feels the need to provide for those ‘less fortunate.’  But the U.S. has never subscribed to that theory.  Those here that are seen as the ‘one percent’ are families that worked hard and invested time, energy and money to accumulating their fortunes.

Image courtesy of http://www.healthcarecareersguide.com/social-worker/