Comparing Western Europe

Over at the League, Koz commented:

Liberalism should be seen as an unmitigated failure by anyone under 30.

To the extent that it isn’t, part of the reason is that American prosperity seems to them as a fact of nature. For anybody with any historical consciousness of the modern industrial state for the last thirty years or so, the rules are pretty simple: low taxes/free markets = prosperity, bloated welfare state = corrupt dependence on the state.

That's some pretty run-of-the-mill conservative boilerplate, which I think misses half the story. Hopefully my response is more interesting...

Koz, I deplore welfare and love myself some low tax rates and free markets as much as the next libertarian--but you should note that Western Europe's welfare states are doing quite well, in no small part because their governments (parliamentary: executive makes policy, legislature approves) and tax systems (consumption tax: VAT) are more efficient than the American model.

You ought to check out Bruce Bartlett's The New American Economy; he offers some good clear-headed explanations of the economic side of things.

My own thesis, in a nutshell, is that the better governance and taxation in Europe is what makes their welfare states politically palatable and attractive to their peoples. Whereas America's bad governance and absurd tax system are what make higher rates and more welfare politically unpalatable and unattractive to Americans.

I believe that if America kept its relatively-low welfare and tax rates but improved its governance and tax system, it would be better off.

And I believe that if Europe kept its good governance and tax system but reduced its welfare state and taxation rates, it would be better off.

Alas, the politics don't seem conducive to either outcome, because good governance/taxation seems to make people tolerant of the welfare state, whereas maintaining enough popular outrage against state expansion seems to depend on having inefficient governance/taxation like America's.