Sunday, July 31, 2011

US Tax Revenues as a Percentage of GDP (Gross Domestic Product) Lag Far Behind the EU European Union Member Nations and OECD Countries

We love America as the country of our youth, but why does one get the impression when one now visits the USA that so little has been done there in the last 40 years?

Indeed, has the United States in some respects sunk economically to the level of a 3rd-world banana republic? Read Ray B. Williams in Wired for Success at Psychology Today online for some hair-raising stats about Why America Is In Decline.

The graphic below shows an integral part of the American problem, which stems from antiquated, unrealistic, nostalgic misconceptions about the nature of modern government, its means of financing and its tax system. Constitutional originalists may yearn for the good old days, but economically seen, that kind of nostalgic sentiment is a formula for future disaster.

Take a look at the graphic below from the Wikimedia Commons
showing Tax Revenues as a Percentage of GDP (Gross Domestic Product)



It is hard for a realist to comprehend how America hopes to police the globe militarily (recent wars have cost about as much as the federal deficit) and keep up with the rest of the world economically, when its own federal government has -- relatively speaking -- much less tax revenue money available than the rest of the civilized, industrial nations on our planet. America is trying to do twice as much on half the money. It is not going to work long-term.

Indeed, realistic analysis leads to the conclusion that it is impossible for America to maintain its world standing under its current system of under-taxation and the correlated under-financing of its federal government.

In fact, America is losing and has been losing its position of world power since about 1970, when the need to import oil began. America became energy-dependent on others, and that has been expensive for an energy culture living in bygone days when oil and gas were locally abundant and cheap. No more.

See Oil & Gas Cartels and American Inertia on Energy Issues : Major Culprits for the Current Economic Situation in the World?

See Europe vs. the USA : A European Economic Model? — Crooked Timber on Manzi : BloggingHeads : Henry Farrell & Daniel Drezner discuss Cohen & DeLong

Well-meaning but totally misguided Republicans in the present U.S. Congress think they have some kind of magic solution for accomplishing more with less, but they are kidding both themselves and the American citizens.

When you have less money you have less money, and sooner or later, the shoe is going to squeeze your foot, as is happening in the current debt crisis. Jobs and revenues are scarce and political entities must react to the realities.

One aspect of America's problems is that they are listening to the wrong people. Take a look at the skewed Europe Is Warning Us at TownHall.com by a writer who got his Ph.D. in Classics, hardly an expertise in law, government, economics, foreign policy or political science. America is full of opinionated poorly informed commentators who are short on facts.

As Bernd Debusmann writes at Reuters in The Great Debate: Who wins in U.S. vs Europe contest?:
"In these days of renewed gloom about the future of Europe, a quick test is in order. Who has the world’s biggest economy? A) The United States B) China/Asia C) Europe? Who has the most Fortune 500 companies? A) The United States B) China C) Europe. Who attracts most U.S. investment? A) Europe B) China C) Asia.

The correct answer in each case is Europe, short for the 27-member European Union (EU), a region with 500 million citizens. They produce an economy almost as large as the United States and China combined.... " [emphasis added by LawPundit]
The LawPundit lives in Europe and most of what is written about Europe in that TownHall.com posting above is just nonsense. The American economy is floundering, while the average European lives at a much higher standard of living, culturally and economically, than your average American, in spite of much higher taxes -- and indeed, in part because of higher taxes and because of much greater income equality. See USA National Debt: WHO Are the Investors? What Role Tax Cuts in the Federal Deficit? The Bane of Income Inequality in the USA.

As a visitor of ours to Germany recently asked: "where do the poor live?", not having seen any. We answered: "there are none, at least, none in the sense you seek". We take care of our own. That is a difference in worlds, folks.

Indeed, America's position in the hierarchy of the nations of the world has changed dramatically in past decades. America maintains its position of world power only because of military superiority and because of a superb educational system at the top institutions of learning. In many other aspects of life, economics and culture, the USA is lagging further and further behind. As written in How Europe Sees America about a survey of world opinions about the USA and its cultural influence:
"In total, more respondents (39%) said America's cultural influence in the world was negative than those who said it was positive (22%). Among European respondents, 32% said U.S. cultural influence was negative, compared to 26% who gave a positive response."
We wrote about this cultural decline previously at America: A Disordered Culture and Country: Peggy Noonan at the WSJ asks What the World Sees in America: Also the Good: Agriculture, Defense, Computers, Airlines.

Articles like those at TownHall.com are the blind leading the blind. For example, we were in the USA recently and were appalled at the shoddy mechanical condition of the commercial airplanes at major US airlines, as compared to European carriers. We know commercial jet pilots here in Europe who state unabashedly that visiting America can hardly be distinguished any more from visiting 3rd world countries.

Wake up, America. Wake up,
and,
above all,
Grow up, America. Grow up.
The world has changed.
Take notice if you want to survive and prosper.
Things will not improve by living in a dream world.

The ISandIS Network

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