The welfare state was always simply an illusion

Great article by Mark Milke of the Fraser Institute. Excerpt:

"In 1995, Greece's net liabilities already amounted to 81 per cent of GDP. (A country's net liabilities are arrived at by subtracting assets from liabilities; GDP is the value of a country's economy). Back then, Canada's net-debt-to-GDP figure was 71 per cent; Italy stood at 99 per cent; France, Germany and the United Kingdom had net liabilities of 38, 30 and 26 per cent respectively. Portugal's was 24 per cent and the U.S. debt figure was 54 per cent of GDP.

Fast forward to 2011 and all the countries on that list are deeper in debt as a percentage of GDP, save Canada: Greece: 125 per cent; Italy: 101 per cent; France: 60 per cent; Germany: 50 per cent; Portugal: 76 per cent; the United Kingdom: 62 per cent; the United States: 75 per cent.

In Canada, our net liabilities are 34 per cent of GDP, substantially down from 1995, though up from the low-point in 2008 when the figure was just 22 per cent. (Between 1995 and 2008, our lowered ratio was helped both by a growing economy and some debt payback. Most other countries just kept borrowing.)

For the record, the fault for the ramped-up public debt cannot be placed on "too low" taxes. A variety of countries with widely differing tax levels all continued to borrow massively over that period.

For example, since 1995, and as a percentage of its economy, Greece's total tax take has been about one eighth to one-fifth higher than the United States (depending on the year). But high-tax Greece put itself into more debt as did the (relatively) low-tax U.S. Or consider the U.K. Its tax rates rose steadily since 1995, but so too its red-ink problem.

In other words, the assumption that higher tax revenues will save a country from its spending and borrowing addiction is mistaken. That's not any more likely than a modest raise for a consumer maxed out on her credit cards whose real problem is overspending.

Besides, higher tax rates do not necessarily equal higher revenues when compared with a moderately taxed nation. A high-tax, inefficient tax regime can slow economic growth and encourage tax cheating and depress tax receipts - another one of Greece's many problems, actually."