Insane - Unquestioning Heirarchical Auto

Why It's (Sometimes) OK to Pay More Taxes

Imagine, if you will, that there are only two countries. The first country, UCS (United Corporate States), values the market. The second country, EW (ElseWhere), tends to value people as much as the market. Neither value system is wrong, but let's imagine how they might view the price of a ham and cheese sandwich.

People in these countries live on three ham and cheese sandwiches a day, with equal proportions of bread, ham and cheese. The UCS sandwich costs:


And the EW sandwich costs:


So the EW sandwich unquestionably costs 25% more than the UCS sandwich. However, the EW cheese costs 100% more! At this point, the news networks in the UCS, all run by profit-making corporations, point out that YOU PAY TWICE AS MUCH FOR CHEESE! Of course, they go on to lament how difficult it is for people in EW to make ends meet and they find it very easy to find people in EW who lament that the price of cheese is so expensive because, since it's not a discretionary cost, they've no choice but to pay it.

But what's it really like in EW? Forget about the price of cheese for a moment and ask yourselves "what are people's lives like?" Well, as is pointed out in this simplistic example, the overall cost is only 25% higher, not 100% higher. And what do you get for that 25%? How about better protection when you're out of work? How about far, far less expensive healthcare? How about an inexpensive, and often free, university education (meaning that your long-term earnings are going to be higher)? In terms of overall quality of life, what do you get for the higher price of cheese?

The The 2010 Mercer Quality of Life Index lists the top 50 cities in the world. The majority of the top 25 are in Europe. You have to go all the way to number 31 (Honolulu) to hit a US city. Every year, International Living Magazine ranks 194 countries by their quality of life. Their 2010 index has 6 out of the top 10 countries in Europe (six countries do better than the USA, with France and their expensive cheese taxes topping the list for the fifth year in a row).

If you start doing quality of life research, you find out that, by most objective standards, the US does ok in terms of quality of life, but consistently loses out to other countries both in terms of average standard of living and is absolutely abysmal in terms of standard of living of the poor.

Why? Because the US is so focused on the price of cheese that it's not paying attention to how many people that sandwich can feed.

In other words, I don't want to hear "you pay higher taxes" spilling out of your mouth until you can tell me what life over here is really like. My wife, Leïla, went to university in France for seven years to earn a Master's Degree in French Law. She spent about €2,000 a year for that. Because she wanted better health care coverage, she spent €30 a month on that. If her parents were poor, she would have gone to university for free. Now tell me the average price of a Master's Degree in Law in the US. My ad-hoc research indicates that it's about ten times more expensive. And yes, my wife also earned a fat salary at the end of that. And her medical costs were covered. And if she wound up with no job, the safety net would take care of her.

Now are you worried about the price of cheese, or your quality of life? If you know nothing about economics (and if you think you do, let's talk about the cross-price elasticity of demand between health care and dead babies), know this: economics is about deciding the most efficient allocation of scarce resources. "Efficient" is often a value judgment, but to understand "allocation", you have to look at more than just taxes.

Update: Fixed some acronym typos that a few have pointed out.

  • Current Mood: thoughtful thoughtful
Re: Actewally ...
I liked how the UCS suddenly morphed into USM & even more tellingly, how ElseWhere suddenly turned into the EU- gotta love hypothetical examples... ;)
Something buggered about that list by the International Living Magazine...

Norway is ranked at 12th place, with a final score that's the same as Canada and Italy!


We don't even have the Mafia or bi-lingual government.
Probably the Lutefisk that pulled the score down.
Home-made chemical weapons of mass destruction probably aren't popular with the judges, even if it's mostly non-lethal...

BTW: I prefer a roast beef sanwich with shrimp salad and slies of pickled cucumbers...
And if you absolutely have to use Cheese, use Jarlsberg, not one of those French... whatever...

Edited at 2010-10-17 04:25 pm (UTC)
Dude, where's my country?
London and the UK both seem to rank pretty low on both lists. To (ab)use your analogy, our cheese costs as much as it does in other countries, if not more, yet it's not as tasty and doesn't seem to go as far.

Given that you've lived in the US, UK and in continental Europe, do you agree with how Mercer/ILM have ranked the UK, and where do you think the UK is going wrong when it comes to quality of life?
Re: Dude, where's my country?
I'd really have to dig in more to understand why they rate it like that, but I think a large part of the problem with the UK is what Leïla noticed when her job required her to attend Tory conferences. The Tories kept talking about how great America is and how much we have to emulate America. I think that starting with Maggie Thatcher, the balance between business and people was lost. Thatcher had no sense of proportion. If she saw £ notes, she thought it was good.

There's also the constant fiddling with the NHS and you John Major did a bang-up job of gutting British Rail. I need to find the stats again, but from what I saw, the UK now has to spend more money on subsidies for trains after the idiotic efforts in breaking up British Rail.
Well said.

Election season is here and I'm sick and tired of political ads. I no longer take anything they say at face value - I'm constantly yelling questions back at the television set, and taxes is something that always irks me. I shouldn't vote for someone because he'll raise taxes? Well, what are those taxes FOR? Because getting our freaking road fixed means a heck of a lot more to me than that extra $10 a month.
I want to repost this...

I value quality over quantity; whether it be money or life or whatever. I've done this analysis. For example, I could quit drinking and live longer... buy why? I enjoy drinking a lot. So it shortens my lifespan: a long boring life, or a happy, experience-dense life, which do you choose?

I know little about Europe other than what I hear. Currently, you're one of my primary sources. But this analogy nails things.

For the record, my 6 year-old degree cost me approximately 55,000$ for a Master's Degree; my ~25,000$ education was covered on a scholarship. Both of those degrees together I estimate would now cost about 125,000$, or about 800$/month. The Bachelor's degree maxed out my earnings at 35,000$/yr; a combination of luck and experience with that Master's degree has led to me doubling that in the last 2 years; most jobs I had, though, until 2007 never broke the 30s.

This is the sort of serfdom/quality of life issues I have with the US and why I want out so badly. Our food quality sucks, our environmental regulation sucks, our culture is the lack thereof... etc. etc. Even with education, there are few opportunities for people who aren't already rich; the way to make money in this country is to have money already—it's called entrepreneurialism. Those chasing after dollars usually are just as unhappy as those without money, you can just pay for booze to deal with it...

Quality man, I want it.

Edited at 2010-10-19 11:07 pm (UTC)