by 
There
is
currently
a
significant
shift
happening
in
the
USA,
with
cuts
to
government
expenditure,
and
ambitions
to
reduce
the
regulatory
burden.
This
creates
institutional
pressure
for
reforms
of
taxation,
government
spending
and
regulation
also
across
the
Atlantic.
The
large
European
countries
which
are
today
stagnating,
have
in
fact
numerous
reasons
to
reform
their
tax
and
regulatory
burdens.
The
first
reason
is
that
stagnation
is
the
result
of
the
high
tax
levels.
During
the
2010s,
those
advanced
economies
that
had
a
lower
tax
burden
had
more
economic
growth.
The
same
was
true
in
the
2000s,
the
1990s,
the
1980s
and
the
1970s.
The
pattern
that
low
taxes
stimulate
growth
is
a
common
theme
in
human
history.
In
accordance
with
this
pattern,
none
of
the
high
tax
European
economies
are
thriving
with
prosperity
growth
currently.
Compared
to
the
USA,
the
large
European
economies
have
stagnated
in
prosperity
growth
for
a
couple
of
decades
already.
They
are
expected
to
keep
behind
in
growth
until
2029,
yet
this
is
not
true
of
all
European
countries.
If
we
focus
on
the
Mediterranean
nations
indeed
Italy,
France,
Greece
and
Spain
all
are
expected
to
lag
behind
the
USA
in
growth
also
in
the
coming
years.
Portugal
is
however
estimated
to
grow
similarly
to
the
USA
while
Slovenia
and
Croatia
are
expected
to
outpace
it.
Malta
and
Cyprus
are
expected
to
significantly
outpace
the
USA
in
growth.
The
pattern
is
that
the
smaller
European
economies,
which
are
the
ones
offering
low
taxes
and
business
friendly
policies,
are
growing.
In
this
column
this
is
shown
for
the
Mediterranean
regions,
but
the
same
holds
true
in
northern
Europe
–
where
for
example
Estonia
and
Ireland
are
growing
while
Germany
and
the
UK
are
stagnating.
The
large
European
economies
are
being
stressed
by
the
USA
growing
faster
than
them,
while
also
their
smaller
neighbors
are
attracting
talents,
businesses
and
investments.
The
smaller
European
nations
typically
have
more
nimble
government
sectors
reducing
the
taxation
burden.
Also,
less
public
expenditure
means
less
crowding
out
of
private
sector
activity.
European
nations
are
competing
to
attract
knowledge
intensive
jobs.
A
comparison
of
the
Mediterranean
region
shows
that
Greece,
where
Plato
created
the
first
Western
institution
of
higher
learning
2,400
years
ago,
has
the
lowest
share
of
adults
employed
in
very
knowledge
intensive
jobs.
Spain
and
Italy
also
have
low
rates,
as
does
France.
Many
of
the
great
universities
through
history
have
developed
in
the
three
latter
countries,
and
they
are
home
to
some
of
the
greatest
artists
in
history
–
but
these
nations
are
despite
their
deep
history
of
human
civilization
behind
in
the
Mediterranean
knowledge
intensive
race.
Croatia
and
Portugal
have
a
relatively
high
share
of
adults
employed
in
highly
knowledge-intensive
jobs.
Cyprus
and
Slovenia
have
an
even
higher
share.
Malta
is
the
leading
knowledge
intensive
hub
of
the
Mediterranean.
The
smaller
European
countries,
with
lower
taxes
and
more
business-friendly
policies,
are
attracting
more
knowledge
intensive
jobs.
The
European
nations
with
higher
taxes
are
falling
behind
in
growth,
and
in
the
knowledge
intensive
jobs
race.
They
are
not
benefiting
from
better
welfare,
as
a
result,
though.
In
fact,
even
in
this
regard
the
lower
tax
countries
tend
to
fare
better.
As
we
show
in
an
up-coming
book
with
Professor
Stefan
Fölster,
systematically
today
the
pattern
is
also
that
countries
with
a
lower
tax
burden
have
the
best
welfare
results.
Particularly
education
and
labour
market
welfare
are
better
in
low
tax
countries,
health
is
similar
but
the
top
ranking
countries
with
longest
life
spans
are
today
low
tax
nations.
In
Europe
Malta
is
leading
the
healthy
life
expectancy
league.
High
tax
Denmark,
on
the
other
hand
has
least
healthy
life
years
expected
for
women
and
amongst
the
least
for
men.
This
is
probably
interesting
for
Americans,
who
are
interested
in
comparing
the
welfare
outcomes
of
different
European
systems.
Denmark
has
the
advantage
of
having
been
a
rich
developed
economy
for
long
and
having
high
taxes.
Malta
has
the
benefit
of
good
climate
combined
with
low
taxes,
despite
historically
being
behind
in
development
it
is
catching
up
in
prosperity
as
well
as
welfare
outcomes.
The
Mediterranean
climate
might
help,
but
nonetheless
the
pattern
is
that
low
taxes
might
give
more
for
less
burden.
Malta
with
lower
taxes
is
leading
the
healthy
life
expectancy,
while
the
high
tax
Danish
welfare
state
is
at
the
bottom.
The
large
economies
in
Europe
are
stressed,
since
they
are
being
outrun
by
the
USA
in
growth
and
reform
pace,
and
since
they
are
in
Europe
being
outrun
in
prosperity,
knowledge
jobs
and
welfare
outcomes.
This
stress
is
ultimately
good,
since
it
will
allow
for
growth
inducing
reforms,
for
the
large
European
economies
to
escape
stagnation.
Europe
already
has
a
thriving
free
market
model,
it
works
great
in
the
smaller
nations
in
delivering
welfare,
prosperity
and
knowledge
intensity.
Through
the
institutional
competition
that
through
the
millennia
has
the
hallmark
of
European
success,
growth-inducing
policies
will
spread.
Nima
Sanandaji,
Director,
European
Centre
for
Entrepreneurship
and
Policy
Reform
(ECEPR)
Graphs:
courtesy
the
author.
Go to Source
Author: Nima Sanandaji
