When real research shown on http://en.wikipedia.org/wiki/IQ_and_Global_Inequality says IQ-average in nations of Africa show figures from 59-84 and IQ-average in the Middle East shows 83-87 I would think that a German in a nation with IQ-average of 99 is able to understand that total average IQ resulted from a weighed average with the presence descendants’ original regions as weighs shall be drawn down even though you might have a non-mathematically background. The last comment I hope you accept as sarcasm.

“Socialhilfe” in Germany 300%, In Denmark 330% when you take amount of welfare (proved by the official Welfare Commission) implies the folowing:

Germany : x/(1-x) * 0,90/0,10 = 3,00 result in x = 25 percent of all “Socialhilfe”

if Germany has 10% immigrants – when the German statistics have been corrected, eventually from Denmark. Notice: births of foreign citizens and births of naturalised (children after “die Einbürgerungen”) are not included in what you read from Statistisches Bundesamt. It matters if you agree that a letter from Bundesamt does not change the identity of an individual and their children.

In Denmark 330% when you take all amounts of welfare of payments/tranfers and wage to public service staff included and all foreign descendants (proved by the official Danish Welfare Commission) analogic implies the following:

Denmark: x/(1-x) * 0,877/0,123 = 3,30 result in x = 31,6 percent of all amounts of public welfare

This is also a 100% correct use of mathematics or a true
projection of universial bricks, even though it is at least 101%
politically incorrect

Joern E. Vig
http://Danmark.Wordpress.com

Ireland in 2004/2005? Please, give 2009 numbers!

We can't expect any financial model to reach perfection, we are still too far from that but what we can do is to constantly find better ways to make economy work. I doubt that mixing different economical levels will bring anything good, I think it would only bring confusion. Each country has it's own financial pattern, changing that pattern is very hard work that takes time and it's not a guarantee that things will get better. We can only work on improvements.
Alaman, finance los Angeles

The Author did a great job. This kind of short, incisive and informative articles is what is needed to launch debates among informed readers and decision-makers.

The Irish model is almost totally unknown here in Italy, but it could be exactly what is needed by our suffering, overburden economy.

Best,

F.

EU subsidy has helped us in Ireland, in that it has allowed the country to reduce taxes without hampering infrastructural development.

I make no bones about it; EU subsidies have been vital to Ireland. Every piece of capital infrastructure being built in the Country has a big blue "supported by the EU" sign on it. I mean everything- Schools, Hospitals, Roads, Bus Stations and beyond.

Ireland's model, none the less, shows the potential for rapid growth which can come from a low taxation structure. As has been outlined in some of the other comments, many other areas have seen similar levels of aid from the EU without experiencing the growth. One important point overlooked in the article is intent; Ireland's economy grew massively, which was the intention, but the Scandinavian model is not intended to stimulate growth.

Ireland was starting from a very low level, so rapid growth was both possible and necessary. Scandinavian countries were coming from a stronger starting point. The intent of their high-tax economy is to reduce inequity. Sweden, for example with a tax burden of 61%, uses it's tax system to take money away from the individual and towards the good of the community. This works for Sweden as it's citizens have a (relatively) high standard of living. Ireland, on the other hand, used a reduced tax burden to incentivise individuals to become more productive, as they would then benefit highly on an individual level.

We're happy with our growth in Ireland, but I'm sure that many Swedes are happy with how their country is going. The two models are different in their result, but they are also different in intent. That's the big difference that has been overlooked in an otherwise excellent piece of writing.

I don't mean to negate your analysis entirely, but one must also consider the factors that Ireland was coming from such a poor and, importantly, agricultural economy. People moving consistently from small agriculture into other sectors is bound to generate growth, regardless of taxation model. Then there is our low tax to encourage foreign investement. Finally, there is our relative openness to immigration, and returning exile community. These factors are easing off now, and we'll see how growth is affected.

I think that the Swedish bureaucrats should pay a visit to e.g., Ireland or Estonia, before it is too late...

All the Best,

Martin Lindeskog - American in spirit.
Gothenburg, Sweden.

I like your article and agree with its main thesis, however, there are some statistical peculiarities with regard to Ireland that you should address to strengthen your argument.

Ireland, because of it's low wage, low tax status within the EU, has attracted a tremendous amount of foreign investment in recent years. Many of these investments have been highly profitable, with many foreign multinationals using Ireland as the manufacturing and services base to serve the EU market.

Now this is all well and good for the Irish economy, and has led to a significant growth in high wage employment. But the profits earned by foreign companies in Ireland are counted as part of Ireland's GDP. Earnings by foreign-owned enterprises are counted in all countries' GDP, but for most developed economies, the difference between GDP and GNP (or net national product, which is the current term, I believe) is not significant. For Ireland, however, the gap between GDP and NNP is (I recall), something like 20% or 25%.

I looked at this a few months ago when Thomas Friedman wrote favorably about the Irish economy in his NYT column. I meant to write it about it then, but never followed up. Hopefully you can address this issue properly.

All the best.

but there is a practical problem in taxing consumption in a country like Belgium. It is very easy to cross borders for shopping. In my case it makes 25 km to get to Holland and 45 to France. It is already a common practice amongst many Belgians to go to France on friday evening for shopping. The proposed measures should have to be implemented on a larger geographical scale.

"[G]overnment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Remarks to the White House Conference on Small Business, August 15, 1986 "
http://www.presidentreagan.info/speeches/quotes.cfm

"How do you tell a Communist? Well, it's someone who reads Marx and Lenin. And how do you tell an anti-Communist? It's someone who understands Marx and Lenin.

Remarks in Arlington, Virginia, September 25, 1987 "

"Government growing beyond our consent had become a lumbering giant, slamming shut the gates of opportunity, threatening to crush the very roots of our freedom. What brought America back? The American people brought us back -- with quiet courage and common sense; with undying faith that in this nation under God the future will be ours, for the future belongs to the free.

State of the Union Address, February 4, 1986 "

History teaches that wars begin when governments believe the price of aggression is cheap.

Address to the nation, January 16, 1984

Excellent article which is very well illustrated. Too often, economic reports are difficult for the ordinary layperson to understand which is why clear illustrations showing the inverse relationship between high taxation and low economic growth are so important. The reality is that what you tax, your get less of, and what you subsidize, you get more of, which is why here in Canada we are overwhelmed with all the bad polcies and social pathologies of the centralized, welfare state. And I fear that Canadians, already brainwashed by the education system and MSM, are about to be bought off again with their own money in the upcoming Nationa election. It boggles the mind.

Interesting article but it's not really news. Ronald Reagan did the same thing in the USA in the 1980s. It boils down to tax what you don't want. If you don't want jobs, savings, citizens with disposable income to fuel a country's economy, raise taxes. If you want to encourage something, don't tax it.

This is a great article, well researched and well written. It needs to be translated and distributed as widely as possible not only in europe but throughout the world.
It is inconceivable that even in the US the Left is denying the reality of the benefits of lower taxation on labor and income. Everytime and everywhere such tax rates are reduced, they result in higher growth and higher tax revenues. The limitations come from the disproven idea of "static budgeting".

I've had a discussion with someone in Ireland about their economic turn-around. While I pointed to the liberalization of government and labor laws, she responded that it was all due to EU investment.

I think that is one reason why Ireland is not held up as a model. The conventional European wisdom is that Ireland's growth is due to the largesse lavished on Ireland by the European Union. With that alternate explanation readily at hand, no one in Europe needs to look further at Americanization of an economy as the reason for rapid growth.

Of course, Greece also had piles of European cash flowing in, and they aren't exactly booming.