Inevitable Expenses

Over at the New York Times, Bruce Bartlett has a column on tax burdens across developed countries. His chart shows rather clearly that the US has pretty much the lowest tax burden in the developed world (depending on whether you consider Turkey, Chile and Mexico, the only nations with lower burdens, part of the developed world or not).

He goes on to talk about how, while we all know that death and taxes are inescapable, paying for our health care is also inescapable. In Europe, of course, taxes pay for the lion's share of the health care, while here that is only true for the poor and elderly. The rest of us pay personally, whether directly or in the form of lower salaries. If you combine both of these inescapable costs, our tax+health care burden in United States rises to very near the average for the countries that are part of the Organization for Economic Co-operation and Development (O.E.C.D.).

But why stop there? There is one other major service that many European countries provide that we normally pay for here in the United States: education. Those that attend college in the United States pay a steep price that can run into six figures for a degree, while in Denmark, for instance, not only is post-secondary education free, but many students also receive a stipend to help with living expenses. And while a whole society benefits if higher education is more readily available, not only because the better educated generally earn more money and pay more taxes, I think that in many European countries the less educated also directly benefit.

After all, our education system consistently ranks as one of the worst in the developed world. It's no secret that while our university system is outstanding, our public K-12 system is in such a shambles that in many areas of the country almost everyone who can afford it sends their children to private schools. And in our current economic downturn, school budgets and teachers' jobs are being cut at unprecedented rates in many states. I know that part of the failure on this level is simply inefficient spending, especially on pensions and on tenured ineffective teachers, but a lot also has to do with the fact that we're not willing to pay for our best and brightest to become teachers, as they do in countries with the best K-12 systems like Singapore and Finland.

I don't think anyone can calculate the combined out-of-pocket expenses and lost opportunity cost our educational system engenders. But I'm absolutely certain that if we could somehow calculate and tabulate it as we have for health care costs, we would find that the education+health care+taxes trio of inevitable expenses born by our citizenry is comparatively much higher than in the chart above.

And if you don't think education is an inevitable expense, try thinking about what would happen if we stopped investing in it altogether.

The point is, whatever some people would have you believe, the overall tax burden is irrelevant. The only thing that matters is how efficiently a country divides its resources. Certain things the government does better, and certain things private enterprise does better.