The U. S. Welfare State

Believe it or not, people are writing about things other than Russia. For example, this post by Chris Pope at City Journal:

As part of a recent study on income disparities, Thomas Blanchet, Lucas Chancel, and Amory Gethin of the World Inequality Lab at the Paris School of Economics found that the United States “stands out as the country that redistributes the greatest fraction of national income to the bottom 50 percent.” This is not the American welfare state’s traditional reputation and seems to have come as a surprise to the left-leaning authors. How can it be so?

Government spending accounts for a smaller share of national income in the United States (35 percent) than in Europe (47 percent), but rates of public spending on education, health care, and benefits for the poor and disabled are similar. The greater cost of government in Europe results largely from its spending 11 percent more of national income on public pensions than the United States—which serves to crowd out private pensions that higher earners would have provided for themselves. To finance these state pensions, Europe imposes payroll and sales taxes at rates twice as high as in the United States. These additional taxes fall heavily on lower-income groups—making government bigger, while imposing higher costs on the poor.

summarizing:

For a while, the cost of the shift was masked by the rebound of ruined economies in the immediate postwar era. But over time, the expense of providing generous retirement benefits and comprehensive health-care services to all ballooned—tilting the bulk of government spending toward middle-class entitlements and eclipsing other spending priorities. France spends a much larger share of GDP (13.6 percent) on public pensions than does the United States (7.1 percent), owing to a lower retirement age (62 vs. 66) and disproportionately generous benefits for wealthier seniors. Yet, as 69 percent of American seniors receive private retirement benefits, incomes from private pensions in the U.S. (5.3 percent of GDP) are much higher than in France (0.3 percent), and the median disposable income of over-65s in the United States ($38,920) is also much higher than in France ($23,490).

There are some important differences. Health and education and, frankly, just about everything in which much of the payments come from the government, e.g. infrastructure, are much, much more expensive here than in just about any other OECD country. And a lot of the difference is because European countries are so heavily dependent on value-added taxes which, as they are implemented there, are very regressive.