The bold part just means people can bludge, a significant problem in most socialist nations, including New Zealand where only 40% of the working population is actually working, and less than 50% of THEM make a significant contribution to the government's tax income.
And this statistic, on its own, means what, exactly? Some people are more productive than others? Is there some major benefit to keeping the least economically productive citizens employed? The mathematics are perfectly simple: given social security earnings even in the case of unemployment, the citizen will only work if the working earnings (minus taxes) exceed the social security earnings by an amount equal to his displeasure at having to work, which obviously will only effect the least productive or laziest citizens who would only be of marginal benefit to the economy anyway.
Corporations will employ as many people as need based on the marginal benefit additional those employees provide; there is no law of economics that guarantees universal employment, and the market always moves to fulfil demands, never to use resources (human or otherwise) just because they are there. In a free market 60 % of the population might simply be too unproductive to be worth employing...
AJ11 said:
And having an income tax in the 65-70% region does not make me want to excell and earn more. I'd rather do the minimum and spend the rest of my time playing Civ4. Not a good way to run a country or an economy.
That's not how it works. If the government takes 70% of your earnings and spends it all on golden toilets for the presidential palace you'd be substantially poorer and hardly have an incentive to take it easy, unless you want to claim that people living in third world kleptocracies somehow have it made.
For purposes of earnings growth the tax rate as such is irrelevant, what matters is the marginal tax rate increase on increased earnings: if the tax rate is flat your post-tax earnings will increase at the same rate as your pre-tax earnings and you have every incentive to increase them.
The problem of the poverty trap occurs if the benefit of increasing your earnings through work is less than the reduced earnings from both increased taxes and decreased social security earnings. That is merely an issue of proper design and a mathematically relatively easy problem to solve (although of course, a potential political nightmare); not something that's somehow endemic to the very existence of social security unless you want to claim it invariably leads to moral decay...
AJ11 said:
Lack of incentive to work to better oneself and in doing so, the nation, is a major problem with ANY socialist paradigm because socialism demands that someone (i.e., those who refuse to work) gains something for nothing. What point is there to work if the dole pays for my food, and everything else is taken care of (children's education, healthcare, etc.)? Why not have fun instead?
That is why socialist countries are generally screwed, whether economically (i.e., physically) or have indoctrinated their people to love mediocrity to the point of them being screwed mentally.
Well, there are also those who are incapable of work are therefore economically irrelevant - which becomes a moral issue.
As for fun on the dole, that's simple: you'll want to work if you want more fun than you can afford on social security. It's generally not paid in the form of yachts so if you want one, or most other luxury products, you'll have to work for it.
Which countries would you consider socialist anyway? Several Scandinavian countries combined very high income equality with high business competitiveness, high GDP per capita and often a higher level of social mobility than the USA. But apparently many people consider the US to be at least partially socialist... I assume Scandinavia qualifies?
