Virtually speaking, every economy in the world lies under two different categories: the state capitalism or the private capitalism. As a matter of fact, those countries that do not fall under the two categories represents mixed economies that encompasses both extremes and a good example includes the sovereign state of America.
The European counterparts such as Denmark, Norway and the USSR either fall under the two extremities. On the other hand, countries that are perceived to be socialists do not have workers running the business of production. Why then is America not flinched by the socialism deeply rooted in some of the European countries?
The Denmark former minister of finance- Mogens Lykketoft at one point gave out a statement that spoke volumes. Mogens set forth a plan to actively improve tax intake in the country and after making the reforms, he noted that despite the numerous state efforts put in place to curb socialism, the number of socialists in Denmark will never come down. This action by the minister shows his commitment towards eradicating the notion of capitalism. Furthermore, capitalists in Denmark hold the minority position and the country is on a quest to become ‘state minded’.
Denmark is definitely grappling with the grave effects of their tolerance towards capitalism. This minority group do not contribute much towards the generation of the necessary revenues to run the state welfare. As a matter of fact, its ranks high in terms of total tax pressure, surpassing the European average which is arguably high enough. It is worth noting that the private sector generally contributes a lot in the economy of any given state, however Denmark has the least private sector in the whole of Europe, the only one that holds the big public sector in the country.
It is rather ironical and somewhat far-fetched of Denmark to provide a very generous income package to its employed and unemployed citizens that nearly equates the salary earned by full time workers in the private sector in majority of European states. At that rate, the country has to increase the tax revenues to levels that has never been achieved by any other country in the world. Majority of the country’s population is either unemployed or working in the public sector, and if a citizen don’t fall under the two categories, then they benefit from a community pay plan. The sick also add pressure to the little tax revenue that is generated.
A little over 20 percent of the population does not depend on the transfer payments made by the state. However, out of the 20 %, a considerable chunk relies on free medical services, subsidized housing or lower childcare costs. In essence, the whole population is virtually dependent on the government through one way or another. In the long run, the ballooning public expenditure will reach a level that is unmanageable.
Generally speaking, the western countries believe that a social welfare community risks endangering the business health of a country. America, for example is among the leading economies of the world because it has managed its public expenditure and has nurtured an independent culture among its citizens.