Should America look up to Europe? For many Americans, it seems like Europe is the paradise continent with high salaries, good education, and free healthcare. So they advocate for the US to adopt a “European Model”—tax and tax, spend and spend, regulate and regulate. Politicians like Senator Bernie Sanders, Congresswoman Alexandria Ocasio-Cortez, and New York Mayor Zohran Mamdani are pushing for a 70% top tax rate, Medicare-for-All, and strict bank and business regulation. But does the European model really work?

Every dollar of government spending comes from taxes, either directly or indirectly, so high government welfare spending (funded through high taxes) inhibits job creation, and employers move to lower-tax jurisdictions. Consequently, countries with massive welfare states like Sweden, France, and Belgium have high unemployment—approximately 9%, 8%, and 6%,respectively.

Welfare also disincentivizes people from working, as employment will cause many to lose their recipient status. So for people who receive benefits, it is more profitable (at least in the short term) simply to stay on welfare. In 1965 Germany, before the massive expansion of the welfare state by Willy Brandt’s government, only 1........

© Eurasia Review