The CEO of a major European bank says swelling the ranks of people dependent upon government may help to win elections but it sets nations on an irreversible decline into socialism.
Lars Christiansen is CEO at Denmark-based Saxo bank, which has a strong presence in many areas of Europe. He says the hallmarks of socialism are evident throughout Europe and increasingly in the U.S..
“European socialism is a system whereby there’s very generous entitlements, lot of social transfer payments (and) a tendency to victimize people so they go on social welfare instead of actually being active in the labor market,” said Christensen. “The real risk is when too large a component of the total population are on social transfer systems they become self-sustaining and increase simply because a very large part of the voter base will have no interest in promoting free markets and liberty but will have much more direct interest in increasing the size of government and state and of the transfer payments that they benefit from.”
Christensen says he fears the U.S. is determined to go down the same path despite seeing what happens in the end. He says many U.S. politicians who have a “romanticized view” of the public services people think are free and the ever-growing number of entitlement programs.
Hesays southern Europe is very far down this path, with Greece routinely teetering on the brink of insolvency and the likes of Spain and Italy heading closer to that chaos. But he says other areas of Europe are on the same road to failure. They just aren’t as far down that road.
“There’s only about 35 percent of the population that works in the private sector, generating all the necessary wealth for the entire system,” Christensen says of the people in his native Denmark. ” As you can imagine in a system where 65 percent of the voters basically have an intrinsic interest in receiving more from the government. That’s not a very healthy place to develop capitalist values and develop economic growth. It is not something to be envied. It is not something that is desirable. It’s important that the U.S. don’t go down that route.”
Denmark is nowhere near the debt crisis unfolding in Greece, but Christensen says that’s due to a massive tax burden which reaches 49 percent of gross domestic product compared to 27 percent in the U.S. To pay for greater entitlement programs, income taxes are at 60 percent in Denmark, capital gains rates are at 42 percent, a 25 percent sales tax and paying ten dollars per gallon of gasoline.
Christensen believes the upcoming elections will have a profound impact on the long term priorities of our nation, but he sees America with one major advantage that the other nations do not.
“It’s much more part of your nature to value freedom to value creativity to value toe American Dream. We don’t have much of that in Europe,” he said.