The Gathering Storm of Class Warfare in Europe – Marcus Cole in Hamburg, Germany

by Marcus Cole.

This week, as I and hundreds of other travelers in Europe remain stranded under clear blue skies full of invisible volcanic ash, a different, more ominous cloud is gathering all over Europe. The weekly current affairs magazine, Elsevier, (the Dutch equivalent of the Economist or U.S. News & World Report) ran a cover story on the increasing pressure to raise tax rates on Europeans earning the highest incomes. With national income tax rates already exceeding 50 per cent on income over € 52,000, Nederlanders already bear the third highest tax burden in Europe, just behind Sweden and Denmark. Now the left in the Tweede Kamer (the Dutch equivalent of the House of Commons) is pushing for more, as well as elimination of the home mortgage interest deduction, largely seen as a loophole for the middle and upper classes.

In the U.K., observers were startled by the results of the first televised Leaders Debate last week, where by all accounts Liberal Democrat Nick Clegg won by a landslide. Clegg now harbors increasingly realistic ambitions of becoming the first Prime Minister from outside either the Tory or Labour parties since David Lloyd George left office in 1922. Clegg’s Liberal Democrats lead in a recent poll by the Sun with 33%, compared to 32% for the Tories and 26% for Labour. Clegg promises to cut taxes for the working classes while dramatically increasing taxes on capital gains. The only response that Conservative leader David Cameron could muster was a warning that votes for the Liberal Democrats would allow Labour’s Gordon Brown to “limp on” in power, assuming that the desire for “change” will translate into a vote for the Conservatives.

These movements in Europe are not isolated. They reflect an increasing mood to attack the higher income classes as the source of the current economic woes sweeping across the continent. In the past, educated and ambitious Europeans could escape class warfare by fleeing to the United States. But with an American administration seemingly sympathetic to European social welfare sensibilities, where will European talent turn for shelter from the gathering storm?

6 thoughts on “The Gathering Storm of Class Warfare in Europe – Marcus Cole in Hamburg, Germany

  1. Suisse, at least, that’s the last haven in Europe for me (being German speaking). Other rich guys might want to look into Eastern European countries that still have flat taxes and as such might resist a little longer.

    Aside from that there are only a few options left and none of them have the advantage of being next to Europe (they might to prefer to have some connection back home).

    However, it is indeed a dire situation Europe is in and they will surely lose some creative and entrepreneural capital by attacking the rich and successful. Already the rigid labour markets do supress creativity and an incentive to work, not only for low income people, but also for academics and mid- to upper salary workers.

    On the up side (if you can call it that way), the more closed-minded the official market will get, the more widely-used will be the black market for labour and everything else. Already, people who are officially uninsured are working at the same time (of course to below “official” market rates).

  2. Given that many European countries just witnessed one of the largest transfers of wealth from the lower-middle incomes to the upper incomes in the financial industries bail-outs, these political sentiments should not be surprising. In Europe upper *incomes* generally are the result of rent-seeking and connections, so this is not really an assault on creative and entrepeneurial capital. And most labor markets in Northwestern Europe are extremely flexibel. (Holland, for example, has highest number of temporary workers in the world.)

  3. Eric, do you see the situation as you describe it in Europe as substantially different from that of the United States?

  4. Dear Jim,
    I think the situation is only partially identical in Europe and the US; in both cases the financial system bail-out rewarded the upper classes (and those that live of their consumption) at the expense of the have-nots. However, I suspect the US has more genuine entrepeneurial activity.

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