I and my family have had the unusual opportunity to live for a long period (nearly 36 years, we are not just tourists) in a socialist country. By this, I do not mean one of the socialist totalitarian countries (such as Cuba), but rather a democratic country with a more mixed economy. It is of a type which I think that most of our liberals have in mind when they endorse socialism (our radical left is a different thing). We live in the small country of Belgium and have close ties with Germany (family and earlier professional ties) and close familiarity with the Netherlands (about a mile away from where we live). I think that this gives me a basis to describe the pros and the cons of this type of socialism.

Benefits

Medical

Since the medical system in the USA is a topic of extreme interest, I will start with a discussion of the Belgian system. The Belgians are proud of their system and from my knowledge of the German, Dutch and British systems, I think that this pride is justified. In Belgium, a basic principal is that no one should be denied medical care. I should add that all these systems practice an extremely high standard of medicine. Quality of care is not a factor.

Do note that I have used the term “system” as it is far more than simply insurance. It does encompass insurance, but also the university system and the legal system to mention only two of the most significant components. Additionally, the tax system and the employment system are major factors.

You, as a patient

What I next describe will seem like heaven to many of you.

In Belgium, all covered fees (e.g. cosmetic surgery is not normally covered) are set by law. Most patients pay this fee at the time of the visit and are quickly (in my experience, 2 to 3 days) reimbursed for a portion of the fee. The very poor do not have to make this payment. Here are the costs based on my recent experience:

Type	Fee (in Euro)	Reimbursed (in Euro)	Net (in dollars)
General Practitioner	€ 27.00	€ 14.78	$ 14.25
Specialist	€ 50.00	€ 28.79	$ 25.10
Dentist (inspect & clean)	€ 71.50	€ 54.50	$ 20.10

We have been fortunate not to have had any recent hospital stays, but several years ago my wife had abdominal surgery for a tumor (benign) and the total cost (hospital, doctors, imaging, medication, etc.) was in the area of 4,000 € (then about $4,200). My wife is in the German system as she had worked in Germany and she was largely reimbursed for this – it took a little longer.

You may ask what medical insurance costs. Since I am retired, I pay the princely sum of € 22.35 (about $24) per quarter. I have been retired for several years, but (based on memory) I paid about € 1,500 per quarter then. I should add that having medical insurance is not optional, everybody must have insurance.

Rationing

I should add that in Belgium you generally do not have long waiting times (such as in the Netherlands and the United Kingdom). You can generally see your General Practitioner (GP) whenever you want (in the current COVID times they typically want an appointment so that their waiting rooms do not become crowded). I should add that in general, GPs work long hours and even make house calls. If your GP thinks that you need to see a specialist quickly, they can normally arrange this within a few days. If you make your own arrangements to see a specialist, this can take anything from a week to 2 or 3 months depending on the specialization.

Cost Controls

Costs are tightly controlled. Not only are the doctors’ fees set for out-patients, the fees are set for each covered procedure. Doctors love you to have a private room in the hospital as then they can charge 2 times the normal fee (in exceptional cases, 3 times); some of the best-known specialists require you take a private room. Costs for medicines are negotiated with the pharmaceutical firm and are generally much lower than in the USA. There are medicines which are not subsidized, and you may be able to buy them at “full price”. If they are not available in Belgium (we have never experienced this ourselves, but some friends have) you may be able to buy them in one of the neighboring countries. The number of doctors and hospitals is tightly controlled.

Limits on numbers

In the Flemish part of Belgium (where we live), prospective medical students are required to pass an exam before being admitted to the University and the number of slots is limited. To practice medicine you need a license (not unexpected), but these are limited in number (if you passed the entrance exam and successfully graduated from a Belgian university you automatically fall within the quota). In Wallonia they do not have the entrance exam, but they do limit the number of licenses.

If you do not qualify for an automatic license (for instance you studied in a different country), you may still get one if there is a need for a doctor of your type in the location you wish to work in. Otherwise, you may work in research or an insurance company or somewhere else that needs medical expertise but does not require working with patients and interacting with the insurance payment system.

How do doctors survive?

You may think that Belgian doctors are near starvation if you consider all the restrictions on fees. However, there are two main things which greatly reduce the cost of being a doctor.

First, the universities are free (not just for doctors). They do not start their career with a load of debt to pay off. The main costs for sending your son or daughter to university are those for room and board.

Second, they do not have to carry expensive malpractice insurance. It is possible to sue a doctor for malpractice, but it is rarely done. To press a case, you have to find another doctor who will testify against your doctor. Should you find one, your potential pay-out is very limited. I do not have current information, but when I researched this 12 years ago, the maximum was € 120 per day for the period of your disability plus the costs of a new operation if applicable. You do not have many lawyers seeking this type of work.

To sum this up, doctors have a comfortable income and usually live better than the average Belgian, but they do not become wealthy purely by the practice of medicine.

Other Social Benefits

The medical system is only one aspect of the total social system. I already referred to free education (for the students), but there are also unemployment benefits (too generous in my opinion – there are no time limits and the gap between what you receive for not working and what you receive for working is too small), government pensions (too small – if this is your only source in old age you are on the edge of poverty), job security benefits (too generous – they put a damper on hiring and cause more unemployment) and so on. It is an all-encompassing system, but since almost everybody receives some benefit from the government, there is little pressure to change anything.

Taxes

All of this must be paid for somehow. Taxes of many sorts are a large part of the equation (the other part is debt). As in most countries, taxes are extremely complicated, what follows is simply an outline. I must say that I am not anything approaching a tax expert (but I did consult one).

Personal Income Tax

The first tax we usually think about is income tax. The first 7-8 thousand euros (or more when children) are tax free; in the following table I have used the average. There is also a city tax which adds an average of 7% of the federal tax. Here are the Belgian basic rates:

Income band	Exemption	Effective Band	In US dollars	Federal Tax rate	Total Tax rate
Up to € 13,250	€ 7,500	€ 7,500 – € 20,750	$ 8,800 – $ 24,380	25%	26.8%
€ 13,250 – € 23,390	€ 7,500	€ 20,750 – € 30,890	$ 24,380 – $ 36,300	40%	42.8%
€ 23,390 – € 40,480	€ 7,500	€ 30,890 – € 47,980	$ 36,300 – $ 56,380	45%	48.2%
€ 40,480 and above	€ 7,500	€ 47,980 and above	$ 56,380 and above	50%	53.5%

You see that even a modest income is very heavily taxed, but people with very high incomes are not taxed more than those which we would count as middle class.

Value Added Tax (VAT)

We can think of VAT as a sort of sales tax on steroids. I do not know of a European country that does not have this system in place as it provides a source of income that is very difficult to avoid, it is largely invisible to the consumer, and it provides a great deal of information about the operations of companies (which makes it more difficult for them to avoid taxes). The tax is applied at each step in a supply chain and it is collected by the “private company” and reported to the government at each step in the chain.

Here is a very simplified example:

You pick an apple and sell it to a wholesaler who then sells it to a grocer who then sells it to someone.

• The act of picking the apple added value to the apple and this value is taxed (let us say 10%).
• You and the wholesaler agree that the apple is worth $1.00 but the actual price you get for your work is 91¢ (at this stage) and the government gets 9¢.
• The wholesaler accumulates a lot of apples and transports them to the grocer, this adds value to the apple and the added value is taxed.
• The grocer agrees to pay $2.00 per apple, but the actual gain for the wholesaler is a little less than 82¢ (at this stage), the rest is what he paid you and 18¢ VAT.
• The grocer unpacks the apples and displays them for sale. This is also an added value which is taxed. A customer sees the apple priced at $2.50 and buys it. The grocer earns slightly less than 27¢ for her work, the rest is what she paid the wholesaler and the near 23¢ VAT she collected for the government.

The real genius in the system is that the government does not collect 9¢ + 18¢ + 23¢ or 50¢, but only the end 23¢. At each step in the process accurate reporting is encouraged because you get credited for the 9¢ the wholesaler paid, the wholesaler gets credited for the 18¢ the grocer paid and only the consumer really pays the VAT (and that is hidden in the price). By having the tax hidden in the price, there is less resistance on the part of the consumer (who could be a voter) and the government knows precisely how many apples were bought and sold at each step of the way. This makes it more difficult (certainly not impossible) to avoid taxes. Of course, apples can spoil or get lost along the way and there are complicated systems to account for this, but I said this was a very simple example.

VAT Rates

I should add that historically, when VAT was introduced in countries, it was either at a low rate (a few percent) or on a limited range of goods (as was done in Belgium). Over the years it was easy to add to this “invisible” tax; the consumers tended to grumble about rising prices but blamed these on the greed of companies and general inflation.

In the example I used a 10% tax to make it easy on myself. There are 4 VAT rates in Belgium. They are:

What	Rate
Periodicals (newspapers & magazines)	0 %
Food, water, medicines, books & transportation	6%
Social housing & meals	12%
Everything else	21%

What this means is that those people who spend almost all their income (the working and middle classes) contribute about another 18% of their income in VAT to the government as well as the minimum of 25% via income taxes. VAT is a sure source of income, but a very regressive tax. Those with higher incomes who save and invest a portion of that income pay relatively less VAT.

Employment Taxes

There are many and varied taxes on employment. Some of these are very roughly to be compared to the Social Security Tax in the USA in that a portion is officially paid by the employer and a portion is paid by the employee. However, since the portion paid by the employee is withheld by the employer it is largely invisible.

If you are an employee, you see your net income deposited in your bank account, usually twice a month. If you are an employer, you see the cost of hiring each employee as the sum of all the taxes paid plus the amount that is deposited in your employee’s account. This is not much different than in the States. The difference is in the percentages. Say you are an average employee, for each € 100 you get paid, your employer pays an additional € 200 in various taxes; the total cost to the employer is € 300. Now of course this does not include the income tax withheld by your employer as it is no real cost to the employer (except for the accounting expenses). If you are in the 40% bracket, you will see only € 60 on your account.

Corporate Income Tax

The basic rate of company tax in Belgium as of 2019 is 29%, plus a 2% crisis tax (a tax on the tax). If certain conditions are met, the first € 100,000 is taxed at 20%. This means the total effective rate of tax for most companies is 29.58%. A 25% rate of corporate tax will apply from 2021, and the crisis tax will be abolished completely.  This in on profit; the rules for calculating profit can be complex and good accountants can help. As in most countries, international companies can become highly creative as to where their income is declared.

Other Taxes

As is true in most advanced countries, there are many other taxes that I cannot cover here. I should note that in comparison to the USA, property taxes tend to be much lower, fuel taxes much higher, and inheritance taxes much higher.

What Falls Through the Cracks

There are a multitude of things, but it comes down to concentrating so much on the welfare state that there is little left for the more traditional functions of the state. The infrastructure (roads, railroads, canals, utilities, etc.) is extensive, but badly deteriorating. Maintenance can almost always be postponed to next year – not to speak of improvements. Brussels and Antwerp have the dubious distinction of having the most hours lost in traffic jams of any city in Europe (on a per capita basis). Neighboring countries are outraged at the poor maintenance of their atomic power plants. They rely on others to provide for the national defense. I grant that a small country in today’s world cannot stand alone, but Belgium cannot come close to the 2% of GDP for defense that NATO asks of its members.

Standard of Living

Now most of Europe is known for its high taxes so how does Belgium compare? The average gross salary in Belgium is the highest in the European Union; the average net salary is only the third highest. The comparison with the USA is much more drastic. According to a study I read last year (2019), taking into account purchasing power, the average net salary in Belgium was about half that in the USA. Now all these comparison studies must be taken with the proverbial grain of salt.

Most Belgians do not live badly. Most of their health statistics are better than those of the USA. They have much longer vacations (typically 6 weeks per year) and travel widely. It can be argued that they eat better and their schools have a good reputation.

They tend to drive smaller cars for more years and live in smaller houses or apartments for longer periods. In normal (non-COVID) times, they can be found filling the cafés and the many good restaurants.

They usually have one or two hobbies that they devote their free time to, not the multitude that we tend towards. If they have a boat, they will be in or around the water a lot. You will not often find a boat, a motorcycle (or two), and an off-road vehicle competing for space in the garage. In fact, even a two-car garage is rather rare. They will have a bicycle though, usually for local transportation, but often a racing or mountain bike for sport. This is partially driven by economics, but also by their cultural history.

Belgium is a small, densely populated country. There are disadvantages to this, but also advantages. Cultural activities such as museums, concerts and sporting events are easily reached even by those living in small towns. They find it easy to form groups around common interests, even those we might find esoteric.

Politics and Patterns of Thought

Politics

Belgium is a complex country. It is a constitutional monarchy which has a federal form of government with three regions. These are based fundamentally on language and geography (the predominate language in an area is the determinate, not the language of the individual).

The Dutch (or Flemish) speaking region (Flanders) has its own parliament and ministers as does the French speaking (Wallonia). The Brussels region (officially dual language, but primarily French speaking) also has its own government. Flanders and Wallonia are further divided into provinces which also have governments.

There are also separate governments for the 3 official language groups (Dutch, French, and German). As I understand it, the rationale is that they protect the interests of individuals living in regions of a different language than their own.

The actual Belgian national government is formed through negotiations between the various parties from the various regions.

I should also note that the proportional system of representation is used (a simple explanation is that a party with 10% of the votes gets 10% of the seats – but it is more complicated than that). The effect is that representatives are primarily answerable to the party leader, not the particular geographic area that they live in.

Another twist is that there is only one national party (a very small one). If you live in Wallonia, no Flemish parties will appear on your ballot. This is true (in reverse) for Flanders. Thus, no voter really votes for the Prime Minister of Belgium.

From what I have seen over several elections is that the two driving forces in Belgian politics are identity and envy. We see echoes of this in the USA, but of course the identities are different. Envy is primarily (but not uniquely) a tactic of the parties on the left side of the spectrum, but it is also used by the more nationalistic (in the sense of Flemish or Walloon, not Belgian) parties. The longer-term result has been less and less national (Belgian) unity. It is sometimes said that the only Belgian is the King.

Patterns of Thought

Discussing patterns of thought in any large group is very risky. People are all different, thus there are more exceptions to any rule (other than the most banal) than not. With that caveat, I will venture on.

I find little political engagement. Everybody votes (they must, it is the law), but they do not feel that their ballot will have any effect. The regime is something apart, it does not feel answerable to the people; it is not their servant, rather their master. Perhaps this is a result of their long history of being ruled by outside powers (the Austrians, the Spanish, etc.) or of the proportional system, I cannot say. Local (town) politics is another thing altogether; more people are involved.

Belgians tend to be a modest people; they recognize that a small country cannot be too pushy. They do take pride in the role that Brussels plays as the capital of Europe and they are joyous if their football (soccer) team does well in the World Cup. For the rest of the time they work hard, have a close family life, and generally enjoy life.

The Net Result

Control, passiveness, and quiet rebellion, these are the top three things that come to mind, but there are thousands of other – perhaps unintended – effects. Belgium also has a high suicide rate, many abortions and legal euthanasia. For whatever reason, life is not worth living for many. On the positive side, true poverty and homelessness are very rare – but they do exist.

Control

I have already mentioned the price controls in the medical sector, but many other areas of the economy have restrictions on prices and/or on the number of competitors allowed within a given geographical area. Sales are allowed only twice a year at set periods. Restaurants and cafés are required to use what are called “white cash registers” for tracking sales and workers; these provide information directly to the government and inspectors drop in frequently and unexpectedly to see that those working are truly recorded. People who own businesses are assumed to be cheating on their taxes by both the government and much of the public (they probably are if they have succeeded in staying in business). The use of cash for larger purchases (say cars or property) is forbidden as it cannot be easily tracked.

Passiveness

Far too many seem not to take actions to provide long term benefits to themselves or society unless they are either provided a subsidy or it is mandated. One small example: one of our cars was a couple of years old and the tires were getting worn. When I went to buy new tires, the salesperson asked if it was due inspection (cars are inspected annually after they are four years old). It was not, but our safety mandated new tires, not the government. He seemed shocked.

I am a member of a local service club. In the early years of my membership I proposed several projects that I had seen being implemented in other countries. I was often told that the club could not do that project as it was the government’s responsibility. When I asked if the government was doing it, the answer was no, but they should. I slowly stopped suggesting out of the ordinary projects. Our club has and does support many small projects to improve community life.

This is not to say that all people are passive and childlike, I know of many innovative people in Belgium who work hard to advance their ideas and to help society. That having been said, we are always pleasantly surprised by the dynamism we find so widespread in the States.

Quiet Rebellion

Cheating on taxes and playing the system are common. Otherwise honest people who would not think of cheating a client will ask for payment in cash so that they can cheat the government. When you pay cash to a workman (painter, plumber, etc.) you save in that you are not charged the VAT; they save income tax and other work-related taxes. It is estimated that about 25% of the Belgian economy is “black” – off the books. Of course, they know about how much they can get away with without attracting unwanted attention. People freely share tips on how to avoid one tax or another; you are told that the national sport in Belgium is “sailing” around the taxes.

There seem to be a large number who are playing the system in other ways. They are too sick or disabled to work but manage to do gardening work (for example) “in the black”. Now this is done in every country (that has unemployment insurance) to a degree, but here it is widely considered normal and many people are complicit in it, including the doctors who provide the certificates.

Summation

Belgium is a free country which has given up much individual freedom (and responsibility) for the sake of comfort. It has been their choice and we have benefited (in part) from the comfort without having had to pay too much of the costs. There are many interesting people here and we have many good friends as well.

I do fear for their system. Much was built on the belief that growth of the economy would provide increasing funds to pay the debt taken on to support the welfare state. In one sense, it has been a slow Ponzi scheme. Demography is working against this. For decades, the family size has been very small and people are living longer (and thus working a shorter portion of their lives). There is a deep resistance to immigration (one possible solution to the demographic problem); many see it as more people coming to claim a portion of the shrinking welfare pie. Some of the resistance is also due to racism, a great many immigrants have been Muslim. This may be an (unintended?) side effect of identity politics.