Clams and Benjamins

As promised here is a brief understanding of the monetary and economic situation here in Belgium. Now if there is anyone who is looking to go to graduate school and study economics, what you are about to read will provide an excellent topic for your thesis. Being an estudante of economics myself, I can't help but appreciate the economy of Belgium and question the practices of the government here.

Okay so here we go...In Belgium, medicine is socialized unlike the US so everyone is entitled to healthcare. Since arriving here, I have yet to see a homeless person, so some of the socialization must be working. In order to pay for the social services the government levies a huge tax on its citizens, atleast 50% of your income. Property taxes are very high too with additional tariffs on goods. So when you here these politicians talk about universal health care, you have to understand that there are steep costs that must be covered. Will the government just subsidize? Sure, but as anyone who has studied economics or who works, there is no such thing as a free lunch as so eloquently put by Adam Smith. Government levies huge taxes and all citizens get health care. This ends the background on economics, now down to how it goes down in Belgium.

The game in Belgium is avoiding taxes. In the US we make donations, use IRAs, 401ks, etc. Belgians pay for everything in euro bills much to the dismay of "for everything else there is Mastercard" and Visa. When you pay with cash there is nothing to trace and the path of tracebility goes all the way to the raw product. Example...You go to the store to buy a new wooden desk. Here is how the desk is brought to the store. Wood mills buy wood from timber land for 10 euro bills. The wood mill sells the cleaned wood to the carpenter for 20 euro bills. The carpenter sells the desk to the store for 50 euro bills and the store sells the desk to you for 100 euro bills which you earned from the factory you work in which pays you in euro bills. So throughout the entire process there are no receipts of cash exchanges and no records on the books b/c its all cash. So in the end there are no taxes and "nothing" really took place except you now own a desk which "never existed" and you are 100 euro less which "never existed" either. In the US you might call this "money laundering." In Belgium, you call this "business 101." If you ever had the dream of being a white collar mafia crime boss, then why risk going to jail in the US? Just move to Belgium and you could do it without fear of going to San Quinten =)

The problem with this shirking society is that the wealth and economic output are incredibly understated. Belgians are quite wealthy but on the books it wouldn't appear so. When the World Bank or the UN measure economic output, belgium is vastly understated b/c everything is done in cash and there are no paper records. Its crazy to think b/c everything you buy is done with cash, bikes(1000s of euros), cars, groceries, etc. Even when you have your house built, "you" build the house yourself so that the tax man can't levy property taxes on your house. By "you" building your house, you are exempt from property taxes so whenever you see a house being built you always see just a few people building it. But the majority of the work is done by professionals you pay . But you get away with this by saying that "you built the house."

Well, I will end on that note. Hope you enjoyed your Belgian money lesson for the day.

Chow Chow
Matthew