Very impressive performance indeed. How does such a turnaround to a production policy happen in practice?
Fundamentally, such production-stimulating policy consists of a substantial reduction of the tax burden on labor and on profit; in other words a decrease of direct taxes. This motivates people to go back to work: it stimulates to entrepreneurship, to dare to take risks, to perform some overtime or to delay retirement. Of course, this does not work with a vague promise for a minor tax cut sometime in the far future as is customary in many countries. Cuts must be felt immediately and they must be substantial. Between 1985 and 2001 Ireland lowered the tax burden on wages from 37% in 1985 to 19.3% in 2001. They roughly halved the burden. In Belgium the burden on labor even slightly continued to rise from 46% in 1985 until 47.9% in 2001. Today the Belgian burden on wages is 2.5 times as high as the Irish. Does it surprises anyone that in Belgium nobody wants to do an hour overtime, and that businesses run away from the country in an ever faster rate? However, it was the cut of the rates on
