At the moment, I live in Italy. Everything here is very expensive, and that is before one takes into consideration that the Euro is worth more than the dollar. It's a little better in other parts of the Eurozone, but if you stick to the 'decent' countries (France, Germany), I can't see it being any better.
I'm trying to hold out on buying some higher-priced non-essential things until the next time I come home (in about a year) and carrying them back over (unless I can get someone to carry them over in the meantime).
And these people still pay an income tax - and a yearly property tax if they own a house. I'm here as a seminarian, so I don't have to worry about those things; but I can't see how the Italians do it... and many don't. It's no surprise that the Italian youth live at home well into their 30s. And they have some services, like hospitals (that nobody dares go to unless they can't afford private care), but the country in general is pretty dumpy - I've heard it described as "a third-world country wrapped in Gucci."
This is the fruit of socialism. Don't advocate it - the chains NEVER DO come off.