Historian Thomas C. Reeves, writing in the History News Network, details the differences between ‘Old Europe’ and the United States:
The United States has moved far ahead of every European country in every significant economic category. As Olaf Gersemann recently pointed out, “Adjusted for differences in price levels, per capita income in the United States now exceeds France by close to 40 percent. Germany and Italy lag even further behind.” If labor productivity continues on its recent path, Americans will double their per capita income by 2026, while Germans will increase theirs by only 44%.
Big government, high taxes (Germany’s government currently taxes away about 44% of the nation’s output), the welfare state, a zero sum mentality that often treats economic competition with disdain, low labor productivity, the failure to develop a dynamic service sector, and a falling birth rate have gravely weakened the future of the European nations. Public confidence has been badly shaken, resulting in what has been called a “crisis of the spirit” among Europeans.
In a Harris poll of 2002-2003, 57% of Americans said they were very satisfied with their life. In France the figure was 14%, in Germany, 17%, and in Italy 16%. When asked how they expected their personal situation to change in five years, 63% of Americans said it would improve. Only 20% of Germans shared that outlook, and only 42% of the French.
While the United States is experiencing jobless rates below 5%, Germany and France have double digit rates. A quarter of all workers under 25 in France, Germany, and Italy are unemployed. A poll conducted among 11,200 Europeans in 2005 showed that 81% of Germans, 58% of the French, and 38% of Italians cited unemployment as the most pressing problem facing their respective nations. When asked if “success is determined by forces outside our control,” only 32% of Americans agreed, while 68% of Germans, 66% of Italians, and 54% of the French took that position.
Ireland and Britain have chosen a different path, opting to be more like the Americans and promoting economic competition, low taxes, and minimal government intrusion. Both countries have prospered accordingly. Ireland today enjoys a per capita income about 20% higher than in Germany and France.
While America prospers and grows, Old Europe, as Donald Rumsfeld and others call it, is in an economic and demographic tailspin. It should surprise few that tensions exist between the Western powers. Many political and intellectual leaders in Europe continue to deride American style capitalism, calling it “right wing” and regressive. One wonders how deeply “Eurosclerosis” will become before voters clamor for serious reforms and abandon the politicos and ideological elitists who currently chain their prosperity and curtail their hope.
So the next time someone suggests higher taxes, more welfare, and more business regulations, tell them about what those have done to the European economy. The full article can be found here.
I agree with the numbers presented in the article except that this has everything to do with high taxes, more welfare, and more business. Countries such as Luxembourg and most of the Scandanavian nations follow these same models and do quite well, Norway and Luxembourg actually surpassing us on many levels.
I think this has more to do with France, Germany, Italy, and Spain recovering from massive wars, repressive dictatorships, and transitioning economies. My wife and I are always talking about the Spanish attitude towards life and success, and the rate at which things are changing economically. The younger generations come from poorer families with pale attitudes towards the prospect of success. Unemployment is extremely high in some parts of Europe and thus education and hard work is not just valued, it’s considered necessary for any chance at a decent life. These factors seem to be producing generations of driven, educated, and fervent people (relative to the people I see in the US) who wont surprise me if they surpass our own American generation of slackers and ingrates.
Think of the immigrants from Mexico who came recently and are still coming in droves to this country. They have come here, sometimes illegally, to succeed and give their families the things they never had. That momentum is similar to what the young Europeans seem to have… the only difference being access to higher education and a solid infrastructure to work from.
I get really annoyed, in fact, it’s a pretty strong pet peeve of mine, when somebody talks about the ‘Scandanavian nations’ as an example of economies doing things better than the USA. The reason I get annoyed is because the Scandanavian economies are cheating, and only then can they even compete with the US economy.
Just to give one example, it is a known fact that Scandanavian economies take in a very low amount of immigrants and even less low educated, high poverty immigrants, like the rest of Europe and certainly the United States does. Had they done so, their economic figures - things like income inequality, health care stats, economic mobility, unemployment rates and others - wouldn’t look nearly as good as they are. Sure, the USA could do the same if we banned more immigration, but one would argue that in doing so, we too are cheating and not really testing our economy to the fullest. As David Schmidtz said in this discussion, “Countries that don’t allow immigration aren’t constantly replenishing the population of people who are starting with nothing. People who come here with nothing are going to be increasingly far behind the rest of a population that has been building up wealth for generations. Countries that radically restrict immigration don’t have people that poor, but it doesn’t give them the moral high ground”. In other words, if you care about immigration and the poor, the Scandinavian economies are not ones to bring up as successful models. For more on Scandinavian economies, go here and here.
As far as coming from “massive wars, repressive dictatorships, and transitioning economies”, lets remember that Japan, a country that suffered just as much as any European country if not more because of war, is also miles ahead of most of Western Europe. The same can be said of very poor countries like Hong Kong and even Taiwan. Europe isn’t just behind the United States, Europe is also progressing far behind the United States.
Percentage of foreign immigrants in:
Sweden: 10.2%
Norway: 8%
Denmark: 8.4%
Those numbers don’t look low to me, especially considering the relatively small populations of the Scandinavian countries. And many of those immigrants are political refugees from places like Somolia, the Middle East, etc.
I don’t know if those figures are right, they seem a bit exaggerated, but even if true, they are still lower than most other countries, especially the United States.
In addtion, take Sweden, the country with the most immigration of the three…it’s unemployment rate is somewhere around 15%, see here.
The unemployment rate in the United States is somewhere around 4.5% and yet we take in vastly more immigrants. The differences couldn’t be more stark…
The ’slash and burn’ market economic model is a fun concept. Wouldn’t we all love to live in an economy where we could unendingly indulge our appetite for disposable electronic and plastic rubbish - and grow richer in the process? Unfortunately, we live on a planet with finite resources and an increasingly fragile ecology. Pull your focus back to the global level. We’re in big trouble - a crisis shamelessly deepened by the Bush administration’s ignorance and arrogance. Nitpicking over economic models won’t seem nearly so important when sea water begins lapping around the ankles of our grandchildren.
Furthermore, the article you quote was published in February 2006, I doubt that the same conditions apply in June 2008 – the mighty market economy is in meltdown. Recently I had the embarrassing experience of having a US acquaintance request my help to pay a doctor’s bill. This person is not a member of the ‘welfare folks’ demographic, but rather a hard-working white middle class American. Fortunately, I, a citizen of an ‘old Europe’ social economy, was in a position to help out.