[Previous entry: "Mettle"] [Main Index] [Next entry: "Father's Day"]

06/20/2004: "A Statistical Lesson for Socialist, uh I mean Democrats."

A study done by two European economists shows the widening economic gap between European welfare states and the US. It gives a little insight into how Mr. Kerry and the rest of his party of “Welfare Programs R Us” would steer our country into the future.

Here’s the Link (http://www.opinionjournal.com/editorial/feature.html?id=1100052420) to the original article. I have reprinted it here because it does require the reader to register.

"REVIEW & OUTLOOK

by Editorial Writer

Europe vs. America
Germany edges out Arkansas in per capita GDP.

Sunday, June 20, 2004 12:01 a.m. EDT

The growing split between the U.S. and Europe has been much in the news, mostly on foreign policy. But less well understood is the gap in economic growth and standards of living. Now comes a European report that puts the American advantage in surprisingly stark relief.

The study, "The EU vs. USA," was done by a pair of economists--Fredrik Bergstrom and Robert Gidehag--for the Swedish think tank Timbro. It found that if Europe were part of the U.S., only tiny Luxembourg could rival the richest of the 50 American states in gross domestic product per capita. Most European countries would rank below the U.S. average, as the chart below shows.

The authors admit that man doesn't live by GDP alone, and that this measure misses output in the "black" economy, which is significant in Europe's high-tax states. GDP also overlooks "the value of leisure or a good environment" or the way prosperity is spread across a society.

But a rising tide still lifts all boats, and U.S. GDP per capita was a whopping 32% higher than the EU average in 2000, and the gap hasn't closed since. It is so wide that if the U.S. economy had frozen in place at 2000 levels while Europe grew, the Continent would still require years to catch up. Ireland, which has lower tax burdens and fewer regulations than the rest of the EU, would be the first but only by 2005. Switzerland, not a member of the EU, and Britain would get there by 2010. But Germany and Spain would need until 2015, while Italy, Sweden and Portugal would have to wait until 2022.

Higher GDP per capita allows the average American to spend about $9,700 more on consumption every year than the average European. So Yanks have by far more cars, TVs, computers and other modern goods. "Most Americans have a standard of living which the majority of Europeans will never come anywhere near," the Swedish study says.



But what about equality? Well, the percentage of Americans living below the poverty line has dropped to 12% from 22% since 1959. In 1999, 25% of American households were considered "low income," meaning they had an annual income of less than $25,000. If Sweden--the very model of a modern welfare state--were judged by the same standard, about 40% of its households would be considered low-income.

In other words poverty is relative, and in the U.S. a large 45.9% of the "poor" own their homes, 72.8% have a car and almost 77% have air conditioning, which remains a luxury in most of Western Europe. The average living space for poor American households is 1,200 square feet. In Europe, the average space for all households, not just the poor, is 1,000 square feet.

So what is Europe's problem? "The expansion of the public sector into overripe welfare states in large parts of Europe is and remains the best guess as to why our continent cannot measure up to our neighbor in the west," the authors write. In 1999, average EU tax revenues were more than 40% of GDP, and in some countries above 50%, compared with less than 30% for most of the U.S.
We don't report this with any nationalist glee.

The world needs a prosperous, growing Europe, and its relative economic decline is one reason for growing EU-American tension. A poorer Europe lacks the wealth to invest in defense, a fact that in turn affects the willingness of Europeans to join America in confronting global security threats. But at least all of this is a warning to U.S. politicians who want this country to go down the same welfare-state road to decline."

God Bless America.

Replies: 5 Comments

I have spent considerable time in Europe. That table doesn't make sense. Germany and Italy have equal GDP/capita? One has to spent about 10 min in Germany and Italy to see how much richer Germany is.

I don't know how those guys came up with their results, my feel based on months of livingm working and traveling around Western Europe is Swiss have by far higher standard of living then we do, West Germans (I haven't been to former GDR part) live comparably to the richest US state(s), French are not far behind. Nordic countries generally have higher standards than we do, as long as you don't mind bad weather.

Mik said @ 07/13/2004 02:13 AM MST

GDP comparisons are misleading because things such as spending money on personal safety and prison building is much higher in the U.S. than over here in Scandinavia. I would argue that this inflates the American GDP figures, since crime rates tend to be lower over here.

I think Europeans might actually be more productive at work, but
there is a salary gap because Europeans choose to have longer holidays etc.. It seems to be extremely difficult to measure "quality of life" and standards of living, though! I suspect someone from rural Texas does not have the same priorities as a Swede. Sweden is probably more "employees"-oriented with a heavy emphasis on "fairness", while the former is a customer-oriented society stressing the importance of economic opportunity.

MARCU$

Liljendal, Finland

Marcus Lindroos said @ 07/13/2004 06:00 AM MST

Last year I was on cross country flight seating next to a man of American-Swedish heritage. He and his wife are born in USA but have many relatives in Sweden, visit every year and plan to retre there. His wife somehow managed to have dual citizenship.

In his opinion most swedes live better than most americans, however picture is a bit clouded by different priorities people have.

I would be interested to know MARCU$ opinion about this issue, in more detail is possible.

Mik said @ 07/16/2004 11:10 AM MST

Thank you for the wonderful website and information I will be back soon, nice Site

eve said @ 09/10/2004 10:30 AM MST

Nice informative site, well written easy to navigate good colour scheme. Thank you for all your hardwork and effort in making this site ...
......................

realizzazione siti web said @ 10/23/2004 04:25 AM MST