I wrote yesterday that many European nations are doomed to demographics and fiscal chaos, but a lot of people don’t care that much about the future.
Bernie Sanders, for instance, looks at nations such as Denmark and Sweden today and says that America should copy their expansive welfare states.
Is he right?
Well, it depends on the parameters. If, for some reason, somebody was holding a gun to my head and demanding that we copy the policies of a nation from the European Union, the Nordic countries would be among my top choices. Yes, their welfare states are too large, but they somewhat compensate for that mistake by having very pro-free market policies in other areas.
That being said, Ireland and the United Kingdom have the most economic freedom among EU nations, and Switzerland would be at the top if the choice was broadened to non-EU nations in Europe.
But I’m digressing. Let’s get back to whether people in places such as Denmark (or anywhere else in Europe) enjoy more prosperity than their American counterparts.
Mark Perry of the American Enterprise Institute has put together some apples-to-apples data suggesting the answer is no. At least if the goal is more economic output and higher living standards.
…most European countries (including Germany, Sweden, Denmark and Belgium) if they joined the US, would rank among the poorest one-third of US states on a per-capita GDP basis, and the UK, France, Japan and New Zealand would all rank among America’s very poorest states, below No. 47 West Virginia, and not too far above No. 50 Mississippi. Countries like Italy, S. Korea, Spain, Portugal and Greece would each rank below Mississippi as the poorest states in the country.
And here’s the table Mark prepared.
As a quick caveat, it’s worth noting that there’s not a one-to-one link between gross domestic product and actual living standards.
Some of the economic activity in energy-rich states such as North Dakota, for instance, translates into income for shareholders living elsewhere in America.
But if you look at the U.S. average ($54,629), it obviously is higher than economic output in European nations.
And if you prefer direct measures of living standards, then data on consumption from the OECD also shows that America is considerably more prosperous.
None of this suggests that policy in America is ideal (it isn’t), or that European nations are failures (they still rank among the wealthiest places on the planet).
I’m simply making the modest – yet important – argument that Europeans would be more prosperous if the fiscal burden of government wasn’t so onerous.
And I’m debunking the argument that we should copy nations such as Denmark by allowing a larger government in the United States (though I do want to copy Danish policies in other areas, which generally are more pro-economic liberty than what we have in America).
Shifting to a different topic, Mark Perry also takes a shot at Donald Trump, who seems to think that other nations are “winning” over America because of trade.
…maybe we should remind him that Mexico and China, as US states, would both be far below our poorest state — Mississippi — by 51% and 62% respectively for GDP per capita; and Japan would be barely above our poorest state — Mississippi. Using GDP per capita as a measure of both economic output per person and of a country’s standard of living, America is winning quite handsomely.
Excellent point. It’s a sign of American prosperity that we can afford to buy more from other nations than they can afford to buy from us.
It’s also a sign of prosperity that, when they do earn American dollars, foreigners often choose to invest those funds in the American economy (remember, the necessary flip side of a “trade deficit” is a “capital surplus”).
P.S. Speaking of European prosperity, here’s a fascinating map I saw on Twitter. The reporter from the Wall Street Journal who shared it remarked that “Purple areas are rich as US states. Yellow areas poorer than Mexico.” In other words, The few dark areas (a handful in Germany and one each in a few other nations) are the only parts of Europe that are economically equal to the U.S.
P.P.S. Here’s another map, concentrating just on Northern Europe.
I don’t have a policy lesson. Simply an observation that the United Kingdom has one really rich region (Greater London) and quite few relatively poor regions.
P.P.P.S One final comment. Long-run growth matters. Hong Kong and Singapore, for instance, used to be a poor jurisdictions. But free markets and small government have produced decades of strong growth. And now these places are among the richest places on the planet. Richer not only than Europe, but even more prosperous than the United States.
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I’d love to share this (and other posts), but please please please learn the subjunctive.
> If, for some reason, somebody was holding a gun to my head
> if the choice was broadened
> if the fiscal burden of government wasn’t so onerous
Should be “were”, “were”, “weren’t”.
Hard to promulgate posts on an intellectual issue when they (almost) always contain this simple error.
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Your article is severly bias. You are just using parameters like GDP (that are heavily based on bussiness perfomance and their activity, not actually people), instead of average or median Income (raw economic power of a citizen) to talk about living standars.
And furthermore, you are not taking into account the fact that most EU countries citizens dont have to pay or pay simbolic prices for Health Care or University and College Education. Which is an expense that cripples americans with for life debts, destroying their purchasing power.
And the consumption index is questionable as how being at the top of it is positive. It does not reflect savings or investment, comsuption only reflects how much americans like to throw the money away, maybe at health care or college tuitions.
Conclusion your article is bullshit propaganda, you dont talk about living standars at all, wich by the way are higher in europe. Because the main two elements to measure it, quality health care and education are accessible to every citizen in spite of their wealth.
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“Unless the Goal Is Lower Living Standards”
I think the goal is exactly that. Progressives believe that our standard of living is a threat to the environment and had at the expense of the poor.
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