Europe's Mighty Economy

Europe's Mighty Economy by Philippe Legrain (first appeared in the New Republic, 06.16.03)

A few bits of info from the article:

"Over the past three years, living standards, as measured by GDP per person, have risen by 5.8 percent in the European Union but by only 1 percent in the United States."

"While living standards in the United States have risen by a healthy 16.1 percent over the past eight years, they are up by 18.3 percent in the European Union."

"To be fair, on a different measure, the United States has outpaced Europe. Its economy has grown by an average of 3.2 percent per year since 1995, whereas Europe's economy has swelled by only 2.3 percent. These headline figures transfix pundits and policymakers alike. But this apparent success is deceptive. Not only are U.S. growth figures inflated because American number-crunchers have done more than their European counterparts to take into account improvements in the quality of goods and services, but America's population is also growing much faster than Europe's."

"Their figures show that, although the average U.S. labor-productivity growth of 1.9 percent per year since 1995 exceeds the EU average of 1.3 percent, five individual European countries have done better than the United States. Belgium managed 2.2 percent per year, Austria 2.4 percent, Finland 2.6 percent, Greece 3.2 percent, and Ireland 5.1 percent. If you take a longer time span, 1990 to 2002, not only does the European Union as a whole outpace the United States, so do ten of the 14 individual EU member states for which statistics are available. (The Conference Board does not include figures for Luxembourg.)"

"Whereas American workers toil ever longer hours, Europeans prefer to take more time off as they get richer. Working more to earn more is a perfectly valid lifestyle choice. But one should not conclude that Americans' higher output is a result of their greater efficiency, when it mostly reflects greater toil."

"Yet Europe is not the unemployment black hole it is made out to be. Although joblessness is shockingly high in some countries, it is lower in others--lower even than in the United States in seven of the 15 countries that make up the European Union."

"Europe's higher taxes also are not as big a burden as they are made out to be.... Look again at the list of five countries that have notched up faster productivity growth than the United States since 1995: Belgium, Austria, Finland, Greece, and Ireland. Consider the six that have higher productivity levels: Germany, the Netherlands, Ireland, France, Belgium, and Norway. Only Ireland is a low-tax economy."

"Obscured by all the cyclical gloom, Europe's new common currency, the euro, is already working its magic. Soaring cross-border trade and investment within the euro-zone are melding individual economies into one. Germany trades one-sixth more of its economy with its European partners than it did before the euro's launch in 1999; France, one-eighth more. Cross-border investment within the euro-zone quadrupled in the first two years of the new currency as companies restructured their national operations along continental lines."

Posted by Dienekes at June 13, 2003 03:23 PM | PermaLink