The per-capita GDP in the United States, adjusted for Purchasing Power Parity, was $39, 496 in 2005. In the Netherlands, it was $29,332. Germany: $28,988. France: $27,738. The EU as a whole: $26,900.
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I can remember a time when Germany and France were about equal to the U.S., back around 1980. That was when everyone was convinced that the European model was the wave of the future. Now, not only is their GDP falling way behind, but these countries have unemployment approaching 10%, and high debt levels and deficits higher than their growth rates, meaning they can’t grow themselves out of trouble as the U.S. can. Germany, for example, has a public debt 67% of GDP, and an unfunded pension liability a whopping 270% of GDP. Germany’s deficit is 3.7% of GDP, while their GDP is only growing at an average of less than 2% per year. The U.S., on the other hand, has a deficit/GDP ratio almost the same, but the economy is growing almost twice as fast. In addition, the U.S. has much lower tax rates, which means it has a greater ability to correct its fiscal imbalances through tax hikes in a crisis.
Furthermore, the EU average GDP growth is only about 2%, compared to 3.5% for the U.S. That 1.5% difference, compounded over 20 years, would put the U.S. another 35% ahead.
Those who say they like the European model better because it allows more leisure time miss out on an important fact: Americans CHOOSE to live this way. No one’s holding a gun to anyone’s head to force them to live in a big house and drive nice expensive cars. I could easily choose to work part-time now if I wanted. We could just move into a smaller home, do without one car and trade the other newer one in for a beater, etc. I could cut my expenses in half and live just like a European if I wanted to. In fact, since we’re overall wealthier (Canada’s PPP is $34,000 - closer to the U.S than the EU), I could cut my hours back to the European average and STILL have a higher standard of living.
For that matter, Americans spend about $5800 per year per capita on health care. The difference in PPP with the EU of over $10,000 pays for health care twice over.
Looked at another way - the poverty line in the U.S. is around $19,000. With an EU PPP of $26,000, the European average isn’t that much higher than the U.S. poverty line, and within 20 years the average European citizen will be living in conditions that Americans would consider to be impoverished.
When people say they like the European model better because it’s less intense, offers more of a safety net, and gives more time off, they should realize that they can have every bit of that in the U.S., so long as they are willing to live as a European would. Sell your house, move into a 900 sq foot tract home, and take the difference and invest it in health insurance and unpaid vacation time. The average American could put $5000 into health coverage, take four weeks of unpaid vacation a year to bring them up to 6 or 7, and STILL have more income left over than the average European makes. Now dump that new car, pocket that $500/mo into retirement and emergency funding, and you can have your very own safety blanket, too.
There are real consequences to choosing a low-growth societal model where the government borrows itself into oblivion to pay for bread-and-circuses. The unfunded retirement liabilities in Europe dwarf those of the U.S. and Canada. Growth is almost stagnant, the populations restive, and huge debt loads promise to choke off growth even more in coming years.
That’s the end result of the welfare-statist, socialist European model. It’s also no surprise that the most vigorous economies are the ones who turned away from the excesses of big government and have opened up their markets, kept unions in check, and scaled back the welfare state.