That’s helpful. Thanks.
I’ve gotta agree, Shodan, that while the structural issues behind hiring are there, the larger cause of the difference in the recoveries between Europe and the United States centers on the central bank’s responses to the hell that was 2007-2009. The Fed’s approach to QE and QE2 freed up a lot more capital to spur a recovery - now well underway - than the ECB’s approach of enforced austerity. While reigning in spendthrift governments is a worthy cause the way the EuroZone is set up makes it very difficult to coordinate an overall response to recent events. Not fun at all.
Three helpful charts on US debt vs. others:
Excepting the big difference of the general acceptance of universal healthcare and certain other aspects of the social welfare state along with a few anciliary social issues (ie death penalty), European and American conservatives do broadly share great similarities especially in their enthusiasm for neoliberal/austerity measures with regards to the economy as well as enthusiasm for tax cuts, privatization, rollback of social welfare programs and so forth. Even on social issues there’s strong opposition to gay marriage (most of Cameron’s party broke with him on that issue while UMP was also strongly against homosexual marriage in France and Merkel at the least is in no hurry to support gay marriage) and to a varying extent on foreign immigration.
European countries generally have a parliamentary system which moves much faster than the american system. This meant they went much further down the socialist road went that was popular. This means that most European countries have a GDP per capita about 70-75% of America’s and are growing slower so the divide will grow over time. They also have a much higher natural rate of unemployment due to rigid labor laws so unemployment levels that would cause panic in America is just accepted as part of daily life. The Euro was a horrible idea that will be hamstringing the european economies for the foreseeable future.
Crime rates used to be much higher in America but have been falling for almost 25 years and are about a third of what they used to be. Crime rates have fallen much more slowly in most of Europe.
Apparently Europe was jealous that America had a race problem and decided to import one. Now many European countries have large communities of poor people of a different culture and since they do not have have America’s history of diversity they will have a harder time integrating those communities into the nation.
Neoliberal reforms such as done by Thatcher in the 80s, Sweden in the 90s, and Germany in the 2000s could really help but even though Europe as a whole is about to go into a triple dip recession, in most countries serious reform is still politically impossible. Sad to see Europe choose a long decline, but at least it has brought us lower gas prices.
Not “socialist” in most cases (excepting a few instances such as post-war Labour government’s nationalization of various sectors of industry) as opposed to creation of extensive systems of social welfare. Paul Krugman actually looked at GDP per capita and found that the difference between Europe and the USA largely disappears once one takes into account working hours. Not to mention, of course, that in Europe basic social services such as health care are guaranteed. The same fact makes unemployment less disastrou for people.
Crime rates tend to fall more slowly when there is far lower rate to fall from-as a measure of comparison murder rates in the US are still over the double of the Western European country with the highest murder rate.
So Europe shouldn’t be allowing refugees from wars in? I agree though that a better job of assimilation can be done and multiculturalism (as opposed to multiracialism) is a dangerous policy.
Neoliberal reforms (as in the US) worsened income inequality and has generally alienated a large section of the working-class and its austerity policies in Europe which has made recovery there far slower and weaker compared to here.
The main reasons Europe has fewer working hours both have to do with government policy. First, high taxes discourage people working extra hours, when Europe had similar tax rates as the US hours worked per person were similar. When European tax rates went up, hours worked per person went down. I’m sure Krugman has read Phelps on this and just forgot to mention it in his column. Secondly, labor laws that make it harder to fire people also depress hirings. This means a much higher unemployment rate. Currently the unemployment rate for the EU is twice that of the US. By excluding a couple of milion people it makes the productivity stats for the rest look better in comparison to the US. However, for the millions mired in unemployment and poverty, the inflated productivity per worker stats must be cold comfort. Even if unemployment in Europe is less disastrous.
As for neoliberalism, it has increased growth every where it has been tried. Growth is what gets people out of poverty, not income equality. Austerity is not a part of neo-liberalism, but if you look at places such as the US and the UK which have their own currency and the ability to do effective monetary policy they have grown despite so called austerity measures, while Europe stagnates economically because of their inability or unwillingness to do effective monetary policy. Every conservative I know thought that the single currency was a bad idea and the European Union was going to lead to ruin although most of us did not expect to be proven right so quickly.
I’m not sure how that follows?
High taxes? Tax on income in the UK:
£0 - £10,000 = zero tax
£10,000 - £31,866 = 20%
£31,867 - £150,000 = 40%
What you got?
Aimed at me?
No!
Phew! 
Substitution effect. Here is the paper by Prescott. pdf
Correlation does not always equal causation-especially since (as I forgot to mention), many European countries also guarantee vacation often for several weeks. Additionally many European countries seem more culturally open to striking a work-life balance compared to America. Not saying that high tax rates aren’t a factor at all, but these other aspects have to be taken into account too.
This is very much distorted by the few European countries (ie Spain or Greece) which have extremely high unemployment rates right now.
Nobody said Europe is perfect-much of economic policy undoubtedly involves trade-offs but on the whole some place like Germany or the Netherlands has a better socioeconomic formulation than we do.
The effect of neoliberalism are pretty disputed to say the least and many have tied to an increase in poverty, unemployment, and the like.
Austerity is the standard prescription for neoliberals to deal with recessions-look at what the EU has been mandating for its member countries or what World Bank/IMF has been imposing on various Third World countries for the last generation. The US, at least, has been pursuing a very much anti-austerity expansionary monetary policy, partially why we are doing quite well in this recession. Additionally there are plenty of leftist critics of the Euro, and those on the centre-left who do support the one currency also argue for a common fiscal policy to match with the single currency.