I used Sweden as an example above. You could say they are putting their money to some kind of charity. All the western European countries do this, thought, but not nearly as much as Sweden.
Western European countries are also using lots of money to create a kind of false reality. By that I mean Europeans still like to think they somehow deserve 10x bigger minimum salary compared to Vietnamese for example. And with less working hours of course. And with guarantees that in case you are sacked company have to pay you amount of yearly salary as a compensation.
That takes money. Lots and lots of it. In fact so much that amount of debt has completely run out of control in most of these countries.
Yes, but USA got it’s debt mainly with wars (and cold war). If it can manage not to get involved in costly wars for some time things should be better. For Western European countries there is hardly option not to take debt. They are in downward spiral with very bleak future, unfortunately.
Sweden hasn’t been involved in wars for last couple of hundreds of year. If anything, it has benefited from wars. That’s why Sweden has been been able to collect huge amount of wealth until recent times. For example infrastructure has been in perfect shape until recent times. If you have shiny, well-maintained railroad network, you can neglect it for decades until it falls completely apart (which apparently is happening there). This wealth is one of the main reasons Sweden has been able to manufacture almost completely artificial society.
Unfortunately for Sweden, the wealth is running out and at the same time they have started to question whether it was a good idea to effectively disband their armed forces and whether it should be rebuilt at great expense. A huge housing bubble is inflating, companies are moving overseas, school system is in tatters and their unique approach to immigration continues as recent years. They certainly can take lots of more debt. I mean, who wouldn’t give debt to Sweden. But at this rate even that can’t continue long any more and what happens after that I really don’t know.
I don’t think that is relevant. If they are not spending money in health and education, what do they spend that money on?
I don’t know if you can look at it that way in the first place; GDP is a measure of production, and saying that the US spends 18% on healthcare is a way to get a relative size of something between countries.
But GDP isn’t like a paycheck that gets spent. That’s I think where your question breaks.
part of me wonders if that is it, do they just have shorter work hours but the same standard of living? I know the US tends to work more hours than most western european countries, but at the same time South Korea & Japan work longer hours than the US, and they also spend a combined 10-12% of GDP on health and military vs 22% in the US.
Not true. As the charts in the wiki page tell you, while there was a lot of debt during WW II, or course, the recent debt accelerated during the Reagan years got better in the late Clinton years, and accelerate again from the Great Recession. If you google us debt as percentage of gdp the images have some good charts by President - these things don’t link well.
Do you have a cite for them not spending on infrastructure maintenance. I don’t know about Sweden (except the Stockholm subway) but rail infrastructure in Germany is pretty good. Maybe some of the extra money comes from that.
Much of Europe has much better vacation policies than the US does. This is mostly private spending, not government spending, and I wonder how much this accounts for.
Can’t you break a GDP into categories? R&D spending for example is something the US also does more of than other wealthy nations, we spend about 3% while most wealthy nations spend closer to 2%. I guess I dont’ understand why you can’t say a dollar spent on health care is a dollar you can’t spend on infrastructure or entertainment.
If you add R&D to the mix the US spends 25% of GDP on military, healthcare and R&D (there is obviously some overlap so maybe 24%, but for the sake of argument 25%). Most other wealthy nations spend about 13% combined on all 3. So for every $1000 in economic activity, a nation like the UK or Canada or Australia is only spending $130 on those 3 things while the US spends $250. That extra money has to go somewhere.
Redistribution, less time spent at work, better infrastructure, etc. have all been proposed and could be possible. But I don’t know for sure (like I was saying earlier though, South Korea & Japan work longer hours so I don’t think the second would apply to them). Even with redistribution the money has to go somewhere. If you take money from one group and give it to another, they still spend it and they aren’t spending it on military, health or R&D the amount the US does.
Canada, Australia, Sweden, Netherlands and a few other nations have a per capita GDP roughly equal to the US. The EU has a combined economy about the size of the US. So claiming you can’t compare nations is something I do not understand.
The thing is, GDP (as the name suggests, is a measure of production, not of consumption or expenditure. As a measure of production it’s a handy pointer to economic performance, and the relative significance of any economic field or sector can be measured by expressing that sector as a percentage of GDP. But a country’s economy isn’t neatly sliced up into non-overlapping fields or sectors, of which “healthcare” is one and “defence” is another. For example, part of the defence budget will be spend on healthcare for service personnel and, often, ex-service personnel. So if US healthcare expenditure is 18% of GDP, and defence spending is 4%, it doesn’t follow that the two will aggregate to 22%. They will in fact aggregate to something slightly less.
That particular overlap will probably be small, but others will be larger. For instance, a fair chunk of US healthcare expenditure would show up if you were measuring, say, US expenditure on financial services (because of the involvement of insurers in healthcare provision). A good deal of both health and defence expenditure would show up in expenditure on construction/infrastructure, or in expenditure on plant and machinery.
So, basically, it is not the case that a decision to spend a relatively large percentage of GDP on health and defence will always have a depressing effect on the GDP share of other fields of the economy. US defence spending, for instance, probably means that the US spends also a relatively large share of GDP on the aviation sector.
Japanese have quite inflexible job markets as far as I know. That means inefficiency. The downfall of Japanese economy seems to also coincide with effects of low birth rate starting to take effect.
About infrastructure and public services falling apart. I already mentioned housing people in shipping containers. I just read a news about high speed chase by Swedish police. They had to give up, because their work shift ended and their department couldn’t afford to pay for the officers for extra time. Swedes who can afford will now buy private health insurance, because public health system is crumbling. This is only one example, I have read and heard lots of stories about this subject. So first they pay highest (?) taxes in the world, then buy health insurance plan. http://www.thelocal.se/20140117/hospital-queues-tied-to-insurance-trend
About Swedish trains http://swedenreport.org/2014/11/24/trains-as-a-symptom/
You are right about Great Recession, I forgot to mention that. Still I believe the nature how USA and Western Europe get in debt is different. In Europe it’s more like “let’s buy fine creps today, someone will surely pay them tomorrow!”. Notable exception is Estonia, who survived even the Great Recession without taking debt. They simply lowered everyone’s salaries.
Germany is a bit unusual Western European country. Not only their character but also their society is more conservative, practical and market orientated. They have their problems too though, for example catastrophic birth rate and mostly failed integration of Turkish minority.
Interesting, thanks. Though some of those issues like school performance seem to be the result policies of the opposite type from those we associate with Sweden.
A couple of years ago new graduates from Spain were going to Germany to get jobs. Now things aren’t so hot. My daughter and son-in-law (he’s German) just moved from Frankfurt to Vegas and he was surprised at how easy it was to get a job here. The Eurozone crisis is affecting everyone.
It seems like I didn’t properly read this Guardian article before I posted it: I can see now they let a Swede to explain the situation! Whenever that is allowed they will almost certainly say something like “we only have to be a bit more Swedish and do things even more Swedish way, then this problem will disappear”.
As far as I see, doing things Swedish way ruined their schools in the first place. There is no discipline in schools, homeworks don’t exist, grades have been largely abolished so nobody will feel bad about them. Student who don’t speak Swedish and don’t have necessarily any prior education are simply put in same class with native Swedes. Widespread school arson is also problem, as it is difficult to study without school. In year 2009 there were 457 school burnings, half of which were confirmed arson. Remember, the population of Sweden is just 10 million.
Yes, think how amazed someone from Spain or Greece for example would be about that.
In Germany minimum salary is somewhat realistic but laying people off is really difficult, which makes getting a job much more difficult than it could be.