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June 21, 2004
The Failure Of European Socialism

If anyone in the United States points out the relative stagnation of the European economy in relation to ours, that person would be castigated as a closed-minded Americacentric demagogue. Fortunately, as yesterday's OpinionJournal article informs us, the Europeans have reached much the same conclusion. A new study by Sweden -- a bastion of cradle-to-grave nanny-statism -- shows that the European standard of living has fallen far off the pace of American life:

The study, "The EU vs. USA," was done by a pair of economists--Fredrik Bergstrom and Robert Gidehag--for the Swedish think tank Timbro. It found that if Europe were part of the U.S., only tiny Luxembourg could rival the richest of the 50 American states in gross domestic product per capita. Most European countries would rank below the U.S. average, as the chart below shows. ... Germany and ArkansasU.S. GDP per capita was a whopping 32% higher than the EU average in 2000, and the gap hasn't closed since. It is so wide that if the U.S. economy had frozen in place at 2000 levels while Europe grew, the Continent would still require years to catch up. Ireland, which has lower tax burdens and fewer regulations than the rest of the EU, would be the first but only by 2005. Switzerland, not a member of the EU, and Britain would get there by 2010. But Germany and Spain would need until 2015, while Italy, Sweden and Portugal would have to wait until 2022.

Not only does Germany's GDP barely surpass that of Arkansas, one of the poorer states in the US, but the standard of living of our poor almost outstrips that of the European average. For instance, those Americans designated as living in poverty dwell in a space averaging 1200 square feet, while Europeans as a whole average 1000 square feet. 77% of Americans living in poverty have air conditioning, a luury item in Europe and the lack of which in France led to over 15,000 deaths last summer, during a prolonged heat wave.

Why are the standards for these highly industrialized nations lagging so far behind the US? The study's authors conclude that their "expansion of the public sector into overripe welfare states" probably has caused their economic progress to lag. As the editorial notes, this is hardly a cause for celebration in the US. For one thing, the poor GDP keeps Europe from contributing to its own defense and the overall defense of the West, and that's hardly likely to change when the new EU ossifies the nanny state across the entire continent. The "guaranteed" entitlements provide little motivation for innovation and production; although this means that the US continues to lead in innovation, the creative gap will continue to exacerbate hard feelings on both sides of the Atlantic, as we have seen with various merger proposals such as GE-Honeywell being shot down by the EU. Lastly, the easy lure of the nanny state continues to exert a sort of siren's call for the American Left, and Europe's now-obvious decline -- even to Europeans -- may not be enough to keep such programs from being enacted here in the name of economic normalization.

The Timbro study should give the Western nations a much-needed slap to awaken them to the realities of socialism. Let's hope the slap is hard enough to keep them awake. (via Memeorandum, where you can not only get the hottest stories in the blogosphere, but also see the reactions from both right and left)

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Posted by Ed Morrissey at June 21, 2004 8:23 AM

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» A Couple of Honest Swedes from Jack Of Clubs
Good points, to be sure, but I think a little nationalist glee may be in order. Especially when you consider that Europe's spiritual state is probably in worse condition than its economic health. UPDATE: Captain Ed has more comments. [Read More]

Tracked on June 21, 2004 7:26 PM

» Linkology 101 For the Week of 21 June from Cranial Cavity
Enjoy this weeks "best of" ... gotta run. Busy, busy, busy day. Mike emerges from the closet, and admits he is a Neanderthal. Hardly news, but well worth the read. Damon Dimmick - "How John Kerry Lost My Vote." Over a bowl of Specia... [Read More]

Tracked on June 27, 2004 4:29 AM

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