Guest Editorial

U.S. economic system stacks up well against European counterparts


Some critics of the American economic system point to Europe as the model we should emulate: shorter work hours, longer vacations, generous employee benefits, and in some cases, an employer has to get the government's permission to fire a worker.

"Money isn't everything," these people say. "Europeans have a better quality of life." Really? Let's take a look.

According to a recent report by two economists at Sweden's Timbro Institute, the quality of life in Europe is pretty bad. France, Italy, Great Britain and Germany have lower per capita GDP than all but four of the states in the United States. In fact, if the European Union were a state in the United States, it would be among the poorest, on a par with Arkansas, Mississippi or West Virginia.

It is true that most Europeans work less than Americans. It is also true that they have less to show for it. The average house in Europe is about half the size of the average American home. In fact, the average European home is smaller than the homes of Americans who live in poverty.

Speaking of poverty, the percentage of poor people in the U.S. has diminished over the past several decades. For example in 1959, 22 percent of all Americans lived below the poverty line. Today, it's 12 percent.

Conditions also have steadily improved for minorities. In 1959, 55 percent of African Americans lived in poverty. Today, it's 24 percent. Not great, but better.

But what is poverty in America? The Swedish authors surveyed poor Americans to get a picture of how they live. They found that 45 percent of poor Americans own their own homes, 73 percent own a car, 97 percent own a color television, and more than half own two or more color TVs. Two out of three poor households in American have cable or satellite TV and one in four has a wide screen television. As the authors remarked, "It is better to be poor in a rich country than in a poor one."

How does this compare to Europe? According to the authors, at least 40 percent of all European households would be considered poverty-stricken in America.

So, what does this tell us? It tells us that despite all our problems, we're on the right track. Conditions are better here than in most of the rest of the world, and they're getting better for the poorest among us.

The study confirms that high taxes and burdensome regulations strangle initiative and economic growth. When that happens, it is the individual who suffers. Italy, France, Germany and Spain all have unemployment rates 50 percent to 100 percent higher than the U.S., and many of the jobs in those countries and other EU members are actually public-sector jobs that "produce" nothing.

Europeans may have an easier time at work, but shorter work hours, longer vacations and great benefits don't matter if you don't have a job.

Since jobs are the focal point of this year's presidential campaign, the Timbro Institute study ought to give us something to think about.

Don C. Brunell is President of the Association of Washington Business.


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