Europe v. US: Economic Indicators of Success

The most recent edition of The American Enterprise contains a symposium on the growing divergence between America and Europe.  Anyone caring for the full details can consult that publication for themselves, but a few statistics jump out. 

German economic growth averaged a paltry 1.4% per annum over the course of the last decade.  The productivity of European workers reaches only 73% of that of their American counterparts.  Unemployment in Europe routinely runs at 9-10%.  European economic growth approximates 1% per annum; in America, we consider the 3%+ we experienced anemic.  While our stock market declined 23%, some European markets lost more than 40% of their value.

Why?  Well, one reason is that the federal government in America – while hugely bloated – spends 19% of GDP, down from 24% when Reagan started the downward trend. Total governmental spending – also hugely bloated – is 33% or so.  In Europe, governmental spending is often twice that level.

So, if you're Paul Krugman – columnist for The Times – or Jon Shure – who writes for PoliticsNJ.com – you view the evidence and conclude ... that America should be more like Europe.

European social (socialist) policies provide that every worker receives huge amounts of paid vacations, generous disability benefits, "free" medical care, and the like.  The inevitable result is that relatively few "workers" stay that way for long.  They work less, produce less when they do work, and sponge off their productive brethren more.  Immigrants, often, end up on welfare, rather than at work.  Since 1970, Europe has produced a pitiful 5 million new jobs; America created 57 million.  The average tax rate in Germany is 43%, more (in theory), than America's highest bracket.

To Krugman, such circumstances are just ducky, provided that everyone is poor together.  He routinely laments growing income inequality in America, pointing to Sweden as a more egalitarian example.  And on some levels, he's right.  ‘Course, if one prefers 25% of a $100 economy to 10% of a $1,000 economy, one's on firm ground.   Krugman reminds one as nothing so much as a spoiled child, endlessly concerned that someone else might have gotten "more", perpetually, petulantly whining, "It's not FAIR". 

(On other levels, though, Scandinavian policies would probably give Krugman indigestion.  They all offer school vouchers; they are moving toward Social Security "privatization" (HORRORS!!)  Capital gains taxes tend to be low or absent; ditto property taxes.  And they have produced a few influential "conservatives" – on several levels – who understand the failure of socialism and apocalyptic environmentalism, having witnessed same first hand.)

Shure is pretty much on the same page as Krugman.  He insists, in a column on PoliticsNJ.com, that:

"The reality of the 21st Century is that balancing work and family is a task too big for people to solve on their own. It demands a public policy solution that involves government, business and workers coming together."

Really! (I'm not making this up)

Translating from liberal-speak, Shure insists that working and raising kids is simply too much for us poor, benighted, over-stressed parents to handle without a governmental nanny.  Oh, sure, of old, families raised children, educated them, ran the farm or what have you, pretty much on their own.  Now, though, society is just so gosh darn complex that people cannot be expected to juggle work and soccer practice without a governmental program.  Perhaps free jitney service to and from the field?  (With a union scale driver, of course.)

Kindergeld, the Europeans call it.  And a fat lot of good it has done them.  Not only are their (very equal, thank you) economies in the crapper, but the number of children per family has dropped below replacement level.

Now, a truly family friendly policy would be to continue slashing taxes so that families could keep more of what they earn and take care of their own kids.  It could involve ending the Alternative Minimum Tax, which penalizes large, middle class families.  It should involve real school choice, which would have the happy consequences of cutting educational costs AND increasing personal freedom.  Instead of subsidizing child care, equal allocation of income to each spouse on tax returns would decrease taxes for many families with stay at home parents (who, of course, receive absolutely no benefit from a paid family leave policy).  It would involve increasing the standard deduction.  You get the point.

But liberals don't want to hear THAT, because it would involve taking money away from government and implies – no, reaffirms – that families can, for the most part, manage quite nicely without "help" from the government.  Indeed, parents would benefit mightily if the government offered a lot less "help", as they would then be freer to raise their children as they see fit.

The Europeans are – ever so slowly – recognizing that Big Government and generous social spending undercut the economy, poisons initiative, and encourages dependence.  We should heed the Bad Example they have set, reject the advice of leftists like Krugman and Shure, and enjoy the bounty our free(r) economy produces.