The “socialism” of Europe is often criticized dismissively by U.S. politicians. Paul Krugman writes in the New York Times today, “For example, does Hillary Clinton have a plan to cover the millions of Americans who lack health insurance? ‘She takes her inspiration from European bureaucracies,’ sneers Mitt Romney.”
According to Krugman, sneering at the economic progress of Europe may be a thing of the past. “Europe’s economy is actually doing O.K. these days, despite a level of taxing and spending beyond the wildest ambitions of America,” he writes. Excerpts from the article:
- Today I’d like to talk about a much-derided contender making a surprising comeback, a comeback that calls into question much of the conventional wisdom of American politics. No, I’m not talking about a politician. I’m talking about an economy — specifically, the European economy, which many Americans assume is tired and spent but has lately been showing surprising vitality.
- It’s important to get the facts about Europe’s economy right because the alleged woes of that economy play an important role in American political discourse, usually as an excuse for the insecurities and injustices of our own society.
- Are top U.S. executives grossly overpaid? According to a Times report, Michael Jensen, a professor emeritus at Harvard’s Graduate School of Business whose theories helped pave the way for gigantic paychecks, considers executive excess “an acceptable price to pay for an American economy that he believes has outstripped Japan and Europe in growth and prosperity.”In fact, however, tales of a moribund Europe are greatly exaggerated.
- It’s true that Europe has had a lot of economic troubles over the past generation. In the mid-1970s the Continent entered a prolonged era of sluggish job creation, which contrasted with vigorous employment growth in the United States.
- Since 2000, employment has actually grown a bit faster in Europe than in the United States — and since Europe has a lower rate of population growth, this has translated into a substantial rise in the percentage of working-age Europeans with jobs, even as America’s employment-population ratio has declined.
- In particular, in the prime working years, from 25 to 54, the big gap between European and U.S. employment rates that existed a decade ago has been largely eliminated. If you think Europe is a place where lots of able-bodied adults just sit at home collecting welfare checks, think again.
- The number of broadband connections per 100 people in the 15 countries that were members of the European Union before it was enlarged in 2004, is slightly higher than in the U.S. — and Europe’s connections are both substantially faster and substantially cheaper than ours.
- I don’t want to exaggerate the good news. Europe continues to have many economic problems. But who doesn’t? The fact is that Europe’s economy looks a lot better now — both in absolute terms and compared with our economy — than it did a decade ago.
- What’s behind Europe’s comeback? It’s a complicated story, probably involving a combination of deregulation (which has expanded job opportunities) and smart regulation. One of the keys to Europe’s broadband success is that unlike U.S. regulators, many European governments have promoted competition, preventing phone and cable companies from monopolizing broadband access.
- What European countries definitely haven’t done is dismantle their strong social safety nets. Universal health care is a given. So are a variety of programs that support families in trouble, helping protect Europeans from the extreme poverty all too common in this country. All of this costs money — even though European countries spend far less on health care than we do — and European taxes are very high by U.S. standards.
- In short, Europe continues to be a big-government sort of place. And that’s why it’s important to get the real story of the European economy out there. According to the anti-government ideology that dominates much U.S. political discussion, low taxes and a weak social safety net are essential to prosperity. Try to make the lives of Americans even slightly more secure, we’re told, and the economy will shrivel up — the same way it supposedly has in Europe.
- But the next time a politician tries to scare you with the European bogeyman, bear this in mind: Europe’s economy is actually doing O.K. these days, despite a level of taxing and spending beyond the wildest ambitions of America
From the New York Times, “The Comeback Continent,” written by Paul Krugman
>What’s behind Europe’s comeback? It’s a complicated story, probably involving a combination of deregulation (which has expanded job opportunities) and smart regulation. One of the keys to Europe’s broadband success is that unlike U.S. regulators, many European governments have promoted competition, preventing phone and cable companies from monopolizing broadband access.
Mike, this sounds like capitalism: Promoting competition, deregulation. We can attribute Europe’s progress to their adopting capitalism? Good for them!
Note that the “supply and demand” theory of economics presumes a perfectly competitive marketplace. If all media providers have equal access to all consumers, then the law of supply and demand operates. If one media corporation controls the means of distribution, then it does not.
In Europe, the government decides what infrastructure will provide media; the media corporations then have equal access to that infrastructure. In the USA, the media corporations bid on and subsequently own the rights to infrastructure in particular geographical regions.
If you want the European model here, then the US government or the state of Ohio would own all the cable and phone lines, not Time-Warner and AT&T.
Interesting take by Mr. Ruddick and I like it, but the key to Europe is tied to many things and its success may be fleeting depending on the weight of:
Combining under a common currency whichs is currently in favor of more petro dollars due to America’s actions
The selection of an excellent Europe wide, efficient, public transportation system, which is a social (istic) mode of transportation.
Dense population that still has ties to the land, so monocropping is less of an issue.
Differing Country policies allow for selection of the appropriate model to emulate, Unlike the States – France chose to proceed down a Nuclear Path, while England pumped oil from the North Sea and Germany invested in Rewnewables. These types of experirements are not done on a State Basis anymore due to centralized planning at the Federal Level. In addition each Country in the EU also as different social policies that are tolerated in the same area as the US, allowing for people to either a) emulate that policy or b) take a train to participate in that social experiement.
The preceding is my definition of
Yes, I agree, good for them, now we better catch up!
I’m of the mind that promoting any “ism” to the exclusion of others is an error.
Capitalism works rather well when we are dealing with goods when their consumption is somewhat arbitrary. It fails when the goods are in limited supply yet essential. I can live without a large-screen TV, and so the manufacturers have incentives to keep their prices competitive; I cannot live without health care, and so those who keep the gates to the hospital and pharmacy have ample opportunity to squeeze my last penny from me.
Some nations manage to discover how to operate in a pluralistic system where free markets rule when they work well, and centralized control is imposed when it works better. That’s the “ism” I’d like to see–pluralism and pragmatism–rather than a simplistic devotion to a single economic system when, thus far, no single system has been shown to work for the common good consistently.