Old Europe

I missed it, but Paul Krugman wrote a column the other day declaring that Americans can learn to love Obamacare and other social democratic experiments if they would just realize what a dynamic economic powerhouse Europe is. Kurgman's penultimate conclusion: you can combine progressive politics with robust growth if you are willing to be brave. That's a standard argument for the American Left, which looks at Europe longingly. I'm sure heads were nodding around breakfast tables all over blue-state America. But, Krugman's column has inspired some tart commentary from his fellow economists: Learning From Europe

Megan McArdle says American tourists might get the idea that Europe is wealthy because of all that beautiful architecture. But, if you try to live like a European, your standard of living will be noticeably lower.

But the standard of living in any given profession is much lower. Preserving London's dazzling antique architecture has meant that most of the people I knew had much longer and more expensive commutes than their American counterparts would. They lived in smaller quarters that were hotter in summer and colder in winter. At any given professional level, you found British people doing things that only much poorer Americans would do, like bringing lunch, hanging their clothes to dry, or going without cable (though the Americans I knew said the cable wasn't worth it anyway). People in Britain are not poor. But they have a noticeably lower standard of living than Americans do.

Greg Mankiw points out that GDP per capita in the US is much higher than that of any European country

Tyler Cowan points out that comparing the US to Europe is beside the point since any social democratic experimentation tried out in the US will be starting from a much different level than "Europe"

Countries have to start from where they're at. If you're constructing policy advice, you can either build on what a country is really good at or you can try to revise the internal culture of the country. If you're going to do the latter, come out and say so. Most of my policy recommendations are based on the former approach, namely strengthening what (the better-functioning) countries already are good at. I'm not suggesting that countries never change, but getting such changes right by deliberate policy interventions is very hard to do. I wish to stress this point applies to the pro-U.S. as much as the pro-Europe side.

I'd like everyone to have a sign, which they would hold up when appropriate: "My policies seek to revise the internal culture of my country." That's OK, but you're raising the bar for your own ideas and don't fool yourself into thinking otherwise.

And, best of all, Super-Economy points out that the poorest US states outrank the richest European ones

If France were to became an American state, it would be the 50th poorest, below Arkansas.

The EU.15 as a whole, which Krugman presents to his readers an economy as dynamic as the US, would be the 49th poorest state,below Alabama, a State that Paul Krugman ridiculed in 2005. Few Americans consider Alabama a dynamic state, because of the low average income (even though, hardly surprisingly, the poorer southern states have much faster per capita growth rates than the rich states such as New York). Why than should we consider Europe a dynamic region?

Even the richer European countries do not fare well against American states (the exceptions being oil rich Norway, financial city state of Luxembourg, free market Ireland and capitalist utopia Switzerland). Denmark and Sweden barely inch ahead of Kentucky, below Louisiana, New Mexico and Missouri. Minnesota is 34.4% richer than Sweden.

Now, sure, Europe has a lot more snob appeal and "culture." But, if you have spent any time around European's in the US - the immigrants, not the tourists - you will hear plenty of complaints about how tough it is to run a small business there. And, if you spend enough time riding the subways around the suburbs of Paris, you will see a lot frankly crummy neighborhoods with block after block of sterile, concrete-shelled apartment buildings. And, Krugman and his fellow travelers would never admit this, but western Europe has benefited from the US military's protective umbrella ever since the end of WW2.

Without the dynamic US economy, the European economy would be in even worse shape. Put that in a column sometime.