Business Magazine

What's the European Economy Really Like?

By Ovid @OvidPerl

<<="" real"="" by="" flickr"="" href="" todd="" technowannabe,="" baker="">What's the European economy really like?

Heidelberg, Germany
Photo by Todd Baker

While the article itself is rather gushing, one Remi Adekoya writes that Europe is still pretty close to paradise. His point isn't really that Europe is paradise on earth, but relative to most other areas of the planet, it is.
I'm always amazed at the number of Americans who think Europe is some kind of socialist hell where people are struggling under the weight of burdensome taxes. In fact, I just checked and at my current income level, my taxes here in France are only 3% higher than than what I would pay in Federal taxes back in the US. If you add in state and local taxes plus health care costs, at my current salary I'd take home less in the US than here in France. In reality, most Europeans do pay more in taxes than Americans and yes, they complain about it, but Europeans are happier than Americans. Despite the complaints, I don't know many Europeans who would make substantial changes to their way of life.
Of course, as the article makes clear, six out of the ten most competitive nations in the world are here in Europe and plenty of investment money flows our way. It should also be noted that while some claim that here in Europe you'll make a lower salary, they like to ignore all of the benefits we get for that salary. Wouldn't it be nice to graduate from university with no debt? What would you do with five weeks of vacation per year? Wouldn't it be a relief to know that you'll never face a medical bankruptcy or die from lack of health care?
But you know what? Despite the claims about US salaries, I'm not even that certain that the American does earn more money than his European counterpart. I know that I would (I've seen the salaries companies in the US keep waving in my direction), but given what I do for a living, I'm not a typical example. Instead, we can consider that the average American took home about $41,000 in 2011, but that's a gross distortion. If Bill Gates sits next to you, the two of you, on average, are multi-billionaires. Instead, consider the median (in the middle) wage of most Americans for 2011: about $27,000. That's a whopping huge difference. The latter, more accurate, statistic helps to explain how half of Americans are low income or live in poverty. Obviously we can't make a claim of "socialist hell" to explain the troubles in the US.
I think what sums everything up is when Adekoya writes:
The US offers more opportunity to the gifted, the entrepreneurial and the rich than Europe does. But those who don't fall into those categories are better off here. Were the average American blue-collar worker to see how his German, Dutch or British peers live, and the quality of healthcare and education accessible to them, he might start wondering if his country is indeed "the greatest nation on earth", as American politicians love to say. And let's not forget that US national debt is more than 100% of its GDP compared to the 83% for the EU, even with its often derided "welfare state".
So his only real caveat is that for certain sectors of society, the US offers more opportunity. But even this isn't really true. We've known for a long time that social mobility in the US is lower than in many European nations: the rich stay rich and the poor stay poor. However, the constant talk of the "American dream" likes to overlook this inconvenient truth.
Yes, Europe, like most developed areas of the planet is struggling right now, but we're doing pretty damned good. I often get email from people asking if it's a good time to move to Europe and it's true that there are problems, but I'm hard-pressed to imagine how things could be much better in the US. The main issue facing Europe now is a structural one dealing with monetary union without a fiscal union. This is a hard problem to solve and if it's not dealt with, things could go very badly here. It's bad enough that even respectable publications speculate on the breakup of Europe.
If there's one thing to know about Europe: it's capitalist through-and-through (surprise!), with voters having decided on various means of correcting some of the worst social problems. Despite the economic issues, life is still pretty good here, relative to many other countries.
Update: And I just stumbled across this little gem. The Euro-bashing needs to stop.

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