Why is the USA so much richer than the EU?
Each person in the USA is on average somewhere between one third and 60 percent better off than the average EU citizen. Why is the EU in the slow lane, and proud of it?
We are always told the EU model is the best in the world, combining free enterprise to deliver the goods with bigger government to enforce redistribution and social justice. We are told by many that this model gives us all a better lifestyle. We are told that the wonderful single market provides the driver for more jobs and greater prosperity.
I have often commented on how the single market measures are frequently counter productive, leading to higher costs and fewer jobs. I have regularly pointed to the very poor record of the Euro area on employment and unemployment, showing they have got a lot wrong. Today I want to look at the big picture of overall income levels in the EU.
In 2013, the average US income was a healthy $53,000. The average EU income was a much more modest $34,000. If you allow for the fact that some of the smaller and more recent members of the union have further to catch up with the EU average, you could get the adjusted EU level up to nearer $40,000.
So each person in the USA is on average somewhere between one third and 60 percent better off than the average EU citizen, depending on how much grace you wish to give the EU for its more recently joined poorer members.
These are huge differences. Why is no-one at EU level worried about it? Why is there no plan to ask what does the USA get right economically that the EU gets wrong? Why is their so much anti American rhetoric and so little understanding of the free enterprise system which has greater sway in the US than in the EU?
I am no uncritical fan of all things US. I am an opponent of neo-con military interventionism. The USA has more than its fair share of rules and lawyers seeking to slow down its enterprise economy. Compared to the EU, however, it gets a lot more right economically.
Take energy policy. It is busy producing more of its own energy and going for cheaper energy to fuel its reindustrialisation and heat its homes. At the same time the EU is busily shutting down cheap energy facilities and making itself ever more dependent on a lethal mix of very expensive and unreliable renewables and imported gas from Russia.
Or take transport. The USA provides roadspace for flexible cars and trucks to get people around its single market. The EU does what it can to make driving more expensive and more frustrating at every turn.
Look at modern technology. The USA leads the world with its digital revolution. The EU struggles to keep up, and mainly uses large US based service providers to automate its own activities.
The USA dominates the university world , the world of knowledge, with most of the world’s leading institutions. Only the UK from the EU manages a couple of entries in the top ten.
There is no evidence that EU membership is helping us catch up with the economic success of America. There is a disappointing lack of energy about the EU when it comes to helping business and entrepreneurs. The EU is in the slow lane, and proud of it.
Mr. Redwood's writing is re-posted here by his kind permission. This and other articles are available at johnredwoodsdiary.com
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