One of the fables that socialists like to tell is how wonderful life is in their peoples’ paradises. From risible stories about how the Cuban people have world-class health care freely available to all and are 100% literate, to more plausible, but equally erroneous, tales about how our Scandinavian brethren manage to have a high standard of living, short work weeks, a benevolent welfare state, etc., these tales are inevitably spun by statists seeking to cast dust in the eyes of their more plebeian subjects the better to hide the failure of their grand schemes.
The received wisdom about economic life in the Nordic countries is easily summed up: people here are incomparably affluent, with all their needs met by an efficient welfare state.
Not so fast. Even in the notoriously socialist-freindly confines of the New York Times, hard economic truths have a way of making themselves felt eventually. What the Times has belatedly discovered about its beloved third way socialist-lite economies is that they are falling behind, shackled to the dead weight of the welfare state, the enervation it breeds, and the taxes it imposes.
All this was illuminated last year in a study by a Swedish research organization, Timbro, which compared the gross domestic products of the 15 European Union members (before the 2004 expansion) with those of the 50 American states and the District of Columbia. (Norway, not being a member of the union, was not included.)
After adjusting the figures for the different purchasing powers of the dollar and euro, the only European country whose economic output per person was greater than the United States average was the tiny tax haven of Luxembourg, which ranked third, just behind Delaware and slightly ahead of Connecticut.
The next European country on the list was Ireland, down at 41st place out of 66; Sweden was 14th from the bottom (after Alabama), followed by Oklahoma, and then Britain, France, Finland, Germany and Italy. The bottom three spots on the list went to Spain, Portugal and Greece.
Alternatively, the study found, if the E.U. was treated as a single American state, it would rank fifth from the bottom, topping only Arkansas, Montana, West Virginia and Mississippi.
While the private-consumption figure for the United States was $32,900 per person, the countries of Western Europe (again excepting Luxembourg, at $29,450) ranged between $13,850 and $23,500, with Norway at $18,350.
Faced with the undeniable economic reality that they have almost eaten their way through the economic seed corn laid up by their frugal ancestors, what do the current panjandrums of the welfare state do? Why, they lie, of course.
Meanwhile, the references to Norway as “the world’s richest country” keep on coming. An April 2 article in Dagsavisen, a major Oslo daily, asked: How is it that “in the world’s richest country we’re tearing down social services that were built up when Norway was much poorer?“
Measuring based on a ‘private consumption’ figure is drastically flawed for some very very obvious reasons – for example, in the USA, healthcare would be taken as ‘private consumption’ whereas in most of the EU, it would not be.
There are others, as well (such as credit and the prevalence of it.)
Based on my experience of living in the USA for three years, there are some additional “balancing” issues. Here in the centre of Edinburgh, I don’t *have* to own a car (and I don’t at the moment). In Overland Park, KS we needed one each for me and my wife. We don’t need to spend a fortune on energy here to heat the place up from -20C in winter and cool it down from 40C in summer.
On the other hand, if I have to fill in another damned child tax voucher credit scheme bonusball giveaway form to get my own money back, I’ll scream.
Cool down from 40C in summer – here in Edinburgh???
Powerline has a link to an article in City Journal about the British descent into collectivism, with some nice references to Orwell, Hayek, and others. The author makes some interesting points about the sources of the intellectual case for socialism, and the results, seen and unseen, of collectivism in action.
Relax Mike, I think Martin is referring to Overland Park, Kansas, USA.
That’s only the official numbers. To avoid the high taxes and onerous regulations a lot of people work ‘off the books’. In Germany about 16 million people are involved in this, eithe as customers or suppliers of ‘black’ labor, goods and services. They account for about 350 to 400 million Euros, about 25 % of official GDP.
There’s agood reason for that, for the various taxes and levies amount to pretty nifty multiplicator: If a plumber and a carpenter charge the same hourly rate, they both have to work 5 hours to pay for a single hour of each others services. The difference between before- and after-tax is that big, so a lot of people simply barter. That’s illegal, of course, and you can go to jail for it, but to them it’s better than going bankrupt and being unable to ever pay off their debt.
I’m making Robert’s point here, of course, for this higher than reported GDP is in spite and not because of government.
PS: At least we don’t have to pay 30 to 50 Euros for a Pizza, like the Norwegians – it’s more like 50 to 10. 🙂
That should have been ‘350 to 400 billion Euros’,
not millions, of course.
Sorry, nope, this is a dreadful piece of analysis comparing all sorts of “wrong” things. Harvey points out some of the others, but other things like University Education will be “private” comsumption, costing a few thousand dollars in most of Europe (if it costs at all) but costing the average American tens or hundreds of thousands of dollars.
There are lots and lots of similar examples.
PPP per capita is a dreadful means of comparing nations or states for that matter.
But, of course, all consumption is ultimately private, just as all taxes are ultimately levied on the individual, no?
This doesn’t refute the criticisms above, of course, but since these critiques are well known and foreseeable, why would one assume that they wouldn’t have been corrected for, especially as the studies come from sources that are not opposed to socialism-lite?
As for health care and education, both are massively, though not entirely, financed through state means in the US as well. The vast majority of schooling though age 18 is state schooling, most of the large universities are state universities that enjoy large subsidies, and of course tax money pays for something in the neighborhood of half of the health care in the US, depending on how you count indirect tax subsidies.
The way I read it, the study and the article were more founded on output (GDP) as opposed to consumption (PPP). The consumption aspect was only some kind of afterthought or byproduct. So all the criticisms above are not reactions to the main premise of the article.
veryretired – the writer you refer to in this issue of City Journal is the sainted social commentator and observer of Britain’s dismal underside, Theodore Dalrymple. He also writes, on different issues, under his real name, Anthony Daniels.
Is this what passes as journalism in the US? Anecdotal nonsense about lunch boxes and one-dimensional economic gymnastics about who is ”richer” – whatever that means…
In my several forays across the Scandinavian territories, i have yet to discover cut-price firearms in the bargain bins of suburban supermarkets.
I think this demonstrates which culture is the ”richer”
No, Trysca, what it demonstrates is your ignorance.
On the contrary, David B.–it demonstrates tryusca’s obvious superiority over us benighted people who believe in REAL freedom, as opposed to the phony kind doled out (pun intended) in socialist Europe.
On the contrary, David B.–it demonstrates trysca’s obvious intellectual superiority over us benighted peons who believe in REAL freedom, as opposed to the phony kind doled out (pun intended) in socialist Europe.
Richard, I may have misread trysca’s comment, that may have been the point. 🙂
The funniest thing about trysca’s comment is here scorn for “Anecdotal nonsense”, then in the next sentence she provides some herself.
Trysca is generally correct. You can’t buy handguns in large parts of Europe. Unless you’re a criminal, of course, in which case there are ways to procure pretty much anything, often smuggled through Yugoslavia.
In other words, you are denied the right to defend your own person and property from the most violent elements. And it’s all for your own good, of course. Isn’t it so much more civilized when everyone is as much of a potential helpless victim as anyone else ?
trysca thinks a populace living placidly, trusting their government to ban anything that it deems not good for them demonstrates a “rich culture”.
A poor culture must be where people have a choice.
Surely it’s not true that pizzas in Norway cost 30 to 50 euros? That’s $40 to $65! For a pizza! It’s not the long winter nights that are driving them to despairing suicide; it’s having to pay $80 for a bottle of vodka and $65 for a pizza! What do they do to go out to a nice restaurant for a meal with a couple of cocktails followed by a bottle of wine? Or is this a once-in-a-lifetime special experience for the average Bjorn?
Remind me to stay away from those “rich cultures” and go slumming with the (armed) Americans.
sorry for the double post, folks….
Richard, haven’t you, in effect, turned your double post into a triple post by apologizing? (And I am now turning that triple post into a quadruple post . . . I wonder if it will continue)
This idea of 30-50 Euros for a delivery pizza seems very odd. I know that people will adjust to different costs of goods to some extent, but at that level it’s hard to imagine that there are more than a handful of pizza joints, serving high-end neighborhoods, in the entire country.
Not saying it’s not true, just strange.
Haha Ironchef, you’re quite right! Though I doubt she’ll realise.
John B – this is true, Richard’s doublepost, apology and your followup has lengthened the thread. However, the true hero is trysca, who gave us enough fodder to keep this thread going for at least another half day or so, thanks to her dim-witted comment. She was even so courteous as to use as an example the issue we all love – gun control.
Surely it’s not true that pizzas in Norway cost 30 to 50 euros?
No, it’s not true. A quick Googling suggests that a home delivery pizza in Oslo runs around the 55Kr mark, so at current exchange rates that’s pusing $10, but using historical ones that’s around $7(ish) – expensive but not bang out of order.
Norway is an expensive place for booze though, then again, so are many places even in the sainted US of A.
Based on no more than personal experience (I used to go out with a Norweigian) they eat out a reasonable amount because there are other areas where they save money. They also drink out in bars, although that’s a pretty scary pastime unless you live and drink somewhere like central London.
Verity,
normally, I enjoy reading your comments but for once, you’ve come out with a complete pile of tosh. Have you ever been to Norway? Have you lived and worked there? What do you know about the place? Masses of starving, ragged Norwegians, unable to afford a mouthful of food? Empty shops and restaurants? A bowed, cowed population unable to afford a thimble full of beer? I think not. Yes, the cost of living is much higher compared to the UK and the quality of some goods can be poor, but from my own experience, the salary I’m earning here is relatively higher than what I was getting in the UK so it more or less balances out. From what I’ve seen, “poor” Bjorn and his friends are quite happy to wine and dine regularly. A high cost of living may not do Norway any favours with the rest of the world but at least it keeps the unwashed oi polloi out.
Oh yes, and on the matter of guns… there’s a local branch of MX Sport (a retail chain similar to JJB Sports in Britain) where you can wander in, and buy a gun (yes, yes, with the right documentation of course). You can’t do that in “free” Britain eh? Norway has, I believe, one of the highest rates of gun ownership in geographical europe. Trysca – if you ever visited Norway, you went around with your head firmly inserted in a place where the sun doesn’t shine…
why would one assume that they wouldn’t have been corrected for, especially as the studies come from sources that are not opposed to socialism-lite?
I’m dubious because of the spin the author of the article put on this. Especially his rather silly comments about packed lunches. I work for an IT company where most of our guys are pretty well paid and the majority of whom bring packed lunches for a mixture of reasons. I occasionally bring one too.
He references the $34 pizza but a quick trawl around the Net and direct personal experience inform me this is not the case. I’d like to know what this place is and perhaps we’d see why they’re over 3 times the cost of other take away places.
However, $34 for a delivered pizza? Is that at current dollar values? In which case my local pizza hut will charge you in the region of $30 for a large deep crust with a couple of extra toppings – but when rendered into local money – pounds – it’s not as bad. A few years ago, that $30 pizza would have been under $20.
…the studies come from sources that are not opposed to socialism-lite?
Really? From the (Link) TImbro website…
“Timbro is the leading free-market think tank in Scandinavia, founded in 1978 and located in Stockholm, Sweden. For 25 years Timbro has advanced a positive agenda for change based on classical liberal values and the free-market philosophy.”
Doesn’t sound like a proponent of “socialism lite” to me. Sounds like they’ve got an axe, maybe a valid one mind you, to grind with Sweden and the way the region is run.
Mark Steyn recently hit the nail on the head, taking another angle at European nanny statism. Life over there is more and more like spending your life being a teenager. You have zero choice on everything that matters hugely in your life : education, security and safety, health care, retirement. A huge chunk of your money is taken to impose inefficient, wasteful and corrupt one-size-fits-all ‘solutions’ to all these.
You are free to spend the rest – the pocket money Nanny is kind enough to leave you as an allowance – on trinkets such as pint-size cars, DVDs, CDs and Michael Moore books. Oh, and don’t forget the 20% VAT on those. Thank you.
Mark Twain once said there are three kinds of lies: lies, damned lies and statistics.
There are real problems in the UK — just ask any reasonably aware citizen. Too many of them are caused by the nanny state.
Still, though, I wonder more than sometimes about how much better off we are here in the U.S.
I can make a direct comparison to a family in the UK. My cousin Harry and his wife Anita live on the outskirts of Nottingham. No, they are not American transplants. They were born into working class families over 50 years ago. They were fortunate enough to attend university. Harry made a career out of being a school teacher. Harry and Anita live in a house comparable to mine. Mine might cost more, but that’s simply a matter of location. They own one automobile, as do I. They manage to travel a bit more than I do. I’ve skied in France. They’ve been to China. In short, while they’re fine people, they don’t seem that much out of the ordinary.
My life in the DC area isn’t bad by any stretch of the imagination. Why, though, do I see my English cousins as having better lives than mine? This is a real question we should examine. What are they doing better than us? What are we doing better than them?
Perhaps we can learn things that will make our lives better.
Chuck – I appreciate your example. However, do you think that examining one family in each country is perhaps not the best way to compare the wealth of two nations?
It might be the old “grass is greener” fable in practice. You’ve visited them, I presume. You were holidaying. You were taking time out to smell the roses. They probably feel the same way when they visit you in the States. I believe the States has the wealth advantage over Europe due to its relatively big upper class, which is far larger and far wealthier than that in Europe.
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