Ali’s blog

Mostly quant stuff with occasional digressions

The Comeback Continent

Posted by alifinmath on January 11, 2008

I kiss the tarmac each time I land in Europe and I’m profoundly grateful to be an EU citizen. So this NYT column, by Paul Krugman, is of more than incidental interest to me:

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.

Meanwhile, Europe’s Internet lag is a thing of the past. The dial-up Internet of the 1990s was dominated by the United States. But as dial-up has given way to broadband, Europe has more than kept up. 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.

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 American progressives.

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