So in the comments to my last blog I had some outstanding questions that hit on the topics I really hoped to discuss. So rather than commenting only in the comment section I thought I would give my take on them in a separate blog.
Eric was the person who asked the questions and he has an outstanding blog himself that you can see here.
We are both Christians but I think we have some different economic and political views. But let’s get to the comments and questions. For clarity I will put his comments in green and my views in blue.
Hi Joe, this is a very interesting post. I am intrigued why you posted this information. I am also interested that you have based your comments on wealth, not on any other measure of wellbeing – which I find curious because a christian surely knows that there are things more important than wealth.
Yes I absolutely agree with you. Certainly, I do not want people to think that wealth is what is most important to me and I would strenuously disagree with anyone saying that would be a Christian outlook. The reason I focused on wealth is because the policies I was mostly taking aim at were economic policies – such as minimum wage, socializing sectors of the economy, adding government regulation to what businesses can do etc. I do agree these policies can have impacts outside of the direct economic policy but those arguments tend to become more speculative.
In other words saying
- These countries have these economic policies and here is the empirical data on how their economy is doing.
seems more closely connected then saying
- These countries have these economic policies and here is there overall happiness measurements.
That is why I focused on the economic impact.
The reason I made the post is because I often see comparisons with tiny Scandinavian countries in discussion about the United States and what our economic policies should be. And the responses and arguments seem to revolve around whether these tiny countries are “socialist” or not. My view is they are more down the road of socialism than we are but drawing hard and fast rules on what is socialism is not all that fruitful.
The bigger problem with the comparison is that it is cherry picking in the extreme. That is the majority of countries in Western Europe that have economic policies that are much closer to socialism than the USA and on the whole they are overwhelmingly doing much worse than the USA. So I am suggesting that instead of just looking at the extremes maybe we should look at an overall picture.
So I am not saying lets focus on Greece or Norway but lets consider all the western European countries including Italy and Spain and France and the UK. I also would agree that Eastern European countries have some unique problems trying to get over the socialist disasters that they had to live through. So I am fine with not including former soviet bloc countries. I am fine with including or excluding Germany.
If you only take the top tiny countries then the better comparison would be to compare them with the top US states. And you will find that the top US states outperform them economically – with the exception of Luxembourg which is so small it is more like a town in the US rather than a whole state.
So there is another way of looking at these things. I have looked at some other factors globally, especially for the USA, Scandinavia and western Europe, and Australia (where I live).
Wealth inequality – measured in various ways as the gap or ratio between the rich and the poor. USA has more unequal wealth distribution than most European countries and certainly worse than Scandinavia and Australia.
Yes but as the Pew research shows that is because the US has many more prosperous people than those countries. They are more equal because they have fewer objectively prosperous people not because they have fewer lower income people. Objectively Western Europe has a much higher percentage of lower income people its just that they have so few objectively prosperous people they are more equal with each other.
To the extent we want to equalize we would want to make the poor more prosperous not the reverse. Do you agree?
GDP per person – highest in Europe and some tax havens, then USA (12th) and Australia (14th).
Highest in Europe? If by that you mean there are a few tiny countries in Europe that have higher gdp per capita than the whole US averaged out then yes. But if you mean Western Europe as a whole then you are very mistaken. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita
For 2019 the US is pegged to be a bit over 65k in gdp per capita. 65,281 by the world bank and 65,111 by IMF estimates. According to the IMF the only European countries above the US in GDP per capita are Ireland Norway Switzerland and Luxembourg. That is not even close to all of western Europe.
Just working off World bank numbers, Denmark would need to boost its economy by about 10% to match the US. Netherlands, Sweden, Austria and Finland would have to boost their economy by about 20% to match the US. Germany and Belgium would need a 30% boost to match the US. The Uk would need to boost their economy slightly over 50% to match the US. France would need to boost its economy by over 60% to match the US. Italy, Spain and Malta would need to boost their economy by about 100% to match the US. Portuagal would need to boost their economy by 180% to match the US. Greece would need to boost their economy by 225%. I haven’t seen anyone take the populations of western Europe into account here but given Switzerland has a population of about 9 million, Ireland and Norway both have populations of about 5 million and Luxembourg has a population of about 620,000 it should be obvious that European economic policy is on the whole performing dramatically worse than US policy.
And it appears Ireland’s performance may be because they tend to go against the socialist model and had unusually low corporate taxes. https://www.investopedia.com/ask/answers/060316/why-ireland-sometimes-referred-tax-haven.asp. This has lead to certain US companies especially tech companies where it is hard to pin down where they are actually making money can claiming their income was generated there. So apple claims they made so much income in Ireland due to Irelands very favorable tax rate. This boosts the heck out of Irelands GDP. Irelands GDP per capita is boosted mainly due to US companies. Luxembourg is also considered a tax shelter for companies.
But on the whole the point is only a tiny number of tiny countries are doing better than the average state. Our best states our better and the average country in western Europe is considerably behind the US economically.
Now it is worth noting that in earlier years the US was doing worse. The main economic changes in recent years have been away from socialism and the European model. They involved tax cuts and less government regulation under republicans. In other words moving away from the European economic models was followed by a huge boost to our economy.
Happiness – highest in Europe and South America, whereas USA is among the lowest. The Nordic countries are consistently in the top ten and often the top 3.
Wellbeing (measures health and happiness) – USA 35th out of 169 countries, with European countries and Japan at the top.
Ok so obviously these studies are much more controversial on their own. Moreover, even if we accept them, it is getting harder to pin this on economic policy as opposed to overall cultural issues that are not so clearly related to minimum wage.
For example Nordic countries are small and homogenous. The fact that they are small means that people might feel they have some control in the way they are governed. In the US you saw people yelling at the sky when Trump was elected. We certainly have a feeling that we have no control over the federal government. I never even saw Washington DC until I was in my 40s. My vote and voice is watered down much more than a Norwegian citizens.
We also have a much more diverse citizenry. So it is not the case that we will all tend to agree on how we should be governed. All of this I suspect leads to less happiness. So is there an answer?
Yes. The answer is sticking to what we call federalism. Federalism means less power to the federal government and more power to the states, local government, and individuals. The U.S. federal government was intended to have very limited powers and most decisions were supposed to be made by states and more local governments. But the trend is to always look to the federal government for answers. Police departments are hired and fired at a city level – and to a smaller degree the state level. But somehow people are yelling at police in a completely different state (let alone city) for the actions of a single cop in a different city in a distant state. And our federal government is now going to try to make the rules for the whole country. I don’t think any American really feels they have any control over what will happen regardless of party affiliation. That is just an example, the loss of local control is happening throughout the spectrum of issues in the United States.
Even with respect to these economic policies that seem to be clearly failing Europe, I do not mind if a city or a state wants to implement a higher minimum wage as some have done. Or if Massachusetts wants a government run medical system they can have at it. If there are barriers to them doing that I am ok with changing it so they can. My main problem is that the Federal government wants to force it all over. My view is if local governments want minimum wage that is fine let’s see how it works for them, rather than destroying the whole countries economy.
Life expectancy and healthy life expectancy – highest include Scandinavia, Canada, Japan and Australia. USA is in the second of 4 categories.
Yes we eat lots of food that is really bad for us. But I am not sure socialist economic policies are the answer.
Everyone in the US has access to medical care. Sometimes the media will try to equate having health insurance with access to medical care. But those are different. The state will provide free health insurance for those who are deemed to poor to afford it. For those can afford insurance, but choose not to buy it – say a 25 year old who is in fine health and never feels the need to see the doctor whether they are insured or not – can go to a clinic as needed and pay for the service. If it is an emergency he can not be turned away even if he can’t pay. My area and the vast majority of areas in the US have free clinics for people who can’t afford care.
Gun deaths – USA is second to Brazil in absolute numbers and in top 20% per capita. USA is highest of all for gun suicides, lower for homicides.
Yes we have quite a bit of crime in the US. Not just “gun deaths.” Why are you including suicides? Increasing the minimum wage will if anything lead to more unemployed people and more crime. Or at least it is far from clear the increasing minimum wage or having other socialist policies will reduce that crime. The most socialist governments run our large cities and they have the most crime.
In the US we believe people have a right to defend themselves. And that is part of our bill of rights, in particular the second amendment. Europe seems fine with making its citizens completely at the mercy of government. That is part of the reason why Europe had to be bailed out from their horrible governments in the last century. The first thing authoritarians do is disarm the citizens. Hopefully, the US will never do that.
Suicide – USA is in top 20% as is Sweden. Australia and other Scandinavian countries are in 20-40%.
I’m not sure what the percentages mean. But to bring this to economic policy, being unemployed is a considerable risk factor for suicide. The US with its recent capitalist changes had reduced unemployment to record lows. It is unclear how reverting to the more European model and higher unemployment will help.
Quality of life – several indices have been used, based on factors like health & health care, wellbeing, education, human rights, etc. USA is not in the top 10, and just about all the countries in the top 10 are western European, including all the 4 Scandinavian. Australia and Canada are also there.
Again I would want to see the studies. Certainly if the studies are valuing socialist ideals that Europe Australia and Canada tends to promote then Europe will unsurprisingly do quite well. And also if you are going to look at tiny countries it might be best to compare them to states rather than the US as a whole. But some of these studies are interesting. Some are better than others.
So those statistics present another way to look at things. I think most people praise Scandinavia and western Europe not because they are sheerly wealthy, but because their wellbeing is high, people are happier, there is less inequality, they have good healthcare, and feel safer. It is not that different here in Australia.
I certainly agree with much of that. I am not that familiar with Australia’s economic model or governance.
If Europe is indeed on the whole better despite being objectively so much poorer, that is interesting. But I think when we look at economic policy the closest links to their efficacy will be on economic results.
If we want to look at overall “happiness” that might have more to do with culture. The US is the country that takes in more immigrants from more various countries/cultures than any other.
So it is in many ways unique. Comparing it with a country of 5 million people who all have about an identical cultural background is unlikely to be helpful. The comparisons should at the very least include all of Western Europe – even though the US is more diverse than even Western Europe and certainly as a country more diverse than any of those countries individually.
Having done the research, I intend to post about it on my own blog, where I’ll give all the references, if you are interested.
I’m very interested. And I look forward to it. I hope you do not cherry pick Europe’s best and ignore the European countries at the lower end of the scales you decide to use. But in any case I appreciate your comments and and questions as I think the discussion we are having is much more productive than arguing whether Sweden really is capitalist or socialist.