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Jan 17, 2010

Europeans Are Less Wealthy

Are Europeans as Wealthy as Americans?
01/15/10 - Links from Cafe Hayek by Don Boudreaux.

Consumption in America vs. Europe
01/15/10 - Cato At Liberty by Daniel J. Mitchell

[edited] People claim Europe is as rich as the United States. I’m shocked, because abundant data shows otherwise. The following charts should be more than enough to end the argument, both from presumably impeccable sources.

The OECD is the Organisation for Economic Co-operation and Development. OECD data (page 6) shows average consumption per capita. I compare America to the EU-15 (Western Europe) adding Norway and Switzerland to boost the European score.

The chart shows US consumption at 152, Western Europe at 105, compared to a benchmark of 100 for the average of all members of the OECD. That is 44% more goods and services enjoyed in the US as compared to Western Europe.

The biggest policy difference between the U.S. and Western Europe is the burden of government.

We're Rich, You're Not. End of Story.
04/17/05 - NYTimes.com by Bruce Bawer

[edited] I am an American living in Oslo, Norway. People here believe the common wisdom about economic life in the Nordic countries. They believe that they are incomparably affluent, with all of their needs met by an efficient welfare state. Some recent studies support my view that the reality is not quite what it seems.

I moved here six years ago. I quickly noticed that Norwegians live more frugally than Americans do. They hang on to old appliances and furniture that we would throw out. They drive around in wrecks. My partner and I took his teenage brother to New York in 2003 on his first trip outside of Europe. He stared boggle-eyed at the cars in the Newark Airport parking lot, as mesmerized as Robin Williams in a New York grocery store in the movie "Moscow on the Hudson".

An office worker in New York might go to a deli for lunch. In Paris, she might enjoy quiche and a glass of wine. In Norway, she will sit at her desk with a sandwich from home. The home sandwich is ubiquitous here, from classroom to boardroom.

It is not simply a matter of tradition, or a preference for a non-materialistic life. Dining out is just too pricey in a country where teachers make about $50,000 a year before taxes. A large pizza delivered from Oslo's most popular pizza joint costs $34 to $48, including delivery and a 25 percent value added tax.

Of Sunroofs and Motor Scooters
06/27/07 - Pittsburgh Live by Donald J. Boudreaux

[edited] I suspect that Parisians have fewer sunroofs on their cars because they are less wealthy than Americans. A sunroof is a luxury unrelated to reliability or safety. It only makes a car ride more enjoyable, like an in-dash CD player.

A very poor person buying a car cares mostly about how reliably the car will transport him. He is unlikely to pay for leather seats and a tilt steering wheel. He prefers to conserve his income for more vital purposes such as fuel, food, and decent housing.

But, give this same poor person a windfall of $1 million, and he is more likely to buy a fancy car.

A large number of Parisians ride motorcycles. This makes me more confident in my conclusion about sunroofs. Parisians might like motorcycles more than Americans do, or Paris' weather might make motorcycles more practical than in America. The most plausible explanation for the larger volume of motorcycle traffic is that Parisians are less wealthy than Americans.

Do We Want to Mimic Western Europe’s Stagnant Welfare States?
02/26/10 - Cato@Liberty by Daniel J. Mitchell

[edited] America today is richer than Western Europe. Per-capita living standards are about 30 percent higher in the United States, according to the statists at the Paris-based Organization for Economic Cooperation and Development (see page 6 of this report). And we have been growing faster, which presumably should not be the case according to convergence theory (see Annex Table No. 1 of this OECD database).

Left-wing populists seem to believe (wrongly) that the economy is a fixed pie, so their fixation on redistribution is understandable. Their view is that robbing Peter is the only way to lift Paul.

Why does the left want America to be more like Western Europe, when their living standards lag America, and the gap grows wider each year? I think they are so fixated on differences in income (or resentful of success) that they are willing to make poor people worse off if they can impose even greater damage on rich people.

The Political Dictionary: Liberal Economics
11/07/08 - EasyOpinions

Money falls from heaven for everyone to use. But, the immoral and sneaky rich gather more than their share. The government's purpose is to redistribute the money the way God intended. Or, if you wish, the way Gaia, or the Tooth Fairy, or whoever intended.

Taxes remove the excess income of the rich and give it to the voting poor, through a fair and organized bureaucracy. The rich oppose this action by selfishly and spitefully decreasing employment. Government responds by increasing grants and spending, to boost employment. The government runs a deficit while it discovers the "knack" for creating the jobs that the rich are hiding.

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