Marginal Revolution: A simple model of Europe and America

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A simple model of Europe and America

Western Europe, that is. Europe is better at producing (many) public goods through the public sector. Europe has more homogeneous nations with more urbanization, higher levels of social cohesion, and a more even distribution of ability. America is better at resource mobility, private sector innovation and catering to elites.

Because European government works better, Europeans demand more of it and get more of it. American liberals look at Europe and see (sometimes) better results per dollar spent. They then conclude that America should be more like Europe, whereas in reality America would end up spending more to get more bad American government. They also conclude that defenders of the American market-based order simply ignore the evidence before their eyes, evidence which supposedly shows the superiority of social democracy.

Market-oriented types look at Europe and think it is on the verge of collapse, when it isn't. They can't imagine that it doesn't, in every way, have American-style government failure.

Europe benefits more from America being American than America does from Europe being European. Ideas -- America's strong point -- are more likely to be international public goods than good governance -- Europe's strong point.

Lovers of Europe should be especially concerned to see America remain so inegalitarian. But in reality American social democrats care mostly about their own country. They think that enough changes would make America enough like Europe; I do not understand their underlying model of the differences between America and Europe, and thus I think they are badly wrong. Policy is not an exogenous or all-determining variable.

Posted by Tyler Cowen on April 4, 2007 at 07:44 AM in Political Science | Permalink

Comments

How is Europe government better than US government? Criteria and statistics please.

Posted by: Huggy at Apr 4, 2007 8:00:12 AM

But Europe is becoming increasingly heterogenous, and the social cohesion
is beginning to fray. So one conclusion of your argument seems to be that if Europeans want
to stay European, and not become like Americans, they will need to radically
reduce immigration over the next few decades.

Posted by: Vanya at Apr 4, 2007 8:23:12 AM

TC is becoming positively elliptical - but I guess he may be referring to Germany (and the Netherlands, Austria and Switzerland) as a bastion of good government (it doesn't seem to apply to France, certainly not Italy nor Spain - but Germany (along with Britain and the USA) have been the main exporters of good systems of micro and macro governance (over the past few centuries). Germanized central Europe has been the most modernized part of Europe for most of the time since the late Middle Ages.

However, I am one of those who believes that Germany, France and Italy are locked into a severe economic decline, which can only be reversed by the kind of market-orientated liberalization which the UK experienced in the 1980s, and which successfully reversed the long-term economic decline here.

Posted by: Bruce G Charlton at Apr 4, 2007 8:38:06 AM

great post! And as simple to see as riding the subway in any European capital. Although I wonder if New York is as efficient as a European city, and if the difference is due more to urbanization and population density than to any other factors.

IMHO, Vanya, more immigration will improve government efficiency, by increasing the economies of scale in the provision of infrastructure.

Posted by: DK at Apr 4, 2007 8:41:22 AM

Tyler,

I am not sure that the US caters more to the elites than Europe does. In fact I would argue the opposite. In terms of stability of the managerial class, control of the bureaucracy, and lack of turnover among the top companies, the evidence suggests that Europe is much friendlier to its entrenched elite. If the US were like Europe most of its CEOS would come from HYP. Ditto for cultural spending which reflects priorities of a small, influential elite. The stability of regional dominance (Paris or London uber alles) tends to favor the same groups. In contrast, I think that an America run like Europe would have seen the NorthEast squash Silicon Valley. They would never have allowed upstart California to become so important. In contrast, local elites -- esp in the South, Texas, and the Southwest often don't give a toss about what New York or Boston think of their ideas and tastes.

I'd say that because of this lack of social support, the US has to compensate its elites more directly in terms of cash and opportunities to make huge fortunes. Top CEOs bear greater financial and employment risk and enjoy less social deference. What they get in return is the chance to make the really big bucks if they back the right innovations.

Posted by: john nye at Apr 4, 2007 8:46:42 AM

"Because European government works better..." What?!?! Not
from where I sit!
Sure, Italy is not an ideal poster-child, but my taxes are
higher, just about everything - governmental services and
otherwise - is MUCH more inefficient, the infrastructure
is creaking, AND it's still only the US Army that is capable
of maintaining world order/creating global chaos.
I dream of Scandinavian efficiency and pragmatism somehow
making headway in this miasma, but Tyler, believe it or not,
the US government, as a whole, is much, MUCH better at what
Europe is trying to be best at.

Posted by: glenn at Apr 4, 2007 8:53:53 AM

What?

First of all, most European countries are tiny. The smaller the population, the smaller the government the more efficient the government is at meeting the needs of its constituency. You also forgot a few things – like the fact that European socialism is subsidized by America. Because America spends so much on defense to protect Europe, the Europeans spend half as much or less on defense (as a % of GDP) than the US does. That’s quite a subsidy.

The zero-sum societies of Europe are having trouble (predictably) absorbing immigrants. The natural rate of unemployment is higher than in the US because of unions and total unemployment is much higher still. Then, there’s the whole problem the EU is facing now. Unelected bureaucrats are making laws that individual countries are adopting and this is causing much unrest in individual countries.

Neither Europe nor the United States government is more efficient at knowing individual tastes and preferences than the individuals themselves. And, as an immigrant who has lived both here and in Europe, I have no idea what you’re talking about when you say “catering to the elites” in the US. If anything, there is far more catering to the elites in Europe because the Elites are much more effective in using government to consolidate power. I, and many more people like me, immigrated to the US and worked our way up from the most menial jobs to the roaring professional careers with high incomes or from our own businesses. None of us could have done that in Europe. There are very few places on earth that provide the opportunity for mobility and where even the “poor” live so well that they are often unmotivated to increase their income.

If Europe is so great, then why, even with the defense subsidy, does the EU still have a smaller GDP/Capita, an aging population, higher cancer death rates, more pessimism and less innovation?

Posted by: Methinks at Apr 4, 2007 9:15:58 AM

I'm not sure how you explain Europe's labor markets as the product of nationally rational action.

Nor is America better at catering to elites. Europe is all opera on network TV, philosophy on the radio, and "community leaders" as representatives in party-dominated centralised parliamentary government. The USA is about McDonald's, popular music, and thousands of elections from Dog Catcher to President.

Didn't you read Tocqueville?

Posted by: Chris at Apr 4, 2007 9:57:56 AM

Because America spends so much on defense to protect Europe, the Europeans spend half as much or less on defense (as a % of GDP) than the US does. That’s quite a subsidy.

Do you think that were the US to cut that spending, Europe would spend more on defense? It seems to me more likely that Eupean countries would increase their military spending only a small amount if at all.

Not all free-riding is inefficient. Often is just a matter of people who value something more paying for it -- the epitome of economic efficiency. I suspect that the US military presence in Europe is such a situation -- far more valuable to the US than to Europe, so the US rather than Europe pays for it. Quite sensible, really.

Posted by: Grant Gould at Apr 4, 2007 10:00:13 AM

yes, Grant is correct. Defense subsidy...come on. The cold war is over, who does Europe need protection from? Certainly no one it can't handle with its own militaries and secret services. I would define current US defense spending as the US wasting its money, not as a subsidy for Europe.

Posted by: graeme at Apr 4, 2007 10:07:15 AM

"The cold war is over, who does Europe need protection from? Certainly no one it can't handle with its own militaries and secret services."

Based on Europe's performance in the Balkans, I'm not sure this statement is true.

I too wish Tyler would use more specific examples of how European government is superior. Based on the diversity of cultures American governments have to deal with, I'd say they do a pretty good job.

Posted by: Ted Craig at Apr 4, 2007 10:24:00 AM

"Europe has more homogeneous nations with more urbanization, higher levels of social cohesion, and a more even distribution of ability."

Was this true 100 or 200 years ago? I am not sure Brittany, Paris, and Provence were so alike in the 18th or 19th century. Or Bavaria and Prussia, or Sicily, Naples, the Piedmont. So much more homogenous than Chicago, St Louis, & Dallas? The social cohesion and even distribution of ability may a result of policy rather than natural conditions.

Posted by: bob mcmanus at Apr 4, 2007 10:32:54 AM

Good post, Prof. Cowen. We do need some evidence, but where we should look is not labor law or armies, but administration of old age pensions, road repair, garbage collection, and so forth, things with outputs easy to compare across nations (police wouldn't be good because the difficulty of coping with crime is hard to measure).

Posted by: Eric Rasmusen at Apr 4, 2007 10:57:42 AM

There was a paper at the Public Choice Society meeting arguing higher levels of trust in Scandinavian populations helps mitigate the free-rider problem concerning all these social programs. Thus, those welfare states are far more stable than we give credit to.

I personally think that's a bit of a stretch, though it's not nothing (and like this is always a little fuzzy). Still, I'd venture Europe would benefit more from capitalism than government-all that Scandinavian trust makes an economy cheaper to run (other countries on the Continent had much lower levels of trust; I remember France specifically having lower levels than the US).

Posted by: David Youngberg at Apr 4, 2007 10:58:24 AM

I'd always understood that fundamental attribution error applied to the individual, but this shows it equally operates at the level of national character.

Perhaps the best workaday advice to follow is to be found here:-

http://en.wiktionary.org/wiki/when_in_Rome%2C_do_as_the_Romans_do

Posted by: knackeredhack at Apr 4, 2007 11:13:41 AM

A comparison of the last hundred years of Europe and America gives the clear advantage to America. Communism, fascism, and war are just a few of the wonders of sophisticated European government.

More recently, we have the example of thousands of elderly dead in a heat wave. But the trains run well, a primary European goal since Mussolini.

Looking at the foot vote, more people still vote to leave Europe for America.

Posted by: Mark at Apr 4, 2007 11:16:23 AM

I know Sweden pretty well and I think Tyler's post applies to that case extremely well. I could tell many personal anecdotes about how reasonable and effective Swedish public services are, to American eyes. The thing is, so are the Swedish private services. Sweden works pretty well with social democracy, and it would work better with liberalism.

Posted by: Daniel Klein at Apr 4, 2007 11:33:41 AM

"Europe has more homogeneous nations with more urbanization, higher levels of social cohesion, and a more even distribution of ability."

European nations are probably less homogeneous than we Americans tend to think. A Sicilian born friend tells a story about attending a meeting in Florida and coming across a woman who looked upset and lost. Speaking in Italian, he helps he out. She remarks on how good his Italian is and asks where he is from. When he says he was born in Sicily she reacts negatively. The people my friend was with ask him what happened because the could see her reaction. He tells them that he told her where he is from and that northern Italians don't think much of those in southern Italy.

Personally, I doubt that the EU will stay in existence without copying much of the U.S. constitution in their constitution.

Posted by: Daniel at Apr 4, 2007 11:44:54 AM

Western European cultures, almost without exception, are in a death spiral, and all for the same reason- the ever-increasing socialism is creating so much moral hazard- people increasingly trying to live off of the still productive- that it is already impossible to raise a generation that replaces previous one, and this is only going to get worse.

Collapses don't always occur in an instant (though weakened societies can be conquered and annihilated quite easily); the one occuring in Europe has the implacability of a glacier.

Posted by: Yancey Ward at Apr 4, 2007 11:47:46 AM

France's Total Fertility Rate is close to replacement, but the rest aren't. Eastern Europe is even worse. I'm not sure a declining population will be able to pay off all those pensions. It'll be much worse than our Social Security/Medicare issue.

I wouldn't call it a homogenous society when British Muslim youth are blowing up trains in London and hundreds of cars are getting torched every night in France by Muslims.

Posted by: cb at Apr 4, 2007 12:06:40 PM

'Europe has more homogeneous nations'

This is the key to everything. The heyday of the U.S. welfare state, such as it existed, was between the immigration crackdown in the 20's and the reform in 65. Following 1965 massive internal migration of Southern Blacks to US cities and gradually increasing Hispanic immigration destroyed the ethnic homogeneity required for a functioning welfare state. People are less willing to trust or share with people unlike themselves, as Robert Putnam has conclusively proven and common sense would imply.

The European welfare states, while inefficient, can be maintained well into the future. However if immigration continues at present levels, as Vanya pointed out in the second comment, then it will bury the welfare state quicker than all the structural unemployment or healthcare waiting lists in the world.

Daniel - there are rivalries of that kind in most European countries. Corsicans vs Continental French, Catalans vs Basques vs Spain, Scottish vs Welsh vs English, Bavarians vs Berliners etc. But the degree of ethnic heterogeneity is not as explicit or obvious as it is in the US (black vs hispanic vs white), and boils down to minor regional rivalries more than anything else (like Southern Hicks vs Northern Yuppies). If Europe continues to import large numbers of Africans and Muslims, however, that will all change. Soon the social contract in Britain and France will be stretched to breaking point.

Posted by: adrian at Apr 4, 2007 12:09:26 PM

Passei mesmo pra conhecer! um abraçO!

Posted by: Zero at Apr 4, 2007 12:19:06 PM

cb is right, and I would add that it happens faster than demographic tables would suggest, as they
tend to assume the productive won't just quit the system. Say the current tax/pension benefit is such
that quitting the system any age before 45 (call it the "worth it" age) makes you come out ahead. Well, some workers see that as a
bad deal and move to a "free pocket" in Europe (Switzerland, Lichtenstein, Luxembourg, Estonia, whatever) or perhaps simply revert to the underground economy.

Well, now taxes have to be raised and/or benefits have to be cut. The worth-it age becomes 47, pushing a few
more workers to leave, and so on. Eventually it becomes too rapid and must collapse. The question is, where does
the acceleration start to kick in? It won't be obvious until it happens.

Note that this closely parallels what happened in American unionized industries, where workers and customers flocked
to brands without legacy obligations.

Posted by: Person at Apr 4, 2007 12:26:54 PM

YES, a defense subsidy.

Off the top of my head, I don't remember where I exactly I read these stats, I'm sure they're widely available, though. The average European NATO soldier belongs to a soldiers Union (???) and is 40 years old. As full time soldiers, they get so much time off that some have part-time civilian jobs. The average American soldier is 28 years old and is committed full time for the duration of his duty. There’s also a big difference in the number of hours the soldiers train – American soldiers train more hours. I don't remember the dismal figures on Europe's crotchety war machinary but I remember that they’re shocking. So, elderly soldiers and old equipment - not a good combo.

People, I know the Cold War is sort of over. But, there's always some kind of threat in the world - or has everybody just forgotten that history didn't start in 1945? That's why you need a military.

Europe may NOT choose to spend more on defense in the absence of an explicit American subsidy. But only because they know that America will, once AGAIN, bail them out of their own muck when the time comes – an implied subsidy. Europeans DEFINE free riding. It’s very sad.

Posted by: Methinks at Apr 4, 2007 12:42:35 PM

I am Spanish and I lived in the US for a while. The American government works better and is less elite-friendly, and the American population is more homogeneous, urbanized and equal in ability, than their Spanish counterparts. I cannot comment on the "social cohesion" thing because I don't know what that is.

You are right that the US is better at resource mobility and private sector innovation. This is partly due to the fact that the US government is less elite-friendly. You are also right that Europe is not collapsing. You say that Europe enjoys "good governance," but that is as sensible as saying that Europe suffers from awful governance. Insensibly enough, I believe the latter.

Posted by: Biopolitical at Apr 4, 2007 12:48:51 PM

Person:

Except the "free pockets" you list aren't big destination countries for intra-European migration. Rather, young people are concentrating in countries where it looks like the welfare state might be more sustainable than where they are coming from (Ireland, UK, Sweden ...) These countries won't need full replacement population to sustain the welfare state another generation or two, while others (eastern Europe) will crash all the faster.

Posted by: Cyrus at Apr 4, 2007 1:10:29 PM

The United States did fantastically well in the 20th century through creating the world's biggest market, welcoming all comers, and relatively speaking, keeping well out of military conflict. These virtues were rewarded by stunning success in any industry that benefited from economies of scale, investment banking, car manufacturing, the computer industry, restaurant chains. Although it serves people on both sides of the Atlantic to pretend that cultural and marginal economic issues are what make the difference, it is the difference in scale that marks the only significant difference in world terms.

As the twenty first century starts, Europe has begun to mimic the United States plan even as the United States gets drawn into militarism and tightens its borders, even with countries that distant foreigners can barely see as distinct and exceptionalism replaces the pragmatism that served it so well. So, although the US has continued to grow steadily the population of the EU has doubled in little more than a decade. Millions in formerly poor countries such as Ireland, Spain, Italy and Greece have already been lifted out of poverty and countries blighted by half a century of communism are blooming.

So far the trend has done little more than stem the rise of US advantages - aviation is now a draw and mobile telephony is the only clear victory for Europe so far but US ascendancy only came when Europe threw its advantages away with military adventurism. China also changes the situation in that its ability to manufacture anything with apparently unlimited scale means that the balance of development is different. Nevertheless the parallels are clear and the New American Century bears an uncanny resemblance to the Old European Century.

Posted by: Jack at Apr 4, 2007 1:14:57 PM

Seems quite odd to extol Europe and assert it's not in decline. It has very high structural unemployment, and with some exceptions little or no economic growth, and it's facing a demographic nightmare much worse than what the U.S. will face; the ratio of working adults to retirees will dip to 2 to 1 in many nations in coming decades, with disastrous results. Who's going to pay for all those benefits?

I've read Marginal Revolution faithfully for a long, long time, and this is the blithest post I've ever seen from Tyler. Please explain, Mr. MR.

Posted by: Chris at Apr 4, 2007 1:31:23 PM

"I, and many more people like me, immigrated to the US and worked our way up from the most menial jobs to the roaring professional careers with high incomes or from our own businesses. None of us could have done that in Europe. There are very few places on earth that provide the opportunity for mobility"

Congratulations on your own good fortune, Methinks, but you are one of the exceptional few. Economists have known for years - and shown in studies too numerous to mention - that the US is at the bottom of the social mobility scale.

Compare this from a recent LSE study, with what you say:

"A careful comparison reveals that the USA and Britain are at the bottom with the lowest social mobility. Norway has the greatest social mobility, followed by Denmark, Sweden and Finland. Germany is around the middle of the two extremes, and Canada was found to be much more mobile than the UK."

source: http://tinyurl.com/9hj83

Posted by: Suvi at Apr 4, 2007 1:35:02 PM

Suvi, you looked at this report I assume. It compares 8 countries, 4 of which are the size of LA county! Regardless of your point, which may or may not be true, this is a weak source.

Posted by: DM at Apr 4, 2007 2:06:19 PM

DM, they are still independent countries, and LSE takes the report seriously, even if you have reservations. In any case, it's entirely consistent with other studies, as any research on the subject shows.

I'm not aware of any study that suggests the opposite, but if you have one, I'll be more than pleased to read it.

Posted by: Suvi at Apr 4, 2007 2:25:21 PM

Social mobility is hard thing to interpret. A hypothetical country in which, at the age of 10, every child drew a number out of a hat that determined their lifelong place in society would have enormous social mobility. Another hypothetical country in which complete redistribution granted all people equal incomes would have zero social mobility. But both these societies feature equality of opportunity and zero reward for merit.

Posted by: Cyrus at Apr 4, 2007 2:37:25 PM

Here are some numbers - if you look at big European countries (instead of the small ones which are the size of US states, or smaller) then the US looks much better than Europe on a range of measures, and the gap is widening.

http://engram-backtalk.blogspot.com/2007/04/quality-of-life-in-america-and-europe.html

Posted by: Bruce G Charlton at Apr 4, 2007 2:52:56 PM

To go over the concept of a defense subsidy in more detail: Actually, history did start over again in 1945, with the advent of the Atomic bomb. It changed everything, and there is no going back. Its very existence means it is highly unlikely we will ever again see a great power war, at least not one that doesn't end in MASSIVE destruction.

So, tell me skeptics, what would happen to Europe if the American army withdrew every soldier from every overseas base. Who would attack Europe? Particularly given that two of them have sizeable nuclear arsenals. What purpose would you use the expanded armed forces for?

I do grant that the Balkan intervention did constitute a one-off subsidy...but that hardly justifies increasing continent-wide defense spending by several GDP points.

America is wasting its money, not subsidizing Europe. Iraq should be a clear enough example of that.

Posted by: graeme at Apr 4, 2007 3:04:03 PM

There is no dodging the fact that by any objective measure (man-hours dealing with bureaucracy, legal costs to incorporate, etc...), it is much easier to start a business in the United States than in Europe. See Cowboy Capitalism for the particular statistics.

Progressives and economic determinists tend to assume that work ethic, esteem for education, and marriage stability, is uniformly distributed across both the European and American populations. In reality, it is not. That is why some ethnic groups with strong cultures of hard work, education, and marriage outperform other ethnic groups. Civl Rights by Thomas Sowell is a good starting point to realize that not all cultures are equal.

Posted by: Justin at Apr 4, 2007 3:08:16 PM

Bruce, that isn't an academic study though, is it - it's just an opinion.

Check out the differences in education between the top and the bottom in the US and west European countries (excluding UK/IE), and then the poverty rates, and then the child poverty rates.

Then include UK/IE, and see how other English-speaking countries, such as CAN/AUS/NZ stack up on the same criteria.

Honestly, they're all rock bottom - only Italy comes anywhere close.

nb: I see that some might be puzzled that countries such as SE/NO/FI/DK compare favourably in many ways; but we allocate our resources differently, and that is the 'secret'.

Posted by: Suvi at Apr 4, 2007 3:26:25 PM

Suvi,

Thanks for that link. I just skimmed that report. Are you at all bothered by the fact that they only studied sons and not daughters? Do you not think that this might skew the stats? I find that odd, since women have made a lot of progress during the period studied.

A couple things: Norway severely restricts immigration compared to Britain, America and Canada. In fact, immigration to America and Canada greatly exceeds immigration to the other countries in the other .

Most immigrants, like me, import our poverty into the United States. However, in the US – unlike in Europe - there are many ways to get a higher education, including community colleges (which are quite inexpensive). Granted, returns on a CC education aren’t as high but it can be a stepping stone. It’s also much easier to get a menial job to pay for school (which I did) as you don’t have to join a union, etc. Plus, you’re not pigeon-holed into a “track” in American high schools as you are in Europe. In addition, you don’t actually have to get much of an education to move along the spectrum here – you can just start your own business (although, I don’t know what percentage of people move along the spectrum that way). Much harder to do that in Europe.

What I’m saying is that there are far fewer BARRIERS to mobility than there are in most European countries. Whether you move up or not is up to you.

Posted by: Methinks at Apr 4, 2007 3:34:57 PM

graeme,

Um...that's not what happened exactly. After 1945, Europe was begging for America's protection from the westward march of my wretched country. The US protected Europe with its nuclear umbrella and shared its nuclear technology with them. Now, see, I call that a pretty heavy subsidy.

"America is wasting its money, not subsidizing Europe."

well, I agree with you there. Europe is a giant waste for America. LOL!

Posted by: Methinks at Apr 4, 2007 3:41:01 PM

Check out the differences in education between the top and the bottom in the US and west European countries (excluding UK/IE), and then the poverty rates, and then the child poverty rates.

That is an intervening variable in that comparison. While Europe has comparable rates of out of wedlock childbirths to the US, it has much lower rates of teenage childbirths by a factor of 4 or 5. That will have a huge impact on both child poverty and entrenched generational poverty.

Of course, Social Democrats might claim that their system results in lower teenage out of wedlock childbirths. But given that the rates have been rising in both the United States and Europe, that is a difficult claim to sustain. A better explanation comes from Tyler: "Europe has more homogeneous nations with more urbanization, higher levels of social cohesion, and a more even distribution of ability. "

Posted by: Justin at Apr 4, 2007 3:45:35 PM

"esteem for education"

I definitely buy that part, Justin

Especially the part that ought to say "education is a right, and is provided free at source from junior school to PhD".

Posted by: Suvi at Apr 4, 2007 3:50:28 PM

Well, in my earlier comment I did mention: "The cold war is over, who does Europe need protection from?" a flaw in the medium of blog comment threads I guess, those two thoughts got separated:P

So. after 1945, yes Europe was subsidized in its defense by America. I didn't mean to dispute that, preventing America from being isolationist was one of the major goals of Canadian and European policy immediately after the war. But, like I said, history did start anew in one sense in 1945 as well, due to the advent of the nuclear age.

And now: the cold war is over, but nukes still exist, making great power wars highly unlikely. Since the soviet threat receded, Europe no longer is at risk, and so additional US defense spending does not constitute a subsidy, as Europe would still be quite safe if America slashed its defense spending.

I most certainly did not mean to imply that Europe was not threatened during the cold war...lol

Posted by: graeme at Apr 4, 2007 3:51:54 PM

Especially the part that ought to say "education is a right, and is provided free at source from junior school to PhD".

The United States spends more money on education than Europe. It also has a better university system. It also doesn't have a huge "make or break" test to determine whether you get to go to college.

The difference is that the left takes for granted their own middle class mores in which education is highly valued. They assume that it holds true for everyone, regardless of their cultural group. Regrettably, this is not true. Again, I quote Tyler: "Europe has more homogeneous nations with more urbanization, higher levels of social cohesion, and a more even distribution of ability."

Posted by: Justin at Apr 4, 2007 4:11:01 PM

"What I’m saying is that there are far fewer BARRIERS to mobility than there are in most European countries. Whether you move up or not is up to you"

Methinks: the main barrier in the US appears to be general education, but even if this wrong, statistically one still stands less chance of improving one's lot in the US than in almost any other western country.

You have done well, but imagine you had been born in a deprived area of the US with distressed schools. Then it might have been different.

Posted by: Suvi at Apr 4, 2007 4:12:23 PM

'It also doesn't have a huge "make or break" test to determine whether you get to go to college.'

What about the SAT?

Posted by: adrian at Apr 4, 2007 4:15:31 PM

Thanks. That's exactly what I've been saying for about five years. Why have so few come out and said what Tyler and I say? One huge underlying driver of the differences between the two, the elephant in the living room of discussions of America vs. Europe that everybody gingerly tries to avoid talking, about is r-a-c-e.

Posted by: Steve Sailer at Apr 4, 2007 4:19:09 PM

You have done well, but imagine you had been born in a deprived area of the US with distressed schools. Then it might have been different.

That depends. If you are Asian and go to one of those distressed schools, you will do just fine. If you are an African immigrant, you will do just fine. But if you are a native born African-American, or if you are a native born Appalachian, ou probably will not do so well.

Heck, Daniel Patrick Moynihan showed that the black community was being held back by family disruption back in the 1960s. School funding made only a small difference. The left did not listen then, and Suvi is not listening now.

The problem is culture. The left is completely unable to recognize the importance of culture and they will hew to any dogma in order to sustain their ignorance. If you have to believe that the funding of social services completely determines outcomes, then so be it.

Posted by: Justin at Apr 4, 2007 4:20:06 PM

What about the SAT?

The SAT is make or break if you want to go to an Ivy League. But a low SAT will not stop you from going to the less prestigious state schools. But in many European countries, low test scores means that you simply cannot go to college.

Posted by: Justin at Apr 4, 2007 4:22:02 PM

"the elephant in the living room of discussions of America vs. Europe that everybody gingerly tries to avoid talking, about is r-a-c-e"

Actually, as Justin points out, race is only part of it. Heterogenous does not only refer to skin color, it can refer to things cultural. It also refers to factors such as religion, language. At times you have some interesting things to say Mr. Sailer, but your monomania harms you I believe.

Oh, I meant to ask Tyler how you would relate Canada in all of this. More government provision than in America, though less than in Europe, and less heterogeneous than both.

Posted by: graeme at Apr 4, 2007 5:11:41 PM

Oh, we left Western Europe because of the lack of Opportunity, Suvi. Also, the racism and extreme ethnocentricity.

You keep ignoring the immigration difference, by the way.

also, when are economists going to learn that there's no free lunch?

There's no such thing as "free education". Or "free health care", for that matter. C'mon, people.

Posted by: Methinks at Apr 4, 2007 5:20:26 PM

Social mobility is not identical to economic mobility, and is probably harder to measure. We have gone from bare subsistance to just below the median, where we are quite comfortable, but we have also gone from being viewed as trash by our neighbors in one community to welcomed and honored in a better one.

Posted by: triticale at Apr 4, 2007 7:26:59 PM

State government here in Colorado seems far superior to that in Georgia or California. Any experience with the Department of Motor Vehicles, for example ... is dramatically different. But we seem to have less of state government here....how can that be?

Posted by: Dave Meleney at Apr 4, 2007 9:23:17 PM

Triticale, good point. I was reading "social mobility" as equivalent to “economic mobility” since rigid social classes don’t really exist in the US and there’s not much emphasis on social mobility as social status is partly derived from economic status. Frankly, I’ll take economic mobility over social mobility any day. Call me a rebel.

Posted by: Methinks at Apr 4, 2007 10:08:31 PM

The United States spends more money on education than Europe

Does this mean they are better educated?

Posted by: Suvi at Apr 4, 2007 11:22:28 PM

Based on the comments we can clearly see some of the "cultural" factors that underlie the differences between Europe and the U.S. First, the issue that any country out there may be doing something better than the U.S. tends to generate a visceral response in many. Worse, accuse the U.S. of being inept at something and well a reliable portion of the population will want you shot. This is always fascinating and disturbing--most dogmas tend to eliminate consideration of ideas and innovation--quite unamerican. Maybe its better to bring in people to generate ideas for if the ideas come from abroad they are resisted? Second, Tyler is quite correct in the distribution of ability. The U.S. top end (top 2% say) in any field tends to be the best in the globe. But for the most part I would rather eat an an average french restuarant than the average american restuaruant and can be fairly sure the average Aussie/Italian has read a paper and even a book in the last week. In the U.S? Hah!!!

Posted by: Roberteconomist at Apr 5, 2007 3:32:57 AM

"The United States spends more money on education than Europe

Does this mean they are better educated?"

Duh. Of course Americans are better educated than Europeans. Refer to the OECD for this. The fact that people even question this says a lot about the power of stereotype over facts.

Iraq is hardly the right test of whether or not the US is subsiding Europe. The interesting question is spelled R U S S I A.

Posted by: Tino at Apr 5, 2007 3:36:45 AM

Roberteconomist,
Americans reads the news a lot, but it's on this thing we invented called the "internet". I am very sorry you are still using dead tress to learn of the news. More books are published in America than rest of the world combined. But again, we must just burn them instead of read them by your account.

Really, this very one sides and stereotyped view of yours is quite repugnant. It’s odd how hateful and dismissive you are of cultures you know very little about. I very much doubt you have been to an American city in your life. Please take your racism and pathetically simply stereotypes elsewhere.

There seems to be a bit of a Disconnect between Europe and America, based on some of the comments I read. I read a story about Italy and I don’t assume I know how the people act or think in that nation… because I have not been there. I mean, how do you know a place if you have not met its people, walked though its parks, and taken the pulse of its life. Many Europeans read a story about America, and they bring up simply and rather idiotic stereotypes about how they think American’s live and think. Please visit a place before you think you really know anything about it.

Posted by: Derek at Apr 5, 2007 4:05:25 AM

Living in a suburb of Paris, where my garbage collectors are currently on strike, where my children's teachers were on strike a record number of times in the past couple of years, where strikes and slowdowns in mass transit are expected, not unusual--indeed can you imagine that you would need a site like Strikes.com?-- and where the government chews through a staggering amount of my income--yet where there are still (obviously) homeless people living in tents along the canals and riots in the train stations, I would beg to differ with Tyler on the superiority of European governance.

Posted by: Kerry at Apr 5, 2007 8:57:49 AM

Derek,

I think Tim Berners Lee is an Englishman and lives in London. All those books being published and the internet invented by Al Gore seem to be doing very little for the math and science scores. Best, from Brooklyn U.S.A. How about then D.C. Schools!

Posted by: roberteconomist at Apr 5, 2007 9:53:41 AM

For an economics blog there is a lack of data and reasoned argument. Lots of opinions and just a lot of defensiveness. A cultural thing. Any number of data can support Tylers view. Say international math scores? Science scores? Paris schools on strike--wanna try Philly schools instead? Competence of Camdem New Jersey or Bronx Borough Presidents office are hardly legendary. An anecdote here and there and some casual empricism do not disprove Professor Cowens point. Find some data and or a cogent argument--otherwise C- to the lot of you. Find some DATA on the internet thingy you yanks invented--first of course agree on some criteria by which governance is compared. Essentially saying Um a Merican and a yuz foreners sux is not sufficient to disprove the good doctor C

Posted by: Down in Oz at Apr 5, 2007 10:09:35 AM

Let's get one thing straight: countries don't "do things" right or wrong. PEOPLE do things. Since the European collectivist system, invented and implemented by Europeans tramples individual liberty to a much greater extent than the American system, I'm inclined to favour the American system and my preferences are more aligned with American individualism than with European collectivism.

I realize that economists are not very interested in the realities in which people live their lives, but they are quite important to those of us living those lives. Better to have aggregate calculable results than to pay attention to messy things like individual tastes.

I disliked living in Europe after escaping the Soviet Union. It was like the USSR light. Individual liberty is subverted at every turn for “the common good”. The barriers to entry in every business, the double-digit unemployment, the lack of breadth of employment opportunity, the punitive taxation, the substandard national healthcare system, the comparatively rigid class structures, the concentration of political and economic power at the top and the general inefficiency and lack of individual opportunity in Europe were a big turn-off for me. The superiority of French restaurants (when the waiters aren’t on strike) simply couldn’t compensate for these other factors. So, we immigrated to the United States.

Frankly, I don’t think government ever does much of anything right. It’s just not in its nature. I also think that government is far too large in the United States. The problem with Europe is that government is tasked with far more than it should be. None of this has anything to do with hating Europe or the Europeans. I’m off to Paris in couple of weeks.

But, that’s just stupid ole’ me and my inconsequential preferences.

Posted by: Methinks at Apr 5, 2007 11:03:33 AM

"Oh, we left Western Europe because of the lack of Opportunity, Suvi. Also, the racism and extreme ethnocentricity.

Methinks:

I'm sorry to hear that, but glad that it worked out for you in the US.

when are economists going to learn that there's no free lunch? There's no such thing as "free education". Or "free health care", for that matter

You're dead right there isn't. When we say "free", we mean they're free at source, meaning there's no barrier at the gate when we go to college or to the doctor. We pay for it indirectly in tax, and like this method because it means we can give education and healthcare to everyone without personalising the expense for it.

Posted by: Suvi at Apr 5, 2007 3:35:10 PM

"Of course Americans are better educated than Europeans. Refer to the OECD for this"

The OECD disagrees with you, Tino.

Browse this site to see what they know and publish after intensive testing and comparison:

http://www.pisa.oecd.org/

Posted by: Suvi at Apr 5, 2007 3:51:41 PM

"...that European socialism is subsidized by America. Because America spends so much on defense to protect Europe..."

This is a persistent canard. Americans spend money on defence because they want to, not because foreigners think it's necessary.

Strangely, the closer one lived to the Sovs or Sov-dominated countries, the less 'the threat' was perceived - and the further away one was, the greater it was perceived.

Posted by: Suvi at Apr 5, 2007 4:29:08 PM

All that education and no jobs:

Young French people are deeply frustrated by lack of opportunity and a lack of respect from their parents' generation.

"Unemployment and instability make us feel vulnerable," says Marion, a 23-year-old Master's student of communications taking part in a youth debate on the main issues of the French presidential campaign. "Our generation has to cope with a health insurance deficit, and pay for our parents' pensions, while spending half of our small salaries on rent. We'd be happy to reach our parents' standard of living. No matter how qualified we are, we fear for the future."

Like many young people in France, Marion has good reason to be worried. The biggest challenge facing her is that it now takes longer to find a proper job. In 1982, only 10 per cent of young people in France failed to find a steady job within three years of leaving education. In 2004, the figure stood at more than a quarter, and finding permanent work can take up to several years of internships and temporary contracts. Tired of working for little or no money, one group of disaffected interns has even formed a campaign group, Génération-Précaire (www.generation-precaire.org), to oppose what it sees as a latter-day form of slavery....

Posted by: Sandy P at Apr 5, 2007 4:37:49 PM

It's interesting that Joschka Fischer got a teeny, tiny clue:

'Europe is increasingly fading away'

The rest of the world will not wait for Europe while it bickers over institutional reform and external policy issues, says Joschka Fischer, ex-German foreign minister, warning that the risk of it becoming a "playground" for upcoming super powers grows by the day.

Tempered by his time in the US where politicians are already looking to China and India as the next powers to be, the former politician-turned-Princeton-professor has a very sober view of the European Union's position in the world as it dusts itself off from recent 50th birthday celebrations.

"Here in the United States, I hear 'who is Europe, where is Europe?' They are looking for China and for India. Europe is increasingly fading away beyond the horizon in the Atlantic," Mr Fischer tells EUobserver in an interview.

"This is a development which is definitely accelerating, so when you talk with the [US] political elite, the weaker Europe is, the less interest you will find."

Relating a recent incident where a former Indian foreign minister came to lecture at Princeton and said that the 21st century will see three superpowers – India, China and the US – Mr Fischer said "I was sitting there and I thought, 'why the hell is nobody in Europe realising what is going on!'"...

----

Posted by: Sandy P at Apr 5, 2007 4:47:55 PM

"This is a persistent canard. Americans spend money on defence because they want to, not because foreigners think it's necessary."

See, I think that this is the persistent canard. This is the lie in which the Europeans ground their mysterious superiority complex. I wonder what would have happened if the Americans pulled out of NATO in the 70’s or had left West Germany to the Soviets. I wonder what European governments would say or do if the Americans just pulled out of NATO now – knowing, of course, that America won’t.

Of course you’re correct, the Americans have an interest in protecting Europe – mostly from itself. The Europeans managed sit back while Russia was dragged into communism, and then to drag isolationist America into two of the worst wars humanity has ever witnessed in the span of less than half a century. Wars, that were started and perpetuated by childish Europe and resulted in over 100 million dead. Of course it’s better to subsidize European peace than subsidize another European war. This is all simplified, of course, but I still think the Europeans are ingrates. Especially the French. And this point will be the source of much teasing back and forth with my friends on my visit to Paris later this month 

“We pay for it indirectly in tax, and like this method because it means we can give education and healthcare to everyone without personalising the expense for it.”

Seems inefficient and unfair to me. More education than is necessary is demanded because the cost is born by others who have no say in the matter. Taxpayers bear all the cost and only get some of the benefit.

Socialism is slavery, in my opinion. It rewards status rather than behaviour.

I'm glad you like living in Europe, Suvi. But I've had my fill. I'm a big fan of the individual's right to "life, liberty and pursuit of happiness" and socialism really limits that.

Posted by: Methinks at Apr 5, 2007 5:15:39 PM

God all this whining about socialism on this thread, it is so bloody tiresome, been there done that a thousand times before. I expect the macho posturing anti-Europeanism of methinks from Gibson or O'Reilly ('French ingrates', my god how many times have we heard that before?) , but this site is supposed to be for thinking people. Newsflash guys - Europe ain't a bad place to live in.

The arc stretching from the Netherlands down through Eastern France to the Alps and into Northern Italy is one of the richest and most prosperous on the planet. Once we get our act together and remove some of the structural inefficiencies, and stop importing large numbers of Muslims, we will be back with a vengence.

Long live Europe!

Posted by: adrian at Apr 5, 2007 6:06:13 PM

Hmmm. Just did some checking on stats.

In the latest UN Quality of Life stats, the US is 8th, behind Norway, Iceland (ooooh, small countries!!!),
Australia, Ireland, Sweden, Canada, and Japan.

In the latest World Bank stats on technological innovativenss, the US is 7th, behind Denmark, Sweden
(oooooh, small countries!!!), Singapore, Finland, Switzerland, and the Netherlands.

In the lates World Bank Indicators, the US is 6th in real per capita income after Luxembourg, Norway,
Switzerland, Denmark, and Iceland (aha! those darned small countries again!!! Clearly they do not count!!!).

I also looked at some trends in real per capita income over time from Angus Maddison.

So, the as a percent of US real per capita income, the 12 Western European nations went from
52% in 1950 to 73% in 1973 to 72% in 1998, and then I saw the figure for Euroland in 2005 from
the World Bank (not quite the same countries), with the US at $43,000 and Euroland at 31,000, about
the same as before.

So, the US has been ahead of most of Western Europe since well back into the 19th century. After
WW II, Western Europe started to catch up, but then stalled out at around 3/4, although some individual
countries, mostly heavily social dem, moved ahead, and are ahead also in quality of life (included
education and life expectancy) as well as technical innovativeness (all that government intervention
and regulation, you know). Not exactly a picture of imminent collapse, even if they are not catching
up, with clearly some major problems in France and Germany.

Regarding China and India, one needs to keep in mind the Law of Relative Backwardness of Gerschenkron.
Far behind countries that take off grow rapidly, but then decelerate as they get near the top. China
and India are doing that now, but will slow down later. Look at Japan that was growing at more than 10%
per year in the 50s and 60s and is pretty slow now. Yes, China and India will be more important, but I
see no particular evidence that Europe is falling down. Both it and the US will be less important relative
to China and India, but Europe will probably remain ahead of both of those countries in quality of life,
especially some of its smaller social democratic ones...

Posted by: Barkley Rosser at Apr 5, 2007 6:17:03 PM

Why do we want to avoid "personalizing the expense"? Usually "impersonal" has a negative connotation. That's why when you send money to some third-world kid the charity sends you cards with their picture on it.

Posted by: TGGP at Apr 5, 2007 6:55:15 PM

"but this site is supposed to be for thinking people" - Adrian

Right! The arrogant implication, of course, is that no "thinking" person would ever think differently from you. How very Euro-fascist of you. Who ate your sense of humour?

BTW, can a small blonde woman be macho?

Posted by: methinks at Apr 5, 2007 9:34:45 PM

"oooooh, small countries!!!"

Do you understand why the point you are ridiculing constitutes a valid criticism of the comparisons? (Evidently not, and if the previous comments haven't clarified it for you then there's probably not much I can do for you now.)

Posted by: Constant at Apr 6, 2007 2:16:24 AM

Where Europe is better than America:

Women: European women (outside the British Isles) are far more attractive than American women. The American penchant for mail-order Euro brides is undoubtedly a product of this.

Ethnic homogeneity: Changing, but still Europe is better than the U.S. In America there are many no-go areas for white people due to ethnic diversity (black ghettos etc) Not so in Europe, where rich and poor tend to look the same and be part of the same overall culture.

L'histoire: The ancientness of the whole place. The way the streets wind and weave with history, are not designed by some fuzzy bureaucrat.

Just keep in mind guys, life is not all economics.

Posted by: adrian at Apr 6, 2007 4:14:25 AM

constant,

Gosh, I am just a moron who can't read.

BTW, do you live in Minnesota?

Posted by: Barkley Rosser at Apr 6, 2007 7:07:24 AM

Try walking through Malmo, Sweden some time.

The real reason why Europe is "better" in this issue is the same reason why Europe is "better" in other issues: Europe started with a homogeneous population that had generally achieved affluence. Go to New Hampshire or Minnesota some time and you won't find any ghettos there either.

A homogeneous society can accept a moderate amount of immigration simply because immigrants have no choice but to assimilate. An immigrant from Cape Verde to Montana cannot disappear into an immigrant sub culture, although he could in Rhode Island.

Objectively, Europe's Social Democratic policies create more balkanization than America. This can be very clearly seen with the only ethnic group that does have significant numbers in Europe: Muslim immigrants.

Posted by: Justin at Apr 6, 2007 9:27:15 AM

"Gosh, I am just a moron who can't read."

I've challenged you to demonstrate that you understand the point that you ridicule repeatedly, and you have not done so. I have a character flaw, and my character flaw includes that I respond to people who ridicule points that they evidently do not comprehend. I developed this character flaw over a decade of dealing with absolute morons on Usenet who substitute mindless ridicule for thoughtful engagement. It is my faint hope that by merely pointing out the error I may be of some small assistance.

"BTW, do you live in Minnesota?"

Irrelevant question.

Posted by: Constant at Apr 6, 2007 3:30:29 PM

Concerning all the anti-European tirades in the comment threads the past few days: There is an unsavory obsession among American commentators to compare themselves with Europe, and vice versa, and this entire discussion is politicized in the degree that it only serves to lambaste the 'lazy social-democrats' of Europe, or the 'hard capitalist' model of the US. 'Methinks' came from Russia, had a bad European experience (in one particular, undisclosed city) and has made it his mission to find evidence of how much worse the WHOLE of Europe is based on this single, provincial, anecdotal experience.
I find it striking that I rarely see similar exercises in finding all the ways in which 'we' are better than Japan. Most people recognize that Japan is so different from the US or Europe, that they find it unfit to pin their political talking points on. It's about time Americans recognize that Europe is as different from them as the US and Europe are from Japan.
Anyway, I checked, and the European stock markets (especially the CAC40 of those pesky French) have been outperforming the American indexes the past 1, 2, 3 and 4 years, and that's NOT taking into account the dollar depreciation. Quite the downfall it is.

Posted by: olivier at Apr 7, 2007 4:42:21 AM

Constant,

Did not see any comments by you on this matter on this thread.
So, I guess you are on your high horse as some enforcer.

So, we are supposed to ignore small European countries because,
well, they are small, like states in the US, homogeneous, and
so forth. But, a) they have much greater powers than US states,
b) there is much greater variation in conditions, cultures, policies
and so forth across European countrie than across US states. There
simply is no equivalence at all between US states and small
European countries. The argument is thoroughly assinine and
has been defended by mere assertion with minimal evidence.

Regarding the Minnesota wisecrack, some of the louder proclaimers
of this argument have dismissed the "see how well the Nordic
social democracies are doing" by quoting stats on Swedish-Americans,
especially ones in Minnesota, the state with the highest life
expectancy in the US (and also one of the highest degrees of
equality, tax rates, and some other social democratic characteristics).
Hence, if you are fan of such arguments, it would not be completely
silly to assume that you would choose to live in a state that is
clearly so superior (unless you hate those high taxes or the cold
weather) than the others.

BTW, you can read my more detailed views and analyses of many of
these countries and these arguments in my _Comparative Economics in
a Transforming World Economy_ (with Marina V. Rosser), 2nd edition,
2004, MIT Press. After you do that, you can come back and point out
my moronic and ignorant nature further.

Posted by: Barkley Rosser at Apr 7, 2007 7:38:44 AM

One thing that is hard to deny is revealed preference. And among the research elite of Europe there is increasing migration to the US. Europe recognizes that this is a problem and that it has a multiplier effect. So today you have a welfare state that makes life nice for 55 year old Metro workers near retirement and entices uneducated Middle Easterners to move to Paris or Bonn. But 35 year old medical doctors or research economists are setting up shop in the US. As are high-flying MBAs.

This may not be a stable equilibrium even for a well-functioning welfare state. Given cultural/ethnic homogeneity and the legacy of a productive economy, welfare state Europe has had a good run. But however it changes, Continental Europe will look far different in twenty years than it did in the 1980s or 1990s.

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