Thursday, November 23, 2006

Economic Lessons from Europe

High Prices -- Lower Pay -- More Unemployed

France's government consumes more than 50% of their economy versus 35% in the US. Germany, Italy and other countries are almost as high as France. Massive government spending takes away personal options and forces dependence. And that reduces the incentives to work, save, invest and do things yourself. If you measure the difference in income you will prefer the US's results: "U.S. per capita output in 2003 was $39,700, almost 40 percent higher than the average of $28,700 for European nations." Walter Williams reports at Townhall on a study by Dr. Daniel Mitchell, research fellow at the Heritage Foundation, titled "Fiscal Policy Lessons from Europe."
Over the last decade, the U.S. economy has grown twice as fast as European economies. In 2006, European unemployment averaged 8 percent while the U.S. average was 4.7 percent. What's more, the percentage of Americans without a job for more than 12 months was 12.7 percent while in Europe it was 42.6 percent. Since 1970, 57 million new jobs were created in the U.S., and just 4 million were created in Europe. Dr. Mitchell cites a comparative study by Timbro, a Swedish think tank, showing that European countries rank with the poorest U.S. states in terms of living standards, roughly equal to Arkansas and Montana and only slightly ahead of West Virginia and Mississippi. Average living space in Europe is just under 1,000 square feet for the average household, while U.S. households enjoy an average of 1,875 square feet, and poor households 1,200 square feet.
And we can see where people choose to live and where they invest their money:
Some 400,000 European science and technology graduates live in the U.S. European migration to our country rose by 16 percent during the 1990s. In 1980, the Bureau of Economic Analysis put foreign direct investment in the U.S. at $127 billion. Today, it's more than $1.7 trillion. In 1980, there was $90 billion of foreign portfolio investment -- government and private securities -- in the U.S. Today, there's more than $4.6 trillion, much of it coming from Europeans who find our investment climate more attractive.
So do the countries of Europe make changes to increase growth and attract more investment. No. They attack their competitors with economic restrictions. Read it. Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.

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