The Economy Of Europe


Veronique de Rugy writes an interesting article about the state of Europe:

The European Union is becoming increasingly uncompetitive in the world economy. The average tax burden consumes almost 45 percent of GNP, and regulatory red tape makes it very difficult for the private sector to create jobs. With this track record, it is not surprising that per capita income in the EU is much lower than it is in the United States. To make matters worse, many European governments face huge unfunded liabilities for pensions, so it is likely that the burden of government will climb rather than fall. So should the European Union get an economic face lift?

That’s the question asked to Sabine Herold at an American Enterprise Institute event earlier this week. Sabine is the spokeswoman for Liberte Cherie a French association founded in 2001 in reaction to unemployment rates, falling living standards, strikes, and the lack of free market ideas in the political debate in France. Two years ago, Sabine became famous for leading a demonstration in Paris against strikes by government workers. To the surprise of the organizers themselves, the event attracted more than 80,000 angry Parisians fed up with the almost daily government employees’ strikes.

She explained to her Washington audience “I am here today to tell you about my experience as a French and European young woman. The problems you read about in your newspapers are my daily life. I put up with the strikes. I suffer from decreasing standards of living. So, yes, the European Union needs a face lift.”

Some of the comparative figures are startling. For instance, per capita economic output in the US in 2003 was $37,600, more than 40 percent higher than the $26,600 average for EU-15 nations. Real economic growth in the U.S. over the last 10 years has been more than 50 percent faster than EU-15 growth in the same period, 3.2 percent average growth compared to 2.1 percent average growth. The unemployment rate in the U.S. is significantly lower than the EU-15 unemployment rate — 5.2 percent in the US versus 8.1 percent in EU15, and 10 percent in France. Also, there is an important gap in the percentage of unemployed who have been without a job for more than 12 months — 11.8 percent in the U.S. versus 41.9 percent in EU-15 nations.

And according to a study by the Swedish think-tank Timbro, France, Italy, and Germany have less per capita GDP than all but five US states. The European economies are so far behind the US that most European countries will need about 15 years of normal growth in per capita GDP to catch up to where the US is today. Also, Connecticut’s GDP per capita is almost twice as much as the GDP per capita in France and the UK. Finally if France were a US state, it would be the fifth poorest state.

According to the OECD, the average tax burden in the EU15 — tax revenues as a percentage of GDP — is about 12 percentage points higher than the tax burden in the US. The burden of government in the EU15 — government spending as a percentage of GDP — is also about 12 percentage points higher than the burden of government in the US.

Unfortunately, European political leaders — especially in France and Germany — do not understand why the economic situation is so bad in Europe. And instead of advocating for less government, they constantly try to export their bad policies to Ireland, the United Kingdom, and the pro-market nations of Eastern Europe. This is the wrong approach. Europe needs less taxes, less regulation and less government spending if it ever wants to become a prosperous and dynamic space.

Much more where that came from.

But of course our very own home grown Socialists, aka Democrats, believe in the same policies of the European leaders. Thank god they are not in power and wont be for quite some time, thanks to Michael Moore, Dick Durbin, George Soros and their faithful followers.

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