January 13, 2008

Krugman Komedy: Europe as ‘the Comeback Continent’

Filed under: Economy,MSM Biz/Other Ignorance,Taxes & Government — Tom @ 10:58 pm

Paul Krugman clearly isn’t lacking in chutzpah.

His January 11, 2008 New York Times column (“The Comeback Continent“; HT Tom Maguire via Instapundit) is yet another in a seemingly endless series of attempts by economic statists to convince people in the US that we need to be more like Europe — specifically Western Europe — and less like the growth-driven, market-based capitalists that we still largely are.

Here is part of what Krugman wrote in a remarkably fact-free column:

…. tales of a moribund Europe are greatly exaggerated.

….. I don’t want to exaggerate the good news. Europe continues to have many economic problems. But who doesn’t? The fact is that Europe’s economy looks a lot better now — both in absolute terms and compared with our economy — than it did a decade ago.

….. What European countries definitely haven’t done is dismantle their strong social safety nets. Universal health care is a given. So are a variety of programs that support families in trouble, helping protect Europeans from the extreme poverty all too common in this country. All of this costs money — even though European countries spend far less on health care than we do — and European taxes are very high by U.S. standards.

Well, Krugman is partially right. Parts of Europe are doing better. The only trouble is that the parts doing better are the ones not embracing the high-tax, high-spending model Krugman so adores.

Here, from this Wikipedia entry, are the real growth rates in Gross Domestic Product in 2006 for the US and various EU countries:

Latvia – 11.9%
Estonia – 11.4%
Slovakia – 8.3%
Lithuania – 7.2%
Czech Republic – 6.2%
Poland – 6.1%
Luxembourg – 5.7%
Bulgaria – 5.5%
Ireland – 5.2%
Finland – 4.9%
Hungary – 3.8%
Greece – 3.6%
Spain – 3.6%
USA – 3.3%
Austria – 3.2%
Norway – 3.0%
Denmark – 3.0%
Netherlands – 2.9%
Switzerland – 2.9%
EU as a whole – 2.9%
UK – 2.7%
Belgium – 2.5%
France – 2.3%
Germany – 2.2%
Italy – 1.6%
Portugal – 1.2%

It doesn’t take a lot of examination to note that:

  • Overall EU growth still trails the US, and most likely will do so again this year. The first three quarters of US annualized GDP growth came in at 0.6%, 3.8%, and 4.9%.
  • The countries Krugman would prefer that we imitate — France, Germany, the UK, and Italy — still trailed the US in GDP growth in 2006. Germany’s performance, while still mediocre, has improved since a less-leftist government headed by Angela Merkel took power in November 2005. One would hope that the center-right government of Nicholas Sarkozy in France that won election in May 2006 can improve that country’s situation.
  • Newer EU members countries, including many that are adhering more closely to a low tax, flat tax, and/or less regulatory model are the ones bringing up the EU’s overall GDP growth to near 3%. These would include countries that Krugman would prefer to ignore, particulary Ireland and the Baltic states, which have used frequent supply-side tax cuts to boost their economies.

So let’s see — The US is still outperforming the EU; the two big underperformers of Western Europe are moving, if in halting steps, away from the cradle-to-grave nanny state of their predecessors; and the EU’s growth stars are for the most part the countries that have embraced free-market economics.

Other than that, Krugman has a point. (/sarcasm)

Cross-posted at NewsBusters.org.

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6 Comments

  1. Tom,

    When will they ever learn??

    :-)

    Comment by Georges — January 13, 2008 @ 11:41 pm

  2. #1, Good to hear from you. Hope you are safe and well, and can resurrect EUR at some point.

    Comment by TBlumer — January 13, 2008 @ 11:49 pm

  3. It amazes me that Krugman was once thought of as a great labor economist worthy of Nobel consideration. What no one considers is that the cradle-to-grave nannyism by Canada and Europe is made possible by the U.S. military and pharmaceutical companies. Their nominal defense budgets and lack of willingness to use them coupled with 90% of pharmaceutical research being done in the U.S.

    Comment by Joe C. — January 14, 2008 @ 6:20 am

  4. #3, excellent points.

    Comment by TBlumer — January 14, 2008 @ 6:21 am

  5. Sorry to butt in on your little self congratulation party, but someone needs to set the record straight. There are lies, damn lies and statistics, as someone once said, so lets forget about bogus stats that have been pumped out over the last 2 decades by US governments. The fact is that in the 1960s anyone from Europe who went to the US could clearly see and feel the higher living standards in the US. There were no or few millionaires in Europe, no industry magnates a handfull of worldclass companies and you needed the equivalent of about 3 EUR in todays money tio buy 1 USD. Today the picture is very different. Anyone visiting the US can see that the “cheap energy” based economy is falling apart, as in most infrastructure. The only world beating companies left in the US are Microsoft and Intel, and the richest individuals are now to be found in India, Mexico and China. Western Europe has 6 of the worlds 15 richest individuals (in 2000 there were only 4)and the US only 5 (versus 8 in 2000). Strikingly the Moribund economies of Old Europe (the ones who beleive in social welfare) have created the additional 2 (France and Sweden). despite the Trillions spent over the past 20 years on military hardware, the US economy seems to be slipping. Finaly another fact, of the top 10 pharmaceutical companies in the world 5 are in Europe and 5 in the US, the 5 European based companies account for more than half of R & D, so 53% of R & D spending on Pharmateuticals is decided in the EU, with a significant proportion of the the actual research being done there too.

    Comment by StephenWen — January 15, 2008 @ 9:47 pm

  6. Wow. 2 decades of bogus US stats crossing two GOP and one Dem Admin.

    The US may be slipping. Old Europe may be reviving, but has a LONG way to go; GDP growth higher than ours would help. Asia is coming on strong and millions are escaping poverty.

    Comment by TBlumer — January 15, 2008 @ 10:01 pm

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