Professor Mark J. Perry's Blog for Economics and Finance
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Paul Krugman extols "Europe's economic success" in a recent NY Times column "Learning from Europe," and writes that "...taking the longer view, the European economy works; it grows; it's as dynamic, all in all, as our own."Greg Mankiw adds this caveat about Europe's "economic success." The chart above provides some additional perspective on Europe's "economic success," based on data available here that compares 2007 GDP per person on a purchasing power parity basis for U.S. states and European countries, and shows that if various European countries became part of the United States:1. Portugal would rank #51 as a U.S. state, below Mississippi in per capita GDP. 2. Italy and Greece as U.S. states would rank between the two poorest U.S. states - West Virginia and Mississippi. 3. If France became a U.S. state it would rank #48 out of 51 by per capita GDP, just barely ahead of America's two poorest states - West Virginia and Mississippi. 4. Belgium, Finland, U.K. Germany and Spain would rank in the bottom 20% of U.S. states by per capita GDP, just barely ahead of Arkansas but below Kentucky. 5. Although Netherlands, Sweden and Denmark are among Europe's wealthiest countries, as U.S. states they would be between 14.5% and 18% below the U.S. average. HT: Lee Coppock
39 Comments: At 1/12/2010 3:09 AM, Luis H Arroyo said...I am European -from Spain-, but I agree completely. I have write a post about it, where I said that if Europe has got so rich, is because It has not to worry (free pay) about defense cost, thanks to military power of US. See http://elaerostato.blogspot.com/
At 1/12/2010 3:18 AM, Mark said...I think the Ireland figure must be mistaken, might it be Iceland pre banking collapse? Although Iceland not currently member of EU.
At 1/12/2010 6:25 AM, juandos said..."I think the Ireland figure must be mistaken"...Hmmm, maybe but consider the following: Ireland GDP Growth RateIreland Gross Domestic Product (GDP) contracted 7.40% over the last 4 quarters. The Ireland Gross Domestic Product is worth 282 billion dollars or 0.45% of the world economy, according to the World Bank. Ireland is a small, modern, trade-dependent economy. GDP growth averaged 6% in 1995-2007, but economic activity dropped sharply in 2008 and Ireland entered into a recession for the first time in more than a decade with the onset of the world financial crisis and subsequent severe slowdown in the property and construction markets...
At 1/12/2010 8:38 AM, billibaldi said...What is the point of being rich if you cannot enjoy it? Take the same list of states/countries and rank them by life expectancy. To really make it interesting, throw in Cuba.
At 1/12/2010 9:00 AM, juandos said...Apparently Krugman doesn't read the rag he writes for: Europe Lags as U.S. Economy Shows Signs of RecoveryJune 11, '09"Take the same list of states/countries and rank them by life expectancy"...Good idea billibaldi, why don't you put it up on your site...BTW 'Chaise Lounge' is a headache to listen to...
At 1/12/2010 9:04 AM, Anonymous said...Can you explain [Washington] DC at three times the US Average? Are they getting credit for Federal spending? Or is that actually the Virginia, Maryland, Dc MSA?Regardless, it smells like a lot of Federal spending.
At 1/12/2010 9:25 AM, Andrea said...I can tell you why GDP per capita is higher in Rome than in the rest of Italy. Because all the politicians and civil servants work and are paid in Rome and they higher salaries than the average, plus a lot of private companies are based in the capital so you should add all the salaries of the CEO, Board, etc. I think this is the case in DC too.
At 1/12/2010 10:01 AM, Anonymous said...What is the point of being rich if you cannot enjoy it? Take the same list of states/countries and rank them by life expectancy.If you compare life expectancy using the metrics, any disparities virtually disappear. Never accept a statistic from a leftist without checking it first.
At 1/12/2010 10:02 AM, Chuck said...DC is a red flag in this argument because 2005 data shows the Fed guv contribution to DC GDP was 28.1B of 81.8B. If you want real data on DC city data might give you a different impression. I am no fan of Krugman and the author's point is directionally correct from a GDP perspective.I am not so sure about PPP and I know the economy in Europe is no picnic. But if you travel to Europe with US $$$'s you'll find the argument of GDP/person is very shallow.
At 1/12/2010 10:10 AM, Anonymous said...DC is a red flag in this argument ... I am not so sure about PPP ...See this post by Dr. Perry:MS Per Capita GDP (PPP) Higher Than EU, JapanThat's right, Mississippi.
At 1/12/2010 10:51 AM, Anonymous said...These numbers don't really compare economic welfare well. Yes, there are more super-rich households in the right tail of the income distribution in the US, why is that good for the average citizen? If you look at the median household income data, the picture is pretty different (see the Wikipedia entry, for instance) and Europe does MUCH better.
At 1/12/2010 11:11 AM, Patrick Moran said...Rule of thumb...never use Wikipedia as a source.
At 1/12/2010 11:14 AM, Anonymous said...Europe doesn't seem to do too much better under the median household income metric. Here's the wikipedia link: http://en.wikipedia.org/wiki/List_of_countries_by_average_wages
At 1/12/2010 11:15 AM, Anonymous said...Oops, wrong link. Here's the correct link:http://en.wikipedia.org/wiki/Median_household_income
At 1/12/2010 11:32 AM, Anonymous said...Yes, there are more super-rich households in the right tail of the income distribution in the US, why is that good for the average citizen?Because the super-rich own businesses and create jobs. They purchase aircraft and yachts. They purchase muni-bonds allowing us to borrow and improve our infrastructure at lower interest rates. They exorbitant taxes that fund the military and our schools.Remind us again, what is it that you contribute?
At 1/12/2010 12:21 PM, Benny The Man said...Still, is life better in Bonn, Amsterdamn, Rome or Detroit?London, Lisbon, Madrid or Houston?The Japanese especially, but also the Europeans, have created civilized cities, while ours look and smell dumpy, and provide daily if not hourly fodder for the "COPS" reality show. Even more remarkably, the Japanese and Euro economies had to be rebuilt after WWII. They have much faster Internet download speeds. Spend smaller fractions of household income on defense and health care.We keep telling ourselves we are the best, but in many regards the world is passing us by.
At 1/12/2010 1:05 PM, DM said...Having lived in both places, Europe is noticeably poorer than the US. My very expensive flat included a crappy TV, terrible water pressure, a heater that just sucked and a washer the size of a microwave.... and let me tell you how fun it is to air dry close in a European winter. Don't get me wrong, I loved the experience, but over time, the minor inconveniences and differences start to become major.
At 1/12/2010 1:28 PM, Econ_Scott said...Benny the Putz;Have you traveled and lived in these Utopian Cities in Japan and Europe you so extol ? Japan is filled with Child Prostitution ... because it's legal, and if you cross the Yakuza in any way, you're dead and your family is dead. Try to put your white kid in Japanese elementary school and see how they are treated. Try it if you are Vietnamese or Thai ... it's worse. Their court system has a 99% conviction rate, usually on extracted confessions. Have you lived and traveled there ?Bonn, Amsterdam and Paris, Marseille and worst of all London & Rome, go to the worst areas, particularly after sunset and you won't walk out alive you ignorant putz. I'd rather walk alone at night in DC, Philly, Harlem, Oakland or South Central LA.Faster download speeds ? Dilbert, you need to get out of the cube sometime.You need to read a book once in a while ... Not only are many of us with family buried in Europe in WW II military cemeteries, having saved it from the atrocities the Nazis were conducting in occupied Europe but that U.S. generation also spent 100 billion rebuilding those countries by taking taxes from American Workers in the Marshall Plan and Lend lease. My parents fed them and rebuilt their cities. The money was never repaid. The U.S. also paid for all the military for 6 decades that protected them from their belligerent neighbors.The U.S. is an exceptional place, we have to put up fences to keep people out from over running the free county hospital health care and free education their children can get here, and decent wages.For many legal immigrants, this is the first place they can actually vote where government is largely free of Crony Corruption (Chicago Excepted).The U.S. is an exceptional place, it is largely free tho too regulated.You are also free here. Free to migrate to those Japanese or EUtopian cities you so love, and become a permanent citizen.Why don't you ?
At 1/12/2010 1:45 PM, Edward Von Bear said...that chart cannot be accurate, since it doesn't have the 57 States Obama referenced
At 1/12/2010 2:18 PM, Machiavelli999 said...Krugman actually responded to this criticism on his blog. He pointed to this article:http://alturl.com/wmzuBasically, to summarize, its about a difference in priorities. Krugman argues that it is possible that France can have a higher GDP per capita, but their citizens value their time with family more than a few more dollars on their per capita GDP number.They work less hours a week and retire earlier by choice. But that reduces their GDP.
At 1/12/2010 2:20 PM, Luis H Arroyo said...I love mi contry, in spite of a lot of problem as Econ-Scott says. But I see the real world, and the real world is that Europe is falling. I hope That Us will not.
At 1/12/2010 2:22 PM, Anonymous said...They work less hours a week and retire earlier by choice. But that reduces their GDP.How does Krugman explain the double digit structural unemployment stretching back almost two decades? Do they choose to be unemployed?
At 1/12/2010 2:40 PM, Benny The said...In 1989 Japan experienced 1.3 robberies per 100,000 population, compared with 48.6 for West Germany, 65.8 for Great Britain, and 233.0 for the United States; and it experienced 1.1 murder per 100,000 population, compared with 3.9 for West Germany, 1.03 for England and Wales, and 8.7 for the United States that same year-Wikipedia.I have lived in Thailand, and I can tell you it is a much safer country than the US. My wife can go into town after midnight, etc, no fears.Unfortunately, I cannot think of a major US city in which one is confident of his wife's safety in all parts of town. Maybe Portland. As a society, Japan has passed by the United States. Thailand will soon. They seem to have stronger cultures than we do.
At 1/12/2010 3:05 PM, Adam Freund said...This is a topic that drives me nuts. Our absolute economic superiority over the Europeans is understated because of two very important reasons. The first is that we basically subsidize the European military. If we factored the economic boost they get from that, the gap would be much larger. The second, and much more sensitive topic, is a need to compare apples to apples. Hopefully I don't sound like a white supremacist or some other bigot (I am actually Jewish), but to accurately compare the United States with Europe we have to compare the same ethnic groups in both places. If we did that the gap would be far wider than what is reported. As I heard Milton Friedman once say, Socialism works in Sweden because they are Swedes. This is the most sensitive of topics, but it colors and distorts the debate far too much. Liberals love to cite this (and the oft repeated trope of gun violence) to dismiss the extreme superiority of this country, based on capitalism and the free market, over that of the rest of the world. www.newliberaldemocrat.blogspot.com
At 1/12/2010 3:19 PM, OA said...Oh Krugaman is such a caring guy. He wants to balloon government and taxes just so I can have a better family life. What a guy.Would it get me a Nobel if I studied people's willingness to work more hours as the government's take increased?Might it look like people were choosing more "family time" rather than deciding the marginal effort wasn't worth it?Seems like the young aren't so willing to make the trade for "family time":http://www.taipeitimes.com/News/world/archives/2006/04/09/2003301779http://www.timesonline.co.uk/tol/news/world/europe/article1719875.ece
At 1/12/2010 3:34 PM, Anonymous said...Your should´nt ues GDP-PPP, as those numbers are estimates rather than hard facts, they contains lots of assumptions and differ widely depending on who prepared them. Just checking the GDP per capita (source: The World Factbook, CIA) your get a world ranking list of (only EU and USA included here): 3 Luxembourg 113,100 5 Ireland 65,800 7 Denmark 62,500 11 Sweden 53,600 12 Finland 52,200 12 Netherlands 52,200 14 Austria 50,600 15 Belgium 48,700 17 United States 46,900 19 France 44,700 20 Germany 44,500 21 United Kingdom 43,90022 Italy 39,80022 Spain 39,80028 Greece 33,30036 Portugal 22,900
At 1/12/2010 3:46 PM, Anonymous said...Your US states GDP-PPP data seems quite wrong, too. According to the BEA , US Department of Commerce (http://www.bea.gov/newsreleases/regional/spi/2009/pdf/spi0309.pdf)the GDP/PP per capita of US States in 2007 (only including states you included, too) was :District of Columbia 62,484Delaware 40,112United States avg 38,615Kentucky 30,824Arkansas 30,877West Virginia 29,385Mississippi 28,541Just WHERE did you get your numbers from ???
At 1/12/2010 3:52 PM, Machiavelli999 said...@Adam Freund,Don't know if you are still following this, but if you are...As to your "US subsidizing European defense" argument, I have to cite, yet again, Krugman: http://alturl.com/thccA quote: I tempted to react to this in two ways:1. Hey, you're changing your story line: first Europe's failure proved your point of view, now "” when it turns out that your facts were wrong "” European performance proves nothing; or2. Well, in that case, you must agree with people on the left who claim that military spending is a terrible drain on the US economy. Right? As to the second part of your argument. I am not even sure where you are going with this. Europe has just as much poor minorities as US. Actually it probably has more. Whether it's the Roma gypsies in Italy or the unassimilated Muslim population in France, Europe has no lack of poor minorities. So, again, I don't really know where you are going with this argument.
At 1/12/2010 4:00 PM, Mark J. Perry said...The last anonymous: In the posting, I have a link to the data source at Political Calculations website, and they have data documentation sources there.
About Me Name: Mark J. Perry Location: Washington, D.C., United StatesDr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. Perry is currently on sabbatical from the University of Michigan and is a visitor at The American Enterprise Institute in Washington, D.C.
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