It has been clear for some time that the United States is performing better economically than Europe, according to macroeconomist Edin Mujagic. But the fact that the gap between the two superpowers has increased in recent years is a worrying observation. Although Europeans find it difficult to resist “the temptation to be negative,” he says.
I also participate in it myself. But at the end of the last week of 2023, a great article appeared on the front page of Het Financieele Dagblad, which may lead to more optimism when you look at Europe.
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Please note: It is not that everything is going well in one place in the world and that everything is going wrong in our country. In fact, a lot of good things have happened – it just depends on what you emphasize. So, if you conclude that the United States is doing better economically, and has done better in recent years than Europe, then you have to look at why that is.
What economic indicators precede it?
Take global prosperity as an example, it has increased dramatically in recent decades. It then begs the question of what choices we have made with this additional prosperity. What did we spend it on? Choice in Europe was quite different in a number of important areas from that in the United States.
“Europe has spent the additional prosperity differently than the United States in a number of important areas.”
In Europe, for example, we find it unacceptable for people below the subsistence level to continue to live for so long in such a high level of prosperity. That's why we created a whole network of social care. Certainly the United States chose less than this.
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This means that Europe is performing somewhat worse economically, but the quality of life in very large parts of Europe is still much better than in the United States. Everyone knows the stories of millions of Americans who need to work two jobs even to make ends meet. I don't want to say that this doesn't happen in Europe, but much less than it does in the United States.
But are there also other differences in spending patterns?
Europeans have collectively decided to spend part of their growing prosperity on scarce goods. Entertainment has been one of the rarest commodities for Europeans in recent decades. So, once faced with rising wages, Europeans partly decided to work less. This was a rational choice, but it meant that we would lose out economically to some extent compared to the United States. But again, the quality of life for many Europeans is much higher than in the United States.
