EDITORIAL – the In the most recent decades, the economy of Europe has developed at a slower rate than the machine that is the American economy.
In addition, the answer might come as a surprise: the fact that the discrepancy is primarily related to demography. A further problem that plagues the Old Continent is the presence of conservative authorities who are overly concerned about inflation and debt.
In a recent statement, South Dakota Governor Kristi Noem expressed concern about the possibility that Vice President Joe Biden could transform the United States of America into a European-like nation. The statement that he made is part of a long-standing practice among conservatives in the United States, which is to repeatedly assert that Europe is the victim of tragedies that, according to them, will inevitably occur in the United States and that are linked to the liberal policies that are currently in place. At the moment, the contentious issue at hand is immigration. In the past, the European dystopia that was stoked by conservatives was believed to be caused by high taxes and generous welfare packages, which would cause people to lose their drive to work and create.
This is the reason why we need to ask ourselves what the actual challenges that Europe is facing are. For the sake of making a comparison with the United States, I believe it would be beneficial to differentiate between the events that occurred prior to the pandemic and those that have occurred since it began. There are a lot of people who say that Europe is suffering from a significant unemployment rate and that it has fallen behind technologically. This viewpoint is completely incorrect. If an adult of working age is looking for a job, they probably have a higher chance of getting one in one of the main European countries than they would in the United States under the same circumstances.
In addition, Europeans have a complete understanding of the information technology and productivity that are present on both North and South America. In spite of the fact that the real GDP per capita in the Old Continent is lower, this is primarily attributable to the fact that Europeans take a significantly greater number of holidays, which is a choice rather than a negative consequence.
Nevertheless, Europe is not a utopia that has been realized. There are a great number of issues, including some that exist in nations that have social safety nets that progressives in the United States can only dream of having. In Sweden, there is an issue with violent gang activity. Despite the fact that Denmark is widely regarded as one of the happiest countries on the planet, the country is really facing a rise in right-wing populism and has a significant number of people who are depressed.
People have the misconception that the economy of the Old Continent has been developing at a slower rate than that of the American machine during the past few decades, and that it is currently experiencing a relative downturn. This impression is right on the money. On the other hand, the answer might come as a surprise: the disparity is primarily attributable to demographic data.
In real terms, the growth rate in the United States climbed by 53% from 1999, the year that the euro was first introduced, to 2019, the eve of the epidemic. This is a significant increase compared to the growth rate in the euro zone, which was 31%. However, practically all of this disparity may be accounted by the fact that the working-age population in the United States (those aged 15 to 64) has expanded dramatically over the course of these two decades, but in Europe, it has barely changed and has even fallen in recent years.
Is it an issue that the population of the Old Continent has remained the same for so long? It raises questions about the finances, specifically whether or not a decreasing workforce can sustain an increasing number of retirees. When these numbers are taken into consideration, however, it is impossible to assert that they are indicative of an economic crisis. For all intents and purposes, this was the circumstance in 2019, prior to the pandemic.
How much has transpired since that time? Both in Europe and the United States, inflation was exacerbated by the disruptive events generated by Covid and later by the Russian invasion of Ukraine both of which occurred simultaneously. In point of fact, if we make use of price indices that are comparable, the cumulative rate of inflation on both sides of the Atlantic since the beginning of the year 2020 has been nearly same.
The United States of America, on the other hand, saw a significantly more robust economic recovery, to a degree that cannot be entirely accounted for by the disparity in population increase. And this is without a doubt owing, at least in part, to the policies that Joe Biden has implemented: the United States has made a significantly greater effort to stimulate the recovery through public investment.
The officials of the European Central Bank appear, at least in their statements, to be much more reluctant than their American counterparts to reverse the recent rate hikes, which puts this region at a much greater risk of recession. This is despite the fact that inflation has decreased in Europe in a manner that is comparable to that of the United States.
What exactly is the problem in Europe? No, the continent is not experiencing an overabundance of migrants. It is not true that welfare governments have decreased the incentives for people to work and create. However, Europe is plagued with leaders that are too conservative. These leaders are not only overly concerned about inflation and debt, but they are also overly reluctant to foster growth.