Why is income per head so much higher in the USA than the EU?

If you read the World Bank figures for per capita GDP in 2018, the last annual figures available, you will see that the USA has the highest figure for GDP per head of any of the larger countries, and is ranked 8th in the world. The EU comes in well below its levels, some 42% lower in GDP per head.

The table is always  led by a few smaller rich countries with special advantages like oil and gas reserves or a high concentration of rich people or their bank accounts. The US at $62,641 is well ahead of the EU at $36,532.

The UK is high by EU standards at $ 42,491. Only Germany amongst the larger countries is higher , with France, Italy and Spain below the UK.

The gap between the USA and the EU has been growing in recent years, and clearly grew again in 2019. The USA has lower unemployment, higher in work incomes, lower tax rates, more successful technology companies and more small businesses than the EU as a whole.

Much of the media spend their time criticising the USA and features of its economic model. Their personal dislike of Mr Trump spills over into a series of campaigns against US policies and conduct they think could be criticised. They rarely or never do the same to policies and conduct of the EU.

In the interests of fair and neutral reporting they should from time to time ask what the US gets right, and what the EU gets wrong. The large gap between the GDP per head and employment results between the US and EU implies some of the US policies of promoting growth make sense and are worthy of study. The persistently high unemployment in much of the Eurozone and the slow pace of growth in countries like Italy should be matters of concern.

As the UK sets out  its own policies to promote greater prosperity we need to learn from both the best in the world and from the mistakes around the world. It is clear from the figures the US has a better tax system and climate to promote innovation and small business than much of the EU manages.

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173 Comments

  1. Ian Wilson
    Posted February 6, 2020 at 5:42 am | Permalink

    Fracking

    • dixie
      Posted February 6, 2020 at 8:59 am | Permalink

      Nope – loyalty

      • NigelE
        Posted February 6, 2020 at 7:07 pm | Permalink

        Nope – both.

    • Hope
      Posted February 6, 2020 at 10:17 am | Permalink

      Watch and listen to Trump’s state of union address. It will give you a perfect insight what should be the U.K. priorities. It requires leadership against left hatred of him and conservative ideas and values and putting family, God and country first.

      Compare and contrast to weak, woke Johnson acting against his own stated views! You could notmtrust him an inch. Yesterday he said Brexit is not used anymore because it is over, it is done. Liar. The country is in vassalage and yet to talk about future relationship with EU nearly four years after the public voted to leave. He now honours those who tried and are trying to prevent our departure!

    • glen cullen
      Posted February 6, 2020 at 10:32 am | Permalink

      and what’s happened to the wonder material ‘graphene’ developed by manchester university, funded by the government ie the tax payer

      • hefner
        Posted February 6, 2020 at 1:17 pm | Permalink

        What about a bit of thinking?
        – Google’s search algorithm was financed by a grant from the National Science Foundation (NSF)
        – Tesla (in fact Tesla, Solar City, SpaceX) have benefited from a total of $4.9bn of US public money (including $465m from the US Dept of Energy)
        – SBIR (Small Business Innnovation Research), à US public investment programme still finances start-ups in the USA
        – HTTP was developed by Tim Berners-Lee at CERN (Centre Européen de Recherches Nucléaires)
        – Internet was originally ARPANET financed by the US MoD
        – idem for GPS funded by MoD to help localize military equipment all over the globe
        – and the technology behind hard disks, microprocessors, ROM, LCD screens all at least receiving sizeable amounts of money from MoD or other US ministries
        – more recently the development of SIRI was financed at Stanford Research Institute by DARPA (Defense Advanced Research Projects Agency)
        – touch screen was the results of post-graduate students from U.Delaware paid by NSF and CIA

        So, does one still want a minimum State not interfering with the « Private Sector »?
        Could it be that the PM (or more likely D.Cummins) is right to think about putting more public money into university-linked start-ups?

        • Matthew
          Posted February 13, 2020 at 11:46 pm | Permalink

          Excellent work digging up every time public investments led to a major commercial idea.
          Notice that they are all in the field of *early* or *incubating* stage technology, and not late stage technology.
          Public monies can bring forward new technologies in their earliest, least commercial iterations, yes. And then industry can hope onto these new things, yes.

          But you have not pointed out how many trillions we have wasted of taxpayer money in other irrelevant areas of Government, in order to enjoy the benefits of early stage science investments.
          The Big government you speak of, is not just science investment (which is fine, even for me), but for many other areas, all of which have produced shockingly little.

          But yes, science investments could have a role in Government.

    • Martin in Cardiff
      Posted February 7, 2020 at 5:10 pm | Permalink

      Income per head is helpful but by no means a complete picture.

      We also need to know the cost of living in a given country to understand the quality of life which it buys.

      In eastern European countries that is very low.

      Also where there is great inequality – e.g. in the US – averages can be deceptive.

  2. Ian Wragg
    Posted February 6, 2020 at 5:50 am | Permalink

    The USA believes in equality of opportunities where the EU believes in outcome I.e. socialism.
    The EU is about control, hence the WA and level playing field.

    • Fred H
      Posted February 6, 2020 at 9:03 am | Permalink

      The EU is a fantasy project – everybody equal, even the unemployed, peace and goodwill….ignore the elite ruling classes, concentrate on the rules of what you can do and what you can’t.

      The USA is about production and wealth – create and you live the dream, those at the bottom will have to struggle to survive.

      UK was a middle ground – but that is being steadily eroded.

      • margaret
        Posted February 6, 2020 at 4:31 pm | Permalink

        Every single person is equal as human beings , however the acts they choose can deteriorate their born equality and the minute we forget this then divides in the minds of men become polarised.

        Wealth does not endow superiority ; many rogues become wealthy. Fantasy project it may have been but the intention was good. The mechanics of this project have proved too competitive and have displayed traits of dictatorship..Competition at all costs is markedly wrong and out of step with any community.

        • Matthew
          Posted February 14, 2020 at 12:07 am | Permalink

          I do not believe everyone is born equal. For example, I know a chap who loved basketball, but only grew to 4’9″.
          He just cannot throw like Michael Jordan, let alone dunk, there is no chance he can dunk, and there’s no amount of training that will get him there.
          He cannot ‘educate’ himself into basketball superiority.
          Yes, you can inject him with growth to get him to 6’4. But he was not ‘born’ equal in that case, he was ‘made’ equal, by taking an UN-equal amount of hormones to Michael Jordan.
          And if Michael Jordan took an equal amount of hormones, then he would still be taller than our hormoned-up hero.
          There is no equality in birth. His basketball fate was set in stone the moment his short parents married.

          Reply We mean when we say all people are born equal that they are equal under the law and have equal opportunity to achieve what their talents and physical characteristics will allow them to achieve. We do not mean everyone will have an equal outcome.

          • Matthew
            Posted February 15, 2020 at 9:11 am | Permalink

            My good lady,

            Of course I understand the concept of equal treatment under the Law.

            My issue is that the left often therefore equates the legal conception of equal treatment to a demand for more equality, or an argument against inequality, which to me is absurd.

            Let me give you an example.
            You have two children.
            One is spoilt rotten.
            One is an angel.
            You earn money by selling a newsletter to other countries.

            The angel goes to work for you at minimum wage.
            The spoilt brat doesn’t work.
            Let’s say you set the minimum wage in your country at $100/hour.

            At the end of just one year, the angel has earned $100,000.
            The brat has not earned anything, and lives off the mother’s food for eating, & shelter. $0.

            Let us suppose we say that those three people (your family) are registered as a Nation.

            (Some Nations do, indeed have very small populations, so this is not absurd. For example, Vatican City has only 500 people roughly who live there).

            Ok so yours is a country of 3 people.

            Now let us measure the inequality of income.
            What do we find?
            We find that your angel son, is also the TOP 50% of the country.
            You, dear lady, are the top 0.00000001%.

            Your spoilt brat son is also the BOTTOM 1% of the country.

            Your spoilt brat earns BELOW POVERTY WAGES.
            Is that your fault? Societies?

            The inequality in your country is INFINITELY HIGH.
            Your angel son, for example, earns INFINITELY more than your spoilt son.
            Not 1x more. Not 2x more. Not 10x more. Not 100000x. No. INFINITELY MORE.

            In fact if you divide his wage, say $20 with your spoilt son’s wage, you get $20/$0, which is SO INFINITE that a calculator gets a #ERROR sign when calculation and maths cannot answer, because when you divide by 0, that is actually, true INFINITY.

            The point is that you just generated INFINITE INEQUALITY in your country in just… 1 year! In fact, after DAY 1 of your country being run, you are INFINITELY UNEQUAL!
            Now imagine how unequal your country is in 2 years? 5 years? 10 years? 100 years?

            But I ask you this:
            Is that an indication that the rich are bad.
            Or that the poor are lazy?

    • forthurst
      Posted February 6, 2020 at 1:14 pm | Permalink

      “The USA believes in equality of opportunities…” Seriously? Try getting into an elite university these days if you are a WASP. The USA has degenerated into an oligarchy/kleptocracy where the infrastructure is crumbling and people on median incomes have seen no real increase in wages for decades.

    • bill brown
      Posted February 6, 2020 at 5:34 pm | Permalink

      Wragg,

      just more Brexit party nonsense and no factual proof, let us have some facts about all your hollow statements

    • Martin in Cardiff
      Posted February 7, 2020 at 5:12 pm | Permalink

      People in the US *say* that they believe that, but the facts are, that like in the UK, being born into a rich family in the US has the closest correspondence with being rich oneself, and the same with being poor.

  3. Henry Jailer
    Posted February 6, 2020 at 6:06 am | Permalink

    A week since we left the EU, and yet another day when the only thing you can write about is how terrible the EU is.

    • Fedupsoutherner
      Posted February 6, 2020 at 8:28 am | Permalink

      Henry Perhaps because the EU has a big impact and not a good one on so many areas of our lives. Even though we are technically out until we have negotiated this trade deal then the EU has too much influence.

    • Ian Wragg
      Posted February 6, 2020 at 8:30 am | Permalink

      It’s good that our host highlights these discrepancies. For too long we’ve been fed a diet of the benevolent EU when in fact is no such thing.

    • dixie
      Posted February 6, 2020 at 9:02 am | Permalink

      JR is comparing the best and worst of setups we are familiar with and saying we should learn from both. What is it with euphilics that they can never see or accept that the EU can make mistakes, refuse to learn from them and take the wrong path.

    • Richard1
      Posted February 6, 2020 at 9:31 am | Permalink

      It’s an interesting piece isn’t it or do you find any whiff of criticism of the EU simply impossible to deal with?

    • formula57
      Posted February 6, 2020 at 9:39 am | Permalink

      And 239 years since we left America (post Yorktown), and yet another day when the only other thing Sir John can write about is how wonderful America is!

      Anyone would be forgiven for suspecting he has wide interests and an enquiring mind.

      • Fred H
        Posted February 6, 2020 at 6:02 pm | Permalink

        you lost me there somehow. If he didn’t have wide interests and an enquiring mind Wokingham would not have re-elected him as our MP. Believe me we are not all sycophants – we just want a fair and intelligent representative in the H of C and dozens certainly don’t get one!

    • oldwulf
      Posted February 6, 2020 at 10:23 am | Permalink

      Henry – our host writes about many things. The European Union has, quite rightly, not been crossed off his list.

    • agricola
      Posted February 6, 2020 at 10:38 am | Permalink

      Your choice of adjectives. Our host in his usual forensic way has presented the bare figures. Even the figures have a limited narrative. They do not tell us how many minutes we have to work after tax to buy a loaf of bread. I’m sure the figure varies throughout Europe. Again bare figures don’t take into account quality of life. This varies nationally and is particular to the demands of individuals.. My quality of life is not yours for instance.

      Though I feel very negative about most things EU, I love living in Spain. I could write a piece on it but you might find it boring or some other adjective. The Spain I love was experienced well before the EU got a grip. Comparisons are a very complex subject.

    • ukretired123
      Posted February 6, 2020 at 10:40 am | Permalink

      Not terrible but for 50 years a corrupt dysfunctional EU bureaucracy that is not utopia if you care to check out 50% unemployment in southern Europe.
      You’ve got to be crazy to condone EU economic mismanagement!

    • a-tracy
      Posted February 6, 2020 at 10:55 am | Permalink

      That’s not the way I read this Henry, it seems more as though John is asking readers why they think the differentials exist in the facts he has discovered from statistical reporting. Surely you are here reading because you don’t like just reading opinions and views of people just like you, that’s why I read the Guardian because I like my views to be challenged.

      We have a lot of consensus in the UK over things the USA do that the big majority of us don’t like and agree with such as gun control and a lack of medical cover for the poorest and the expense and exclusions in their medical insurance model. I also wonder about the stabbings and knife murders we experience in the UK how do they compare with the USA, and the rest of the EU? Shouldn’t we look at best practice from both cultures?

      Aren’t you interested in discovering why unemployment is lower is the USA?
      Aren’t you interested in the reported higher in-work incomes?
      –“– lower taxes
      –“– more small business and successful technology companies – I am!

      • glen cullen
        Posted February 6, 2020 at 9:42 pm | Permalink

        bang on

  4. agricola
    Posted February 6, 2020 at 6:12 am | Permalink

    In technical detail I do not have enough experience of life in the USA and EU. I get the impression that the USA believes in the creative power of the individual whereas the EU is more of a collective. Both systems have their plus and minus sides. We in the UK try to tread a path somewhere inbetween. Perhaps now we are approaching detachment from the bureaucratic socialist model of the EU we can dispense with much of it’s constraint and free up the entrepreneurial within our DNA. This should enable the creation of sufficient wealth to provide for the disadvantaged in society, among whom I do not include those who make a life choice of living off the backs of those who choose work. It is in the hands of our politicians to strike the right balance between wealth creation taxation and government spending. A balance that at present is in need of adjustment towards wealth creation and retention.

    • Andy
      Posted February 6, 2020 at 8:00 am | Permalink

      It is amusing that you think the EU is socialist. It has a centre right majority. Most of the countries are centre right. It has strict rules against state aid. And it is probably the world’s most dominant enforcer of competition rules – far more so than the U.S. The EU is also has a similar number of employees to that infamous hotbed of bureaucracy – Derbyshire County Council.

      • The Prangwizard
        Posted February 6, 2020 at 12:45 pm | Permalink

        It may have rules against state aid but it allows them to be broken and remedies are deliberately late and ineffective. The breaches are therefore repeated.

      • agricola
        Posted February 6, 2020 at 4:15 pm | Permalink

        You can place the EU within the political spectrum wherever you wish, if it reassures you. I see it as a totally unelected contolling bureaucracy, not unlike the old USSR, minus the gulags.I have known Spain since 1965 since which it became a democracy in 1975 with governance switching from left to right and back again until the present day. The EU has given it handouts, but unemployment has remained at roughly the same level throughout the period I have known it. An average of 20% rising to 50% for youth. The black economy remains at just under 20%. EU strictures and the Euro have kept it where it is. If that isn’t socialism I don’t know what is. The competition rules it enforces ensures it does not have to compete with anyone outside who can do it better and cheaper. I call that socialist protectionism. Get used to it you are about to enter the real World.

      • Edward2
        Posted February 6, 2020 at 5:18 pm | Permalink

        Gosh, you think the EU is centre right.
        That says lots about where you sit on the political spectrum Andy.

        • Andy
          Posted February 6, 2020 at 10:33 pm | Permalink

          It doesn’t matter what I think. It is a simple fact. The EU is currently centre-right.

          Von Der Leyen is from Merkel’s centre-right CDU party.

          The right has a small majority in the European Parliament.
          The centre-right European People’s Party has the most MEPs.

          10 of the 27 Council members are centre right. Another 4 are also right wing.

          Just 7 are left wing, the remaining 6 are centrists.

          So if think the EU is currently not centre-right it says lots about where you sit on the political spectrum.

          • Edward2
            Posted February 7, 2020 at 11:12 am | Permalink

            By centre right you mean social democratic.
            It is indeed about the position on the spectrum Andy.
            Bear in mind you think Merkel is right wing politician.

  5. Shirley
    Posted February 6, 2020 at 6:13 am | Permalink

    For some reason the EU is rarely criticised, while Trump and the USA are subjected to lots of vitriol.
    Maybe it’s something to do with the bribes, grants and funding dished out by the EU and the conditions placed upon those bribes, grands and cheap ‘loans’ that they must support the EU at all times. Our money is being used to buy loyalty for the EU and steal loyalty from those who actually fund the EU.

    • Anonymous
      Posted February 6, 2020 at 9:06 am | Permalink

      It’s just an innate hatred of Anglophone capitalism. On one arm, Climate Change is the perfect stick to beat it with, on the other a child makes the perfect shield.

      The BBC is run by radicals. I expect freedom of speech allowed among its staff would not extend to even the limits allowed in the Commons.

      I expect that if you were working at the BBC and expressed Tory back bench or Brexit views you would find your career to be curtailed sharply.

    • Hope
      Posted February 6, 2020 at 10:21 am | Permalink

      Shirley, the Tory govt only talks about EU contribution. As pointed out in Con Woman, how about all the other ancilllary funds as well?

      Johnson is out to silence questions about what is happening under his watch. He wants all spin and good news stories. The rest buried. Particularly all things EU. He capitulated and acted against what he said and wrote. He cannot change facts or history. Like during the election hiding in a fridge, stealing a journalists mobile etc.

    • agricola
      Posted February 6, 2020 at 11:01 am | Permalink

      Very true Shirley. The Donald is an easy target. He stands out, larger than life. He epitomises financial success, his solutions for a successful USA are very different and exceedingly sinful because they seem to be working. He is the very antithesis of everything his political opponents stand for. Expressed hate of him migrated across the pond because the Left here did not have a real target until Boris arose.

      The EU has created a dependant society. Eight pay in and nineteen get handouts. Their largesse extends into many areas of society from local government to seats of learning, agriculture and information arms such as the BBC. Al Capone ran much the same system. It is hardly surprising that so many sign up to their message and decline to look for the downside.

    • hefner
      Posted February 6, 2020 at 4:14 pm | Permalink

      Shirley, did you ever wonder why? What about this: The USA speak a kind of English that most here can understand, most of the EU27 countries speak other languages. What do you think is easier for our “searching journalists”, whether BBC or any other print or TV media?

      • Hope
        Posted February 6, 2020 at 8:17 pm | Permalink

        Not sure that is correct Hef. There are many employers who require a foreign language. I would be surprised if media outlets did not require some of their staff to speak another language.

        For example, even though accounting has to be English some accounting firms require their staff to speak the language of the country they visit. Some of these firms have offices in every major city throughout the world. Some also view it as a basic courtesy to speak the language of the country they visit even though the people they do business with speak English.

        It is a modern world Hef.

        • hefner
          Posted February 6, 2020 at 9:56 pm | Permalink

          Thanks for that. I do not doubt it is a modern world. But still I am not sure I understand. As far as I know (I certainly do not know the details) Deloitte, PWC, EY or KPMG, present in more than 150 countries, tend to have a lot of local people with proper accounting qualifications in their offices distributed around the world. Those locals certainly write a version of their reports in English to conform to international regulations, but they might only get a few British/US consulting people to supervise their tasks. Are you talking about those?

          • Hope
            Posted February 7, 2020 at 9:48 am | Permalink

            I think you will find teams are sent from London to European cities, those teams will speak the local language and secondments are normal to cities around the world. From either their to here or here to there.

            Modern language degrees available at all good universitues.

            Supervisors are not specifically U.K./US consultants. Multi national means supervisors and staff of every nationality and language. Modern world Hef.

          • hefner
            Posted February 7, 2020 at 10:54 am | Permalink

            Thanks.

  6. Richard1
    Posted February 6, 2020 at 6:30 am | Permalink

    Indeed this is rarely observed or commented on, and never on the BBC. It is also the case that income inequality – the traditional stick with which the leftist media beats the US – is narrowing under Trump. It is a remarkable thing in all the commentary on Brexit from EU officials, continuity remain hold outs in the UK, and some EU leaders, that not a word of criticism is uttered on the EU and it’s economic model. Perhaps the reason is a lack of robust democracy at the EU level. There’s debate within nations – but no opposition at the EU level to the sclerotic statist high tax model.

  7. DOMINIC
    Posted February 6, 2020 at 6:31 am | Permalink

    The application of human ingenuity to the production of new products and services is at the core of all material gain that allows material convenience

    One only has to follow the history, development and growth of MS, Apple, Amazon, Dell, Facebook and many other large US mega-companies to realise that the growth of an economy is driven not by the dead and docile hand of the backward political State but by the drive and application of human beings outside the political world.

    Once you hinder creative commerce by political interference and State liability you damage the very driving force of a prosperous economy

    A culture that promotes self-reliance, ambition, individual and personal responsibility and the rejection of State dependency will thrive. The EU and the UK political class have since 1990 deliberately tried to encourage State dependency. This affords the State leverage and control.

    We’ve seen it since 2010. Yes, your party John. More State spending, more State reliance, more politicisation. A refusal to radically reform all of Labour’s parasitic, wealth destroying client state that destroys growth but protects Labour and promotes its vested interest

    This nation is in dire need of radical reform of both the oppressive State and its parasitic culture and the unleashing of the market to reinvigorate our competitive advantage vis a vis our European neighbours

    Johnson won’t do what is necessary for the future prosperity of this nation. He’s no radical reformer, but a manager. His capitulation on HS2, the malignant BBC and climate change lobby tells me all I need to know.

    • oldtimer
      Posted February 6, 2020 at 7:09 am | Permalink

      I fear you have summed up BJ all too well. I now await the forthcoming budget with concern that we will not get the tax reforms this country needs if it is to lift itself up by its own bootstraps.

    • Nig l
      Posted February 6, 2020 at 7:47 am | Permalink

      Great post, indeed the dead hand of the welfare state providing a safety blanket going back further meaning no one needs to ‘try’. Add vast swathes of nationalised industries again with no competition, look how inefficient the NHS is even now plus a jobs for life civil service.

      All managed, as you rightly say, instead of being led by a faceless blob of MPs without an ounce of entrepreneurial spirit or knowledge amongst them.

      Risk avoidance is their mantra. Why should the rest of the country be any different?

    • Fedupsoutherner
      Posted February 6, 2020 at 8:30 am | Permalink

      +1

    • Lifelogic
      Posted February 6, 2020 at 8:53 am | Permalink

      One reason is inheritance tax in the UK 40% over just
      £325k in the USA you get about 10 times this sum tax free and taxes are at a much lower rate too.

      In the UK why bother to work hard and earn more then pay say 50% income tax and NI to the government then another 40% on death?

    • Hope
      Posted February 6, 2020 at 10:25 am | Permalink

      And the disasterous Haewei. No rational sane person would not countenance such stupidity. Even inparliament yesterdayanswering Green and Davis he spoke of high risk vendors! Why take the risk! It who in their right mind would sign up to vassalage through the WA and PD which also restricts negotiations for future relationship especially after recognizing it, resigning from govt for it and then willing sign up to it!

    • glen cullen
      Posted February 6, 2020 at 10:46 am | Permalink

      I fully agree with your assessment, our current reliance on academia, red-tape and political dogma is killing industry and manufacturing

      With a wave of a hand politicians tell us that all new jobs in a decade will be green jobs….no let market forces and innovation dictate what jobs will be required in a decade

    • agricola
      Posted February 6, 2020 at 11:07 am | Permalink

      While I agree with most you say, it is too early to judge Boris. I am cautiously optomistic, but the jury is still out.

      • Fred H
        Posted February 6, 2020 at 6:09 pm | Permalink

        but a pretty poor start.
        WA mk2…..Delayed budget……soft-pedal BBC….. Offer knife-in-the back once-colleagues peerages….HS2 delay to soften continuing…..amicable look to EU discussions….zero information about undoing past shambles of May……reduce tax on the wealthier not the poor.
        Whats to like?

        • Fred H
          Posted February 6, 2020 at 10:43 pm | Permalink

          oh…..and 5G …….ignoring Farage Contribution to getting him the PM.

  8. GilesB
    Posted February 6, 2020 at 6:46 am | Permalink

    GDP per head can be a very misleading statistic.

    Take Ireland where a massive percentage of exports, and GDP, is due to the Pharmaceutical industry. There are a few thousand well paying jobs, but nearly all of this so-called GDP is license income that is paid on to Luxembourg based tax shells. Very little stays in Ireland.
    Whereas agriculture is shown as a much smaller share of GDP but as an industry is the largest employer.

    The US and UK are similar with large proportions of GDP in no way benefitting the residents. Neither paying salaries to workers nor tax to the community. Vultures and parasites are of zero value to the man in the street. It’s misleading to use statistics that include them.

    Median income is a better measure.

    • Alison
      Posted February 6, 2020 at 9:11 am | Permalink

      Ireland’s GDP and GDP per capita are massively inflated by Ireland’s flag of convenience for low corporate taxation. Of course, those taxes paid in Ireland are revenue lost to other countries, where those companies also operate and consume services. As Brian Monteith put it, Ireland is “a phantom economy achieved by rerouting the sales of multinationals across the whole EU into Ireland and crediting it as Irish GDP.”
      There’s a super Global Britain study on this.
      One wonders how long the EU will be allowed by other member states to allow this .. uneven playing field. When it does, the ramifications will be significant. Inter alia Ireland will be much more dependent on its trade with the UK.

      • Murphy
        Posted February 6, 2020 at 9:20 pm | Permalink

        In the case of Ireland its economy is small enough compared to the other major economies and multi billion dollar companies surrounding it but the Irish can box clever in that they know it takes only a few crumbs from the table of the super rich to make the difference- hence the low corporation tax rate. And so Ireland would be equally correct to say to the EU- if you want a level playing field on this then you have only got to reduce your own EU corporate tax rates back to 12.5 per cent- the same as Ireland.

    • formula57
      Posted February 6, 2020 at 10:01 am | Permalink

      Supposing that “Median income is a better measure”, it appears to show the same result, with Pew Research reporting U.S. median disposable income in 2010 @ $60,884 contrasting to Germany @ $44,901 and the U.K. @ $40,888.

      Pew notes that European governments are more likely to provide services to households (like the N.H.S.) that may not be captured in household income than is the case in the U.S., eroding the apparent income gap.

    • Edward2
      Posted February 6, 2020 at 10:22 am | Permalink

      A quick internet search shows UK median income is approx £28,500
      USA median income it says is approx $55,000
      A bit lower for both compared to GDP per capita figures but there is still a large gap.

    • hefner
      Posted February 6, 2020 at 10:37 am | Permalink

      Median income PPP per country for 2018 in $ is available from worldpopulationreview.com

    • agricola
      Posted February 6, 2020 at 11:21 am | Permalink

      Yes the Global Predator companies with economies stronger than many UN members have to be dealt with in the UK after Brexit is complete. This is for government. They must be subject to the same levels of taxation as the corner shop. To me I think we must revert to a sales tax, payable in the customers country. This is at least proportional to the level of commercial activity.

  9. GilesB
    Posted February 6, 2020 at 6:49 am | Permalink

    But of course you are right that unemployment is a major problem in many EU countries. For which there are many causes. But the EU ‘one size fits all’ straight-jacket is certainly a major contributor.

    • Andy
      Posted February 6, 2020 at 7:33 am | Permalink

      Except that there are also many EU countries with a very low unemployment rate. Lower than the US, lower than us. So that doesn’t really explain your ‘straight jacket’ theory, does it?

      • Richard1
        Posted February 6, 2020 at 2:41 pm | Permalink

        Certainly it explains it. Having Greece Spain Portugal Italy and even France in a currency union with Germany and the Netherlands doesn’t work unless you have a transfer mechanism – political and economic union in fact. President Macron has this right.

        • Mitchel
          Posted February 7, 2020 at 10:50 am | Permalink

          They should have learned from the historical example of the unification of Italy when the northern Kingdom of Piedmont-Sardinia was joined by the southern Kingdom of the Two Sicilies.Economic activity tended to rapidly concentrate in the north,the south was devastated and impoverished,leading to mass migration(particularly to the US-bringing the Mafia with it!).

      • Edward2
        Posted February 6, 2020 at 2:47 pm | Permalink

        Actually it does explain it very well.
        The Euro is at an exchange rate which doesn’t suit many members based as it is on Germany’s economic strength.
        This leads to low growth and high unemployment for some.

      • Fred H
        Posted February 7, 2020 at 11:22 am | Permalink

        Andy – -there are many many more with much higher rates:
        Greece-17% Spain-13.8% Italy-9.5% France-8.5% Sweden-7.1% Croatia-6.9% Lithuania-6.1% Latvia 6.4% Portugal 6.2% Luxembourg-5.7% Slovakia & Belgium-5.5% Ireland& Denmark-over5% Austria/Slovenia/Estonia- over4%.
        UK 3.8% – – -why allow facts to get in the way of your allegation?

    • agricola
      Posted February 6, 2020 at 11:39 am | Permalink

      One of the symptoms of excessive control of economies is that it fails and results in the rise in the Black Economy. The estimated percentage level of black economy to the economy as a whole is as follows in Greece 21.5%, Italy 19.8%, Spain 17.2%. These are the countries suffering the greatest levels of unemployment under the EU socialist regime.

      • bill brown
        Posted February 6, 2020 at 5:32 pm | Permalink

        Agricola,

        For your information a majority of the 27 EU countries have no socialist governments and most of the politicians now running the EU are conservative and liberal , so I do not know where this socialist EU really comes from

        • a-tracy
          Posted February 7, 2020 at 9:57 am | Permalink

          bill brown – I get the impression the EU biggest members are socialist through UK newspapers, we are told Germany is Liberal centrists, France, collection of left wing parties led by Macron, Italy – left wing coalition government, Spain in Jan we were told they backed a new left wing government, and the Netherlands liberal centre is being shaken by a move to the right, why would the adjective ‘shaken’ be used it if were conservative?

  10. Lifelogic
    Posted February 6, 2020 at 7:19 am | Permalink

    The UK is hugely over taxes, the government spend money very inefficiently often/usually on pointless or even damaging things, we have endless damaging red tape, huge numbers of essentially parasitic jobs, very restrictive employment laws and an expensive and idiotic energy policy. We have very little freedom and choice in the free at the point of (rationing/delay) use NHS or schools. We fund vast numbers of largely worthless degrees in and put people in £50K of soft debt for them. Most will not be repaid.

    The US is not even a very good system, far too many lawyers and litigation, too much tax and red tape there too. Plus a healthcare that is far too expensive and inefficient. We could actually do far better than the US. Singapore is about 55% better of in GDP PPP than the USA, Switzerland in also a bit higher. The UK tax system encourages the wealth and hard working to leave or not to bother working too hard so they do. It also deters inward investment.

  11. margaret
    Posted February 6, 2020 at 7:23 am | Permalink

    Every one tells me to go to Saudi where living standards are exceptionally high yet there are other things to consider. I see President Trump has been exonerated of his said collusion and corruption . I didn’t imagine anything would be different.
    I feel positive about the UK making a go of things and with ethical overtones. I see Harrogate has made it’s target of 2025 for a change to all electric buses.

  12. Derek Henry
    Posted February 6, 2020 at 7:26 am | Permalink

    Fiscal policy.

    Might as well just come out and say it John.

    Trump has smashed US government spending records and provided tax cuts and the sky did not fall in or ground open up.

    He knew his $ trillion budget deficit provides a $ trillion surplus in the non government sectors. More importantly he knew who he was giving that surplus to. The military and the wealthy.

    The UK has to start giving the non government sectors bigger surpluses to play with. The lower and middle classes and tax cuts and businesses rate cuts to small and medium size companies. The wealthy will get their share when the lower and middle class start spending their surplus.

    Acting as if we are still on the gold standard and we use fixed exchange rates ie the Euro has to stop.

    Loading private debt onto the shoulders of households and business just so banks get their share has to stop. If we keep slashing government deficits and thus non government sectors surpluses. Just so banks can give out more loans.

    Then brexit will be a farce.

    The Conservatives have to get used to higher private sector surpluses again. The government finances are not that of a household. We are no longer on the gold standard or use fixed exchange rates.

    Private sector savings are a good thing a conservative thing to do. Economic expansions on the back of private sector debt is a fools game.

  13. Mark B
    Posted February 6, 2020 at 7:35 am | Permalink

    Good morning

    One should always be careful when comparing apples to oranges.

    The UK and other European countries have higher social costs compared to the USA. Also, US States have far more independence than EU member countries. And let us not forget that US States benefit from wealth transfers as part of a functioning currency union. The EURO, as we all know, is not a completed project.

    The US also benefits from having the Dollar as the reserve currency. This means other countries need to buy dollars to trade.

    As we slowly but surely reassert ourselves on the world stage the UK will be better placed to grow our economy and exports. Imports too should be cheaper once we no longer import through Rotterdam and pay the EU Danegheld.

    • margaret howard
      Posted February 6, 2020 at 6:00 pm | Permalink

      Mark B

      “As we slowly but surely reassert ourselves on the world stage the UK will be better placed to grow our economy and exports.”

      What stopped us doing that before we begged to join the union? Makes you wonder why we bothered. Mind you, it was a good thing we did as it turned us from the ‘sick man of Europe’ into the world’s 5th largest economy. All thrown away now.

      • Edward2
        Posted February 6, 2020 at 8:21 pm | Permalink

        We joined a Common Market.
        It has been hijacked and turned into the United States of Europe.
        Now we are free of it.

  14. Roy Grainger
    Posted February 6, 2020 at 7:43 am | Permalink

    The EU doesn’t have proper mobility of labour. This is because of the multiple languages in use throughout the EU. If they standardised on English (like USA) they’d do better.

    • margaret howard
      Posted February 6, 2020 at 5:51 pm | Permalink

      For over a thousand years European countries used Latin as a universal language without abandoning their own languages. Most Europeans have always been able to speak more than one language. How monotonous it would be if that would change. Unlike America it is not a continent of immigrants.

      And even there things are changing. A Texan friend of ours is worried that Spanish may replace English and one town near him has already adopted Spanish as official language.

  15. steadyeddie
    Posted February 6, 2020 at 7:49 am | Permalink

    Half of USA states have an average income below the UK and the highest income is in the state of….Washington DC, where government is by far the major employer. Regulation, tax, employee benefits, minimum wage are all factors that are not reflected in gdp per head. I know where I would rather live,particularly if I fell ill.

    • Lifelogic
      Posted February 6, 2020 at 1:04 pm | Permalink

      Have the used the NHS rationing, incompetence and delay system recently?

      • Lifelogic
        Posted February 6, 2020 at 1:06 pm | Permalink

        Lots of good and dedicated people work there but the overall system, funding and management is appalling.

  16. Andy
    Posted February 6, 2020 at 7:49 am | Permalink

    I have lived in both the United States and continental Europe – and I really like both.

    But as an economic model, for me, Europe wins hands down.

    And the reason for this is simple.

    In America the constant pursuit of wealth trumps (pardon my language) personal wellbeing.

    In Europe it is the opposite. America is live to work. Europe is work to live.

    My American friends all get a bum deal. 10 days paid holiday a year. What’s that about?

    Women having to return to work days or weeks after having a baby. Eh? Madness.

    Medical care only for those who can afford it.

    We know there are some in the Tory party who want us to be just like America.

    I can tell them now – come for our holidays, and our health services and our time with our children and we will come for you. And you won’t win.

    • Lifelogic
      Posted February 6, 2020 at 1:11 pm | Permalink

      I do not want to be like America. The UK can be far better richer than the USA but without the guns, crime and with fewer lawyers (though still far too many). We just need far lower taxes, freedom and choice in healthcare and education, cheap energy, far less red tape and far less government. It is all really very simple. Also a criminal justice system that actually deters crime rather than encouraging it.

    • a-tracy
      Posted February 6, 2020 at 3:02 pm | Permalink

      “Medical care only for those who can afford it.” I really wonder about this Andy because an American friend of mine told me that America’s back up system for people that aren’t private spends double our per head spend.

    • Glenn Vaughan
      Posted February 6, 2020 at 4:48 pm | Permalink

      “I have lived in both the United States and continental Europe…” Andy

      It’s amazing how imaginative some people can be with their Jobseeker’s Allowance.

    • Mitchel
      Posted February 6, 2020 at 5:18 pm | Permalink

      Ian Birrell in the Mail on Sunday did a report on the “neo-feudal” conditions in California-the squalor that many people live in-the sort of thing you have only seen reported on by the likes of RT before.

      And isn’t life expectancy now falling in the US?Not had chance to read it but there is an article in the current edition of the prestigious Foreign Affairs magazine :”The epidemic of Despair;will America’s Mortality crisis spread to the rest of the world?”

      President Carter popped up to give a speech last year (google it) bemoaning that the US spends so much on wars and the MIC that it is falling behind in many areas-he contrasted the extensive high speed rail network in China to the dearth of it in the USA.And let’s not mention Huawei shall we,or the edge Russia’s new weapons have.

      But the biggest killer of all may be that the “exorbitant privilege”-the $ as reserve currency and control of the western financial system is being challenged by the SCO/BRICS bloc with their own institutions, payment mechanisms and secure access to key natural resources.

    • Fred H
      Posted February 6, 2020 at 5:46 pm | Permalink

      I agree with most of that. However rather a lot of Europeans avoid work and taxes and get away with it. Nice (work) if you can get it.

  17. Kenneth
    Posted February 6, 2020 at 7:52 am | Permalink

    The eu has been very cunning in its ability to tie down those organisations that have access to the media and are in a position to criticise.

    Many of them either receive grant funding from the eu or have the eu as a major customer.

    Add that to the well known pro-eu bias by the BBC (and others) and you are left with the current warped coverage.

  18. Ian@Barkham
    Posted February 6, 2020 at 7:56 am | Permalink

    Political rule bythe unelected and unaccountable vs trust in the people

    Massive Government vs small government

  19. jerry
    Posted February 6, 2020 at 8:05 am | Permalink

    I note that the UK has rejoined the WTO as a member in her own right, rather than having to cede her voice and vote to the EU, so we are already more powerful economically just 5 days after leaving the EU. Not that the average person in the UK would know, the silence from the MSM in reporting this was deafening.

    The USA has a high GDP because it has much natural resources, but perhaps more importantly has traditionally always liked making its own widgets, and since Trump’s policy to encourage companies to retain or return production on-shore in the US both GDP and employment is up, personal wealth is up, so are sales of ‘Made in the USA’, even if the checkout price is higher than that of the off-shore(d) competitor product.

    Might I suggest again, as others have also suggested, that the UK at the earliest opportunity makes it law that the actual country of origin be marked on products, not merely the last point of assembly, and were there might be multiple parts of different origin a breakdown of the origins be available -for example a motor car might well have been assembled here in the UK, even be marketed as a British Heritage brand, but when perhaps 80% of the vehicle is made up of sub-assemblies or parts from Germany…

  20. Newmania
    Posted February 6, 2020 at 8:07 am | Permalink

    Ireland , Netherlands Switzerland France Germany Norway Sweden Belgium are all, like the US above the UK and that is despite having grown faster than our neighbours throughout most of our time in the ” rich men`s club”. These countries furthermore, have services that are far superior to the US , are safer and have much less poverty.
    In truth I think this sort of comparison is usually more of a parlour game than a serious contribution, but if we are going to play ….
    The great wave US power came in the late 19th and 20th century when it experienced massive immigration of Irish Italians Greeks Jews and many more ,often without any ‘points’.
    Perhaps that has something to do with it , or perhaps it is the joining of many States into a single trading area with a single currency.

  21. Kevin
    Posted February 6, 2020 at 8:27 am | Permalink

    i>”As the UK sets out its own policies to promote greater prosperity”

    Before the Conservative Government can do this, it needs to set out the terms of our independence. If it is not doing so already, when can we expect the Government to inform the public of the legal regime that will subsist on 1st January 2021, in the absence of a Canada-style FTA with the EU?

    P.S.: 330 days till the Conservatives’ gift to the EU of legislative power over the UK expires; or,
    1,060 days if Boris offers it the three-year, “premium vassalage”, upgrade.

  22. Alan Jutson
    Posted February 6, 2020 at 8:29 am | Permalink

    Perhaps the tax system encourages work, along with more sensible regulation towards doing business.

    Are they scrapping the sale of new petrol and diesel cars in 2035 as an example

  23. margaret howard
    Posted February 6, 2020 at 8:40 am | Permalink

    Maybe you ought to give us an idea what the cost of living is in your beloved US, especially most important of all for peace of mind, the cost of health care? Otherwise you might like to explain why, in the universal Quality of Life Index the US comes in at number 14 behind 8 EU countries with Denmark at the top (but alas ahead of the UK at No 20).

    Also where in Europe do you find income in some parts 3X higher than in others as in the US where the differences between the north and southern states are staggering?

    • Dave Andrews
      Posted February 6, 2020 at 12:45 pm | Permalink

      Ireland NMW €1706.90/hr, Bulgaria €312/hr. That’s more than 5x.
      If we are going to have a FTA with the EU, can we have a level playing field please? Preferably where Eastern European workers aren’t exploited with low wages to undercut UK competition.

      • Dave Andrews
        Posted February 6, 2020 at 12:48 pm | Permalink

        Sorry, missed out Luxembourg at €2,141.99/hr. So that’s nearly 7x.

        • Dave Andrews
          Posted February 6, 2020 at 12:50 pm | Permalink

          Sorry again. That should be per month.

        • Lifelogic
          Posted February 7, 2020 at 3:58 am | Permalink

          Luxembourg is rather misleading for various reasons one of which is that a lot of people work there (so contributing to GDP) but do not live there. So GDP per cap is rather distorted.

          • hefner
            Posted February 8, 2020 at 11:56 am | Permalink

            Indeed, as it is misleading to harp on Singapore’s GDP, isn’t it?

    • Edward2
      Posted February 6, 2020 at 5:13 pm | Permalink

      You are correct that healthcare and prescription drugs are more expensive in America.
      However transport costs, car prices, food and drinks, fuel for cars, electric and gas for homes, property prices and general taxation is much lower.
      And average incomes are higher than UK and Europe.

      Income disparity in Europe is huge.
      Like America it is a big continent and standards of living in Milan or Paris or Munich are way higher than rural Spain or Poland or Romania.

  24. Fred H
    Posted February 6, 2020 at 8:41 am | Permalink

    OFF TOPIC…
    Oh Boris….’you really don’t get it’.

    Boris Johnson has nominated two men he kicked out of the Tories in the Commons for opposing him on Brexit for seats in the Lords, the BBC has learned. Former Chancellors Ken Clarke and Philip Hammond had the Conservative whip withdrawn last year for attempting to block a no-deal Brexit. They have now stood down as MPs but have continued to be critical of the prime minister’s policies.

    • SM
      Posted February 6, 2020 at 2:09 pm | Permalink

      At the age of 79, it is presumably considered that Mr Clarke will not bother to make that much trouble in the HoL. Regarding Mr Hammond, one can only hope that somewhere in the bowels of Westminster a present-day Francis Urquhart is keeping a close watch on things.

  25. HJ
    Posted February 6, 2020 at 8:41 am | Permalink

    The headline says “Income per Head” but the text talks about GDP per head.

    These are not the same thing and the connection between the two is not necessarily linear.
    Ireland has a very high GDP per head but it is well known that these figures are hugely distorted by large companies locating their European HQs there and recognising as much revenue there as possible (due to low corporate taxes). Consequently, Ireland has a much higher GDP per head than the UK, but a lower income per head.

    Similarly, in countries which specialise in high investment industries (such as Germany) they produce more per head (i.e. higher GDP per head) but they consume more of that GDP within those industries simply to produce that output. The UK specialises more in lower investment service industries but a higher percentage of that output is available for wages/consumption.

  26. bill brown
    Posted February 6, 2020 at 8:44 am | Permalink

    Sir JR

    I have major reservations about your conclusions

    Yes, the US economic model is working well for the moment also with higher growth, but the federal budget deficit is out of control and the social problem are significantly higher than in most Eu countries.

    I do not recognize the majority of EU countries with high unemployment, but what I do recognize is a significant number of EU countries with recognized high quality of life and supposedly being some of the happiest people in the World. (DK< Fin, Swe).

    We have to have a differentiated look at the World including the US and in your case for the EU.

  27. Everhopeful
    Posted February 6, 2020 at 8:52 am | Permalink

    I imagine that the EU economy is much hampered by liberal/socialist policies.
    Intervention by a big state re matters of commerce can not help GDP nor can overblown welfare states which reduce the need and incentive to work.
    In the US people work from an earlier age to a later age, pay less tax and do not have much in the way of unions.
    Ludicrous regulations are fewer and innovation is thus encouraged. It also seems that banks ( does the US have more smaller banks?) are willing to lend to new businesses.
    The EU by comparison is stagnant and stultified.

    • bill brown
      Posted February 6, 2020 at 1:50 pm | Permalink

      Everhopful

      Interesting hypothesis and scenarios, but unfortunately not really built on real facts.

      First of all trying generalize across 27 countries is a big order itself. Bt if I look at the Scandinavian countries with low unemployment but high taxes but low corporate regulation, the new businesses are doing really well and they have incentive to work.

      This is not just about taxes and regulations, if you have a well working society with good infrastructure, a good judicial system and educational system , you can create enterprise even with high taxes.

      So, kindly spare us for non-factual generalisations across 27 countries

  28. dixie
    Posted February 6, 2020 at 8:58 am | Permalink

    OT (sorry) – The government has published a “consultation on decriminalising TV licence evasion at;
    https://www.gov.uk/government/consultations/consultation-on-decriminalising-tv-licence-evasion/consultation-on-decriminalising-tv-licence-evasion

    Section 9 indicates how to respond to DCMS, please respond to them by April 1st, 2020.

    In the context of this blog, does the US impose the equivalent of TV licence?

    • miami.mode
      Posted February 6, 2020 at 3:07 pm | Permalink

      Frankly, dixie I almost reluctantly think it should stay as a criminal offence because if non-payment is contracted out to debt collectors, they will probably take a far harsher line than any magistrate and it will more than likely cost offenders more in monetary terms due to the extra costs involved. Plus it will be one more reason to change the BBC fundamentally. It will be fascinating to see how MPs vote.

      • dixie
        Posted February 9, 2020 at 7:51 am | Permalink

        I suspect you are right if there were no constraints imposed on debt collection. However a criminal record has wider implications and effects.

        I think they should simply abolish the licence completely and the BBC find other ways of raising funds without public coercion, many countries have never had a licence (eg Canada, USA) or have abolished it (eg Australia).

  29. Anonymous
    Posted February 6, 2020 at 8:59 am | Permalink

    All we hear from the BBC is how terrible President Trump is. It permeates much of its output, not just news and politics.

    Looks like Trump is going to get a second (stronger) term in office. Clearly his people don’t think he’s terrible.

  30. Lifelogic
    Posted February 6, 2020 at 8:59 am | Permalink

    Hammond and Ken Clark to be elevated to the house of Lords it seems. For services to treachery, betrayal and being appalling Benn act traitors costing the nation billions one assumes. Both, particularly Hammond, were absolutely appalling, tax borrow and piss down the drain Chancellors too.

    • Lifelogic
      Posted February 6, 2020 at 9:10 am | Permalink

      Not much sign that Javid will be any better, it seems he want to attack entrepreneurs CGT tax relief and continue to piss money down the drain on HS2 and similar. A man with zero pro-enterpise vision.

    • steve
      Posted February 6, 2020 at 8:25 pm | Permalink

      Lifelogic

      Agreed 100%

      Conservatives are toast as far as I’m concerned.

      The record so far :

      1) Show no real sign of getting tough with the EU.
      2) Pandering to environmentalists.
      3) Banning petrol engines.
      4) Not providing a feasible alternative.
      5) Giving the likes of Clarke and Hammond peerages.
      6) Talking utter crap about things of which he knows nothing, but it’s ok cos his new mate is Mr Wannabe Darwinian.

      I’m finished with this lot, they’re surrounded by social injustice, poverty, despair, and victims of universal credit, we have people living on the streets and surviving off food banks, and the best these buffoons can come up with is to take our cars off the road.

      It all just proves that once these bums get themselves parked on green leather and oak they think they can do as the hell they like. It was never otherwise.

      • glen cullen
        Posted February 7, 2020 at 9:57 am | Permalink

        fully agree with your assessment

  31. Newmania
    Posted February 6, 2020 at 9:00 am | Permalink

    By the ay – Just to pick up on this point , I sort of agree
    ” Much of the media spend their time criticising the USA and features of its economic model. Their personal dislike of Mr Trump spills over into a series of campaigns against US policies and conduct they think could be criticised. They rarely or never do the same to policies and conduct of the EU.”

    As a statement this makes almost no sense as it rests an an entirely false comparison.Where John does have a point is to draw attention to the woeful reporting of European politics and our involvement in it while it was actually a political reality for us
    Every toss of Nancy Pelosi’s head is microscopically examined despite the fact the UK is no more than spectator
    As a Player in the European world we influenced events with real consequences and the only people who drew anyone`s attention to the process were the purple loons fulminating about what Winnie would have said.
    More evidence were any needed that the UK media is idle ignorant and irresponsible …..Mr Johnson and Mr Give come from what background ?

    • dixie
      Posted February 9, 2020 at 7:59 am | Permalink

      I never heard or read of any pro-EUs complaining that our people were not doing a good enough job for the UK. Never.

      So not reporting widely in detail was all part of the game to keep the UK electorate ignorant of what the EU was actually up to and how our interests were not being protected and promoted – why alert the frog to his being boiled to death.

      Far too late in the game for you to be doing programmes on what the EU does and what other EU citizens think.

  32. Caterpillar
    Posted February 6, 2020 at 9:07 am | Permalink

    GNI per capita in USA and UK were similar in 2008. Since 2008 USA has continued to increase and UK has gone down (as GDP has largely flat-lined). UK has had lower investment as percentage of GDP for decades and this has not recovered sufficiently since 2008 – it is stuck at 16-17%. Somehow this needs to get over 20+%; how is of course a/the question. [Mis-allocation of capital to housing over business, and then not clearing this through default but maintaining/increasing is an ongoing UK problem – I guess USA had more defaults.]

    Public investment and spending that tends to cause crowding in (such as transport infrastructure, safe cities, cleanliness, schools and culture) has been insufficient in UK, and perhaps not focused – cities at scale is a major difference between UK and USA e.g. commute times in USA average 20 to 30 mins, UK is typically two to three times higher (obviously policies that have biased London-only and a relatively flat London since WW2 have been long-lived).

    Economies that are heterogeneous tend to be more robust and dynamically, rather than statically, efficient.

    The basic belief of low cost labour is perhaps stuck in UK thinking e.g. discussion of future income level threshold for immigration being less than GDP/capita (by definition bringing down the latter), people with buckets replacing car wash machines, people with bottles of water cleaning windscreens on the corner – a huge amount of necessity rather than opportunity entrepreneurship (this of course is a symptom).

    The left-side in the education distribution (what OECD call less than upper-secondary education) in UK very likely is a problem.

    Tax rates in themselves might not be a problem e.g. Singapore has high social security tax (the Central Provident Fund) on top of its lower income tax i.e. it is not really a low tax environment as often headlined. It might well be the management and use of the tax (to where are resources directed) that is more important.

  33. Lynn Atkinson
    Posted February 6, 2020 at 10:04 am | Permalink

    Placing the job destroying anti-British ex-Chancellors Clarke and Hammond in the Lords is not a step in the right direction.
    I’m afraid Boris’ first 100 days is going to be marked by the biggest mistakes of any Tenure – apart from Brexit which the British people forced upon him.

    • steve
      Posted February 6, 2020 at 6:59 pm | Permalink

      Lynn

      Hammond and Clarke – the latter who demanded that the EU membership vote should have simply been ignored, now getting peerages.

      You couldn’t make this up. It’s absolutely disgusting.

      Clarke is absolutely the LAST person who should have a peerage.

      Boris has blown it with me I’m afraid. Never again will I vote these bums into power.

      • Fedupsoutherner
        Posted February 7, 2020 at 12:27 am | Permalink

        Steve I agree. Bor is is turning out to be a big disappointment

      • glen cullen
        Posted February 7, 2020 at 9:59 am | Permalink

        I am very concerned by this direction of travel

        So after brexit the political picture hasnt really changed

  34. glen cullen
    Posted February 6, 2020 at 10:26 am | Permalink

    In the land of the free there is less red-tape, less bureaucracy, less subsidies, less behavioural engineering. Which promotes innovation, product design & development and invention……and growth

    During the 50s 60s some of our greatest developments in growth and therefore resultant higher incomes, came from products built in a shed…..our current rules and regulation stop any innovation and invention.

    The UK & EU have a ‘can’t do that’ philosophy while the USA have a ‘can do’ philosophy

  35. Peter Parsons
    Posted February 6, 2020 at 10:30 am | Permalink

    The USA is a federal system. The individual states, counties and cities have devolved tax raising powers and devolved laws created at multiple levels (federal and state). If the Conservative party and John Redwood are serious about learning from the USA, one key lesson is that they need to stop centralising all power in one place – Westminster, however this attitude to power seems engrained in their DNA, as evidenced by both Brexit and the attitude to further devolution within the UK, and I see no evidence of a willingness to change.

    This article also ignores the fact that the USA, due to its geography, was basically untouched by the major wars of the 20th century, unlike much of Europe which has had to invest in repairing that damage. It also ignores the single, common currency in the US federal system.

    I’d also point out that, despite Trump campaigning to eliminate the US national debt, he’s actually increased it and if he gets a second presidency, his budgets are projected to result in a 50% increase under him. He also campaigned on being able to get the economy growing at 5%-6%, which has subsequently been rowed back on, twice (now much closer to 2% after being cut to 3%-4%).

  36. formula57
    Posted February 6, 2020 at 10:47 am | Permalink

    O/T – is there such a shortage of Quislings in the ‘Lords that a top-up is required despite such being an afront to decent folk?

  37. mj jameson
    Posted February 6, 2020 at 10:55 am | Permalink

    I had high hopes of Boris Johnson to begin with but following all the nonsense pouring out of No 10, it looks like we have yet another idiotic Blair on our hands. Johnson is an agreeable character personally but has always seemed to be full of wonky ideas, and they’re getting worse. If he carries on with the foolishness, he’ll ruin the country.

    • miami.mode
      Posted February 6, 2020 at 2:31 pm | Permalink

      mjj, it’s known as going native and is extremely infectious.

  38. beasties
    Posted February 6, 2020 at 11:09 am | Permalink

    The US and the EU are two different beasts- one is already up and running the other is still building it’s economy and it’s consumer base far into the Eu Eastern regions. It’s difficult to say how things will look in say forty or fifty years time and maybe with Russia added on.

    In the meantime why don’t you give us a break from this constant EU bashing- you will have plenty of chance to vent off again in June July when negotiations about Fish Vs Financials is on the table.

    Reply I am not EU bashing but discussing what works!

    • a-tracy
      Posted February 6, 2020 at 12:19 pm | Permalink

      Italy, Spain, Portugal and Greece aren’t still building their economies they’re longer established than the USA?

      • Mitchel
        Posted February 6, 2020 at 4:53 pm | Permalink

        Not Italy;It was only substantively unified in the mid 19th century(in a process not completed until 1918 on the destruction of Austria-Hungary)!

        • Mitchel
          Posted February 6, 2020 at 4:56 pm | Permalink

          Greece,too,only became independent in the 1820s-effectively recreated- and was reconfigured at least once over the subsequent 100 years.

      • Fred H
        Posted February 6, 2020 at 5:21 pm | Permalink

        They are so-called advanced economies wrecked by membership and shored up by more industrious ones – but at a slave penalty.

  39. JoolsB
    Posted February 6, 2020 at 11:22 am | Permalink

    John,
    Totally off topic, I have just listened to Jacob Rees Mogg in the house say he is willing to look at abolishing EVEL in answer to an SNP MP Tommy Shepard requesting it be abolished because he and all the other Scottish and Welsh MPs couldn’t vote on the ENGLISH NHS yesterday.

    This on top of JRM last week saying we English found the rotten deal we got from the union a price worth paying to keep Scotland in the union and that England would be a shrivelled up nation if they left.

    When is your party, there by the grace of England, going to stop pandering to the pampered Scots and start standing up for England?

    • a-tracy
      Posted February 6, 2020 at 12:15 pm | Permalink

      What has the English NHS got to do with Tommy Shepard and other members from the devolved regions? Did JRM offer up an English Parliament instead?

      • JoolsB
        Posted February 6, 2020 at 1:36 pm | Permalink

        What do you think a-Tracy? SNP MP stands up and demands an end to EVEL justifying their rights to vote on the English NHS because of Barnett consequentials thanks to this Unionist/anti-English Tory Government refusing to address the Barnett Formula let alone the WLQ or English Question and JRM’s response was simply to acquiesce. As usual his answer did not involve the word England let alone an English Parliament.

        • steve
          Posted February 6, 2020 at 9:42 pm | Permalink

          JoolsB

          “English Parliament.”

          That’s something or other phobic, that is.

          But seriously, to address the Scots Nats issue I think they should be granted another indyref, but this time it should include the whole UK vote, since it affects all of us.

          And of course on condition that an SNP win would mean not keeping the pound, all public offices – HMRC etc and anything funded by the English taxpayer must be immediately withdrawn and relocated. We cannot be subsidising an independent Scotland, let the EU take that responsibility, assuming the EU was willing to accept Scotland as a member state, mind you Scotland would be stymied well and proper if it got independence from us nasty English oppressors….and the EU said ‘non’. That would be hilarious.

          So too hilarious if the EU said oui…..Scotland has to have the euro and take orders from those whom she did not elect but even further away than Westminster.

          Suddenly us nasty English oppressors won’t seem so bad after all, and Brussels can listen to 300 years of moaning ungratefulness.

          So yeah, I’m in favour of another indyref.

        • a-tracy
          Posted February 7, 2020 at 12:26 pm | Permalink

          Could the Westminster government disconnect the NHS funding from the Barnet Formula? Do you know how discussions about the English NHS affect the Barnet settlement?

  40. miami.mode
    Posted February 6, 2020 at 11:30 am | Permalink

    If I buy from Amazon the account seems to get routed through Luxembourg. Who benefits apart from Amazon?

    • Richard1
      Posted February 6, 2020 at 12:17 pm | Permalink

      You as you get something you want. The vendor who is paid by you thorough Amazon. And society as more stuff gets more efficiently into the hands of people who want it at the market clearing price.

      • miami.mode
        Posted February 6, 2020 at 2:26 pm | Permalink

        R1. Apropos the thread, who benefits on the GDP per head data, the UK or Luxembourg? If Luxembourg then this debunks the system of GDP per head.

      • Ian @Barkham
        Posted February 6, 2020 at 3:54 pm | Permalink

        You miss the point. Great profits and no contribution to the system that provides the infrastructure and wealth, is not equal tax for all.

  41. bigneil(newercomp)
    Posted February 6, 2020 at 11:50 am | Permalink

    We live in a place where we are taxed purely so our leaders can show how generous THEY are giving everyone else’s cash away to other countries – of course our leaders first ensure THEY don’t live at the same level the rest of us do. We still have “Heat or Eat”.

    • Iago
      Posted February 6, 2020 at 3:09 pm | Permalink

      I have similar thoughts when I look at my unused electric storage heaters.

    • Ian @Barkham
      Posted February 6, 2020 at 3:57 pm | Permalink

      sarcasm, maybe – but pointing out the equality in the system. If we had more of our own money, we would spend it more wisely and society as a whole would be richer.

  42. glen cullen
    Posted February 6, 2020 at 1:41 pm | Permalink

    So a spit in face to the leave majority was when Oliver Robbins got a knighthood

    But the knife in the back & front was the news today that Hammond & Clarke where getting a peerage

    I’d always thought that the spoils go to the winner

    Are these the same people that suggested the UK would collapse without being members of the EU

    • margaret howard
      Posted February 6, 2020 at 11:06 pm | Permalink

      The whole political honours system stinks.

      • Fred H
        Posted February 7, 2020 at 11:08 am | Permalink

        MH – – OMG – it can’t be.
        I seem to agree with you. Is that a first?

        • margaret howard
          Posted February 8, 2020 at 12:02 am | Permalink

          Fred H

          My own version of a ‘smiling emoji’: -:) !

  43. villaking
    Posted February 6, 2020 at 1:41 pm | Permalink

    Sir John,
    The answer to your question probably lies in cultural differences as much as economic policy. European countries value fairness and social justice more than the US hence in comparison to, say, Germany (and most other EU countries) the US has much higher inequality, a higher proportion of people in poverty, minimal social security and a significant part of the population without access to proper healthcare. Having what many would deem a more caring and compassionate society will have costs in terms of higher taxes and a bigger state machine.
    In order to try and correlate economic policies with GDP per head, one also needs to look at longer term trends. In 1970 for example, GDP per head in Germany was about half that of the US, now it is about three quarters. Does this mean that our economics lessons should come from Europe and not the USA? It is much too simplistic to look at the latest GDP per capita data and conclude that the US does things much better and makes society much happier than the EU does and it is tiresome to always blame the media for not reaching the same over simplified conclusions as you.

    • Matthew
      Posted February 14, 2020 at 12:02 am | Permalink

      The US’s system will ensure the US continues to *economically* outperform the EU forever.
      If you’re going to move the goalposts and talk about *happiness*, well, I know hippies who are happier than Sports Stars. So if you want a population of un-accomplished layabouts grinning and smoking dope, sure.
      But leave that to Europe. The UK and US are more serious countries interested in innovation and economic health only. If you want to relax, live in the Barbados. You don’t even need a job to do that.

  44. Tabulazero
    Posted February 6, 2020 at 2:10 pm | Permalink

    Yet another post about the EU…. It is becoming sad.

    The inclusion of eastern Europe in the EU when the Berlin wall came down depressed the average GDP per capita. If the USA were to incorporate Mexico, you would expect GDP per capita to come down as a result. A bit more GDP. A lot more people.

    One thing you also purposely overlook is how much GDP per capita has grown in eastern Europe since their entry in the European Union.

    Now. There is something that we must address because your fixation on what goes on inside the EU after you have left it is getting a little bit sad. A couple of point to remember:

    1. You have left. You won. You have the Brexit you wanted. It’s all yours. Congratulations !

    2. You are heading for no-deal (which was always the plan) which you will try to unsuccessfully rebrand as “Australia +” because people aren’t that dumb not to notice what you are trying to do.

    3. Whatever the EU decides from now till year end will have absolutely no impact on the UK because it takes years for EU legislation to filter down and you will be out by then

    4. Whatever happens in the EU is none of your business. You chose to be isolated from the rest of Europe. It is a valid choice but leaving the institution where things gets discussed is certainly not going to enhance your clout on the continent.

    5. You are a trained economist so calculating an average should not be too difficult for you.

    You could be spending your time doing so many other things… such as explaining why the UK has one of the highest internal income disparity of its Europeans peers ?
    Why is that do you reckon?

    I think we are going to have to open a clinic for the rehabilitation of former Brexiters such as Daniel Hannan and yourself.

    You have left. You won. You have the Brexit you wanted. It’s all yours. Congratulations !

    Reply Bizarre. Why are you so worried about any analysis of the EU. We remain followers of its rules this year and need to analyse the good and the bad so we keep the right bits of law once out.

    • Tabulazero
      Posted February 6, 2020 at 9:09 pm | Permalink

      Reply to Reply: Bizarre. Has John Redwood just publicly said that there are good bits of EU Law that he thinks the UK should keep ?… I must have misheard.

      • Fred H
        Posted February 7, 2020 at 11:07 am | Permalink

        a bit like your comments on here — the curate’s egg.

      • Edward2
        Posted February 7, 2020 at 11:20 am | Permalink

        Boris has said the Government isn’t going to reduce existing UK laws we have on the environment and workplace and health and safety.
        You are just carrying on with Project Fear 3.0

        • Tabulazero
          Posted February 8, 2020 at 7:29 pm | Permalink

          If Boris says so it must be true. He never lies.

    • margaret howard
      Posted February 6, 2020 at 10:59 pm | Permalink

      Reply to reply

      Yet another anodyne explanation without addressing any of the interesting points raised.

      • Edward2
        Posted February 7, 2020 at 11:21 am | Permalink

        Interesting points?
        I just read another rambling incoherant rant from Tab.

    • Matthew
      Posted February 14, 2020 at 9:09 am | Permalink

      “I think we are going to have to open a clinic for the rehabilitation of former Brexiters such as Daniel Hannan and yourself.”

      Ahh the left and their good ol’ re-education camps. Never far from that option, it’s kind of on your utility belt as a leftist as a go-to, one-size-fits-all, unisex option, for everyone who dare disagree.

      Always, if you don’t agree with the Left you just need one more degree, here let’s throw you in three more years of school until you agree with the left. Assimilate or face consequences, they say!

      MA? PhD? Bah. Not enough, if you don’t agree with the ideology of the left, that is. If you do, well, you’re clearly very *well* educated as far as the left is concerned. Excellent work!

  45. Sea Warrior
    Posted February 6, 2020 at 2:20 pm | Permalink

    Well, I’m sure that the accession of Albania will do wonders for the EU’s figures.
    More seriously, GDP/capita is one of those metrics that British politicians seem to ignore. It’s almost as if they have something to hide.

  46. NickC
    Posted February 6, 2020 at 2:40 pm | Permalink

    JR, I’ll tell you why the USA has higher productivity from my own experience. Two factories: one in the USA; one in the UK. Similar product; similar machinery. I was an eyewitness in both.

    In the USA the whole floor was operated by one man. He had complete personal authority to ensure the machinery was properly maintained, and in peak production condition. He had both the production responsibility and the power to make it happen. If he needed something to do the job better, he got it.

    By contrast in the UK there were dozens of people milling around, some with clipboards. There was no clear responsibility and certainly no power to do anything about faults without a reporting procedure. There were lots of meetings; lots of charts; no ownership. Too many suits, too many layers.

  47. Ian @Barkham
    Posted February 6, 2020 at 4:03 pm | Permalink

    The EU is going for an isolationist protectionist State. The US is open to all on an equal basis, but will after the event rattle the cage if you abuse it.

  48. JimW
    Posted February 6, 2020 at 4:20 pm | Permalink

    Over the last few years I have spent almost 50% of my time in the US and 50% in France. It has surprised me how similar my experiences are in both locations.
    As previous posters have remarked looking at median disposable salaries is a good place to start any comparison. The gulf between the US and EU/UK quickly evaporates when you factor in just one cost, that of health. However its wrong to believe the ‘european social model’ also provides better pension provision. The US scores well here, the UK relatively badly against the US and EU.
    The world is becoming homogeneous very quickly. Middle income ( measured on a national basis) in many countries provides very similar opportunities for expenditure once local factors are taken into account.

  49. Fred H
    Posted February 6, 2020 at 5:18 pm | Permalink

    OFF TOPIC.
    from BBC website.

    A Chinese doctor who tried to issue the first warnings about the deadly coronavirus outbreak has died of the infection, Chinese media say.
    Dr Li, 34, had noticed seven cases of a virus that he thought looked like Sars – the virus that led to a global epidemic in 2003. The Chinese doctor who tried to warn others about coronavirus. On 30 December he sent a message to fellow doctors in a chat group warning them to wear protective clothing to avoid infection. Four days later he was summoned to the Public Security Bureau where he was told to sign a letter. In the letter he was accused of “making false comments” that had “severely disturbed the social order”.
    He was one of eight people who police said were being investigated for “spreading rumours”. Local authorities later apologised to Dr Li.

    It is government lack of responsible action and publicity that can kill millions in these modern aggressive virus’.

  50. DOMINIC
    Posted February 6, 2020 at 6:48 pm | Permalink

    ‘woke immersion’

  51. steve
    Posted February 6, 2020 at 6:52 pm | Permalink

    JR

    “…..the US has a better tax system and climate to promote innovation and small business than much of the EU manages.”

    It was always thus, JR.

    The vast majority of inventions the US lays claim to were actually due to european emigrants, who got nowhere with their ideas while in europe. The US as a ‘country’ actually invents very little.

    The difference is the US is not stupid when it comes to innovation and opportunity, all you need is an idea and a determination, america provides the rest.

    Pity we can’t do the same, especially when you consider the industrial revolution was born here.

    In addition, in america you don’t have to go very far to buy any materials you want, if you’re a budding inventor trying to knock out a prototype. They don’t have the sissy nanny state EU rules that we have.

    Even paints in this country are all water based gnat’s pee these days. Oh and don’t even attempt to creosote your shed or fence….that’s banned too. What you’re supposed to do is use water based wood preservative (cough) and have the fence rot out in no time, thus creating more environmental load. Clever or what.

  52. Chris
    Posted February 6, 2020 at 7:26 pm | Permalink

    In answer to your question in the title, because the President is on the side of the people and not the globalists. Listen to his inspirational State of the Union Address, for starters.

    President Trump’s accomplishments for and on behalf of the people of American are too numerous to list, but the fact that he is on course to be voted in for a second term with a huge majority indicates that he has the recipe for success. It would appear that Boris is falling woefully short on that score. I am hugely unimpressed with Boris Johnson as he seems to be easily swayed by those he comes into contact with, and is not courageous enough to be his own man and do what is best for the UK. Pandering to the latest green nonsense is a disaster, in my view, as are the reported honours awards for Clark and Hammond.

  53. Headsup
    Posted February 6, 2020 at 9:52 pm | Permalink

    We could also turn this question on its head and ask – given a choice would you rather be a destitute person in the US or in the EU

    • Fred H
      Posted February 7, 2020 at 11:06 am | Permalink

      Headsup….to add a new dimension to that:
      ‘would you rather be a destitute person in the Los Angeles area(US) or in the Paris-3,000/Antwerp-1,000/Berlin-36,000/London-3,100 area ?

      By way of explanation –
      Overall, an average of nearly 59,000 people were sleeping on sidewalks, in makeshift tents, in abandoned vehicles or in shelters and government-subsidized “transitional housing” on any given night in Los Angeles County, according to a June study by the agency.

    • a-tracy
      Posted February 7, 2020 at 2:48 pm | Permalink

      That is quite a big question Headsup, destitute in California or destitute in New York or Mississipi?
      Destitute in Sweden or destitute in Hungary, or Spain?

      Not all US States are the same just as not all EU Countries are the same.

    • Matthew
      Posted February 13, 2020 at 11:37 pm | Permalink

      Obviously I would prefer to live in the UK if well-off.
      But under the example of being destitute, I would choose the US.
      There I would have a chance to pull myself up by the bootstraps.
      Being broke in the UK means living in a small, hopeless, oftentimes bleak town, with absolutely no economy to speak of, other than the local fish & chips.
      Being broke in America means being a few CV handouts away from a job.

  54. The Next New World
    Posted February 7, 2020 at 9:52 pm | Permalink

    Because scientists in the EU instead of doing scientificky things to make the economy go better, go off to Antarctica with a thermometer in the front pockets of their anoraks.
    What need of orbital technology?
    It’ll be quite a nice day in Antarctica soon if estimates are correct. There is oil there for sure. The Falklands gives us an automatic claim as large as Australia’s. Lots of tiger bones and such in pristine condition. I might buy a farm. Years of compost to go at. The future looks bright.

  55. Gareth Warren
    Posted February 8, 2020 at 10:40 am | Permalink

    The huge difference in wealth between the EU and USA does need to be highlighted as it underlines the fact that both we and the EU must be doing something wrong.

    Why is interesting.

    I would say their freedom of speech helps prosperity. I would also say our welfare state drags it down, but the differences between the two is small.

  56. Ken Moore
    Posted February 8, 2020 at 1:44 pm | Permalink

    ..

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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