Why is the USA so much richer than the EU?


We are always told the  EU model is the best in the world, combining free enterprise to deliver the goods with bigger government to enforce redistribution and social justice. We are told by many that this model gives us all a better lifestyle. We are told that the wonderful single market provides the driver for more jobs and greater prosperity.

I have often commented on how the single market measures are frequently counter productive, leading to higher costs and fewer jobs. I have regularly pointed to the very poor record of the Euro area on employment and unemployment, showing they have got a lot wrong. Today I want to look at the big picture of overall income levels in the EU.

In 2013 the average US income was a healthy $53,000. The average EU income was a much more modest $34,000. If you allow for the fact that some of the smaller and more recent members of the union have further to catch up with the EU average, you could get the adjusted EU level up to nearer $40,000. So each person in the USA is on average somewhere between one third and 60% better off than the average EU citizen, depending on how much grace you wish to give the EU for its more recently joined poorer members.

These are huge differences. Why is no-one at EU level worried about it? Why is there no plan to ask what does the USA get right economically that the EU gets wrong? Why is their so much anti American rhetoric and so little understanding of the free enterprise system which has greater sway in the US than in the EU?

I am no uncritical fan of all things US. I am an opponent of neo con military interventionism.  The USA has more than its fair share of rules and lawyers seeking to slow down its enterprise economy. Compared to the EU, however, it gets a lot more right economically.

Take energy policy. It is busy producing more of its own energy and going for cheaper energy to fuel its reindustrialisation and heat its homes,. At the same time the EU is busily shutting down cheap energy facilities and making  itself ever more dependent on a lethal mix of very expensive and unreliable renewables and imported gas from Russia.

Or take transport. The USA provides roadspace for flexible cars and trucks to get people around its single market. The EU does what it can to make driving more expensive and more frustrating at every turn.

Look at modern technology. The USA leads the world with its digital revolution. The EU struggles to keep up, and mainly uses large US based service providers to automate its own activities.

The USA dominates the university world , the world of knowledge, with most of the world’s leading institutions. Only the UK from the EU manages a couple of entries in the top ten.

There is no evidence that EU membership is helping us catch up with the economic success of America. There is a disappointing lack of energy about the EU when it comes to helping business and entrepreneurs. The EU is in the slow lane, and proud of it.

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  1. Mark B
    Posted September 2, 2014 at 5:29 am | Permalink

    Good morning.

    I do not think it wise to compare apples and oranges.

    The US is / was a model of Capitalism. It has also benefited by not having endless wars on its territory, and has not had to constantly rebuild. Also, it has not had to absorb poorer nations from the former Soviet Block.

    It benefited greatly after the Second World War from German and British technologies and the collapse of the British, French and Japanese Empires. Opening up markets to its business that had previously been closed to it.

    It has also benefited greatly by being the worlds reserve currency and, can run large debts.

    But one only has to look at places like Detroit to see that the sun is now setting on the ‘American Dream’. The world is changing and, other countries are moving up fast, both on the US and the EU. The future I believe, lay in having a low regulation, low cost economy, with a dynamic and well educated work force with an outward looking mentality. The EU is none of those things in my opinion. It is inward looking and protectionist. Long term – it cannot survive.

    • Hope
      Posted September 2, 2014 at 1:17 pm | Permalink

      Good to see 130,000 sign a petition to bring back the parents from Spain for trying to do their best for their son. A pity the over zealous authorities did not behave so swiftly to protect the children in Rotherham.

      This is the reality of the EU arrest warrant Cameron wants the UK to opt back into. The same person who claims he will renegotiate powers while still giving them away! JR, some of your blogs still want us to think otherwise.

    • Lifelogic
      Posted September 2, 2014 at 1:45 pm | Permalink

      Indeed the EU is very inward looking and protectionist. But above all it has too much government interference in every aspect of people lives and the state sector wastes and misdirects vast sums. It should be spending about half & spending it wisely on thing of value that the state can do better than individuals.

      Why on earth do they want to regulate the power of vacuum cleaners to below 800W (Cleaners that are on a for only few minutes a week anyway and will need to be on longer at lower powers). Yet we can buy cars that produce several hundred kilowatts that might be used for many hours a day?

      Some electric cars are over 300KW and the government even subsidies them (£5000? I think). Furthermore so much of this energy is just wasted in electricity generation, its transmission, and the charging/discharging of the (heavy, very expensive & rather short life) batteries too.

      As bonkers as HS2, Boris Island Airport and gender neutral insurance.

      • Bazman
        Posted September 2, 2014 at 4:31 pm | Permalink

        More efficiency or MPG has been brought to bear on manufactures indirectly by emission laws. It’s not 800w as you well know its 1600w. The rule being to increase the efficiency of the cleaners. If you followed Johns post it would have been clear to you that wattage is not a measure of air watts or suction.
        Little has been said on EU crash testing and its interference. I wonder why? Should we not be able to choose less safe cars?

        • Edward2
          Posted September 2, 2014 at 9:12 pm | Permalink

          We should be allowed yes.
          They would not be popular.
          Have faith in people.
          Allow them to choose for themselves Baz.
          Do you think the proles are so stupid they would actually choose a car that is said to be unsafe versus one that is safe?
          Its odd how confidence the left have in people.

          • Bazman
            Posted September 6, 2014 at 7:31 am | Permalink

            They would choose what they want which may or may not include adequate impact abilities. Not acceptable to road users and pedestrians or themselves. We all including them need protecting from fools and fly by night companies.

          • Edward2
            Posted September 9, 2014 at 4:09 pm | Permalink

            Less safe cars are already on the market.
            Some are higher rated in industry crash protection tests.
            Some 5 star rated, others are not.
            I presume you would ban all that are not 5 star rated Baz.

        • Lifelogic
          Posted September 3, 2014 at 7:15 pm | Permalink

          They are moving later to 800W

          • Bazman
            Posted September 6, 2014 at 7:32 am | Permalink

            Says who?

      • Mark B
        Posted September 2, 2014 at 4:56 pm | Permalink


        They do it, because they can ! They need no other reason.

      • lojolondon
        Posted September 5, 2014 at 11:00 am | Permalink

        Totally bonkers. They want to limit the power of hair dryers. So instead of using a 1000W hair dryer for 2 minutes, people will use a 600W hair dryer for 5 minutes. Or do they count on people getting bored and giving up with their hair still wet? Truly depressing!

  2. john malpas
    Posted September 2, 2014 at 5:42 am | Permalink

    Well WW2 started it all. If you lived in the UK ( once Grewat Britain) you would knw that it was bankrupt. Partly from paying for WW2 and from the socialist adventeurism afterwards.
    Then there are more trade unions in Europe than in the USA.
    The politicians in the USA were largely patriotic. In Europe they were political.
    And to a large degree might is right.

  3. Cheshire Girl
    Posted September 2, 2014 at 6:00 am | Permalink

    I lived in the USA for fifteen years and my answer is this:

    Because they are not so ‘politically correct’ and don’t allow other countries to tell them what to do!

    • acorn
      Posted September 2, 2014 at 4:27 pm | Permalink

      To be a proper Redwood Redneck, you would have to have lived in Clay County, Kentucky. This being the spiritual home of laissez faire, neo-liberal Conservatism. Even the average American is embarrassed by it. High unemployment; low educational standards; low median income, but; always votes Conservative (sorry Republican).

      • REPay
        Posted September 3, 2014 at 4:11 pm | Permalink

        It is a very big mistake to confuse Republicanism with Conservativism! Republicans are also big state people – big military…as opposed to the more welfarist Democrats. I am a Tory back home and a Democrat, on paper at least, here. I would vote for a moderate fiscally conservative and socially liberal republican or a fiscally conservative Democrat. We live in hope here…

        • lojolondon
          Posted September 5, 2014 at 11:12 am | Permalink

          Agreed, it is easy for Brits to confuse Republicans with Conservatives – partly because the Biased BBC always comes down on the side of Democrats/Labour.
          I met a nice lady recently who introduced herself as a “fiscally responsible democrat’. How we laughed – but she still tried to convince me that such a creature exists.
          Looking forward to seeing the state of the economy that Obama leaves behind him, also looking forward to hearing his strategy for the Middle East when he comes up with that!

  4. alan jutson,
    Posted September 2, 2014 at 6:21 am | Permalink

    Do not forget that the US in general is a patriotic Nation as well, much more so that the EU experiment.

    From my limited experience of visiting and talking to Americans, it would seem that given the choice, most of the population would prefer, and do, purchase US made goods and Services rather than from Companies overseas.
    So there is an automatic barrier to overcome.

    Just look at how many UK Companies have attempted and failed, to get a foothold in the US.

    Somehow I do not feel patriotic about purchasing goods from any other country but the UK. that is not to say I do not purchase engineered goods from Germany (usually quality) and like some italian design products, but overall I simply do not see that I have much in common with our so called fellow European neighbours.

    I suppose a very crude and simple example patriotism would be;
    Would we feel the same when fighting for a cause against Romania, as a Texan would fighting for a cause against California, when both are from outside influences.


    Do not forget JR, that whilst in general the US does seem to have a can do attitude, that in parts of the US many people are also destitute, its not all the land of milk and honey they would like to portray in films and TV programmes.

  5. Old Albion
    Posted September 2, 2014 at 6:21 am | Permalink

    Even more reasons to vote UKIP.

  6. Bazman
    Posted September 2, 2014 at 6:30 am | Permalink

    If you take into the quality of life and the massive inequality that exist in the USA. Then Europe is the winner. Free healthcare/education, similar taxes and house prices with more secure jobs.
    This idea the third world poverty that exists in parts the USA would be tolerated in the smaller countries of Western Europe is for the birds. Maybe in Eastern Europe where the plutocrats basically rob the population it is more poor and worse to live than then the US.
    Northern Europe is essentially more advanced than the US in many areas, better education systems, better health systems, are more innovative, more competitive, etc.
    It is this idea hat many on this site seem to believe that if the countries of Europe somehow became more like the USA and in particular like Russia we would be all richer.
    You would not last a week in Russia. Not a day even. You would be eaten alive and the same in the US but more slowly. The USA without an affordable healthcare system is quite scary and don’t forget how much you are all helped by your middle class social security system in this country. It does not exist? As if. Its surprising how many are able to hold down a job with their lack of understanding of the real world. A real world they seem to want to put on everybody else…

    • Iain Gill
      Posted September 2, 2014 at 9:34 am | Permalink

      Free Healthcare?

      not here for sure, what with crazy car park charges, massive prescription charges, mostly you end up having to go private anyways as the NHS fails to deliver

    • agricola
      Posted September 2, 2014 at 10:24 am | Permalink

      With respect neither healthcare nor education are free in Europe or the UK. If you pay taxes of any sort in Europe this is where the money comes from. These services are government provided not consumer oriented, and therefore vary markedly in quality. As another contributor has pointed out from experience, the service in the USA is much better because it is in a very competitive environment. Payment for it is less detached so there is little delusion that it is free. Just like insuring your car you insure your health, and to compensate, taxes at all government level are lower.

      The free service under the European model where GDP is largely stagnant means that Farmacias in Spain have to wait six months to get paid for the drugs they dispense. Despite this the actual medical service is very good and not like the UK, overburdened with multiple layers of management.

      I would hardly describe Spain as having more secure jobs. Yes it is expensive to get rid of staff you no longer need but this deters them from being employed in the first place. 26% overall unemployment and 50% youth unemployment is a strange form of security. Ask why so many well educated Spaniards are moving to the UK. There is a very meagre but no long term blanket for the unemployed here in Spain.

      The system in the USA does need the sort of fine tuning that ensures the really needy, through no fault of their own, are looked after. The UK would benefit from something very similar. The NHS holy cow has become a white elephant and no one in government dare go anywhere near it.

    • William Gruff
      Posted September 2, 2014 at 11:52 am | Permalink

      Neither education nor healthcare are free anywhere in Europe. Both are hugely expensive and, in Britain, wasteful and the real cost, at least in the ‘U’K and to England, has been that our country is effectively bankrupt. We have mortgaged our great grandchildren’s birthright for a life of temporary ease and the pursuit of a mad egalitarian fantasy.

      The various British education systems used to be in the top rank globally, now we are near the bottom of the league in the developed world, and our healthcare system is one of the worst in Europe, certainly not comparable to that in the USA.

      • Bazman
        Posted September 2, 2014 at 8:55 pm | Permalink

        If you have no healthcare as millions in the US do not then it must be better. By the same argument education must be better as we have Eton. Housing is good too as you can stay at the Ritz if you choose.

        • agricola
          Posted September 3, 2014 at 9:48 am | Permalink

          I smell the politics of envy.

    • Edward2
      Posted September 2, 2014 at 1:26 pm | Permalink

      I think Russia is a red herring because I’ve yet to hear anyone, on here or elsewhere calling for the UK or the EU to follow their economic model.
      However, I do agree with your comparative points about the NHS and welfare as well as the sometimes stark inequality that affects parts of USA society.

      But, and it is a big but, the EU is increasingly failing its citizens and needs new policies urgently to tackle unemployment, falling living standards, high taxation, ever increasing regulation on business.
      It is complacent in allowing huge multi-nationals to pay little in the way of corporate taxes, whist the majority of SME’s trading in the EU, are left paying higher rates and are less less competitive as a result.
      The single market should be giving us good growth but there is none and we are going backwards against other nations and trading blocs.

      • Mark B
        Posted September 2, 2014 at 4:59 pm | Permalink

        For the record, I am NOT an EU Citizen.

        I was never asked and/or consulted.

        • Edward2
          Posted September 2, 2014 at 9:14 pm | Permalink

          Sadly they think you are Mark. Voting is not very important to them.
          But I do take your point as someone who resents holding new style passport

      • Bazman
        Posted September 2, 2014 at 9:09 pm | Permalink

        The EU fails in many ways as you say plus the obvious one is a dictatorship in the geographical centre that it seems powerless to tackle. I have been there and it is a dictatorship no ifs no buts, no opinions you can see it in their eyes, the buildings, the poverty, the military. Everything is very expensive to add to the poverty. Ironically it is an English middle class holiday fantasy land to my eye, with allotments on the land between the rows of new an old blocks of flats. Marvellous! Soon they will discover it. To expensive and restricted for now like Russia. Tuscany is just so last century Darling! With many on the right having secret admiration for todays Russia and it’s methods. With much support coming from the City and the Conservatives.

    • Lifelogic
      Posted September 2, 2014 at 1:49 pm | Permalink

      Some inequality is very important. It is what makes people get up in the morning and go to work. It also leaves the capital & resources to those who tend to use & invest it best.

      • Bazman
        Posted September 2, 2014 at 4:24 pm | Permalink

        What about a financial aristocracy which we are increasingly seeing. Do they always know best? Where is your answer to the cars/cycles question? I take it you will not be repeating that cars are more efficient if you cannot answer these points? You will?! LOL! How credible and scientific you are.

    • Mark B
      Posted September 2, 2014 at 2:36 pm | Permalink

      There is no so such things as FREE healthcare. It is just free at the point of service.

      The US education system, certainly University level is of a higher quality. How else have they come to dominate the hi-tech industries ?

      You seem to forget that we did not always have an NHS, and that our model was very similar to that of the US.

      • Lifelogic
        Posted September 2, 2014 at 6:59 pm | Permalink

        NHS Paid for in advance and rationed at the point of delivery or non delivery.

        • Bazman
          Posted September 2, 2014 at 8:52 pm | Permalink

          So an insurance backed system is for the best? Switzerland and France are similar to Britains standards and cost. Which system do they use in your tax haven? If they have one that is?
          Will cutting cleaners and porters wages by a third whilst giving large amounts to foreign companies to send to tax havens help the NHS an its patients? One would have to hazard a guess at no to to that one.

    • Bazman
      Posted September 2, 2014 at 4:19 pm | Permalink

      Of course it is not ‘free’ and has to be paid for by the state. For the majority of the populations of Europe one sick child or one big health problem would see you bankrupt. In America this is the case or you avoid it by paying massive health insurance premiums with some working for little else than healthcare.
      You assume The NHS is wasteful and private healthcare is not. Why are parts of the NHS being privatised when they are cheaper than the privately run. Yes they are. Private cheap, state expensive, Says who? You don’t seem to mind state owned private enterprise when it is foreign owned. Competition may well work for takeaways, but not for more complicated models such as healthcare. Dogma and fantasy pretending to be fact.

      • Ludwig
        Posted September 2, 2014 at 10:03 pm | Permalink

        “Dogma and fantasy pretending to be fact.” Yet you confidently state that “competition may well work for takeaways, but not for more complicated models such as healthcare.” This is pure dogma masquerading as fact. Competition can drive down costs and increase quality, and healthcare provision is no different in this regard. What is important is to separate funding from provision. Funding should ensure that everybody who needs access to essential healthcare can get it, whether that be via taxation (UK) or a compulsory regulated insurance scheme (as in Germany). However, there is absolutely no requirement for a state monopoly to provide that healthcare. Even France, which is naturally more socialist than we are, allows patients to take their social funding and choose to go to the private sector for treatment. A German or French system would avoid the problems caused in the NHS because of a lack of competition and it would also avoid the spiralling costs and variable access of the US system.

        • Bazman
          Posted September 4, 2014 at 3:48 pm | Permalink

          So the hospital goes out of business by bad service and the ‘customer’ just ‘chooses’ another one. This fake market has cost he NHS a fortune and lined the pockets of wealthy foreign state owned companies, money that should have been spent on care and equipment. Massive bills for agency nurses that have been sacked and then re-employed and so on. Reshuffles paying unbelievable wages to mangers and again paying them off to be re-employed weeks later.
          Often this competition is pitting worker against worker within the same organisation. A large metal finishing company I could name owns several sites doing the same work under different names with the profits going to the company which owns them all. These organisations are forced to compete with each other and to cut wages and costs. Is this the competition you are calling for?

          • Edward2
            Posted September 4, 2014 at 8:47 pm | Permalink

            Tough though it is for staff the end result of the company you mentioned if they do not try to compete is total closure.
            Are you saying they are short of staff or work?

          • Bazman
            Posted September 5, 2014 at 3:29 pm | Permalink

            The result is not total closure as they are the main player. It is putting worker against worker to do more for less. You can be sure the management will not face this ‘competition’ to beggar thy neighbour. Playing everyone of against each other is the game and i when faced with his myself have just laughed and collaborated with the opposite man. Kill your self for the often bone idle managers? As if. The factory I worked at for a number of years was the most efficent in the group. Fiort one to be closed. They would tell us we had to do more to keep our jobs. Ex-shipyard workers like myself just looked at each other and we where proved right. Get real edward as one day you may have to.

          • Edward2
            Posted September 5, 2014 at 9:50 pm | Permalink

            Its already happened to me Baz.
            I got out of engineering over 10 years ago.
            Fed up with the increasingly desperate effort of trying to survive against impossible opposition from cheap world competition.
            I admire those who are left, who tend to be low volume, high tech, high margin companies.
            I earn a living outside engineering now but still miss the smell of suds oil and swarfega.

      • agricola
        Posted September 3, 2014 at 9:55 am | Permalink

        Well there isn’t anything much more complex than the pharmaceutical industry or the aircraft industry. They seem to function as private industries.

        • Bazman
          Posted September 5, 2014 at 3:23 pm | Permalink

          Not much competition if you are a primary defence contractor such as BAE systems. Who else is going to build the new Trident system? As for the drugs industry over the past decade the pharmaceutical
          industry has been the target of numerous antitrust actions by both government enforcement agencies and private plaintiffs.
          Every time competition is introduced to anything the costs to the customer go up not down. Except in takeaways where they do face a number of regulations to protect public health. Competition is not enough to do this as we all know from dirty restaurant stories which it could be argued are the result of intense competition to cut costs/

    • libertarian
      Posted September 2, 2014 at 6:48 pm | Permalink


      You do know that the USA spends more on “free” public health than the UK?

      The average wage in USA is $55,935 Min wage depends on the State and is anything from Federal minimum $7.58 upto $13.25 Of course US tax rates are lower so workers keep more of their money too

      • Bazman
        Posted September 2, 2014 at 8:47 pm | Permalink

        It does and still millions are without any healthcare so what does that tell you?

        • agricola
          Posted September 3, 2014 at 10:04 am | Permalink

          It tells me that they are not prepared to insure. The State should only be supporting those who through no fault of their own find they cannot afford to insure.

          • Ted Monbiot
            Posted September 3, 2014 at 4:48 pm | Permalink

            There are also those who have insurance but it excludes cover for problems they were born with and those who have cover withdrawn for a particular problem once it becomes known.
            A USA friend of mine is now without cover for any heart or circulatory issues after suffering a mild heart attack despite 30 years of previous good health

          • Bazman
            Posted September 4, 2014 at 3:37 pm | Permalink

            Or they cannot afford the premiums because they are not fit as a butchers dog which also gives them a lower income. To bad is one answer, but I suspect not many will come out into the open to defend that one.

          • Ted Monbiot
            Posted September 5, 2014 at 9:53 pm | Permalink

            Im told President Obama has tried to stop insurance companies doing these things as part of his Obama Care legislation.
            Which is good.

    • bluedog
      Posted September 3, 2014 at 5:32 am | Permalink

      As a rule of thumb, any service provided by private enterprise has a cost base just 50% of that provided by a government agency.

      The NHS is no exception, and there are many services within the NHS that could be privatised without any reduction in service quality. If the cost of service delivery in the NHS is reduced, the burden on the public finances is also reduced. That in itself is a public good and leads to lower taxes. If you insure privately your premiums will fall.

      If you think about it, the cheapest form of health insurance is to self insure, then you never pay the admin costs incurred by government or the health funds.

      The NHS has become a sort of security blanket and its remarkable how many people cannot envisage life without it. Labour loves those dependent souls.

    • lojolondon
      Posted September 5, 2014 at 12:41 pm | Permalink

      Bazman, have you ever been to the USA? It doesn’t show much for your intelligence saying “The USA without an affordable healthcare system is quite scary”. Does 99% of the world live in fear, because they do not have a health service? I guess not. Here, we live in fear of being without Bupa, to protect us from the NHS, so we pay twice, once for an over-regulated, overstretched immigration machine, and the second time, like every other civilised nation, for our own, personalised health service that we can count on.

      Someone else jumped in above and mentioned my second point that the USA spends far more on ‘free’ healthcare than the UK. Ignore the propaganda from the Biased BBC pretending that we deliver the ‘envy of the world’ health service, it is clear that we do not.

      Further you state “Northern Europe is essentially more advanced than the US in many areas, better education systems, better health systems, are more innovative, more competitive, etc.” – all pure hogwash.
      The USA has the best healthcare there is (eg. Mayo Clinic), best universities (MIT, Harvard, Yale), as for innovation and competition etc, the only areas of genuine excellence I can think of in Europe are – financial services (London), sports cars (Germany, Italy), perhaps some areas of pharma (UK). That is it.
      The USA rules the world in so many areas, and it is all because of one system – capitalism. We are lagging because of one reason – social responsibility (ie. socialism). When your political system tells people the do not have to work to look after themselves and their families, that is the beginning of a downward spiral that ends back in the third world. Calling that ‘being advanced’ is just ignoring the facts and history (see USSR 1990, Cuba, Venezuela 2014, etc).

  7. Robert K
    Posted September 2, 2014 at 6:30 am | Permalink

    Thank you for the good data. No doubt the lefties will flag income discrepancies in the US, saying your figures are distorted by the high number of billionaires in the States. But in the US, enterprise is rewarded. The billionaires are people like Bill Gates who have built huge business that create wealth and employ thousands of people, many of whom will be highly paid. Aside from the higher degree of regulation in Europe, income tax in the US are much lower, allowing more people to keep their money and spend it how they see fit.
    The US is far from perfect, and is moving ever closer to a socialised empire than a liberal republic – its financial services regulation for example is labyrinthine and it seems to revel in its highly militarized status as the world’s only superpower. But it does seem still to be a place where enterprise is lionized, which is a very different thing from the corporatist bureaucratic structures beloved of the EU.

  8. Lifelogic
    Posted September 2, 2014 at 6:44 am | Permalink

    Indeed and the USA has far lower costs of living as well. So the relative standards of living are far wider than the income figures. This despite the fact that they have far too many parasitic lawyers, a daft litigation culture, far higher murdering and shootings of each other, their medical systems are rather inefficient and over priced and they can still spend a great deal on defence and daft wars too.

    The problems of the EU are very clear: over regulation, over taxation, expensive energy by government religion, an anti air and anti car religion, bloated governments regulating everything even down to vacuum cleaners, too little investment in quality engineering & science, too few roads, airport and bridges (especially in the UK), too many planning restrictions, far too many payment to augment and encourage the feckless.

    At least it seems the Boris airport lunacy is dead. A five runway Heathwick is by far the best solution, a new runway at each and a HS train link round or even over the M25.

    Europe could easily be as rich or richer than the USA. Europe is a very pleasant and varied place to live, just get all the parasitic government out of the way, fire the countless parasites at local government, devolved government, central government and EU levels and kill the quack green, anti progress, expensive energy religions.

    The UK (and EU) is crying out for sensible small efficient government yet not even the Tories dare to make the highly moral case for it. Small government works and makes everyone (other than some parasites, regulators, bureaucrats, feckless and rent seekers) better off.

    Start by reducing state sector pay (including pension) by a third, to match the private (& far more productive) sector and halve their numbers. Many do nothing of any use, many just cause harm. Build Heathwick, stop the subsidies for expensive green energy, Tesla cars, CAP and other nonsense and set a small state, low tax, low regulation vision.

    There is no point in having a good presenter & PR leadership, if they are leading you down a cul-de-sac or over a cliff – one needs to turn round – only eight months (less Christmas) left. They need to turn before the conference season.

    • Lifelogic
      Posted September 2, 2014 at 6:48 am | Permalink

      We should relax patent and IP protections too, they often do not actually help innovation but delay, deter and prevent it. We also need to deal with the clear lack of competition in banking, the health system and several other areas.

      • Richard1
        Posted September 2, 2014 at 11:45 am | Permalink

        In banking I think the issue is virtual absence of a free market due to so much state intervention – everything from providing unlimited subsidised financing, to implicit guarantees to the endless box ticking compliance which is now eating the financial services industry from the inside to no benefit of customers. In health and education the virtual monopoly state provider is in urgent need of robust competition.

        As pointed out in Iain Gill’s post above one of the main reasons the US economy is so much more successful is there is real customer choice and competition.

      • David Price
        Posted September 3, 2014 at 5:42 am | Permalink

        You have almost definitely benefited from the patents process but have you ever patented anything or had any IP stolen? I doubt it otherwise you would be less sanguine about allowing other people’s hard work to be ripped off.

        If an inventor wishes to allow his invention to be copied immediately he can publish it using a range of open source licences. However, if he needs to recoup some income to justify the R&D expense or even get rich off the back of his innovation and endeavour he can keep things a trade secret. Or, he could patent the invention so while he can still make a return off his work others could take his original idea and do the same provided they improve on it or they could simply licence his patent.

        If you use a smartphone or tablet you are most probably benefiting from this process.

        • Lifelogic
          Posted September 3, 2014 at 7:23 pm | Permalink

          I agree patents can have benefits sometimes, but on balance I maintain the effect of patent protections is actually negative. They certainly generates a lot of essentially parasitic jobs in the legal industry and at government patent offices.

          • David Price
            Posted September 4, 2014 at 7:20 pm | Permalink

            So you would rather not allow an inventor or company that has invested in R&D to make a return on his effort?

            What a very socialist viewpoint.

    • Lifelogic
      Posted September 2, 2014 at 8:08 am | Permalink

      Government expenditure as a percentage of GDP from WIKI and GPD per cap by purchasing power parity:

      France 56.1% 35.7
      Italy 49.8% 29.6
      UK 48.5% 37.3
      USA 41.6% 52.8
      Switzerland 33.8% 54.8
      Hong Kong 18.5% 52.7
      Singapore 17.1% 62.4

      The inverse relationship seems fairly clear.

      • petermartin2001
        Posted September 2, 2014 at 9:56 am | Permalink

        The inverse relationship seems fairly clear.

        Only when you cherry pick your examples. You could have included:

        Bangladesh 16%
        Turkmenistan 15.2%


        Sweden 51.2%
        Denmark 57.6%

        I don’t about you, but I’d rather live in Denmark than Bangladesh!

        • Lifelogic
          Posted September 2, 2014 at 7:07 pm | Permalink

          Well I am looking at fairly advances & developed nations. Government expenditure is clearly not the only factor but these two are broadly in agreement too adding the GDP per cap in PPP figure.

          Sweden 51.2% £40,900
          Denmark 57.6% £37,800

          Some government do spend the money a little more wisely than others do.

          • Bazman
            Posted September 3, 2014 at 6:04 am | Permalink

            What about individual maximum tax rates tax rates for these countries? Denmark 61.03% Sweden 57%. both having Vat of 25%. You would like to see these rates here if the money was spent more wisely I presume?
            You want this by tolls instead then? No you want it for free. Scrounging right wing nonsense.

          • petermartin2001
            Posted September 3, 2014 at 11:08 am | Permalink

            Well no! I’d just make the point that hardly anyone wants the government share to be 0% and hardly anyone wants 100%. So what’s the correct level? The answer must be that there isn’t one. Its all a matter of opinion.
            Averages also can be misleading. For example the GDP per person now is much higher than it was 20 or even 10 years ago but levels of social deprivation at the bottom are worse.
            That can only be due to the distrubution of the available wealth. Now, it could well be that its possible to have a better distribution but still have a smaller state. That’s the option I would be looking for.

          • lojolondon
            Posted September 5, 2014 at 12:52 pm | Permalink

            As I have said several times before, UK tax is far, far higher than 61%!! Marginal rate is 40%, plus 12% plus 12% (employers NI). So if your boss has a budget of £100 to pay you, he will pay tax on your behalf of 40+12+12 = 64, so you will receive only £36. THEN you pay 20% VAT, plus far more tax on energy, petrol, cigarettes, alcohol, rail charges, road charges, £145.50 BBC tax, etc. A dreadful and corrupt system, made worse by the basic dishonesty of pretending we only pay 40%.

          • Bazman
            Posted September 6, 2014 at 12:03 pm | Permalink

            Those poor people having to exist on 150k year or more. A downtrodden minority.
            The rich have got tax cuts the majority have got tax rises.Myself over £1000 due to tax credit margins reduced and VAT increases. Am I guilty of the politics of envy and should welcome this as for the best?
            Bad politics at least.

      • Feodor
        Posted September 2, 2014 at 1:14 pm | Permalink

        Are you comparing like for like here? Or are there other factors that need to be taken into account, which would adjust the numbers?

        • Feodor
          Posted September 2, 2014 at 2:47 pm | Permalink

          I seem to have made a cack-handed job of replying. The above comment–‘Are you comparing like for like…’-is directed at Lifelogic’s comments about the relationship between government spending and purchasing power.

          • Lifelogic
            Posted September 2, 2014 at 7:08 pm | Permalink

            Clearly there are other factor too, but for developed nations it is a pretty good rule of thumb.

          • Feodor
            Posted September 2, 2014 at 8:28 pm | Permalink

            “Clearly there are other factor too, but for developed nations it is a pretty good rule of thumb.”

            That’s not good enough. Why use rule of thumb, when you have a ruler to hand?

            Cherry-picking examples, not taking into account the size of a territory and the natural resources it contains, alongside such things as whether a large financial centre distorts the figures, esp. in respect of smaller nations, as well as other matters like international obligations, esp. military commitments–who could take seriously proclaimed economic truths which ignore all this?

  9. Margaret Brandreth-J
    Posted September 2, 2014 at 6:55 am | Permalink

    To make it slow and simple.The EU has communication problems. There are too many different languages. In the European Court there are microphones and interpreters and all seems well. Outside in the real world the system for understanding one another is far too complicated. One might even think that they can understand a language and speak many, but for business there are literary considerations. The nuances of language are important as and when deals are made.
    If one goes to the USA there are also different languages , but the main language is English. David Miliband has moved to the USA. Perhaps he knows something we don’t.

    • Mark B
      Posted September 2, 2014 at 2:40 pm | Permalink

      “David Miliband has moved to the USA. Perhaps he knows something we don’t.”

      Yes, his chances of being the Labour Party leader are zero until after the 2020 GE. 😉

  10. John E
    Posted September 2, 2014 at 7:01 am | Permalink

    I think the US figure is median household income, not individuals. Where do your figures come from?

  11. Roy Grainger
    Posted September 2, 2014 at 7:15 am | Permalink

    “We are always told the EU model is the best in the world, combining free enterprise to deliver the goods with bigger government to enforce redistribution and social justice”.

    Are we told that ? When and by whom ? I seriously don’t think I’ve ever heard that claimed by anyone at all, it is not how the Labour Euro-enthusiasts describe the benefits of it.

  12. Steve Cox
    Posted September 2, 2014 at 7:28 am | Permalink

    Actually the situation is even worse than you paint here John as, when comparing standard of living between nations, most economists accept that you should use the PPP (purchasing power parity) adjusted income per head figures. It’s well known that many goods and services in the US are much cheaper than they are in Europe or Britain, which makes the PPP numbers for the US still more damning for those people on the wrong side of the pond. Even rich Switzerland and Norway fare relatively poorly compared to the US by the PPP measure, as this interesting recent article in The Independent shows:


  13. Martin
    Posted September 2, 2014 at 7:46 am | Permalink

    The USA’s figures are inflated by not counting millions of illegals from Latin America.

  14. Gary
    Posted September 2, 2014 at 7:57 am | Permalink

    The USA is insolvent. Far more so than the EU.

    The congressional budget office and the IMF has effectively pronounced the U.S. bankrupt.

    Section 6 of the July 2010 IMF Selected Issues Paper says:

    “The U.S. fiscal gap associated with
    today’s federal fiscal policy is
    huge for plausible discount
    rates.” It adds that “closing the
    fiscal gap requires a permanent
    annual fiscal adjustment equal to
    about 14 percent of U.S. GDP.”

    To make up that deficit would require a permanent doubling of all personal, corporate and federal taxes. The reserve status of the dollar is the last bastion against financial oblivion. As long as they can get the rest of the world to hold dollar reserves, mainly to buy oil and gas, the USA temporarily staves off a wipe out. Russia and China have now directly challenged this. I fear this means war.

    Reply The debts and deficits of many EU countries are bigger than the US one as a proportion of their incomes.

    • APL
      Posted September 2, 2014 at 9:24 am | Permalink

      Gary: “The USA is insolvent. Far more so than the EU. ”

      Agree on the first clause, disagree on the second.

      I’d assert that the EU is worse.

    • Gary
      Posted September 2, 2014 at 10:50 am | Permalink

      The EU as a whole has a total public debt to GDP of 103% , the USA 114%. Sure the EU variance between the EU countries is large, but it is also probably large within the states of the USA. UK public debt is also at 114% – Source OECD Economic Outlook No. 92 (database) as of December 2012.


      All OECD countries are hopelessly mired. When you look at total debt the USA is at about 350% , the UK is at about 1000% of GDP the highest in the OECD by some margin.

      • lojolondon
        Posted September 5, 2014 at 12:58 pm | Permalink

        Beware of “lies, damned lies and statistics”. The whole western world is in trouble, partly caused by elections – where politicians borrow money to deliver immediate favours to the electorate on the basis that someone else will have to pay it back –
        Maybe we need a King/Emperor, someone who doesn’t care about the next election, because he will still be in power and remains responsible – that might solve it.

  15. agricola
    Posted September 2, 2014 at 8:25 am | Permalink

    With good reason you point out the deficiencies of the EU, but it is not just the EU. Their sub office in the UK, the Lib/Lab/Con consortium of EU think has also got it drastically wrong too. They are so far into it that they dare not admit to having got it so badly wrong. They are condemning their patient, the people of the UK to death, due to incompetence and dogma. The biggest offenders are those in power at the moment because they have the power to take corrective action.

    The second group of offenders are those in the Conservative Party who like yourself vote for change and espouse good logical reasons for such, but when it comes to crunch time are not prepared to do anything that would jeopardise their beloved Conservative Party, deeming it’s survival more important than that of the UK. This inertia will complete a decline already under way. This is perhaps why Douglas Carswell is so much admired in his constituency. Not only does he argue the case, he backs it with action. Were but half of the 100 Tory dissenters in the current Parliament prepared to follow DC we might have the momentum for that very real change. Moving to UKIP is only a vote for real conservatism, a version that has increasing appeal across the political spectrum.

    You point out how far ahead the USA are, again quite correctly. Others might overtake the USA in time ,but will they offer the same degree of individual freedom that currently exists in the USA. I have my doubts. Ask yourself this , how much of the USA’s current position is down to it’s legacy of making the right decisions and how much is down to the Obama presidency. It is hard to recall a more reviled president, and that comes from his own people. Our growing DEBT is £1.2 Trillion, what is that of the USA.

    The time for talking is well past, the time for action is upon us.

  16. Iain Gill
    Posted September 2, 2014 at 8:39 am | Permalink

    I’ve lived in the States. So yea I was “well off” middle class, but I had lots of friends of different levels of wealth so got to see things from a lot of different perspectives.
    The biggest difference for me is the fact that the end consumer really does exercise real choice and buying power in every possible interaction. Don’t like you kids school, you can move them quickly and easily, no need to move address, or claim another religion. Don’t like your GP, no problem just turn up at another and get seen straight away. Sitting in a hospital waiting room and being treated very rudely? No problem get in a taxi to another hospital where they will see you no problem. You forget how much of UK income is spent on services which completely and utterly fail to react to end consumers, and get away with rubbish service.
    So say you are on a big programme, you are the critical path because you have some specialist skill that is busy for that part of the schedule, and you need medical treatment. In the UK it’s a 3 day wait to see a GP, a 3 month wait to see a specialist, a 3 month wait for tests, a 3 months wait to see a specialist again, put into the queue for treatment and if you are lucky seen months later. Not forgetting the wheezes the NHS has to put you back to the front of the queue. In the US this humble but critical worker would be seen and treated within the week, GP the same day, consultant the next day, tests the day after that, treatment the next day, if not sooner. So our whole economic throughput is slowed down to a massive extent by the poor service from the state providers, because that single critical worker is multiplied up a lot.
    Need heart medication in the US? Sure many have to pay, but there is real competition between the supermarkets to provide them and most are available for buttons, far less than prescription charges here. The fantasy that the NHS is the envy of the world is crumbling, and you only have to see first-hand how well poor people in the US get treated in their medical system to understand.
    Yes there is no road thinning in the US, and the police are as likely to shoot up the few speed cameras as any other resident, there is no tolerance for politically correct nanny state. The roads are far less congested BY DESIGN, it’s the rubbish road design fashions we see here that are half the problem.
    The US is not perfect. There is lots wrong with it. But it does show obvious problems with the UK to anyone caring to look.

    • Lifelogic
      Posted September 2, 2014 at 9:36 am | Permalink

      “The biggest difference for me is the fact that the end consumer really does exercise real choice and buying power in every possible interaction.”

      Indeed, in the UK most have little choice in healthcare, schools, old age care, even general housing often. You get what you are given, shut up & like it.

      • Iain Gill
        Posted September 2, 2014 at 3:35 pm | Permalink

        and worse than that all of the main political parties seem to think its acceptable, no real opposition within the political class at all.

  17. A different Simon
    Posted September 2, 2014 at 8:46 am | Permalink

    Mr Redwood ,

    I don’t think the difference is so much down to the different systems in place as the personnel running them .

    The EU seems to be attempting to be a Command-and-Control economy like China .

    This cannot work for the simple reason that there is a gulf in calibre between the people running the EU and countries of Europe and the Chinese hierarchy .

    Similarly the “management” of the US is just a heck of a lot smarter at all levels than the clowns which end up in office in the UK and Europe .

    They don’t try to micromanage their people either , they let them get on with it .

    Put consistent achievers like Arsenne Wenger and Alec Ferguson in charge of the country and things would change for the better a lot quicker than people would believe .

    • A different Simon
      Posted September 2, 2014 at 8:55 am | Permalink

      I was talking with a confirmed socialist a couple of months back .

      He told me that “it’s getting harder in America but at least in America the American Dream is still alive” . He is of the opinion that you “can’t do it” here in the UK anymore and he’s got a point .

      The CULTURE in American is more conducive to enabling talent to rise – a meritocracy .

      The UK system is (with a few exceptions such as yourself , Mr Hague , Chris Hohn the hedge fund manager) a rigid society with your outcome decided at birth .

      The middle classes in the US are entrepreneurial and start their own businesses and employ locals .

      What remains of the middle classes in the UK is anti-entrepreneurial and dreams of working for a big company .

      Cultures don’t arise overnight .

  18. JimS
    Posted September 2, 2014 at 8:46 am | Permalink

    I remember a couple of EuroElections ago Jack Straw telling us that the EU was good for us because “60% of our trade was with it and ‘cheap’ air fares”.

    Well, of course, 60% of our trade was within the EU because we had had barriers imposed on trade with the commonwealth, (100% of nothing is nothing, be careful what you wish for!), and ‘cheap’ was measured against the yardstick of cross-Atlantic air fares which, mile-for-mile, were even cheaper. In other words we had spent decades trying to reduce the cost of 200 mile journeys within Europe when, without the EU monster, we had done better outside the EU!

  19. David Price
    Posted September 2, 2014 at 8:49 am | Permalink

    Doesn’t it depend on how you define and measure “rich”?

    The World Bank website lists various metrics including GDP per head. This measure has a number of EU countries ahead of the UK including Denmark, Sweden, Austria, Netherlands, Ireland, Finland, Belgium, France as well as the Norway and Luxembourg.

    As for technology components when I build a prototype or product I order the bulk of mine direct from China, not from the US, UK or EU. The parts cost has a lot to do with this and detractors would probably be correct in pointing to the low employee costs. However, a major element is the shipping charges which are at insane levels between the UK and US/EU but can be lower than intra-UK from China.

    BTW I wouldn’t be so ready to claim the US has the world lead in technology and education, maybe it has in the English speaking world. As far as the digital revolution is concerned it’s success is based very much on international standards which the US were traditionally very slow to support and take up, GSM and the web being clear examples. Meanwhile the latest hot technology, 3D printing, owes more to a Bath University professor, some Europeans and an Israeli company than the US, despite what US media would have you believe.

  20. Max Dunbar
    Posted September 2, 2014 at 9:15 am | Permalink

    I think that using these rather basic statistics of overall income levels is misleading. There are so many other factors to take in to consideration when trying to measure wealth. In America property taxes are very high relative to property prices. In the Czech republic people earn considerably less than in Germany or America but luxuries such as wine and cigarettes are cheaper. Wages in eastern Germany tend to be lower than in western Germany. Quality of life in a poorer country can be higher than in a wealthier country. Some areas in the north of the UK have high levels of unemployment and low quality of life, however the suburbs of some of these cities are prosperous with people in well paid jobs.
    I would also like to know how these income levels are arrived at. Do the people of Detroit feel better off than the people of Warsaw?

    There has always been anti-American rhetoric. Probably, one need look not much further than our universities with their left-wing academics who spout this poison whilst feeding off the capitalist system and enjoying the privileges accorded to them in these insulated institutions.

    You mention the EU very frequently but the main issues lie here with the British people. At present we are in danger of losing our nation due to internal subversion and division. Next year we may have a Labour government in power. These threats are a higher priority and can only be dealt with by the people of the UK.

    • Feodor
      Posted September 2, 2014 at 1:01 pm | Permalink

      “Quality of life in a poorer country can be higher than in a wealthier country.”

      I recently spent some time in Spain. The country has terrible economic problems–the landscape is dotted with half-built buildings, unemployment is intolerably high and the people are poorer than us. Yet one is hard-pressed not to admire their way and quality of live. The relaxed culture, fine food, cheap prices, cohesive family lives etc. You’re right that numbers can conceal realities instead of illuminating them. It’s hard to reconcile Mr Redwood’s argument with the pictures we see of America’s poorest, most dilapidated enclaves and the problems which beset their inhabitants. Few (western) European nations would tolerate this. And in this regard, I’d take European civilisation over American every day of the week.

  21. Lifelogic
    Posted September 2, 2014 at 9:17 am | Permalink

    One of the main reasons, in the UK, that we keep voting for this endlessly bigger government, ever more tax and generally incompetent government is that the BBC endlessly encourages people to think in this way daft state knows best/green crap way.

    Governments do not create jobs they destroy them. They do not have a magic money tree, merely money they have taken off people who would use it rather better in general (not usually very much of a challenge). Governments mis-allocate capital massively, very often using it to actively cause no benefit and huge net damage. As with most of their motorist mugging activities and over restrictive planning & building controls.

    • Lifelogic
      Posted September 2, 2014 at 9:22 am | Permalink

      Employment laws also need huge simplification. The best protection for an employee is more job availability, not silly legal restrictions. The best protection for tenants is more house/flat availability.

    • Feodor
      Posted September 2, 2014 at 1:10 pm | Permalink

      “Governments do not create jobs they destroy them.”

      Demonstrably false. For a start, just look at the numbers of people employed in government/government-funded institutions. Then consider how impossible it would be to grow an economy in a country which had poor infrastructure, no effective legal system, no state-funding of education and research and development etc.

      “They do not have a magic money tree…”

      What is a printing press, then?

      • Lifelogic
        Posted September 3, 2014 at 7:31 pm | Permalink

        Clearly you need defence and law and order but not much beyond that (and we are way, way beyond that) then governments clearly destroy net jobs not create them.

      • Lifelogic
        Posted September 3, 2014 at 7:32 pm | Permalink

        What is a printing press, then?

        A government inflation & taxation machine.

    • David Price
      Posted September 3, 2014 at 6:55 am | Permalink

      Government do create jobs, the question is what the value of them is and whether they are appropriate at all stages of the economy. What is generally missing is the market pressure to decide these aspects.

      However there is no reason why you could not set up a private school or hospital in competition, there are many examples.

      • Lifelogic
        Posted September 3, 2014 at 7:28 pm | Permalink

        How can you compete with something that is free at the point of use it is rather hard!

        • David Price
          Posted September 4, 2014 at 7:25 pm | Permalink

          There are private schools and hospitals and dentists etc … find a way to compete.

          Even with “free” education parents will still pay for cramming and summer schools.

  22. Tad Davison
    Posted September 2, 2014 at 9:24 am | Permalink

    What is the national debt of the US and how does it propose to repay it?

    How much does the US spend on arms?

    How much does the US tax-payer give to Israel each year, like it or not?

    How much of the US sovereign debt does China hold?

    When was the last time US gold reserves were audited?

    Why is the US Federal Reserve bank in private hands?

    I could go on, but I guess you can see where I’m coming from.

    Tad Davison


  23. Lifelogic
    Posted September 2, 2014 at 9:30 am | Permalink

    Brussels bureaucrats are interest in increasing average income per head, but largely only their personal incomes it seems.

    No one in government seems too concerned about the huge difference between total remuneration per head, in the state sector as compared to the private sector. It is about 50% higher for working fewer hours, better working conditions and far more sick days too.

    • REPay
      Posted September 3, 2014 at 2:59 pm | Permalink

      That is the “wrong sort of inequality”…no interest will be shown in that!

  24. A different Simon
    Posted September 2, 2014 at 9:31 am | Permalink

    At the risk of sounding like I’ve got a lot of it , money is not the be all and end all .

    Freedom is more important . Americans are still freer .

    • Lifelogic.
      Posted September 4, 2014 at 6:15 am | Permalink

      Indeed money is not everything and freedom is important, but having money does gives you more freedom and choices.

  25. petermartin2001
    Posted September 2, 2014 at 10:03 am | Permalink

    “Why is the USA so much richer than the EU? “

    America has always been wealthier. That’s why emigrants have travelled to America from Europe.

    The question should really be “why are they getting relatively more wealthy”?

    That’s because the Americans do understand that there is no need to run a government deficit of only 3%. There’s no need to have to run trade surpluses just for the sake of it. If China wants to send a computer to America, be paid in US$, and just keep that money as US treasury bonds then the Americans, or at least the sensible ones, don’t have any problem with that.

  26. A different Simon
    Posted September 2, 2014 at 10:04 am | Permalink

    ‘Why is no-one at EU level worried about it?’

    Same as why nobody at UK level is worried about it .

    The outcome for them is guaranteed – they have defined benefits pensions and at EU/UN level a job for life .

    Unlike the plebs they are completely isolated from the consequence of their own actions .

    They will never have to use the systems they devise e.g. NEST pensions or for instance purchase personal financial products which they supposedly regulate .

  27. stred
    Posted September 2, 2014 at 10:23 am | Permalink

    2 points which may have something to do with it.

    Land area and natural resources per head.

    Holidays. Long in EU. Almost non existent in US.

    • Jagman84
      Posted September 2, 2014 at 4:06 pm | Permalink

      A further 2 points…..

      The United States of America, founded by Libertarians and the European Union by Marxists. Pity that the USA have found their own Marxists to drag them down to our level.

      • Bill
        Posted September 2, 2014 at 5:23 pm | Permalink

        “Libertarians?” Surely not! Calvinists, more like. What were the beliefs of the Pilgrim Fathers? They were Puritans, weren’t they?

        • Jagman84
          Posted September 2, 2014 at 8:52 pm | Permalink

          So the USA was founded in 1620? I think it was a little later than that, in 1776. It may have changed slightly in the interim.

      • petermartin2001
        Posted September 3, 2014 at 11:22 am | Permalink

        The United States of America, founded by Libertarians and the European Union by Marxists.

        Libertrians are economically very conservative, but socially very liberal. The former may be true of the founding fathers, but certainly not the latter.

        Marxists aren’t known for their economic conservativism. But that’s what the present day EU have signed up for in a big way. So what’s the Marxist strategy? To wreck capitalism in the EU and thereby provoke a workers’ uprising? Given the mess the current EZ is in , I suppose that could be a plausible theory!

  28. julian
    Posted September 2, 2014 at 10:23 am | Permalink

    I agree that the US is much more dynamic than the Eu but there is one factor which partly accounts for the income difference – in the US you have big medical insurance bills and /or medical bills.

  29. Antisthenes
    Posted September 2, 2014 at 10:26 am | Permalink

    I believe the Democrat party of the USA is doing it’s utmost to emulate the EU notably by Democrats such as Al Gore and Obama. If Hilary Clinton is the next president then I have no doubt they will succeed.

  30. acorn
    Posted September 2, 2014 at 10:31 am | Permalink

    Selective use of metrics again I see. “Averages” are easy to get but are generally meaningless. “Medians” are better but harder to calculate. Hence, OECD uses the “average household net-adjusted disposable income per capita” to try to get nearer to reality metrics. The US for instance is 39 531 USD a year, much higher than the OECD average of 23 938 USD.

    In the United Kingdom, the average net adjusted disposable income of the top 20% of the population is an estimated 53 785 USD a year, whereas the bottom 20% live on an estimated 9 530 USD a year. Gini index 33.

    In the United States, the average net adjusted disposable income of the top 20% of the population is an estimated 85 996 USD a year, whereas the bottom 20% live on an estimated 10 854 USD a year . Gini index of 45 and increasing, as more and more national income is going to capital owners and not to wage earners. Inequality in the US is much higher than in Europe particularly northern Europe. Different culture; different priorities.

    Even Sweden the country with the lowest Gini index of 25 (most equal across its social classes), still ain’t perfect. If you have kids doing economics, have a look at the OECD Better Life Index site and build your own utopia. There is a lot data on this site:-
    http://www.oecdbetterlifeindex.org/topics/life-satisfaction/ .

  31. Chris S
    Posted September 2, 2014 at 10:45 am | Permalink

    The first principal of America policy is to put their country first in everything they do.

    Cheap energy, an aggressive export policy and foreign aid spent on US sourced products and services are just three examples of how this is put into effect. US citizens are also intensely patriotic.

    Europe is far to concerned with human rights, political correctness and every other liberal lefty policy imaginable.

    Our influence and position in the world will continue it’s downward spiral for as long as we are wedded to a high tax / high public expenditure economy. For all it’s bluster, the coalition has continued Labour’s policies without interuption and borrowing is for ever increasing.

    We need to learn lessons from our economic competitors : until we take a huge axe to public expenditure and cut taxes, nothing will improve.

    Smaller Government that does less is the only way forward.

  32. BobE
    Posted September 2, 2014 at 10:54 am | Permalink

    Greece had a way of providing extreemly cheap holidays. The euro wiped that out making Spain and Greece very similar. Greece suffered badly. I distinctly remember the relaxed low cost greece holidays which supported so many people. Its a shame the euro runied them.

  33. BobE
    Posted September 2, 2014 at 10:55 am | Permalink

    Off topic but of interest I think.
    The Clacton by-election will be held on Thursday, 9 October

    • Lifelogic
      Posted September 3, 2014 at 7:36 pm | Permalink

      So just after the Tory party conference, time for Cameron to actually act for a change or does he just want to lose badly?

  34. Richard1
    Posted September 2, 2014 at 11:32 am | Permalink

    Interesting article by Wolfgang Schauble and Karl Lamers, senior German Christian Democrats, in the FT arguing for more European integration. They support ‘sound public finances’, liberalising labour markets and a transatlantic free trade deal (all sensible). On the other hand they recommend appointment of a European budget commissioner with power to veto national budgets (i.e. the end of parliamentary democracy, and not clear whether this only applies to eurozone countries), they want to curb ‘harmful tax competition’, and they also want an energy union (EU-wide green crap I assume). No thanks very much to any of those 3.

    Its going to be a toughie to get a good deal with these guys.

    • Denis Cooper
      Posted September 2, 2014 at 3:46 pm | Permalink

      Oh, I’m sure that given the chance Cameron would get us an excellent new deal, just as Wilson did. Then the 100 nameless Tory MPs who have allegedly decided to tell their constituents that they want to leave the EU would all decide that it was such an excellent deal that they wanted to stay in after all, apart from a small number who were being genuine about it rather than just trimming.

  35. Roy Grainger
    Posted September 2, 2014 at 12:52 pm | Permalink

    Like several posters here I have also lived and worked in USA as well as in UK and Germany. In addition to the points made so far it is striking how there is far less bureaucracy in USA – just a small example, it took me about 5 minutes on my own with minimal paperwork to open a bank account there but much longer in Germany with many forms and levels of authorisation and meetings with people who could vouch for me and so on – I think this is extended to all areas in USA – as a result it is just much easier to run a business there.

  36. Leslie Singleton
    Posted September 2, 2014 at 1:03 pm | Permalink

    It’s like weightlifting which is an unfair sport because big strong blokes have an advantage

  37. oldtimer
    Posted September 2, 2014 at 1:37 pm | Permalink

    The short answer is that the USA is closer to being a free market economy than the EU, which regards itself as a social market economy. Add to that a shared language, a working single currency, significant self sufficiency in many resources, including substantial low cost energy sources, and well developed capital markets, including venture capital, and the ingredients for US wealth creation are in place for those with the motivation to succeed.. The EU is obsessed by regulation, some of it intended to add to business costs of which renewable energy and its anti-CO2 legislation are prime examples of measures introduced to destroy wealth and wealth creation.

    • Mark B
      Posted September 2, 2014 at 5:06 pm | Permalink

      They have also held on to English Common Law, as opposed to the dreaded Napoleonic Code. The former tells you what you cannot do, where as the latter tells you what the State permits.

  38. Vanessa
    Posted September 2, 2014 at 1:47 pm | Permalink

    The USA is not told to apply GLOBAL WARMING to all its energy policies and also it has a lot more unused land for fracking which the EU is desperate to legislate against, so we are hamstrung.

    Their legal system is not run by a foreign organisation – the EU – and so all our brakes called “human rights” etc., do not stop them.

    The single market nearly lost Tate & Lyle because the EU will legislate on sugar in 2015 which eliminates sugar beet quotas but sugar cane will be heavily restricted. Germany & France are producers of sugar beet. Tate & Lyle refine sugar cane and so will be at a disadvantage. So much for “Trading Partners” ! More like “Trading Enemies”.

    I have not even begun on the legislation against the City of London financial centre !!!

    • Terry
      Posted September 2, 2014 at 3:43 pm | Permalink

      True but Obama “Advised” us to remain in the EU. Of course, he had little idea what the EU was when he spoke and probably believes it is still the EEC.

  39. Terry
    Posted September 2, 2014 at 2:32 pm | Permalink

    You preach to the already converted. It’s a pity that those deaf to reality cannot hear you.

  40. Terry
    Posted September 2, 2014 at 2:46 pm | Permalink

    Actually, Hong Kong is a better example as the system was designed by a British Civil Servant having decided that having a small Government was the best policy to develop local talent and stimulate growth.

    The question arises, “If the UK saw how well that worked in the Far East, why on earth was it not adopted back in the old country”?

    • Dennis
      Posted September 2, 2014 at 10:52 pm | Permalink

      Thank god it isn’t and wasn’t. and to compete with the USA economically to steal from others even more than our fair share of the biosphere is the road to disaster.

      No one here has mentioned how the USA uses around 25%, is it, of the world’s resources and all are calling for us to do the same! Total greed with never a thought for others.

  41. Atlas
    Posted September 2, 2014 at 2:54 pm | Permalink

    Agreed John,

    The EU is the road to poverty.

  42. John E
    Posted September 2, 2014 at 3:15 pm | Permalink

    I’ve just seen this on the FT website. Forget forming a government next year if we have blackouts this winter. People will believe Labour when they blame the Energy companies, not the EU. After all what has this government done constructively about the issue.
    Some of us (yourself included) have been flagging this issue up for some years now.

    “Emergency supplies of electricity are being sought by the National Grid for this winter because of the threat of shortages of output from the UK’s coal, gas and nuclear power stations.”

  43. Denis Cooper
    Posted September 2, 2014 at 3:28 pm | Permalink

    “These are huge differences. Why is no-one at EU level worried about it? Why is there no plan to ask what does the USA get right economically that the EU gets wrong?”

    Surely you haven’t forgotten about the Lisbon Agenda?

    Well, I suppose one could easily forget about something that achieved so little:


    “The Lisbon Strategy, also known as the Lisbon Agenda or Lisbon Process, was an action and development plan devised in 2000, for the economy of the European Union between 2000 and 2010.

    Its aim was to make the EU “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion”, by 2010.[1] It was set out by the European Council in Lisbon in March 2000. By 2010, most of its goals were not achieved.”

    So now there’s the “Europe 202o” updated strategy, I wonder how that is going?

    In which connection, in 2004 the EU Commission admitted that excessive regulation in the EU could be costing up to 12% of GDP.

    Page 10 here:


    “The EU, in particular in comparison to the US, is seen to place a relatively heavy regulatory burden on enterprises. It has been suggested that an increase in competition in product and labour markets to US levels could raise euro area GDP by even as much as 12%.”

    Well, maybe it could be that much or maybe not, but it certainly knocks on the head the idea that the EU provides any net economic benefit.

    • Dennis
      Posted September 2, 2014 at 10:58 pm | Permalink

      Was the aim of the Lisbon Strategy, also known as the Lisbon Agenda or Lisbon Process really to make the EU “the most competitive and dynamic knowledge-based economy in the world capable of SUSTAINABLE ECONOMIC GROWTH?

      What fools!

  44. cosmic
    Posted September 2, 2014 at 5:52 pm | Permalink

    The attitude to someone driving down the road in a Porsche in the USA is, “Wow, what do I have to do to get one of those?”

    The attitude to someone driving down the road in a Porsche in the UK is, “That’s all wrong. It should be taken off the flash git”.

  45. cosmic
    Posted September 2, 2014 at 5:56 pm | Permalink

    Look at the Lisbon Strategy from 2000.


    Creating a dynamic, high tech, entrepreneurial economy for the EU, by numbers. Now why didn’t that work?

    The EU likes the idea of this, but not the reality and doesn’t realise it’s a question of creating the conditions in which it can happen, not attempt to manage it.

  46. forthurst
    Posted September 2, 2014 at 6:16 pm | Permalink

    On Information Technology, “Speaking to the Financial Times, Simon Segars, chief executive of Arm Holdings, said the growth of UK tech companies is stunted due to a lack of later stage funding.

    “There is a pretty healthy angel investment community in the UK, which is great but access to capital to grow to the next stage is much harder to get access to,” Segar said. “I live in California, where there is a very different industry and access to capital is a huge thing.”

    London in particular has seen strong growth in tech start-ups over recent years with more than 3,000 based in the capital, but a lack of finance means that many are selling up early rather than remaining independent and growing into global players, Segars warned.

    He also said that the culture of entrepreneurship in the UK is not as strong as in Silicon Valley.”

    According to the University Rankings, German institutions are comparatively mediocre, but somehow Germany seems to overcome this ‘disadvantage’ with its preeminence in science and engineering which relate to added value; the high value in the tables set on e.g. Nobel Prizes is clearly bonkers.

  47. Eddie Hill
    Posted September 2, 2014 at 7:52 pm | Permalink

    You rightly ask: “Why is no-one at EU level worried about it? Why is there no plan to ask what does the USA get right economically that the EU gets wrong? Why is their (sic) so much anti American rhetoric and so little understanding of the free enterprise system which has greater sway in the US than in the EU?”

    Perhaps it’s more pertinent to ask why Britain is still a member of an organisation that is in the slow lane and proud of it? An organisation that hasn’t had an audit signed off since it was created? An organisation in which € tens of billions either go unaccounted for or are known to have been lost in frauds every year, yet demands more and more money to pour down a drain somewhere? An organisation in which each country still looks after its own interests at the expense of every other country that can be persuaded or forced to pay for it? An organisation that grows like topsy creating mirror institutions hat happily duplicate (or even triplicate) those of member countries?

    And also, why are you still a member of a Party that wants us to remain in the EU when there is a party that wants out?

    Finally, when all of this, and more, is common knowledge, why are we still asking these questions?

  48. Stephen Almond
    Posted September 2, 2014 at 8:44 pm | Permalink

    Why is USA richer than EU?
    Have you noticed how the USA doesn’t try to incorporate Mexico/Guatemala/Nicaragua/Costa Rica etc. etc. into itself?

    Compare that with the EU, which wants to adopt every poor country on this continent and beyond.

  49. Kenneth R Moore
    Posted September 2, 2014 at 9:06 pm | Permalink

    America seems to have been ahead of Europe for at least the last 50 years so I’m not sure the Eu project is the whole answer. In the 50’s American consumers were buying domestically made Tv’s, cars, washing machines etc. when they were considered luxuries for the few over here.
    I guess the US was quick to embrace automation – having a large domestic market must have helped in this. Better paid workers in factories then became consumers so it was a virtuos circle. A ‘can do’ attitude rather than the ‘can’t do’ attitude of some Europeans was also a virtue.
    England and the rest of Europe was slower in responding to change and still is.

    America takes a much more robust stance in protecting it’s industries – the collapse of Rover for example would never have been allowed to happen over there. Americans still mine coal in quantity , can buy a large range of US made goods and are generally quite patriotic in their buying habits in stark contrast to us.

    Business in Europe is seen as been all about grinding the faces of the workers in the dust over, fat cats filling their bank accounts. If we see someone with a big house and a nice car we ask’how much debt must they be in ?..Over in America the same person would be congratulated for their drive and endeavour.

  50. David Price
    Posted September 3, 2014 at 6:38 am | Permalink

    You omit to mention that the US government spends vast amounts on their science, technology and military activities, in effect they subsidise a lot of their advanced industry. Certainly there are a large number of purely private sector businesses but how many benefited from early years pubic sector funding and custom, for many it is ongoing. In this there is a lot of similarity with the EU, so what is your answer for how the EU has got things wrong?

    Is it purely down to attitude?

    I don’t think the UK would fare any better if it left the EU without some systemic changes in government and general attitudes, particularly in the financial markets. The government and the economy is far too focussed on the finance and services sector and yet access to funding for business is basically broken, SNAFU to borrow a phrase. When I started work the complaint was that the banks were too short-termist to support a science, engineering and technology sector with a need for continual R&D. That situation hasn’t changed except perhaps for seed funding but that can be accessed via Kickstarter anyway.

  51. REPay
    Posted September 3, 2014 at 2:58 pm | Permalink

    I live in the US and one of the big differences is the scepticism shown to government by a healthy minority of the population.

    In the UK and (I have also lived in France and Germany) the most dominant voice is for government to do more and spend more and to employ more. The something most be done brigade and the use of the public purse to win headlines is more prevalent here.

    That is not to say that the US does not have its problems. Its state public sector pensions are in meltdown – years of politicians buying votes or failing to address the deficits and DC is choked with traffic from all the QE money that was pumped into jobs as well paid and useless as any in Whitehall or Brussels.

  52. Lindsay McDougall
    Posted September 3, 2014 at 8:51 pm | Permalink

    I really object to all European Member States being lumped in together. The whole point of getting out of the EU is that we don’t need to do this.

  53. WAS
    Posted September 5, 2014 at 7:35 am | Permalink

    The economy of the European Union generates a GDP (nominal) of about €14 trillion (US$18.451 trillion in 2014) and a GDP (PPP) of about €12.71 trillion (US$16.773 trillion in 2014) according to International Monetary Fund,[1] which makes it the largest and second largest economy in the world respectively if treated as a single economy.

    The European Union (EU) economy consists of an internal market and the EU is represented as a unified entity in the World Trade Organization (WTO).




  • 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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