If We Europeanize, Europe is in Trouble
By now you may have heard: America is on its way to becoming another European country.
Now, by that I do not mean that we're moving our tectonic plate off the coast of France or anything. But rather, that a century-long dream of American progressives is finally looking like it might become a reality. The recently passed health-care legislation is the cornerstone of the Europeanization of America. And to pay for it, the White House is now floating the idea of imposing a value-added tax (VAT) like they have throughout most of Europe.
In the egghead-o-sphere there's been an ongoing debate about whether America should become more like Europe. The battle lines are split along almost perfect left-right lines ideologically. Liberals like the European welfare states, unionized workforces (in and out of government), generous benefits, long vacations, etc. Conservatives like America's economic growth, its dynamism and innovation.
From what I can tell, everyone agrees that you can't have Europeanization without European-size governments. Hence, America's government outlays (pre-Obama) have tended to hover around 20 percent of GDP (the average of the last 50 years), while Europe's are often more than twice that. In France, government outlays are nearly 55 percent of GDP. In 2009, the bailout and Obama budget sent America's government outlay to 28 percent of GDP, but that should decline a bit over the next decade, unless Democrats have something else in mind.
To be fair, liberals insist conservatives are wrong to think that Europeanizing America will necessarily come at any significant cost. New York Times columnist and Princeton economist Paul Krugman says that in exchange for only a tiny bit less growth, Europeans buy a whole lot of security and comfort. Economists such as Stanford's Michael Boskin say Europeans have a standard of living about 30 percent lower than ours and are stagnating. Others note that the structural unemployment rate in Europe, particularly for young people (it's over 20 percent in many countries), is socially devastating.
Obviously, I'm in the conservative camp. But I think the debate misses something. We can't become Europe unless someone else is willing to become America.
Look at it this way. My 7 year-old daughter has a great lifestyle. She has all of her clothes and food bought for her. She goes on great vacations. She has plenty of leisure time. A day doesn't go by where I don't look at her and feel envious at how good she's got it compared to me. But here's the problem: If I decide to live like her, who's going to take my place?
Europe is a free-rider. It can only afford to be Europe because we can afford to be America.