The U.S level of job creation from 2000 to 2003 was less than that of the Eurozone. Do you agree?
There are many variants on market-based economies. But to hear and read the views of those who support the Anglo-Saxon model of 'free' markets one might be left with the impression that there is only one viable variant - that of the United States. Promoters of this viewpoint are to be found on both sides of the Atlantic, but some of the more opinionated stances are to be found amongst some politicians, economists and journalists in Britain.
One of the less endearing habits of such people is to comment adversely, even sneer at, the supposedly inferior social models of capitalism that are to be found in countries as diverse as Sweden, Norway and Finland, on the one hand, and France, the Netherlands and Germany - and, of course, Japan and the S.E Asian countries on the other.
We have learned that it is rather difficult to have a general and rational debate on the subject of economic success. A recent attempt to discuss whether Sweden, with its low crime, absence of poverty, excellent health and education systems and manifestly egalitarian social systems was any 'better' or 'worse' than the United States rapidly deteriorated into a slanging match, ending with the not uncommon, 'We saved you Europeans at the end of World War Two', argument.
So, how do we judge the success of an economy? Can we separate it from questions of how it serves the general public good? What constitutes a successful or 'good' society - all of these questions need in our view to be addressed in judging the success of any economic model.
Widening the question is also likely to throw a different light on the Anglo-Saxon vs 'Social' capitalism argument, but that is not our purpose in this piece.
We wish to focus briefly on one dimension of economic 'success', job creation.
It is widely believed that the flexible and dynamic U.S economy is far better at creating new jobs than the scelerotic and inflexible Eurozone ones.
But....... There is some reason to believe that this is not the case.
The American economy has been recovering from stagnation since 2000. But, there has been little new job creation, despite a huge expansion of 1.1 million public sector jobs. So, by the end of 2003, employment was still only at the level of 2000.
In the eurozone, excluding the new entrants to the EU, the EU's Employment in Europe survey indicates that, between 2000 and the end of 2003, the number of employed people increased by 4.1 million. The increase in the United States was half as much. There is also reason to believe that the quality of new job creation in the UK and U.S is low, focusing on low-pay, low-benefit service and retailing jobs, with a good proportion of part-time work.
Which leads to another issue.......
It is frequently claimed that the rate of economic growth in Britain and particularly the U.S is far greater than 'old' Europe. But, such data need careful scanning to test for compatibility. For example, the statistics measure growth in total output, not in output per head. And, as Anthony Hilton says in the 'Evening Standard' of February 5, 2005, The European economy grows less fast because it has a slower-growing workforce that likes longer holidays. Economic statistics do not put a value on leisure time - but if they did, they might conclude that the overall 'wealth' of the Europeans, defined as income plus leisure, outstrips that of the Americans.
If we add to this the fact that the Americans measure inflation differently, which inflates the nominal U.S rate of growth, then the claimed gaps between Europe and the US rapidly diminish.
To conclude, it is highly likely that those who are ideologically inclined to talk up the North American model conveniently omit many factors that may modify a view about whether this model is superior and serves the public good better than other variants of market capitalism.
To quote Anthony Hilton again, '......There is so much business and political thought which takes it for granted that America does far better than Europe in economic terms. But if the race is much closer than conventional wisdom might have us believe, should not much of that conventional wisdom be rethought?
In this website, we are dedicated to trying to understand the real facts and issues as a basis for making intelligent decisions about what works best. We would therefore strongly agree with Hilton.