If Sweden was a U.S. state, how rich would it be? (HINT: Not Very)

If Sweden was a U.S. state, how rich would it be?

Two Swedish economists recently published a study that asks how European countries would fare if suddenly admitted into the American union. The results? If the UK, France, or Italy became U.S. states, they would rank as the fifth poorest of the fifty, ahead only of Arkansas, Montana, West Virginia, and Mississippi. The richest EU country—Ireland—would be the 13th poorest. Sweden would be the 6th poorest. In fact, the study found that 40% of all Swedish households would classify as low-income in the U.S.

This means that poorer U.S. states enjoy affluence comparable to that of richer European states—Denmark is equivalent to Kentucky—whether measured in terms of home ownership, or number of microwaves and cars possessed. “Material prosperity,” the authors write of the U.S., “is high and not associated with the material standard of living which many people in Europe probably associate with poverty. Good economic development, in other words, results in even poor people being relatively well off.”

By the 1880s, the U.S. had become the world’s richest nation (measured in per capita GDP). In the 1990s, U.S. growth was twice that of Europe’s, and three times that of Japan’s. The U.S. per capita income is now 55% higher than the EU-15 average, and 50% higher than Japan’s.

Here’s the not-so-secret recipe for achieving European-style stagnation and decline. First, combine high unemployment and aging populations to ensure that welfare costs far exceed worker contributions. Then, stuff with generous entitlements, massive tax burdens, rigid labor markets, and regulation-mad bureaucracies. For flavor, add dashes of socialism and right-wing paternalism. Bake. (For additional recipe ideas, consult Joy of Administrating by Ted Kennedy, or English departments everywhere.)

Joey Tartakovsky is assistant editor of the Claremont Review of Books.

(Here's the study's preface - the entire document is 49 pages)

PREFACE
IF THE EU WERE A PART of the United States of America, would it belong to the richest
or the poorest group of states?
At the beginning of the 1990s, there was no need to ask. Europe’s economic future was
a subject of growing optimism. Productivity growth had for some decades been higher
than in other countries of similar standing, and that growth was now going to be hugely
accelerated by the elimination of trade barriers and the closer economic integration resulting
from the Single Market. The EU as an institution was – and was undoubtedly seen as
– a vehicle for growth and economic liberalisation. In other words, the EU was able to do
what politicians in several member countries had wished for but had failed to achieve: to
increase economic openness, to strengthen the process of competition, and harness the
political process behind a liberal reform agenda.
Today, the perspectives on the EU, and the outlook on its future, are radically different.
Economic growth during the 1990s never became what many had wished for. Some
countries performed reasonably well, most notably Ireland, but on the whole the EU
was lagging far behind other countries during the whole decade. Productivity growth
decreased and by mid-decade the EU was running behind the US in this respect. The
process of convergence in productivity, a much talked-about process since the 1970s,
had once again become a process of divergence.
The role, and status, of the EU in the economic reform process has also changed. Instead
of a clear focus on economic reforms and growth, the EU (the Commission as well as the
Council) has concentrated its ambitions on other political objectives. Hence, the EU no
longer is – or is seen as – the great economic liberator of Europe. It is generally not
performing as a vehicle for reforms, nor as leverage for policies that are needed but
impossible to accomplish in the national political arenas.
Is it possible to break the spell of economic stagnation in Europe? Yes, undoubtedly.
But, alas, it seems highly improbable. The member countries have agreed on a relatively
far-reaching reform agenda in the Lisbon accord (yes, in the modern European context it
is far-reaching). But the agenda lacks impetus. Not to say a true awareness of the need
of reforms. Worse still, many European politicians and opinion-formers seem totally
unaware of the lagging performance of the EU economies and that a few percentage
units lower growth will affect their welfare in comparison with other economies.
Such is the background to this study on the differences in growth and welfare between
Europe and the US. Too many politicians, policy-makers, and voters are continuing their
long vacation from reality. On the one hand, they accept, or in some cases even prefer, a
substantially lower growth than in the US. On the other hand, they still want us to enjoy
the same luxuries and be able to afford the same welfare as Americans can. Needless to
say, that is not possible. But the real political problem is that lower welfare standards –
as with inequality in general – are a relative measure for most people. They are always
viewed by comparison with others, and rarely in absolute terms. People would rather
weep in the backseat of a new Mercedes than in the backseat of a second-hand
Volkswagen.
This study is based on a widely acclaimed and thought-provoking book – Sweden versus
the US – that was published earlier this year in Swedish by the same authors – Dr. Fredrik
Bergström, President of The Swedish Research Institute of Trade, and Mr. Robert
Gidehag, formerly the Chief Economist of the same institute, and now President of the
Swedish Taxpayers’ Association. The study presents important perspectives on European
growth and welfare. Its highlight is the benchmark of EU member states and regions to
US states. The disturbing result of that benchmark should put it at the top of the agenda
for Europe’s future.
Fredrik Erixon
Chief Economist, Timbro

Excellent food (real bread, coffee, beer,wine, cheese, etc.), more time off with family, less cars and traffic, more regular exercise (BICYCLES everywhere), lots of parks and free public amenities, (nearly) free higher education--all these things make for a very nice way of life over there.

Good bakeries are everywhere I have been in the US. If one is unfortunate enough to live far from one, it is still possible...and simple...to bake bread from scratch. I drink real coffee, fresh ground every morning from relatively inexpensive ($7/lb) beans. Occasionally, I will splurge for double that to enjoy my favorite Sumatra Dark. The local supermarket carries beer and wine from all over the world and anyone can purchase whatever one likes. I can't speak for the time off with family, as we are self-employed and work together about half the time. Everyone I am close to is also self-employed in family enterprises. We have income, freedom to set our own schedule and plenty of time together.

Traffic depends on locale. If traffic is a bother, one could always move to a rural area where the problem is likely to be getting stuck behind some farm machinery, although, in the past few years, the traffic in our nearest small town has become more congested and I admit to being irritated by the amount of traffic in cities and on the major Interstates, but that is just a reality in a large country with a productive economy. Bikes are a matter of choice, as well. How many Europeans can own acres of their own land? When you can walk around your own 40 acres or more,canoe or kayak or fish just across the road and bike on side roads through gorgeous, quiet scenery, parks are irrelevant. I have lived in Milwaukee, decades ago, and there were loads of beautiful parks. Today, the parks in LaCrosse, WI are also impressive. While upper-income families may pay through the nose for the elite schools, I know plenty of middle to working class families whose kids receive government grants and scholarships to attend public universities for relatively little cost to themselves.

We usually choose islands for vacation, as cities just don't appeal to us, and usually we are surrounded by Germans, Norwegians and Dutch. They tend to scrimp more than the Americans, and often seem to be on no-frill holidays. OTOH, we have met a few who are also self-employed, gregarious, and altogether enjoyable companions.

A friend is a university professor, renowned in her specialized field. A few years ago, she spent a semester in Norway. She was looking for a pair of shoes and was frustrated because there seemed to only be a few styles available everywhere. She mentioned this to a colleague, who responded:"We don't feel the need to be different. No one needs a lot of choices." She has vowed to not return there, ever, characterizing it as Stalinoid.

Another friend of Spanish descent spent time there a couple of years ago, visiting family. They reported that most people have their official job, which is taxed punitively, and a second job off the books. It was my impression that many people punched into their official job and then went off to earn their untaxed income during the time they were supposed to be working for their taxable income.

The two things visiting Europeans seem to most shocked by in America is the prevalence of firearms and target ranges and the amount of land individuals can own. Once, back in the 90s, some close friends were hosting a group of Europeans from the NIS. They assumed that our shopping area was a Potemkin mall, so they were invited to pick any place at random on the map. After an afternoon driving hither and yon throughout SW WI, SE MN and SE IA, they had to admit that all Americans had access to, to them, extremely varied goods, mostly of high quality.

It wasn't always this way. When I moved here over 30 years ago, I would travel 90 miles every 3 weeks or so to stock up on ethnic and gourmet foods. Today, some of these are available in my local supermarket and I am about 45 minutes from an excellent selection in a mid-sized city.

I have so few complaints about my quality of life that about all I can come up with that I must drive 4 hours to attend quality live cultural events. However, since many of the same artists who exhibit/perform in those urban galleries and concert halls actually live close by, I do not really feel deprived.

Sorry for the extended post, but I remember when everyone I knew was one generation removed from Europe and all the older folks would ever say was:"It is better here."

I have visited Europe and it IS poor compared to the United States. The upper class areas are more or less the same but once you get away from the wealthy cities you see the difference.

I was stationed in Europe for 14.5 years and conducted operations in almost every nation in what is now considered "Western Europe." What qualifies the Europeans as poor? I found them rich in western history, the arts, theater, transportation systems.... In all countries, "once you get away from the wealthy cities", a difference is always noted, i.e. city dweller vs. country dweller.Case in point: Appalachia and the East coast of the U.S.

I have also found that the people living in these "depressed" area's are essentially friendlier, more open, and more willing to invite you into their homes for a coffee, than a city dweller.

Let us not denigrate a people for their culture, but accept it, as it only enriches us.

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