This blog has discussed Europe's problems many times: demographic collapse, rising crime, loss of confidence in its own heritage, impending dhimmitude. Now add to that litany economic decline. Fareed Zakaria in the Washington Post discusses an OECD report showing that Europe has fallen far behind the United States in economic production, and looks set to fall behind even farther.
It's often noted that the European Union has a combined gross domestic product that is approximately the same as that of the United States. But the E.U. has 170 million more people. Its per capita GDP is 25 percent lower than that of the United States, and, most important, that gap has been widening for 15 years. If present trends continue, the chief economist at the OECD argues, in 20 years the average U.S. citizen will be twice as rich as the average Frenchman or German. (Britain is an exception on most of these measures, lying somewhere between Continental Europe and the United States.)
Mr Zakaria talks about the various statistics used to measure the decline: unemployment rates, working-age population, per capita Gross Domestic Product, expenditures on research and development, etc. But he never really comes to grips with possible causes of Europe's relatively poor economic perfomance.
Why exactly is Europe falling farther and farther behind the US? Mr Zakaria does mention failed attempts to liberalise trading rules. That is important, but I would suspect the fundamental problem is high taxes levied to pay for Europe's expensive welfare state programs. As the population ages and the proportion of workers declines, those programs are only going to become more expensive and so taxes will have to be ratcheted up even higher. Unless there is a fundamental change in European fiscal policies, economic decline will continue.









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