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Europe vs. America

1.

Consider a mug of American coffee. It is found everywhere. It can be made by anyone. It is cheap—and refills are free. Being largely without flavor it can be diluted to taste. What it lacks in allure it makes up in size. It is the most democratic method ever devised for introducing caffeine into human beings. Now take a cup of Italian espresso. It requires expensive equipment. Price-to-volume ratio is outrageous, suggesting indifference to the consumer and ignorance of the market. The aesthetic satisfaction accessory to the beverage far outweighs its metabolic impact. It is not a drink; it is an artifact.

This contrast can stand for the differences between America and Europe—differences nowadays asserted with increased frequency and not a little acrimony on both sides of the Atlantic. The mutual criticisms are familiar. To American commentators Europe is “stagnant.” Its workers, employers, and regulations lack the flexibility and adaptability of their US counterparts. The costs of European social welfare payments and public services are “unsustainable.” Europe’s aging and “cosseted” populations are underproductive and self-satisfied. In a globalized world, the “European social model” is a doomed mirage. This conclusion is typically drawn even by “liberal” American observers, who differ from conservative (and neoconservative) critics only in deriving no pleasure from it.

To a growing number of Europeans, however, it is America that is in trouble and the “American way of life” that cannot be sustained. The American pursuit of wealth, size, and abundance—as material surrogates for happiness—is aesthetically unpleasing and ecologically catastrophic. The American economy is built on sand (or, more precisely, other people’s money). For many Americans the promise of a better future is a fading hope. Contemporary mass culture in the US is squalid and meretricious. No wonder so many Americans turn to the church for solace.

These perceptions constitute the real Atlantic gap and they suggest that something has changed. In past decades it was conventionally assumed—whether with satisfaction or regret—that Eu-rope and America were converging upon a single “Western” model of late capitalism, with the US as usual leading the way. The logic of scale and market, of efficiency and profit, would ineluctably trump local variations and inherited cultural constraints. Americanization (or globalization—the two treated as synonymous) was inevitable. The best—indeed the only—hope for local products and practices was that they would be swept up into the global vortex and repackaged as “international” commodities for universal consumption. Thus an archetypically Italian product—caffè espresso—would travel to the US, where it would metamorphose from an elite preference into a popular commodity, and then be repackaged and sold back to Europeans by an American chain store.

But something has gone wrong with this story. It is not just that Starbucks has encountered unexpected foreign resistance to double-decaf-mocha-skim-latte-with-cinnamon (except, revealingly, in the United Kingdom), or that politically motivated Europeans are abjuring high-profile American commodities. It is becoming clear that America and Europe are not way stations on a historical production line, such that Europeans must expect to inherit or replicate the American experience after an appropriate time lag. They are actually quite distinct places, very possibly moving in divergent directions. There are even those—including the authors of two of the books under review—for whom it is not Europe but rather the United States that is trapped in the past.

America’s cultural peculiarities (as seen from Europe) are well documented: the nation’s marked religiosity, its selective prurience,1 its affection for guns and prisons (the EU has 87 prisoners per 100,000 people; America has 685), and its embrace of the death penalty. As T.R. Reid puts it in The United States of Europe, “Yes, Americans put up huge billboards reading ‘Love Thy Neighbor,’ but they murder and rape their neighbors at rates that would shock any European nation.” But it is the curiosities of America’s economy, and its social costs, that are now attracting attention.

Americans work much more than Europeans: according to the OECD a typical employed American put in 1,877 hours in 2000, compared to 1,562 for his or her French counterpart. One American in three works more than fifty hours a week. Americans take fewer paid holidays than Europeans. Whereas Swedes get more than thirty paid days off work per year and even the Brits get an average of twenty-three, Americans can hope for something between four and ten, depending on where they live. Unemployment in the US is lower than in many European countries (though since out-of-work Americans soon lose their rights to unemployment benefits and are taken off the registers, these statistics may be misleading). America, it seems, is better than Europe at creating jobs. So more American adults are at work and they work much more than Europeans. What do they get for their efforts?

Not much, unless they are well-off. The US is an excellent place to be rich. Back in 1980 the average American chief executive earned forty times the average manufacturing employee. For the top tier of American CEOs, the ratio is now 475:1 and would be vastly greater if assets, not income, were taken into account. By way of comparison, the ratio in Britain is 24:1, in France 15:1, in Sweden 13:1.2 A privileged minority has access to the best medical treatment in the world. But 45 million Americans have no health insurance at all (of the world’s developed countries only the US and South Africa offer no universal medical coverage). According to the World Health Organization the United States is number one in health spending per capita—and thirty-seventh in the quality of its service.

As a consequence, Americans live shorter lives than West Europeans. Their children are more likely to die in infancy: the US ranks twenty-sixth among industrial nations in infant mortality, with a rate double that of Sweden, higher than Slovenia’s, and only just ahead of Lithuania’s—and this despite spending 15 percent of US gross domestic product on “health care” (much of it siphoned off in the administrative costs of for-profit private networks). Sweden, by contrast, devotes just 8 percent of its GDP to health. The picture in education is very similar. In the aggregate the United States spends much more on education than the nations of Western Europe; and it has by far the best research universities in the world. Yet a recent study suggests that for every dollar the US spends on education it gets worse results than any other industrial nation. American children consistently underperform their European peers in both literacy and numeracy.3

Very well, you might conclude. Europeans are better—fairer—at distributing social goods. This is not news. But there can be no goods or services without wealth, and surely the one thing American capitalism is good at, and where leisure-bound, self-indulgent Europeans need to improve, is the dynamic generation of wealth. But this is by no means obvious today. Europeans work less: but when they do work they seem to put their time to better use. In 1970 GDP per hour in the EU was 35 percent below that of the US; today the gap is less than 7 percent and closing fast. Productivity per hour of work in Italy, Austria, and Denmark is similar to that of the United States; but the US is now distinctly outperformed in this key measure by Ireland, the Netherlands, Norway, Belgium, Luxembourg, Germany, …and France.4

America’s longstanding advantage in wages and productivity—the gift of size, location, and history alike—appears to be winding down, with attendant consequences for US domination of the international business scene. The modern American economy is not just in hock to international bankers with a foreign debt of $3.3 trillion (28 percent of GDP); it is also increasingly foreign-owned. In the year 2000, European direct investment in the US exceeded American investment in Europe by nearly two fifths. Among dozens of emblematically “American” companies and products now owned by Europeans are Brooks Brothers, DKNY, Random House, Kent Cigarettes, Dove Soap, Chrysler, Bird’s Eye, Pennzoil, Baskin-Robbins, and the Los Angeles Dodgers.

Europeans even appear to be better at generating small and medium-size businesses. There are more small businesses in the EU than in the United States, and they create more employment (65 percent of European jobs in 2002 were in small and medium-sized firms, compared with just 46 percent in the US). And they look after their employees much better. The EU Charter of Fundamental Rights promises the “right to parental leave following the birth or adoption of a child” and every West European country provides salary support during that leave. In Sweden women get sixty-four weeks off and two thirds of their wages. Even Portugal guarantees maternity leave for three months on 100 percent salary. The US federal government guarantees nothing. In the words of Valgard Haugland, Norway’s Christian Democratic minister for children and family: “Americans like to talk about family values. We have decided to do more than talk; we use our tax revenues to pay for family values.”

Yet despite such widely bemoaned bureaucratic and fiscal impediments to output, Europeans appear somehow to manage rather well.5 And of course the welfare state is not just a value in itself. In the words of the London School of Economics economist Nicholas Barr, it “is an efficiency device against market failure”6 : a prudential impediment to the social and political risks of excessive inequality. It was Winston Churchill who declared in March 1943 that “there is no finer investment for any community than putting milk into babies.” To his self-anointed disciples in contemporary America, however, this reeks of “welfare.” In the US today the richest 1 percent holds 38 percent of the wealth and they are redistributing it ever more to their advantage. Meanwhile one American adult in five is in poverty—compared with one in fifteen in Italy.7 The benefits don’t even trickle down anymore. To many foreigners today this is a distinctly unappetizing vision: the “American way of life” is at a steep discount. As an economic model the US is not replicable.8 As a social model it offers few redeeming qualities. One is reminded of Oliver Goldsmith’s mordant reflections upon an earlier age of private greed and public indifference:

Ill fares the land, to hast’ning ills a prey,

Where wealth accumulates, and men decay.9

2.

This is the case put forward by Jeremy Rifkin and T.R. Reid. Rifkin is the more ambitious of the two, rather too much so: his book, The European Dream, is replete with efforts to summarize everything from church history to Enlightenment philosophy, all to the end of demonstrating that it is individualist America that is stuck in a time warp and cooperative Europe that represents the future. I think he is fundamentally right: but the case can only be hurt by the jejune summaries of the “Making of the Bourgeoisie” or the “Rise of the Nation-State,” as well as by a crassly reductionist account of American materialism, and a hodgepodge of ill-advised allusions to chaos theory, the “Great Chain of Being,” Hobbes, Descartes, Hegel, and the Enclosure Acts.

  1. 1

    The US television network that recently broadcast a passing glimpse at Janet Jackson’s anatomy was excoriated for its wanton lapse of taste; but the avalanche of accompanying commercials for products designed to enhance male potency passed quite without comment. The female breast, it seems, can rot a nation’s moral core; but malfunctioning penises are wholesome family fare.

  2. 2

    See Robin Blackburn, Banking on Death: Or, Investing in Life: The History and Future of Pensions (Verso, 2002) p. 201, Table 3.2.

  3. 3

    For the 2003 PISA (Programme for International Student Assessment) report, issued by the OECD on December 6, 2004, see www.pisa.oecd.org.

  4. 4

    See Andrew Sharpe, Appendix Table 2, “Output per House Levels in the OECD Countries Relative to the United States” for 2003; Centre for the Study of Living Standards, International Productivity Monitor, No. 9 (Fall 2004), at www.csls.ca/ipm/9/sharpe-tables.pdf.

  5. 5

    Note, too, that the steadily rising cost of private medical insurance in the US puts at least as much of a burden on American firms as social taxation and welfare privileges place upon their European counterparts—while providing none of the attendant social benefits.

  6. 6

    Katrin Benahold, “Love of Leisure, and Europe’s Reasons,” The New York Times, July 29, 2004.

  7. 7

    Following the OECD definition of a family income, less than 50 percent of the mean personal income of the nation.

  8. 8

    Appetizing or not, the American economic model could never be replicated anywhere else. Americans are the world’s consumers of last resort. But their national deficits on budget and current account are reaching unprecedented levels. The collapsing dollar is sustained only by foreigners’ willingness to hold it: Americans are currently spending other people’s money on other people’s products. Were the US any other country it would by now be in the unforgiving hands of the International Monetary Fund.

  9. 9

    The Deserted Village (1770).

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