European economic performance: Playing politics with data

The great socioeconomic policy debates nowadays involve political interpretations of the vast wealth of empirical data we have on the performance of different national policies over a variety of factors.

So it is with sadness that I realize that perhaps millions of readers of both liberal and conservative persuasions will find the recent anti-European public policy articles by David Brooks and Tom Friedman in the N.Y. Times. One can only hope that I overestimate the importance of the Times and its readership, and that no one takes either of these two writers seriously anymore.

The problem is this: both writers purport to lay the underperformance of France/Germany/Italy at the feet of those countries' welfare states. Ironically, they accomplish this feat by selectively choosing those countries that have poorly-functioning welfare states, rather than actually dealing with countries that have strong welfare states -- such as Norway, Sweden, Great Britain, or the Netherlands. Confronting a comparison between the latter four countries and the United States presents a different picture for Messrs. Brooks et Friedman.

First, let us establish how the two writers define underperformance. It is defined by Brooks primarily in terms of unemployment rates and low GDP growth rates, both of which are typical of France, Germany, and Italy during the past decade. That much we'll grant. But of course Brooks is cherry-picking here. And another article will have to deal with Friedman's stunning suggestion that a 35-hour work-week is something of which the French should be ashamed.

Let's also set aside the obvious point that these are hand-picked measurements that aren't necessarily the best ones for measuring national wellbeing. Let's run with them anyway. In the four "good welfare states," what are the corresponding figures to the United States' 2004 GDP growth rate of 4.4% (Bureau of Economic Analysis) and unemployment rate of 5.4% (Bureau of Labor Statistics)? Using a few different countries than my own, Ben P. at MyDD has performed a similar analysis (so I will steal his figures where possible).

Great Britain - 3.3% GDP growth rate, 4.7% unemployment rate
Norway - 2.9% GDP growth rate, 4.5% unemployment rate
Sweden - 3.2% GDP growth rate, 5.5% unemployment rate
Netherlands - 1.4% GDP growth rate, 6.4% unemployment rate

Curious. Having a well-functioning welfare state and an active, interventionist national government must obviously increase employment and foster lower growth and competitiveness because... Orthodox conservative economic theory says so. Stop looking at the data; pay no attention to the man behind the curtain; just look into this camera-like device so we can flash your memory a few times...

This is not to say the United States has not performed extraordinarily well coming out of 9/11. At least as far as these two indicators go (w/ all the caveats attached to them) the U.S. has done quite well. But what do you know? So have the four European nations I mentioned above. Imagine that. And some of them have better employment levels, too.

Second point: Brooks wants to say, "wait! None of this matters, the 'European' standard of living is on a par with Arkansas!" Interesting, because Arkansas and continental Europe, while sharing a similar GDP/capita, have several distinct differences:

1. In continental Europe, you would receive free health care no matter who you were, and often this would be rather high-quality care, without waiting lines for simple procedures (contrary to fear-mongering by right-wing publications without any actual data, France does not have waiting lines for its world-class healthcare system).

2. In continental Europe, if you were at the 25th percentile of the income ladder, you would have far more income than a person at the 25th percentile of the Arkansas income ladder. That is because continental Europe has higher income equality, something Americans never quite seem to understand. It mean that wealth and income are more evenly divided among the people, so that there is less of a difference between those at the 25th percentile and those at the 75th percentile. This is why average GDP figure are distorting.

3. Education is much better funded, covers more subjects, and by international standards (and many studies) is probably superior to what the majority of Arkansas students would receive. Not to mention that the French or Germans would not dream of teaching their children nonsense such as "Intelligent Design theory" or whatever the propaganda ministers have decided to call it now.

4. Oh, by the way, the French live longer. Appreciably so, in fact. And they have a lower infant mortality rate, among other standard health indicators not mentioned by the NY Times pair.

Final points: If Brooks and Friedman had the cajones, they would have done some thorough research that took into account numerous other factors than we have even covered here. But they did not, and for a simple reason: their goal is political, and it is to misrepresent the relative performance of the modern European welfare state by finding the current countries that are struggling the most with what can best be described as "non-innovative" welfare states, as opposed to the countries that have found successful ways to provide their citizens with the guaranty of universal healthcare, pensions, and strong unemployment insurance (which dampens the effect of those unemployment figures, does it not?). The latter is the only fair comparison of economic systems, and even this small sketch we have provided is not adequate to encompass what a full analysis would and should consider.

Point: The New York Times deserves better.