The Euro Joneses

One of the interesting things in global politics is how much countries compete with each other for bragging rights. Who is better at creating jobs? Who has the smallest deficit? Who has the strongest military? Who gives its people the most rights? In any of these discussions all measures of success are relative to other countries of a similar position.

The attitude of "keeping up with the Joneses" is prevalent among countries just as it is among neighbors. For just one example, look at colonialism. European countries raced for control of Africa. Just as quickly, those same countries abandoned Africa when they saw others doing the same. Peer pressure in this regard can be both positive and negative. In this example, the de-colonization would be positive peer pressure, while the colonization would be negative.

America is currently the world's only superpower (beware of China), but that does not seem to lessen our desire to compare ourselves to the Joneses.

Enter Europe. The United States and Western Europe have long been each other's best comparable. In the aftermath of WWII, and again in the aftermath of the Cold War, we saw Europe trend in the direction of the United States: free markets arose and private industry flourished. In the last ten years or so there has been a growing though subtle movement to push the U.S. in the direction of Europe: bigger governments trending toward social welfare state status.

A few days ago France's Socialist candidate, a powerful woman named Segolene Royal, laid out her platform for France's upcoming presidential election. Here are just some of her proposals:

• Increase pensions
• Make it harder for small businesses to fire or lay off workers
• Increase the minimum wage to the equivalent of $2,000/month
• Raise taxes on business profits
• Make employers raise wages for all workers
• Free contraception for women
• More money for the unemployed and disabled

As if all that weren't enough, she summarized her platform with this sweeping statement:

The unfettered rein of financial profit is intolerable for the general interest. You told me simple truths. You told me you wanted fewer income inequalities. You told me you wanted to tax capital more than labor. We will do that reform.

More equality, less wealth, higher taxes, more government. That is the French way.

What does that have to do with us? I fear the United States is on the slow drift in that direction. Politicians in America are offering many of these same things, but in much more moderate forms. Don't these policies sound great? Wouldn't we all love the government to step in and allow us to work less while earning more? Wouldn't we all like to be more equal to Bill Gates? Wouldn't we like to have the government give us everything we need? Yes, yes, absolutely, and of course.

But America should not follow Europe down this road. While these things sound great, they end up strangling an economy and generally allowing everyone to have less (though in a more equal fashion). As a percentage of the total economy (GDP) the American government spends far less than its European counterparts, yet:

• The U.S. has far lower unemployment
• The American unemployed are without jobs for a far shorter period of time
• Americans earn much more
• The U.S. economy is growing far faster than Europe's
• Americans have far more disposable income the Europeans

In short, Americans have it much better than Europeans. This is in large part because our government does less, not more.

In the wikipedia entry about the French economy it discusses the virtues of the French social welfare state: they work less hours, have guaranteed vacations, are protected from firing, have incredibly strong unions, and the list could go on.

But buried toward the end of the entry is a little tidbit that should be very informative. In trying to solve their unemployment problems, some French politicians are advocating "removing or weakening workforce legislation and lowering payroll contributions in order to stimulate employment". In other words, to create jobs they need to be more like America. They need less government. They need freer markets. They need lower "contributions" (read: taxes).

With the very long and grinding presidential election season bearing down on us we are going to hear politicians of all stripes explain how they will wield government power to solve your problems. The effect will be sending America down the road of Europe.

Of course America has problems, but solutions must come from outside--not inside--the government.