Krugman Cheerleads For Europe Again

Krugman comes out cheerleading for Europe in a column recyled from two years ago. His point, then and now - when Evil Republicans say that Democratic policies will make the US look just like Europe, energized Dems should proudly say "And loving it" rather than cower with "Sorry about that, Chief".

Krugman continues to ignore some major counterarguments, such as the Europe's looming demographic disaster, their chronic free-riding on the US for defense and health care innovation, and their utter inability to create jobs that would absorb immigrants.  However, anyone interested in learning how to upgrade their disingenuity or present awkward statistics in a positive light will benefit from Krugman's latest.  Some snippets:

The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.

Actually, Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it.

Is that how Nobel Laureates in economics are evaluating international economies these days? Paris is prosperous so its all good in Europe?  Geez, the next time Krugman drives though his hometown of Princeton with his eyes open maybe he will come away convinced that it is all good in the US, too.  OK, we all know he will come away envious of the huge homes being put up by the hedge fund heroes that are paid even more than Princeton profs with lucrative book deals, but still - his new position that anecdotes are evidence if they support your side seems like a new path for the once self-described reality-based community.

It’s true that the U.S. economy has grown faster than that of Europe for the past generation. Since 1980 — when our politics took a sharp turn to the right, while Europe’s didn’t — America’s real G.D.P. has grown, on average, 3 percent per year. Meanwhile, the E.U. 15 — the bloc of 15 countries that were members of the European Union before it was enlarged to include a number of former Communist nations — has grown only 2.2 percent a year. America rules!

Or maybe not. All this really says is that we’ve had faster population growth. Since 1980, per capita real G.D.P. — which is what matters for living standards — has risen at about the same rate in America and in the E.U. 15: 1.95 percent a year here; 1.83 percent there.

Per capita GDP matters for living standards but size matters when it comes to political power - as Jim Manzi notes, China is ruling Hong Kong, not vice versa. 

Krugman also seems to accept (or wants to pretend) that low population growth just happened to Europe.  However, small families may have been a logical consequence of a social policy oriented towards small cars, small homes, small job prospects, and huge taxes.  I know I have an old post on this which I can't find which linked to European economists studying that very point, but The Economist noted European free-riding in this area as well:

An expensive welfare state also tends to reduce the size of the workforce.  In arguing for a "libertarian approach" to fertility, Mr Quiggin seems to be implicitly assuming that Europe's birthrate is an exogenous variable, unaffected by the policies in question.  However, there is substantial evidence that in modelling the welfare state, fertility is an endogenous variable:  the more secure the safety net, the less likely people are to have children.  

Governments have largely nationalised the traditional functions of the family, but in doing so they have not eliminated the need for future generations to care for the current ones in their dotage.  Unfortunately, the assumption of family duties by the state allows people to free ride on the fertility of others—which they seem to be trying to do in massive numbers.  As we've mentioned before, a society where everyone tries to free ride on everyone else is headed for disaster.  Europe's safety nets, or at least the pension systems, may contain the seeds of their own destruction.

Back to Krugmania:

And what about jobs? Here America arguably does better: European unemployment rates are usually substantially higher than the rate here, and the employed fraction of the population lower. But if your vision is of millions of prime-working-age adults sitting idle, living on the dole, think again. In 2008, 80 percent of adults aged 25 to 54 in the E.U. 15 were employed (and 83 percent in France). That’s about the same as in the United States. Europeans are less likely than we are to work when young or old, but is that entirely a bad thing?

"Is that entirely a bad thing"? Really?  Does the notion that unless something is all bad it is good actually win arguments on the left these days? Gosh, I want to play too - global warming will expand crop output in some regions and extend the summertime recreation season in New York and New England, so warming is not an entirely bad thing.  Case closed.  That was easy.

Well, maybe Krugman has created the Dem message for the 2010 election - Obama, Pelosi and Reid have not delivered more unemployment, they have delivered more quality family time!  So who is the party of family values now, hmmm?

And now for some big-time Nobel Laureate quality work:

And Europeans are quite productive, too: they work fewer hours, but output per hour in France and Germany is close to U.S. levels.

They don't work as long, but they produce less per hour! I'm sold.  Put another way, despite our deplorable public schools and willingness to accept unskilled workers (legally and illegally) from anywhere, the US still manages to produce more per worker than Europe.  And this is meant to persuade people that Europe is on the right path?

The point isn’t that Europe is utopia. Like the United States, it’s having trouble grappling with the current financial crisis. Like the United States, Europe’s big nations face serious long-run fiscal issue...

Let's see - Europe has lower population growth, an older population, higher unemployment, less productive workers, and more generous pension and health care programs, so they lag us in every relevant variable.  If the US has a looming Social Security and Medicare problem, what do they have?  Well, like the US they have a problem! 

Tyler Cowen is typically cogent in response to Krugman; among his many excellent points is this:

8. Countries have to start from where they're at.  If you're constructing policy advice, you can either build on what a country is really good at or you can try to revise the internal culture of the country.  If you're going to do the latter, come out and say so.  Most of my policy recommendations are based on the former approach, namely strengthening what (the better-functioning) countries already are good at.  I'm not suggesting that countries never change, but getting such changes right by deliberate policy interventions is very hard to do.  I wish to stress this point applies to the pro-U.S. as much as the pro-Europe side.

I'd like everyone to have a sign, which they would hold up when appropriate: "My policies seek to revise the internal culture of my country."  That's OK, but you're raising the bar for your own ideas and don't fool yourself into thinking otherwise.

America has been built on immigration and needs a growing job market that can absorb immigrants in a way that is very different from Europe.  "German" is an ethnic identity' "French" is an ethnic identity; "American" is a state of mind.  Third generation guest workers living in Germany are still Turkish; a person from anywhere can be as American as they want to be overnight.

Jim Manzi may have sparked Krugman's latest Euro-boosting with this piece titled "Keeping America's Edge"; Manzi follows up here and here.

Comments

[Sue]

Yeah, about that whole revolution to become independent and not part of Europe? Forget about it. Experiment gone wrong, or something.

[Clarice]

If you are upper middle class or higher in Europe it's a rather good life.Plenty of lower wage servants. Free college for your kids. Nice roads to drive your cars on and pretty old homes in picturesque places. If you aren't and enjoy a static life where for the moment all your basic needs are taken over by the state--except for cooling auntie's apt in Paris in August or getting her fired carcass buried before the return from the sea--until it runs out of Euros or whatever they will be using in a few years,you'll like it, too.
But if you are a person who hopes he and his children will have a full opportunity to be whatever they choose to and want to have a say in the major issues of the day like immigration and taxes and war, you'll like it not so much.

[Rob Crawford]

Friedman longs for a Chinese-style command economy, a government so pervasive it can ban plastic bags overnight.

Brooks longs for government by the "educated class" -- a category long on Ivy League lawyers and "government" school grads and their sycophants and short on people who, you know, do things in the real world.

Krugman longs for European-style social democracy, with a cradle-to-grave suffocating nanny state.

Is there an NYT columnist who likes the United States?

[Jack is Back!]

Since I have spent a large part of my working life, military life and retirement life in Europe (my wife is Belgian and my family is British) I had to laugh my ass off reading Krugman.

He hasn't a freeking clue as to what it is like in Europe - either from life style, individual liberty, affluence or security. They are just now waking up regarding Islam and immigration but not to the degree needed to defend itself but rather finally acknowledging that something has changed before their eyes and they didn't see it happening. Also, Europe is aging fast and its social-economic model is financially strapped to the point they are cooking the State books to look like they are conforming to the EU budgetary requirements. Greece, Italy, Spain and Portugal probably are out of alignment today with those requirements but still participate in the Euro zone.

If they had to pay the same % GDP we pay for attending to our national security (even in a collective way) they would not be able to afford all those little things Krugman thinks are so lovey-dovey. Then there are the little things like Sunday papers, satellite TV, broadcasting the games on the day they are played, etc. that believe me you end up missing first. [The Brits have Sunday papers but not the Belgians, for example. But you can't get the soccer games on Saturday only a bunch of ex-jocks sitting at a big table talking about the games as they listen to them on radio].

[Ignatz]

Demographics and Krugman's beloved 'social democracy' are on a collision course. To prevent ruin one is going to have to be altered. I'm betting demographics proves a lot more resistent to alteration than either the 'social' or the 'democracy'.

[squaredance]

Oh for crying out loud! This idiot is hanging out with the rich. What he does not realize is that person that appears to him to be "middle class" by American standards is a quite wealthy member of the upper middle classes or lower upper classes; the VERY rich may not even come near him. He is mostly dealing with the national and EU apparatchiks and their relatives.
The "real" middle class in the EU? What a nightmare. It is prohibitive to even own a car. People get cars with a "great job", and a "great" middle class job is lucky to pay 100 to 140k.

Twits like Krugman love the EU because it is a paradise for self appointed, Socialist intellectual elitists. In actual fact, if he grew up there, he would not have had the career that he had over here. This is a deep irony, particularly in his case--try undertaking a career as a Jewish academic/intellectual/pundit with the background that he has. in continental Europe.

THe only reason they listen to him at all is because he bashes America.

A reasonable truck driver in Oklahoma has a better material life than the real "middle classes" of the EU.

That is what many American liberals never seem to understand. The people who they are talking to over there are not the co-equals of our middle class, not the "real" middle class.

It is just this sort of narrow social pyramid that the limo-liberals want over here, and it is one of the major thrust of their "liberalism": To destroy the great, unwashed middle classes and to keep them from bettering themselves. Socialism, for the rich liberals, is just a dodge. (Oh and are they in for s surprise on that one.)

The thing is, that the EU upper classes get away with this by sponging of the USA and having really tough, though hidden, protectionism.

Real personal advance, outside of some gifted people brought into the Enarch or "Enarch like" systems, is almost impossible in the EU. A few make it in commerce, and they have to grease more than few palms and break more than a few laws to get there. Most are locked into the situation in which they are born into.

Even with all that, the EU will not be able to keep it up for very long, particularly with the USA out of their security picture.

The EU is devolving down to a Soft USSR.

We need to shun it; shun everything about the EU. It is suicide to emulate them.

[Clarice]

Yes, squaredance. Exactly.
A first rate surgeon in France gets about $50k salary and lives well on it only if he's inherited a lot from his family. Inheritance or corruption are the only paths upward for most.

[Old Lurker]

Jack, they can have my Sunday WaPo for the asking. Send me your in-laws mailing address.

[Danube of Thought]

When I see crap of that kind from the likes of Krugman, it always sends me scrambling to Google to resurface this gem from his fellow Nobel-winning statist, John Kenneth Galbraith:

"After one of his chummy sight-seeing tours of Moscow in 1984, the Harvard economist John Kenneth Galbraith wrote an article about his trip for The New Yorker. The Soviet’s 'great material progress' impressed him, as did the look of 'solid well-being of the people on the streets.' He dismissed as groundless the rumors that were beginning to circulate that there was trouble in paradise. Although some commentators had suggested that the Soviet Union was in crisis, even 'in danger of collapse,' Galbraith brusquely dismissed such pessimism: 'This I strongly doubt.'”

I never, ever tire of that one. Once you have dreamed the statist dream, you cannot be awakened by reality.

[Ari Tai]

re: Paris. My goodness. Has he been to the north side of Paris recently? It's right up there with South West DC. If even the bad parts of NYC, Detroit or LA had the numbers of cars torched every night we'd label it an insurrection. The difference is the press doesn't cover it and their police and justice system aren't as PC as ours (one of the few benefits of the Napoleonic system.. nothing quite the judge being aligned with the prosecution, if not the prosecutor).

Would be wonderful to have someone publish the numbers that show our bottom quintile lives better, at least in terms of consumption and quality of goods available at any given price, than the 4th quintile in France, and matches in many ways the 3rd and in some ways the second (e.g. availability of something we take for granted, like air conditioning).

[Joe Y]

It's amazing what rhetoric can do.

Not being able to find work if you're under 25 or over 54? No problem! Turn it into: "...less likely than we are to work when young or old, but is that entirely a bad thing?" (by the way, the answer is, "Yes.")

US economic growth over 36% higher annually for 30 years? No problem! Turn it into: "All this really says is that we’ve had faster population growth...per capita real G.D.P...is what matters for living standards. (just don't put off dying before that low population growth wreck your economy, but unless you're one of those few, and getting fewer, people who are under 60, no worries.)

US per capita GDP is slightly over 6% a year higher than Europe's for almost 30 years? No problem! Turn it into: "Since 1980, per capita real G.D.P. — which is what matters for living standards — has risen at about the same rate in America and in the E.U. 15: 1.95 percent a year here; 1.83 percent there." (I guess they dropped the compound interest section of the Nobel Prize qualifying test.)

Rhetoric. Is there anything it can't do?

[Ignatz]

--his fellow Nobel-winning statist, John Kenneth Galbraith--

Actually DoT, I think John Kenneth Galbraith is one of only two or three economists of the last century who didn't receive a Nobel Prize.
Apparently thet do have some standards over there.

[jimmyk]

"All this really says is that we’ve had faster population growth."

That population growth is a response to the better economic and political conditions here (at least until 2008). It's immigration and higher fertility, both of which reflect optimism opportunity. They also result in a younger and lower-skilled population, which may adversely affect per capita GDP but should hardly count against America in favor of Europe.

Krugman once again proves that old adage about "Lies, damned lies, and statistics."

[MayBee]

Slublog tweets this link in response. How European countries would rank as US states.

[Danube of Thought]

I assume you're correct, Ignatz. I had some doubts myself, but was too slovenly to check. It's reassuring that he didn't, because he was much more a pop sociologist and polemicist than he was an actual economist.

[Greg Q]

Since 1980, per capita real G.D.P. — which is what matters for living standards — has risen at about the same rate in America and in the E.U. 15: 1.95 percent a year here; 1.83 percent there.

Well, now, let's whip out the old calculator:

1.83% growth for 28 years = 445% growth.
1.95% growth for 28 years = 664% growth.

IOW, thanks to that magic of compounding, since 1980 we've grown 50% more per person than has Europe.

Consistent little differences matter.

[daddy]

Krugman makes a good point in asking us to look at cities like Paris, but he doesn't look closely enough.

For instance, this ">http://www.dailymail.co.uk/news/worldnews/article-1240302/French-arsonists-torch-thousand-cars-New-Years-Eve--narrowly-missing-years-record.html"> UK MailOnLine Story tells is that "French arsonists torch over a thousand cars on New Year's Eve... narrowly missing last year's record."

Sure Disenfranchised youths burned 1,137 cars across France overnight on New Year's Eve, the French Interior Ministry tells us, plus over 400 in the City of Paris that night, but the part that Krugman is missing is the downturn from the previous year.
It was 10 short of last years record of 1,127 torched by disaffected youth on New Years Eve.

Obviously their incentive to get off the couch and burn stuff is down from 2008, so when Krugman looks at a Citrone surrounded by Muslim street gangs with torches, he sees a Citrone half full of lighter fluid, whereas I see a Citrone half empty.

And yes it is worth noting that 43,000 cars were torched in France for the year, averaging 118 per day, but the downturn that Krugman somehow missed means less cars will be needed to be replaced next year by French Auto-workers than last years, thus jobs will be lost, the economy will continue to drop, and all because disaffected French youths are failing to live up to the standards that perceptive visitors like myself have come to count on in the environs of Paris.

So point taken TM, and another black eye for Krugman's observation of how well Europe is working as compared to America. Perhaps we need to import more angry Muslim youth to even the balance.

[jimmyk]

thanks to that magic of compounding

Greg, you must have borrowed that calculator from Peter Orszag. My calculations say:
1.83% for 28 years: 66.16% total growth
1.95% for 28 years: 71.73% total growth

for a roughly 5.5% difference.

28 years isn't that long of a sample, and it wouldn't surprise me if the numbers were notably different with different start and end dates. And is there any doubt that Krugman would have chosen the dates that least favor the U.S.?

[Greg Q]

JimmyK

I used 1.83^28. What did you use?

More importantly, Krugman ignores the sources of population growth, when blathering about GDP / pop.

Americans have more children than Europeans. and immigrants tend to have lower wages than people who were born here. When a family of 5 sees their income growing 20% faster than a family of 4 (and that family of 4 has their income growing twice as fast as a couple with no kids), that's not an indication that "everyone is equally well off." But that, essentially, is what Krugman is arguing.

[JM Hanes]

The Ritz in Boston is nice too.

[jimmyk]

100*(1.0183^28-1)

But I agree with your points, as is clear from my upthread ramblings. Krugman is an embarrassment.

[Mockingbird]

For a real Nobel Prize economist look up Dr Milton Friedman.

[Senator John Kerry]

It is well known that Europe has better culture and better food than America's urban sprawl could ever hope to produce. And apparently they have much looser sexual standards on prime time TV, and are more accepting of mistresses.

Oh, and intellectual curiosity is not only welcomed, it is rewarded.

Point- Europe! I say.

[Danube of Thought]

Rasmussen this afternoon: Coakley 49, Brown 47.

[cathyf]

jimmyk, you underestimated a tad,

e^(28 * 0.0195) = 1.72633385
e^(28 * 0.0183) = 1.66929269

A difference of about 8.5%...

[anduril]

Steve Sailer has an excellent article in which he explains Why Paul Krugman makes excuses for George W. Bush

Here's a snapshot:

All those boring end-of-year / end-of-decade articles that journalists phone in so that they can take the last week of the year off are finally over.

But here’s something that was missing from all of those summaries: a hidden key to understanding the two seminal events of the last decade—9/11 and the economic collapse.

The factor linking the two big stories of the 2000s: George W. Bush’s sizable degree of culpability in both disasters:

* Bush had Transportation Secretary Norman Mineta eradicate the airport security ethnic profiling system before 9/11. (Then he reappointed Mineta, a Democrat, for his second term!).

* Bush repeatedly signaled the mortgage industry in 2002-2004 that zero down payment home purchases would be A-OK with his federal regulators.

Of course, those are by no means the only causes of the subsequent disasters. But shouldn’t we at least talk about them?

And what links Bush’s two blunders?

George W. Bush’s Commitment to Diversity.

Bush explicitly articulated that he was fighting airline security and traditional credit standards in the sacred cause of battling racial inequality.

Was he lying? I’ve never seen any evidence that Bush wasn’t the truest true believer in Diversity. His immigration bills, No Child Left Behind—it all testifies to his naiveté. Compared to Bush, Obama is practically Lee Kwan Yew for worldliness.

Republicans don’t want to talk about Bush’s blunders because Bush was a Republican. Democrats don’t want to talk about Bush blunders because they want to make more blunders like them.

Yet how are we supposed to learn from mistakes if nobody will mention them?

[kevin]

What I realy like about Paris is the fact that "The unemployed imigrant Youths", torch over 1000 automobiles per night, (and upwards of 2500 at times such as new years eve), thus providing full employment opertunities at RENOULT, and PEUGOT. Not to mention all the jobs created at the insurance agencies. (provided people can afford the massive premium costs).