Skip to comments.EU's Growth Gap
Posted on 02/19/2005 12:29:50 PM PST by Kitten Festival
Economics: Europe has been the source of many of America's most beloved fairy tales. Not all are of ancient origin. Take the European Union's insistence five years ago that its economy would leapfrog ours by 2010.
The so-called Lisbon Strategy was unveiled with much fanfare. Struck in the Portuguese capital, the deal essentially predicted the EU economy would pass up America's and leave it in the dust.
At the time, it sounded reasonable. The EU was adding new members, and the common wisdom was that the U.S., though a big military power, was suffering from what geostrategists like to call "imperial overreach." Europeans, with their savvy ways and state-directed investment schemes, would soon be No. 1.
Didn't happen. Since 1991, output has grown 27% faster in the U.S. than in the EU a big difference. And those who expected the gap to narrow after 9-11, as the U.S. spent hundreds of billions fighting terror, have been sorely disappointed. The gap is widening.
(Excerpt) Read more at investors.com ...
The EU just needs to form another commission and five year plan. Less liberty and more planning is all they need.
What I find hard to understand is the value of the Euro vs. the Dollar. Now I am no genius, but why do people place value on the Euro when the economies of the main countries backing it are so bad?
A study last year by the U.S. Labor Department also compared long-term trends in the U.S. and other countries. It pegged real per-capita GDP in the U.S. at $34,960 in 2003, a full 24% higher than the $26,698 average in Europe's biggest, richest countries.
The average EU worker would think they had died and gone to heaven if they worked in Fort Worth, went to the museums, ballet, symphony, jazz clubs and went home to a 3,000 sq ft house that costs half of the price of an EU 1200 apartment. Years ago a Russian was on a tour with city leaders, he went in to an Albertsons late in the evening with the mayor he asked, "Yes, this is nice but where do the regular people shop?"
By golly, what they need is...A Summit!!
The EU is the orgasmic dream of all Free-Traders. One currency, etc. Look what that dream has become! A nightmare!!!!
No sheet shurlock!
easy: TWO SETS OF BOOKS.
Seriously, the Eurostat which is responsible for EUecconomy statistics has been caught up in two major book fixing scandals.
The euro is being inflated by the USA intentially in order to impose a "poor mans" tarriff on EU governments subsidizing their goods and services. WTO does not allow a tarriff, but it does allow for a good old fashioned currency manipulation.
part of the goal of the euro-currency-ization of the EU was tax and WAGE harmonization. IOW all EU would have the same costs of living and minimum wages.
Instead the poor or less incomed (because you could earn less and live quite comfortably in some countries) has lead to grass roots inflation.
Every day items have been rounded UP to the most whole euro. This means pensions which are based on the OLD currencies are unable to pay in the new euro currency ecconomies.
Of course the eurozone is dominated by socialists who want to continue increasing taxes and regulating charges which means their ecconomies stagnate more.
I think thats probably as good an explanation as any.
The Euro soviet 5 year plan was supposed to "bury us". Nikita Kruschev couldn't have said it better.
The Euro at it's inception was set to be worth more than the dollar (my thing is bigger than your thing syndrome), and it has appreciated about 10% since its introduction.
The US is running a large trade deficit which is one reason and the other is for diversification (don't put all your eggs (money) in one basket (dollars))
The nightmare is because of a huge welfare state, not free trade or a single currency.
Nice try. The problem is that Europe, before and after the EU enactment was a welfare state. The FT's told us that the spreading of free-trade thoughout Europe would bring a wave of prosperity, a promise predicated on the knowledge that Europe was a welfare-state. Just another Free-Trade promise not kept.
I agree, but before and after the EU enactment, EU growth lagged US growth. Ergo, I say the lack of growth in the EU compared to the US is due to the welfare state.
But if FT was as promising as its advocates said it would be there should have been huge economic growth. We're not talking incrementalism here, we're talking about a massive experiment that has failed to deliver on its promises.
Hilarious. Even more so that the observation is thought to be serious.
It has failed to deliver so far on its promise which are probably overrated. The EU is changing the way they do bookkeeping, but does not fundamentally change the countries involved and will not much be responsible for gain or loss. I think a single currency does make for more efficient trade and bookkeeping, but that is insignificant compared to the drag imposed by the welfare state.
That is why it will be very profitable to 'short' the Euro.
I just took it as a reference to a covert weak dollar policy , but your explanation also makes sense. Europe may also be playing cautious with its currency so soon after its inception.
Who are these imaginary FT's you keep quoting? Put down the pipe and step away from your keyboard. LOL!
You're confusing free trade with a common currency. The EU thought a common currency would expand trade. They were probably correct. Unfortunately for them, the massive regulation they added on everything from fruit content in jelly to food labeling to anything else to do with any product has more than destroyed any boost they might get from a single currency.
You thought NAFTA was a lot of paperwork, it's nothing compared to new EU regs.
the biggest problem is that EU created barriers for business creation instead of being a catalyst. Now people have to abide by 4 regulations instead of 3 nation/state/local with eu standard on top. The thought was that Eu standard would streamline into one nationwide standard instead of becoming another hurdle. Furthermore the extra layer of beuracrats hasn't helped at all. This extra layer of usuless power makers just creates more tension and less ability to come to terms with each clique trying to get its own way.