According to macroeconomist Edin Mujakic, it has been clear for some time that the US is economically outperforming Europe. But it is a worrying observation that the gap between the two superpowers has been widening in recent years. Although it is difficult for Europeans to resist the 'temptation to be negative,' he says.
I also participate in it. But on the last weekend of 2023, a brilliant article appeared on the front page of the Het Finanzielle Talkblad, which might inspire more optimism as we look at Europe.
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Please note: It is not the case that everything is going well in one place in the world and everything is going wrong in our country. Actually, a lot of good things have happened – it just depends on what you insist on. So, if you decide that the US is doing well economically and has been doing well compared to Europe in recent years, you need to see why.
Which economic indicators are leading it?
Take global prosperity as an example – it has increased tremendously in recent decades. And then there is the question of what we have chosen with that extra richness. What did we spend it on? Europe made very different choices than the US in several important areas.
In Europe, for example, it is unacceptable for people below the subsistence level to live long in a house with such high affluence. That is why we have created a whole network of social care. America has chosen less for this.
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This means that Europe is somewhat worse off economically, but the standard of living in large parts of Europe is still significantly better than in the US. Everyone knows the stories of the millions of Americans who have to work even to make ends meet. I don't want to say it can't happen in Europe, but much less than the US.
But are there other differences in spending patterns?
Europeans have decided to spend part of their increased wealth on rare goods. Leisure has been one of the rarest commodities for Europeans in recent decades. So Europeans, once faced with wage increases, decided to work somewhat less. That was a rational choice, but it meant that they would lose out somewhat economically compared to the US. But again: the standard of living for many Europeans is significantly higher than in the US.
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