Wealth without economic wellbeing?

From a European perspective many young people still strive to, one day, settle in the USA. It seems to be a tradition – rooted in the European mind, that the “new” world across the big pond is the land of opportunities and freedom. Whereas a lot of young American people have long seen reality. Europe, meaning the EU, has long overtaken the USA, especially when wealth and economic wellbeing is measured by the majority of its people and not only by a few.

At the end of 2015, the USA and EU produced roughly the same GDP. The US reported 18.3 trillion Euro (19.3 trillion USD) and the EU 18.9 trillion Euro (20.4 trillion USD). Compared to 507 million citizens in the EU and 319 million in the USA. At first glance, one would assume that the American output is higher and therefore the American nation must be richer. However, it is not about the GDP alone, it also matters hugely what a nation does with its wealth. When digging a bit deeper, it quickly comes apparent that the Europeans are better in harnessing the wealth for their citizens. When one scratches at the surface and looks at how wealth is transformed into economic wellbeing, than the European system of spreading wealth starts to make sense.

A study conducted by the Boston Consulting group looked at how, around the world, wealth is transformed into economic wellbeing. They looked at three elements and ten dimensions: economics (income, economic stability, employment); investments (health, education, infrastructure); and sustainability (income equality, civil society, governance and environment).

For example. Between 2006 and 2013, the economies of the US and Germany reported both an average GDP growth per capita of 1.1%. However, Germany’s ability to transform wealth into economic wellbeing was similar to an economy growing at an average rate of 6.2%, while the US only managed to achieve an average wealth/economic wellbeing transformation rate of 0.5%.
Investments in health services, affordable education and good public transportation have immediate benefits for citizens’ lives.

Europe also beats the US when we look at the development of the general population’s take home pay.
Between 1950 and 2013 the bottom 90% of earners in the US had a pay increase of ca. 70%, whereas the EU average was at around 200%.
If we now look at the top 1% of earners in 1975, the majority of the EU countries and the US recorded about 8% of their population within this bracket. Over the next 40 years the top 1% of earnings in the US was divided by about 18% of the population, whereas in Europe this spread was more modest at around 12% of the population. Europe did manage to spread the wealth more evenly. Nowadays, Europe would argue that it was all down to political intentions. Being realistic, it was down to civil demand. European workers have, since the industrial revolution in the middle of the 19th century, ever more demanded decent pay for decent work. Americans often look at the European model as being socialist. Fact is, this idea of European socialism has been spread by American industrialists, who want to make sure that American workers don’t go down the same route as their European counterparts. Belittling the European way of life as socialism and at the same time emphasising that socialism is some kind of swear word, the American employers have been able to keep the workers off their back. The EU is not a socialist union. The European Union is based on a free market with social responsibilities.

The American Dream

Yet, the American dream is still alive and kicking. From a European perspective, the opportunities in the US are endless. Europeans tend to ignore the fact that the economic playing field between the two regions have leveled. If you play your cards right, you have as many chances to advance in Europe as you have in the USA.

When young Europeans look at the US, they see vastness, wilderness and adventure. This is exactly what is so tempting. Adventure. The 319 million citizens of the USA share a total area of 9,833,520 sq/km (3,796,742 sq mi), whereas the 507 million citizens of the EU share 4,324,782 sq km (1,669,808 sq mi). The immense extra space the Americans have, is often pure wilderness, which has been destroyed over the centuries in Europe. Saying that, it doesn’t mean that Europe is without it’s wildlife. Visitors and Europeans alike are often under the illusion that Europe is free from deadly wildlife. This is a dangerous misconception. Europe’s ten deadliest wild animals can be found here.
The EU is a borderless travel zone, once you’re within the Union, you can travel without hindrance. However, here is much more to Europe than the EU. Europe (743 million citizens) as such comprises 50 countries (EU = 28) and has an area of 10,180,000 sq km (3,930,000 sq mi). The vastness of Europe is actually similar to the US.

Social Injustice

When traveling in the US, as a European, the social injustice as described above, is very obvious. The cities of America are full of tent settlements. Homeless people in large numbers seem to be a huge part of society and it looks like they’re there to stay. It’s just another way of American life. The homeless American seem to come to terms with their life. For Europeans it is incomprehensible. Not that there isn’t any homelessness in Europe. There is. In Europe however, the politicians at least pretend that they’re embarrassed about the mess and at least pretend that they’re doing something about it. Also, the homeless in Europe are, if at all possible, kept out of sight.
Is this any better than the American way of dealing with it? Well, this is open to debate.