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I think what we have to understand is that to a large extent these perceptions are being driven by a wealthy elite (and their media minions) who want to redistribute income and wealth upward.

This is exactly what has happened in the United States in the last 30 years. When the post-WWII economic boom ended and corporate profitability slowed, that's when you began to get "backlash" against taxes, "excessive" government spending, regulation and "red tape", "out of control" labor unions, etc. The goal was largely to restore the incomes of the rich at the expense of ordinary working people by removing barriers to corporate profitability. The results are clear - wages, which no longer keep pace with productivity, and family incomes have hardly grown at all in the last 30 years, economic inequality has increased explosively (none of which is true of Europe), while corporate profitability is higher than ever. The fruits of economic growth are mostly being distributed to the rich because the institutions that used to guarantee a more equitable distribution of national income and wealth - labor unions, state regulation of labor and financial markets, the welfare state -- are all under attack in this country. This sounds like conspiracy theory, but take a look at Joel Rogers' and Thomas Ferguson's Right Turn: The Decline of the Democrats and the Future of American Politics for all the gory details.

Paul Volcker once let slip in the New York Times with the following statement: "The standard of living of the average American has to decline. I don't think you can escape that." Well, if your aim is to restore 1960s levels of corporate profitability in a 1970s and 1980s economy in which the economic growth rate is only 2/3 of what it was back then, of course you can't escape it. Unfortunately there was no FDR or Walter Reuther around to reply "No, Paul, the profitability of the average American corporation will have to fall, too, if we are going to share fairly the burdens of slower growth."

I'm sure the business elites in Europe would like nothing better than to replicate their "success" over here. When people like Tom Friedman bitch about "lazy European workers" and "rigid labor markets" and "the welfare state run amok," essentially what they are saying is "The standard of living of the  average German and Frenchman will have to decline. There's just no way you can escape that."

Fortunately, it seems that these people are having a harder time convincing Europeans to go along with it than they did here in the U. S.

by TGeraghty on Fri Jul 1st, 2005 at 02:14:49 AM EST
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Fortunately, it seems that these people are having a harder time convincing Europeans to go along with it than they did here in the U. S.

Great commentary, TG. Thanks. These facts make my blood boil...the wealthy are destroying the US for their personal gain. My radar is ip here on this exact subject...very sensitive to statements that are positive towards the US "rich get richer/poor get poorer" system. Bravo for the European people that they resist this trend...and must continue to do so!

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia

by whataboutbob on Fri Jul 1st, 2005 at 02:44:17 AM EST
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You're right, in my view, about almost everything -- in particular the thirty-year period during which the prosperity of the working and middle classes has been under deliberate attack.

You're mistaken, though, to imagine that "none of [this] is true of Europe". Exactly the same forces have been at work in Europe. The rich/poor divide has greatly widened. The old industrial working class has been pretty much shafted. There is no longer the feeling -- anywhere in Europe -- that there's an upward movement, that tomorrow will be better than today for people who are willing to work. (Sorry, I forgot some parts of Europe, like Monte Carlo, Davos, Lichtenstein, etc...)

The difference, certainly, is that the safety net is better here than in the US. So we have people on unemployment benefit or other forms of "welfare", who would forced to work two low-payed jobs in the States just to survive. We have the unemployed, America has a far greater number of working poor.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jul 1st, 2005 at 03:01:16 AM EST
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Your point is well-taken: social exclusion in Europe has increased in the past 30 years, it has just taken different forms, like more long-term unemployment in some countries, especially for younger workers. I never meant to deny that both the European and the US economies have their problems

It's still true, though, that wages have risen faster in Europe relative to the U.S., and income and wealth distributions are much more equal in Europe. Economic mobility is higher on the continent than in either the US or the UK. The well-paying jobs of the manufacturing base are much better preserved on the continent. If you're poor or lower working/middle class, you're better off in Europe than in the US.

by TGeraghty on Fri Jul 1st, 2005 at 03:34:11 AM EST
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Fascinating discussion. I have two points to add.

Firstly, I agree that the poor/rich divide is unmistakably widening in Europe. Any numbers can be presented as desired, but everywhere I see the trend that income of the top branch has increased while income of workers has increased with virtually nill - and this during economic recession in a number of EU countries. That's a wrong trend for working moral. No one is going to like to work knowing that the CEOs decide about their fate and get an increased paycheck for it! I think this is clearly an issue to address - but I hesitate whether Brussels should.

What irks me, too, is the absence of European charity foundations, a trend that is growing for many American multi-millionaires (The Kellog Foundation, Bill Gates Foundation, etc etc.) Although a multitude of these are founded by company chairmen, an European equivalent is sorrily lacking. Because Europe a has more social safety net doesn't plead European companies free.

Secondly, the working poor are a growing phenomenon in (western) Europe - or at least in The Netherlands. There was a leading article in NRC Handelsblad (one of the major national newspapers of the Netherlands) a couple of weeks ago describing this problem. I think it relates back again to growing costs versus stagnant income/minimum wages.

On the other hand, regional government are already undertaking initiatives to support this group financially to prevent them spiralling down even further. Examples range from financing tuition fees for young children, replacing broken down washing machines at the cost of the city council, reduction in tax etc. That is a good development and a pragmatic solution, though I feel they work around the fundamental problem: the stagnancy in lower income is not addressed.

by Nomad on Fri Jul 1st, 2005 at 07:31:23 AM EST
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