(Jerome believes that you should not look at this in percentage terms, but in absolute terms--I, and I think most economists, agree that % terms which adjust for the size of various economies is the proper analytical view.)

I agree that the relative level per se is not worrying, but only for the budget deficit. The trade deficit, at close to 7% of GDP, reaches Argentina-like levels.

In addition, the absolute level does matter in a context where the deficits need to be financed with foreign borrowing, and when the absolute amount of international savings available is close to be borrowed in full by the USA (the last number I saw was 80% of available net world savings, and the absolute numbers have increased since)

So why does productivity grow faster in the EU, but GDP per capita grow slower?

The trick is that there are many different measures of productivity: per worker per year, per worker over their lifetime, per hour worked, of for the overall workforce, each of which brings different numbers as other numbers can move at the same time (number of workers, hours worked per person, years of work, etc...) Pick and choose, and make one country look better or worse at your convenience.

Here at ET we don't say that Europe is necessarily doing better but that there is a definite focus on the numbers that make Europe look worse, and thus that it is in "crisis" and needs "reform".

And reform means only one thing: lower wages and lower rights for workers. What you call "moving towards socialism" in the US (the Plan D  thingy) is more a huge corporate giveaway to the pharma industry than a real progress for patients. Lower taxes for the rich and the weakening of all the big regulatory agencies (the main "reforms" of Bush) do not point to what you describe in the USA (i.e. a move towards Europe), quite the opposite.


In the long run, we're all dead. John Maynard Keynes