Book Review: The US American and the European Model

Abstract

It has become a common place to speak of a "social Europe" and an "economically efficient America". In the present volume, Karl Aiginger and Michael Landesmann underline the argument that Europe most probably lost the "Lisbon race" for the pole position in the field of competitiveness and technology in 2010 already during the Clinton boom years.

Sections of the new study by the Vienna Chamber of Workers and Employees show really a new way forward for comparisons between the European and the US social "model". Several of the contributions (Erich Hoedl on the "European model"; Peter Filzmaier on money and power in US democracy; Juergen Hoffmann on liberal and coordinated market economies, Stephan Schulmeister on "financial" capitalism and "real" capitalism) however remain within the mainstream of the contemporary discourse on the "European" and the "American" model.

Richard Sturn and Franz Prettenthaler in their essay on the effects of social expenditures on patterns of economic growth show the difference between gross social expenditures and net social expenditures on both sides of the Atlantic. Popular, as they may be, the usual explanations of the growth differentials between Europe and the US do not hold. Net of taxes, and including public and private social spending, even in the "old Europe" of the richer, Western 15 EU states, net total social spending is only 24% of GDP, while in the USA this portion is 24.50%.

So, in a way, Europe subventions it's poor, but takes the money out of their pockets again by heavily taxing their consumption. And usual comparisons between the "social sector" in America and in Europe overlook that the US spend a lot more on the level of the 50 states, that contribute to a total government expenditure share of 38.50% per GDP, not really different European countries like Spain, the UK, or Portugal. The study under review presents also a detailed comparison of the social sector in Belgium, Denmark, Germany, France, Great Britain, Italy, Austria, the Netherlands, Norway, Sweden, Spain and the USA by Agnes Streissler.

The author presents his own politometric data from Eurostat and UN sources to support these assertions.

Note: Downloadable document is in Polish.

Keywords: Integration

JEL Classification: F15