There was a nice article in the Washington Post today (h/t to Americablog) about the conventional wisdom view that ‘Old Europe’, i.e. the European Union, is stagnant and decadent. One hears this most from conservatives, who tout the transcendence of the free market system over those ‘socialist’ systems. The article, by Steven Hill, points out that many of these views are unjustified myth:
The European economy was never as bad as the Europessimists made it out to be. From 2000 to 2005, when the much-heralded U.S. economic recovery was being fueled by easy credit and a speculative housing market, the 15 core nations of the European Union had per capita economic growth rates equal to that of the United States. In late 2006, they surpassed us. Europe added jobs at a faster rate, had a much lower budget deficit than the United States and is now posting higher productivity gains and a $3 billion trade surplus.
Paul Krugman made similar observations in a recent blog post.
I have some experience with this, having spent two years living in Holland, specifically Amsterdam, as a postdoctoral researcher. I can’t speak quantitatively about Dutch economics (as my girlfriend will attest, I’m not so good with money matters), but if the Dutch have a horribly suffering economy, it’s not terribly obvious on the streets. New construction is underway all around the city, including a rapidly growing financial area (literally their ‘world trade center’) and a new subway line.
More than that, however, is just the overall attitude of the people. I was struck, the first time I traveled to Holland and every time since, how relaxed people are. The lifestyle is more leisurely, and people generally seem less stressed than they do in the United States. There are any number of factors that contribute to this: real job security (it’s very difficult to fire people), guaranteed health care and social security, large amounts of leisure time (four weeks minimum vacation), and essentially free higher education (which must be tested into).
As mentioned in the Post article, Europe is more of a ‘workfare state’ than a welfare state. This means that the governmental system is designed to keep people happy and healthy, and in the end this means they work better.
I’ve realized for some time that there are only so many hours in the day that a person can work well. Beyond (at most) an 8-hour day, people get tired, sloppy, and generally inefficient. If a person also has to worry at the same time about health care, education, etc., they’ll spend even less time thinking about how to get a job done properly. Dutch people, who are not suffering under any of these psychological burdens, manage to get along splendidly.
To be sure, The Netherlands has its problems, as well. Immigration and the clash of cultures following it is a big and still growing problem. This was brought to the world’s attention in 2004 by the murder of filmmaker Theo van Gogh, who was killed by a Dutch-born jihadist for daring to make a film which documents the violence towards women in Islamic societies. Immigration is perhaps even more of a hot button topic in Holland than the U.S.: unlike the U.S., Holland actually has health services which illegal immigrants can take advantage of. It’s worth noting, though, that the xenophobia and demagoguery surrounding the immigration debate in the U.S. suggests we’ll have just as many problems as the Dutch in a few years.
My postdoc advisor summed up the comparison between the U.S. and Dutch economies nicely. He said, in essence, that the Dutch have traded volatility for stability. The amount of taxes which go towards social services in Holland make it more difficult to ‘strike it rich’. The flip side, however, is that the Dutch system keeps you from complete disaster in the event you don’t get lucky.
Personally, considering how unlikely it is to make oneself a millionaire, I know which system I prefer.