Wednesday, January 13, 2010

America and Europe, a Krugman Takedown

Krugman has tried to argue that Europe is more dynamic than America. Several people have started addressing this. A most excellent rebuttal comes to us from Tino Sanandaji, PhD student Harris School of Public Policy. The link is here. A handful of appetite whetting facts:

If the European average was a state in the US, it would be the 49th poorest, just barely above Arkansas. Minnesota is 34% richer than Sweden.

Europeans who moved to the US earn $53,000. In Europe, $33,500. At that income level, Europe would have a total GDP 8 TRILLION dollars higher than it does (21 vs 13 trillion) - that's production every year.

The primary question this does not address for me, however, is how the bottom halves of the distributions are doing. A large part of the reason I'm interested in a "dynamic economy" is for what happens in that bottom half over time.

I'm also tossing around a question of cultural capital. Great Cultural Treasures, almost by definition, were created a long, long time ago. Are either Europe or America currently building Great Cultural Treasures? The Treasures of the past relied very heavily on gross income inequality. Is that still true?

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