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The European Union’s remarkable growth performance relative to the United States

https://www.bruegel.org/analysis/european-unions-remarkable-growth-performance-relative-united-states#:~:text=The%20EU%20has%2C%20in%20fact,Figure%202%2C%20Panel%20A

The EU has outperformed the US on per-capita output growth; in terms of output per hour worked, some EU countries are as productive as the US

The European Union’s remarkable growth performance relative to the United States

The article chooses to take a metric that you usually do not see much: GDP per employee and per hours worked, at purchasing power standards

40 comments

maynarkh

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The European Union suffers from numerous weaknesses compared to the United States, including the lack of European tech giants

I for one do not mind that the EU legal environment does not lend itself easily to forming megacorporations. There is a lot of great innovation coming from the EU. The development of Lemmy is for example funded by the EU public sector.

On the topic of the article, I wonder how much of our economy is still restrained by still existing protectionism and division between member states. There is free trade, yes, but we still speak different languages and moving to work between countries is still not as easy as moving between US states.

Marsupial

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So why are Stellantis and VW owning all your car companies if it’s hard to form mega corps?

Unilever own almost everything you can think of in the world and Britain was in the EU.

Nestle.

Etc etc. just because you don’t have a successful tech industry doesn’t mean you don’t have ridiculously large mega corporations

RayJW

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I'm sorry to be that guy but Nestlé is Swiss which is not EU. Not saying that it's any less of a fucked up Megacorp though.

jmcs

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Switzerland applies most of the EU laws because they want access to the single market though, so for this purpose they might as well be in the EU.

RayJW

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That's not true though. Swiss laws differ wildly from EU laws in so many different fields including the markets. They have been in fights for tens of years over so many different things regarding regulations of the free market etc. you really can not consider Switzerland part of the EU.

Ooops

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Because the companys at the core (and the sectors they work in) of these megas are comparably ancient compared to technologiy megas. And they started at a time before today's easily accessable global market.

While big tech companies are the startups of just a few decades ago. And there it is immensely beneficial a) to have a big domestic market and then b) to be able to reach a lot of international markets that speak your language without the need for translations (the translations can basically start later for the countries with an already established market to finance it).

For this reason you see a US dominance in tech (big domestic market and the language most internationally understand), then followed by countries like UK (same language), China or (emerging) India (big domestic market).

While new European companies especially in the tech sector basically have no chance unless they develop in foreign english in the first place, and even then they are still at a disadvantadge.

Nerd02

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I don't think the language barrier is that big of a deal. And more importantly I think the cultural value it provides us vastly outweights the economic benefit of a shared tongue.

I think one of the more urgent reforms that could help the EU prosper would be a common fiscal policy. We have the same tarifs on goods coming from abroad and most of us share the same currency, but countries are still offering varying tax rates. I think having an EU wide tax policy would help spreading the European branches of foreign companies more evenly. Though I reckon not everyone would like this (wink wink, Ireland).

EDIT: oh and also. I agree with your overall point, but using Lemmy as an example for "great innovation coming from the EU"... KEKW

Blaze

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I think one of the more urgent reforms that could help the EU prosper would be a common fiscal policy. We have the same tarifs on goods coming from abroad and most of us share the same currency, but countries are still offering varying tax rates. I think having an EU wide tax policy would help spreading the European branches of foreign companies more evenly. Though I reckon not everyone would like this (wink wink, Ireland).

It's interesting because every US state has a different fiscal policy (Delaware being the well-known tax heaven for companies for instance), and it doesn't seem to hinder them too much.

Nerd02

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Oh do they? Never heard about that. Guess I've learnt something new. I wonder if it would be different for us, given how fewer big companies the EU has compared to the US.

I'm not familiar with the Delaware situation. Is it similar to Ireland's, then?

Foreign-owned multinationals continue to contribute significantly to Ireland's economy, making up 14 of the top 20 Irish firms (by turnover), employing 23% of the private sector labour-force, and paying 80% of the collected corporation tax.

https://en.wikipedia.org/wiki/Economy_of_the_Republic_of_Ireland

Blaze

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Oh do they? Never heard about that. Guess I’ve learnt something new. I wonder if it would be different for us, given how fewer big companies the EU has compared to the US.

Yes, for instance their equivalent of VAT is state-based, some of them having 0: https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States

Delaware is indeed kind of similar to Ireland: https://www.investopedia.com/articles/personal-finance/092515/4-reasons-why-delaware-considered-tax-shelter.asp

Both are listed as tax heavens on that page: https://en.wikipedia.org/wiki/Tax_haven#Lists

Blaze

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There is free trade, yes, but we still speak different languages and moving to work between countries is still not as easy as moving between US states.

The language is a big one. English seems to become the lingua franca, but the proficiency level among the population differs a lot from one area to the other, and also brings the question of the local culture and heritage.

I was thinking the other day that just even a language such as Interlingua (https://en.wikipedia.org/wiki/Interlingua), that can be easily learned for all speakers of Romance languages, would help a lot in collaborating between populations of neighboring countries. On the other side of the spectrum, languages like Latvian might go extinct due to the massive emigration: https://data.worldbank.org/indicator/SM.POP.NETM?locations=LV

tryptaminev

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We will not get people who are past their 40s to learn a new language en-masse. Meanwhile many of the young generations are quite proficient with English.

In the business context in particular it is important that language is precise, so contracts can be negotiated. This often enough is an issue even if all parties are of the same native language. There exists a lot of legal interpretation for each language as to how specific terms are to be understood, as well as standard formulations and references for specific industries.

All of this established practice would have to be re-established with a constructed language. This process takes decades, if not centuries. In the current situation it seems much easier to teach proper English in school and encourage usage of English, so people are proficient in it.

Blaze

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Meanwhile many of the young generations are quite proficient with English.

Probably more in Germanic languages countries than Romance countries (don't know about Slavic). Proximity to the language and lack of dubbing helps. I come from a Romance language speaking country, half of my friends don't know how to properly speak English (let's say enough to be able to work in English)

tryptaminev

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I mostly know the situation in Germany, the Nordic countries, the Netherlands and some eastern European countries. When i recently visited Denmark i was positively shocked that people in their 40s and 50s overwhelmingly were fluent in English too. In the eastern European countries it is a strong generational divide. Young people tend to be very good english speakers while there are very few among the older generations. I guess that is the result of learning russian as second language in school and english only as third language and probably many people didn't learn english in school at all. Judging from my parents there isn't much of the russian left that they learned in school either.

Blaze

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Same experience as yours when I visited Norway a few years back, 50 year old people were at ease with English. I guess the Norwegian media only get you so far ha ha.

To contrast, in France, French-speaking Belgium, Italy, Spain, (I dont' know about French-speaking Switzerland), even young people would have issues speaking English. You can clearly see the divide here:

https://www.ef.com/assetscdn/WIBIwq6RdJvcD9bc8RMd/cefcom-epi-site/reports/2023/ef-epi-2023-english.pdf

Portugal is the exception, I don't know why.

HarvesterOfEyes

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Portuguese here. This is anecdotal evidence but, as far as I can tell, a lot of our proficiency comes, essentially, to constant exposure to the English language since the early to mid-90s. We don't dub English-speaking media (apart from movies and tv shows more aimed at kids, but even then, Cartoon Network didn't even have subs when I was a kid and I still watched it religiously), the video games we played when we were kids also didn't have a Portuguese language option so we were basically forced to learn English.

And now that the Internet has become widespread throughout the country, the younger generation consume a lot of English-speaking content, so they have little trouble with speaking and writing in it.

This results in a good % of the population having decent to good English, not just the kids but a lot of people in their 30s (and some in their 40s) too.

GregorGizeh

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Maybe in Western Europe, but years of online gaming have taught me that Eastern Europeans have dreadful English skills. Your perspective is probably skewed, since we Germans are comparatively fluent.

Ooops

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Your perspective is probably skewed, since we Germans are comparatively fluent.

It's even worse. Germany has still some generational divide here but high proficiency on average on a level comparable to countries without that generational gap. So in reality Germans are not comparably fluent, but very proficient... or not at all. Which skews perception even more.

Nerd02

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I love Interlingua, as a Romance speaker I find it awesome, but after having consulted with some Germanic and Slavic friends it seems pretty unintelligible to them. Unfortunate, cause it's so easy and effective for us.

Blaze

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Definitely, it's nice! I feel like there could be some similar initiatives across family languages

Interlingua for Romance languages
another one for Germanic languages
another one for Slavic languages

That would reduce the language burden at a European level, and still kind of preserve the local culture and language? Seems more balanced than having English as the one lingua franca

Nerd02

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I agree, it would be great! Also definitely more efficient than the 24 official languages we currently have, lol.

I guess Hungarians and Finns wouldn't be too pleased by this division though. Hehe.

Blaze

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Well, they can make their own common language if they want, that would still reduce the number of Finno-Urgic languages by 50% ha ha (not sure about the language group name, my memory is blurry)

maynarkh

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Hungarian and Finnish are far enough, the Finno-Ugric group is as diverse as the Indoeuropean one, it was just mostly wiped out in the Great Migrations.

Hungarian is actually Ugric IIRC, and it is as close to Finnish as English is to Russian. The grammar is similar in some ways, but I don't think there is substantial shared similar vocabulary.

java

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There is a lot of great innovation coming from the EU. The development of Lemmy is for example funded by the EU public sector.

How does Lemmy affect GDP though, how many work places has Lemmy created? The article is about economics, after all. And what's the actual innovation? It's based on a W3C standard and is essentially a clone of reddit. There's no innovation.

Ooops

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Those are partly the same topic btw...

Not having a massive domestic market to start in and even higher requirements to translate your product costs money. It's not a coincidence that the country with the most successful tech startups in europe is english-speaking.

HowRu68

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This is very good info, most US /EU comparison studies are US centric. And any comparison between these two, although interesting, is too different. This article compensates the difference by using Purchasing Power, finally.

But in this article, and this still bites me a bit, they are still comparing the US universities according to the US ranking and the Times ranking, in which they score lower. Other articles comparing education, state clearly that the standards for US/ EU education quality are different.

Also flinging in China's economy as a third party for comparison, won't help us much. The WTO ( iirc) just accepts any output figure Beijing gives them, but there is no accounting for it.

So let's keep this quality studies and info rolling, and see how it can enlighten us.

Added:

● par 2:" Frustrated with current university rankings – mostly commercial ventures that give greatest importance to research – the European Union is backing a new form of listing." link euroactiv 2013

● par 3:" How to measure China’s true economic growth? Mr Li confessed that the province’s gdp figures were “unreliable”. link economist 2023

tryptaminev

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I had an argument with some blog poster here recently, who tried to compare the US and EU based on how neoliberal the economic policies are. But the difference in economic growth was then attributed to these policies, ignorinh the underlying structural factors.

Unfortunately i rarely see articles like this one, that adresses the structural aspects. Overall population and working population are key factors to economic growth. The US population grew siginificantly over the past two decades, while European populations only grew minimally or stagnated.

If the reactionary and liberal politicians in the EU blame the overall slower growth of the economy compared to the US on labor rights, social systems or public companies they deflect from how their restrictive immigration policies are the main factor why the US can grow faster economically.

Justas

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I get the impression that the young people in the West are, in general, poorer than their parents were.

Badeendje

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Justas

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I am a Lithuanian living in Lithuania. I work from home and my SO works at a nearby city. It will be different if/when we have children, but we don't need to work extra hours to get by. Most people here don't have extra part time jobs, even with large families.

Badeendje

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Ooops

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The worst part is that technological advancements massively improved productivity. So nowadays you need to work 7 days to support a family instead of 5, but then produce the same in just 3 of it. Because the actual problem is that payment hasn't increased wiht output. That increase collects at the top as massive amounts of money for a very few.

ebikefolder

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The ones on top successfully convinced almost everybody that we need constant growth. Without, we could live perfectly well working 3 days, and payments wouldn't even need to increase because we wouldn't have to buy this ever increasing amount of stuff that is produced in ever decreasing quality so it doesn't last too long.

And if, due to some horrible error, it does last, the manufacturers will find ways to render it useless. By preventing repairs, not providing spare parts, software "updates" that cripple performance etc.

Ooops

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While there is valid criticism about constant growth, it actually exists. More is produced by less input in ressources, because we got better at it.

The actual problem I talk about is that this growth is not going back into the system but it accumulates at the top.

Blaze

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Definitely true, but valid on both sides of the Atlantic, there were a few articles on !personalfinance@lemmy.ml about cars and houses becoming unaffordable in the US

Justas

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That is true for Southern and Western EU, but not for Eastern EU though. I grew up in the 90's. I am already richer than my parents were back then and it is true for almost everyone in my age group that I I know.

Blaze

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Oh yeah, definitely. I had a Romanian colleague who moved to Western Europe to give it a try. He went back to Romania after a few months, and when he explained me the way he was living there, I couldn't but understand.

Justas

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Yep. Some people go to western countries, work a few years and save everything they can to make the initial mortgage payment back home. Western people don't have that option.

crispy_kilt

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Sure we do (moving to the East with some capital, I mean)

Justas

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Ah yes, welcome to Kalabybiškės, your monthly mortgage payment is 69 euros.

crispy_kilt

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Perfect

middlemanSI

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All this is to say employee pay rise is some 15 years overdue.