Historically speaking, the
E.U. and U.S. are relatively large in territorial expanse and population, so it
is only to be expected that significant economic (and cultural) differences
exist from state to state in the respective unions of states. In Europe, some
medieval kingdoms have relegated to being but regions in E.U. states. Holland,
for instance, is a region in The Netherlands, which in turn is a E.U. state. The
same can be said of Bavaria (and England, were the United Kingdom still a E.U.
state). To compare the economic inequality in such a region with the inequality
in the E.U. (or U.S.) over all would be deeply misleading. For example, rural/urban
economic patterns that pertain to an economy containing one major city do not
translate into the multiple rural/urban patterns that exist in a modern
(empire-scale) union of states. In short, scale matters, especially in how we make
use of mathematical averages. Comparing
GDP per capita is a case in point; states should be compared with states.
Although recent studies had suggested
that upward mobility was higher in the E.U. than in the U.S., the GDP per
capita in the latter was significantly more in the latter than the former. To
be sure, the gap is less “when adjusted for purchasing power parity (PPP)—which
accounts for cost-of-living differences.”[1]
Also, comparing the E.U. and the U.S. misses out on the significant differences
between states in each of the empire-scale unions; such
differences in turn can be used to compare individual states in one union with
individual states in the other.
It is difficult
to believe that in “the third quarter of 2024, Mississippi’s GDP per capita was
€49,780, just €1,524 less than Germany’s at €51,304.”[2]
That the industrial base in the latter state greatly exceeded Mississippi’s
industry makes the respective numbers all the more perplexing. Because the E.U.
average GDP per capita was €40,060 as compared to the U.S. average of €80,023,
a person might begin to wonder whether a false economic-equivalence has pervaded
both the American and European general perspectives. Certainly geographically,
Americans may be surprised how much smaller Europe is than North America (and,
accordingly, the E.U. in relation to the U.S.). The GDP per capita comparisons may thus be
like superimposing geographic maps at the expense of previously-held
perspectives and assumptions of equivalence.
This is not
to say that every E.U. state was poorer than every U.S. state; Luxembourg’s €125,043
is more than New York’s €107,485.[3]
Nevertheless, it is significant that the figures for Germany, France, Italy,
and Spain are less than those of West Virginia, Arkansas, Alabama, and South
Carolina—each of these being below the U.S. average. It would not be at all
surprising to read that these figures are incorrect, but, then again, the generally-held
false geographical equivalence that Americans and Europeans naturally hold
concerning the E.U. relative to the U.S. may, as a phenomenon of a false
assumption of equivalence, exist economically too.
Were I to attempt
an explanation—not being an economist—I would want to look at whether the
relatively higher tax rates in the E.U. discourage economic activity. I would also
want to investigate the extent to which the shorter work-week in Europe may
also be a factor in the relatively lower GDP per capita. Furthermore, the relatively
generous social policies in many E.U. states may also discourage the long-term
unemployed from filling job openings, thus reducing factory efficiency and
output and lowering per capita averages. Lastly, I would want to know
just how much the different PPPs decrease the gaps of GDP per capita. I
suspect, however, that all of these possible factors operate only on the
margins, rather than explaining the entirety of the differences, given the
magnitudes of the differences. It may simply be that hoch Kultur and
the higher population (urban) density in the E.U. carries with it the false assumption
that the E.U. must be as economically productive per person as in the U.S.
2. Ibid.
3. Ibid.
