Learning from Europe

Given everything going on in Europe these days, I thought it might be worth jumping in the WayBack Machine and jaunting back to this January 2010 column by New York Times columnist Paul Krugman titled “Learning from Europe.”

As health care reform nears the finish line, there is much wailing and rending of garments among conservatives. And I’m not just talking about the tea partiers. Even calmer conservatives have been issuing dire warnings that Obamacare will turn America into a European-style social democracy. And everyone knows that Europe has lost all its economic dynamism.

Strange to say, however, what everyone knows isn’t true. Europe has its economic troubles; who doesn’t? But the story you hear all the time—of a stagnant economy in which high taxes and generous social benefits have undermined incentives, stalling growth and innovation—bears little resemblance to the surprisingly positive facts. The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.

Actually, Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe—official economic statistics or your own lying eyes—the eyes have it.

In fairness, Krugman does go on to cite statistics to back up his impressions. But I’ve always liked this part of the argument. It reminds me of the old story about how Nixon was asked if he believed in over-population and he replied, “Of course the world is overpopulated. Everywhere I go, I see huge crowds.” (That’s the way I heard it, at least).

Suffice it to say that just because New York Times columnist and Nobel Prize-winning economist Paul Krugman didn’t see poor and backward parts of Paris, London, and Frankfurt on his various junkets doesn’t mean Paris, London, and Frankfurt do not have poor and backward parts.

Anyway, as Europe grapples with its troubles—troubles largely resulting from the fact that it cannot afford the successful economy Krugman sees as so apparent, maybe it’s time to learn from Europe after all.

Correction: The original post misstated the date of the Paul Krugman column.

4 thoughts on “Learning from Europe

  1. Isn’t the lesson that social democracy can work when it’s done well and thoughtfully (Norway, Sweden, Germany, Canada) but can really go wrong when implemented in a cronyist (Italy), profligate (Greece), backwards (Portugal) or half-assed (United States) fashion?

    Europe is a currency union but it isn’t a monolith – some parts of it are working quite well and some parts of it are failing miserably. The lesson here is that governance matters, not that one world-view is right and one world-view is wrong.

  2. “For those Americans who have visited Paris: did it look poor and backward?” I take it that the Professor has never ventured into the Paris suburbs. I stayed with a friend’s extended family in the suburb of Aubervilliers (my friend’s Armenian father immigrated to the US, eventually started his own business and was fairly well off; my friend’s aunt and her husband immigrated to Paris, were poor and lived in public housing, go figure). And Aubervillier was as poor and backward as any American slum I’ve been to, if not more so.

  3. I recall a colleague’s impression of England, after a business trip that took him to London and some towns in Essex, “A whole country that looks like Sommerville.” If Krugman taught at Harvard rather than Princeton, he’s understand.

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