Surprising? Not really. While the EU accounted for over 27 percent of the world’s GDP in 1990 — more than the U.S. at the time — today, its share is a little over 17 percent. And as Europe’s economic strength shrinks, the less it can project regulatory power on the world stage — a fact illustrated most acutely by the failure of 14 EU sanctions packages to derail Russian President Vladimir Putin’s war machine.
Centrists seeking to strengthen Europe’s global role and keep populists at bay would thus do well to make the economy a centerpiece of their policy agendas. And they could also stand to learn a lesson or two from the U.S., instead of sneering at America’s brutishness and political dysfunction.
Many of the grievances exploited by populists — from concerns about cost of living and rising fuel and energy prices to the pressure put on housing and public services from immigration — stem from a lack of economic dynamism and sluggish productivity growth.
And for all its problems, the U.S. economy remains significantly wealthier and more dynamic than its European counterpart. For instance, in a real income comparison using 2021 data, “French GDP per capita was lower than the 48th poorest U.S. state, Arkansas, while German GDP per capita had fallen to become as prosperous as the 38th [poorest] U.S. state, Oklahoma.” Moreover, real wages, expressed in terms of purchasing power parity, have grown faster in the U.S. than in any other G7 nation, and remain more than 30 percent higher than in Germany.
Gridlock and overwrought rhetoric coming from Washington is hardly an example to the world, of course. Yet, the combination of federalism and a large internal market continues to act as a reliable engine for American prosperity.
At the same time, America’s political antics shouldn’t distract outside observers from the fact that President Joe Biden has signed into law more bills passed with bipartisan support than any president in recent decades — including on semiconductors and infrastructure. Earlier in August, the White House announced new measures to streamline existing regulatory requirements involved in building new housing and transport projects. And while red tape and “not in my back yard”-ism remain a substantial barrier to economic growth — much like with other advanced democracies — behind the façade of climate change activism, the U.S. administration has also overseen a dramatic supply increase in oil production on federal land.
