I've had enough.....its time to put your nonsense to bed:
The Question of European Growth and the Myth of Stagnant Europe
Before addressing the challenges facing Europe, and the necessity of a strong, transformed EU to realize its potential role in the world, the vision of the liberals must be examined more closely. The issue of a growing economic divergence between the US and Europe is the centrepiece of the liberal/US demand for economic reform in Europe. Nevertheless, the claim that the US economy is leaving Europe behind is typically exaggerated and even distorted. The myth of the US as a dynamic powerhouse and Europe as a stagnant ‘sick man’ stems from long-standing ideological positions that continue to rely unreflectively on superficial headline data. While an exhaustive treatment of this issue lies beyond the possibilities of this short analysis, we will focus on some of the key points. Much of this debate fixates on recent economic and productivity growth. GDP growth in the US for the year ending in March came in at 5% compared with only 1.3% in the euro zone, fueling the short-term media emphasis on US dynamism and European paralysis. In the three years to the end of 2004, the US will have experienced growth of 2.2% (2002), 3.1% (2003) and 4.1% (2004), while the euro zone will have lagged significantly behind (0.9%, 0.4%, and 1.7%, respectively). In the ten years to 2003, the US averaged annual growth of 3.3% compared with a more modest 2.1% in euro zone. Nevertheless, a closer look reveals that headline GDP figures exaggerate the US’s relative performance. A recent report in The Economist (‘Mirror, Mirror on the Wall’ June
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Área: Europe - ARI Nº 117/2004 Fecha 07/05/2004 19, 2004) demonstrates that, in per capita terms, the divergence is not nearly as large: per capita GDP grew at an average annual rate of 2.1% in the US during the ten years to 2003, and at 1.8% in the euro zone. Furthermore, all of this adjusted underperformance can be explained by Germany. Stripping Germany from the numbers yields an average annual per capita GDP growth for the other two-thirds of the euro zone of 2.1% –exactly in line with the US–. If the UK were a member of EMU, The Economist argues, the picture would look even more positive for the euro zone. Moreover, during the last three years, at least, much of this growth difference can be accounted for by the diverging macroeconomic policy stances in the US and the euro zone. According to OECD data cited by Martin Wolf in a recent analysis in the Financial Times (‘It’s the Economy, Stupid’, June 15, 2004), since 2000 the US’s structural budget deficit has increased by nearly six percentage points of GDP. Meanwhile, the euro zone has experienced no net fiscal stimulus, with its structural deficit remaining below 2% of GDP, compared with a structural deficit of nearly 5% in the US. Monetary policy has also been relaxed much more rapidly and significantly in the US than in Europe during the last three years.
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