At his various speeches and rallies, President Trump likes to tout a particular list of recent indicators of a strong U.S. economy — relatively robust growth, very low unemployment (including for women, African Americans, and other minorities), and a booming stock market. Meanwhile, the recurring theme of his Democratic rivals is that the economy is somehow not “working” for average Americans. Here are some examples of Democratic candidates expressing that theme:
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Bernie Sanders, from February 5, 2019: “Despite what President Trump says, it is not “a hot economy” when 43% of households can’t afford to pay for housing, food, child care, health care, transportation and a cell phone without going into debt. That is not a hot economy.”
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Elizabeth Warren, from July 19, 2018: “There was a time when saying, ‘Hey the unemployment rate has gone down,’ that [was] a great thing. But you know, when people are working at minimum-wage jobs that won’t support them or they’re working two, three, or four jobs to try to pay the rent and keep food on the table, then simply saying ‘The unemployment rate figures have gone down’ just doesn’t get you there.”
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Pete Buttigieg, from his current website: “In America today, it is harder and harder not only to get ahead, but also to hold on to what we’ve got. The stock market may be up, but millions of Americans see their paychecks stay flat even as the costs of health care, housing, and college are rising. For too many workers, one job is not enough. Working and middle class families simply can’t keep up.”
All of those three, as well as the other six or so remaining in the race, propose massive increases in government spending and programs supposedly as the way to make the economy “work” better for the average family.
Without minimizing any of the statistics cited by the President, there is an even more revealing place to look to get a true idea of the overall success of the American economy, including success for those toward the lower end of the income distribution. That place is the statistics for per capita GDP and income. The statistics on those subjects show the extent to which the U.S. economy greatly outperforms all of its competitors on the world stage.
In making these comparisons, note first that the United States has a large and very diverse population that includes every ethnic group in the world, and very large numbers of immigrants, many of them recent and unskilled. Among the countries of the world, the U.S. ranks third in population, after only China and India. Our 330 million or so people include close to 40 million legal immigrants, and another 10 or more million illegal. The comparison of U.S. economic performance to that of the other large-population countries is truly dramatic (IMF figures for 2019):
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China: population 1.4 billion, per capita GDP $10,098
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India: population 1.3 billion, per capita GDP $2,171
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United States, population 330 million, per capita GDP $65,111
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Indonesia: population 270 million, per capita GDP $4,163
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Pakistan: population 216 million, per capita GDP $1,388
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Brazil: population 207 million, per capita GDP $8,796
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Nigeria: population 200 million, per capita GDP $2,222
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Bangladesh: population 163 million, per capita GDP $1,905
All of those outside the U.S. suffer from unjustifiably large government role in the economy and lack of personal freedom for the citizens. The results are there for all to see. China is the best of the bunch, with per capita GDP less than one-sixth ours. Most of China’s wealth is concentrated in the gleaming new coastal cities, while out in the hinterlands hundreds of millions continue to live in abject poverty. How has 70 years of socialism worked out for them? Meanwhile, as China increasingly cracks down on freedom of expression and even slight political deviation, it remains to be seen whether it can continue the rapid economic growth of the past couple of decades.
Democratic candidates like Sanders and Warren like to ignore any comparison with the countries above that are the U.S.’s real competitors, and instead focus on a few tiny, ethnically uniform countries in Europe, like Sweden and Denmark, that are not really “socialist,” but have more extensive social welfare programs than we have. Remarkably, despite their small size and uniformity, they still can’t match the U.S. for economic performance:
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Sweden, population 10.1 million, per capita GDP $51,241
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Denmark, population 5.8 million, per capita GDP $59,795
As the European countries get bigger and more diverse, with their high social spending model, the degree to which they lag the U.S. widens:
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Germany, population 83.7 million, per capita GDP $46,563
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France, population 65.2 million, per capita GDP $41,760
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UK, population 67.9 million, per capita GDP $41,030
None of these European countries bears anything near the military burden carried by the U.S. All of them suffer from very high youth unemployment that is a hallmark of overly generous social welfare schemes. (Youth unemployment rates for December 2019: United States 8.1%; Sweden 19.7%; Denmark 10.3%; France 18.8%; UK 11.2%.) And the social spending makes the assimilation of immigrants particularly difficult. From the Mises Institute, August 20, 2018, “The Swedish Welfare State Leads to Poor Immigrant Assimilation”:
At the moment, Sweden is experiencing trouble in assimilating its immigrant population. Recent reports reveal a rising number of violent crimes in immigrant suburbs. Although Sweden’s overall crime rates are low, the country is experiencing increasing levels of gang violence and shootings, and the emergence of immigrant ghettoes. . . . Sweden’s vaunted welfare state could be the very culprit behind the recent wave of immigrant unrest. Since the publication of Nina Sanandaji’s Scandinavian Unexceptionalism, a growing number of intellectuals have started to remove the magical aura of the Scandinavian welfare model. . . . Sanandaji argues that the welfare state has impaired immigrants when it comes to integrating into, and contributing to, the Swedish economy.
And finally, there is the ridiculous idea that vast and wasteful new government spending programs like the “Green New Deal” are somehow going to “create jobs” and improve economic performance. If you think that, you must not be following the latest economic developments from Germany, as it accelerates its authoritarian push to “decarbonize” its economy. From NoTricksZone, February 11: “Germany’s Green New Deal Begins To Deliver: ‘Horrible Numbers,’ A ‘Disaster.’”
Germany’s onslaught on its famed automotive and production industries appears to be taking an economic toll as the country pushes ahead to go green by phasing out internal combustion engines and coal power plants. Recently we reported how electricity prices are again slated to increase this year, and thus will continue to make German power among the most expensive worldwide. A wave of green activism has led to tighter regulations against the internal combustion engines and to a planned phase-out of coal-fired power plants. . . . “Experts spoke of ‘horrible numbers’, a ‘disaster’ [for year-end 2019 numbers]. Industry, construction, and energy providers produced a full 3.5 percent less in December than in the previous month,” the Handelsblatt reports. . . . The German auto sector has been hard hit. . . . Late last year Daimler, owner of Mercedes Benz, announced plans “to ax at least 10,000 jobs,” Volkswagen’s Audi said “it would slash up to 9,500 jobs or one in ten staff by 2025 and car suppliers Continental and Osram announced staff and cost cuts.”
As far as I can tell, all of the Democratic candidates support the policies that have gotten Germany to this point.
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