A friend recently emailed me a link to this report by the Center for Economic and Policy Research (CEPR): "Is the U.S. a Good Model for Reducing Social Exclusion in Europe?" According to the British Government’s Social Exclusion Unit, "Social exclusion happens when people or places suffer from a series of problems such as unemployment, discrimination, poor skills, low incomes, poor housing, high crime, ill health and family breakdown. When such problems combine they can create a vicious cycle."
The concept is a frequent subject of newspaper reports in Europe (in German it’s called Ausgrenzung). It becomes a bigger problems in societies such as France or Germany, where umemployment has been in the double-digits for years. According to the CEPR, "[s]ustained, high levels of unemployment in the majority of Europe’s largest economies have led many Europeans to look to the United States as a possible alternative economic model."
- The U.S. spends much more on healthcare than all other nations, while leaving a population the size of Spain uninsured and obtaining worse health outcomes
- U.S. primary education is no more than average in world comparison.
- The U.S. murder rate is about 5 times the world average, and the U.S. incarcerates a much larger proportion of its population than any comparable country (see chart on right).
Defenders of the U.S. admit that life may be hard for those at the bottom, but argue the U.S. is the "land of opportunity" where anyone can break out of poverty if they just work hard. See Clarence Thomas! Bill Clinton! It’s a comforting cliche, but the real issue isn’t whether exceptional poor children can rise from poverty to become millionaires or top officials. They’ll be able to do that in any reasonably free land. The policy issue is whether social and economic policy gives most poor children the chance to move a few rungs up the social ladder — say, to a decent job with benefits. In the U.S., intergenerational poverty — especially extreme poverty — is hard to break out of in the U.S.
European countries do a better job here: "[T]he United States has the lowest share of low-income workers that exit their low-income status from one year to the next (29.5 percent). The corresponding rates in several European countries are greater than 50 percent: Ireland (54.6), the Netherlands (55.7), the United Kingdom (58.8), and Denmark (60.4)." The same effect holds over the long-term: "Intergenerational economic mobility was lowest, by a substantial margin, in the United States…" That is, it is much more likely in the U.S. that children will end up in about the same income bracket as their parents were. Interestingly, Germany had the highest intergenerational income mobility — nearly four times as high as the U.S.!
There are a few bright spots for Uncle Sam. Even adjusting for factors that artificially lower the U.S. unemployment rate, the U.S. does a better job generating jobs than the large, "sick" European economies — but not the small, efficient cohesive welfare states in Northern Europe. Further, "absolute" poverty, that is, the number of people who make earn less than a certain income level, isn’t much higher in the U.S. than in most European countries, and is lower than it is in France, Ireland, Australia, and Italy.
The biggest surprise for me, though, was in college degrees. Among the population as a whole, the U.S. has more college graduates than almost all comparable countries. 38% of Americans between the ages of 25 and 64 have the equivalent of a bachelors’ degree, but "[m]ost Western European countries fall in the 20-30 percent range, with several in the teens." Looking at just 25-to-34 year olds, the U.S. has 39%, about the norm, and a few European countries "still lag far behin the United States: Italy (12), Austria (15), Portugal (16), Germany (22), and Greece (24)."
I was genuinely puzzled by the last statistic; I would have thought that countries such as Austria and Germany would do better here. Perhaps some of the result is due to longer time spent in college in these nations (although I know very few 34-year-olds who’ve still failed to get any sort of degree). Another factor is probably social attitudes. It’s been a truism in the U.S. for at least 30 years that you’re doomed to a marginal life if you don’t get at least one college degree, and all middle-class families send all of their children to college, or die trying. Until recently in Germany, there were plenty of "solid" blue-collar jobs which offered nice benefits, excellent security, and plenty of vacation. "Why waste 6 or 7 years going to college, when I can just get a job in the nearest Volkswagen factory at 22 and basically be set up until I retire?" These days are, of course, almost over in Germany, which is the subject of about every third news article printed…