More on economic conditions and tech firms leaving certain areas

[David Farber <dave () farber net>]

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From: Rafe Colburn <rafeco () gmail com>
Reply-To: Rafe Colburn <rafeco () gmail com>
Date: Wed, 02 Feb 2005 14:44:04 -0500
To: <dave () farber net>
Subject: Re: [IP] More on economic conditions and tech firms leaving certain
areas

On this topic, a recent article from the New York Review of Books:

Europe vs. America
By Tony Judt

...

These perceptions constitute the real Atlantic gap and they suggest
that something has changed. In past decades it was conventionally
assumed-- whether with satisfaction or regret--that Eu-rope and
America were converging upon a single "Western" model of late
capitalism, with the US as usual leading the way. The logic of scale
and market, of efficiency and profit, would ineluctably trump local
variations and inherited cultural constraints. Americanization (or
globalization--the two treated as synonymous) was inevitable. The
best--indeed the only--hope for local products and practices was that
they would be swept up into the global vortex and repackaged as
"international" commodities for universal consumption. Thus an
archetypically Italian product--caffe espresso--would travel to the
US, where it would metamorphose from an elite preference into a
popular commodity, and then be repackaged and sold back to Europeans
by an American chain store.

But something has gone wrong with this story. It is not just that
Starbucks has encountered unexpected foreign resistance to
double-decaf-mocha-skim-latte-with-cinnamon (except, revealingly, in
the United Kingdom), or that politically motivated Europeans are
abjuring high-profile American commodities. It is becoming clear that
America and Europe are not way stations on a historical production
line, such that Europeans must expect to inherit or replicate the
American experience after an appropriate time lag. They are actually
quite distinct places, very possibly moving in divergent directions.
There are even those‹including the authors of two of the books under
review‹for whom it is not Europe but rather the United States that is
trapped in the past.

America's cultural peculiarities (as seen from Europe) are well
documented: the nation's marked religiosity, its selective
prurience,[1] its affection for guns and prisons (the EU has 87
prisoners per 100,000 people; America has 685), and its embrace of the
death penalty. As T.R. Reid puts it in The United States of Europe,
"Yes, Americans put up huge billboards reading 'Love Thy Neighbor,'
but they murder and rape their neighbors at rates that would shock any
European nation." But it is the curiosities of America's economy, and
its social costs, that are now attracting attention.

Americans work much more than Europeans: according to the OECD a
typical employed American put in 1,877 hours in 2000, compared to
1,562 for his or her French counterpart. One American in three works
more than fifty hours a week. Americans take fewer paid holidays than
Europeans. Whereas Swedes get more than thirty paid days off work per
year and even the Brits get an average of twenty-three, Americans can
hope for something between four and ten, depending on where they live.
Unemployment in the US is lower than in many European countries
(though since out-of-work Americans soon lose their rights to
unemployment benefits and are taken off the registers, these
statistics may be misleading). America, it seems, is better than
Europe at creating jobs. So more American adults are at work and they
work much more than Europeans. What do they get for their efforts?

Not much, unless they are well-off. The US is an excellent place to be
rich. Back in 1980 the average American chief executive earned forty
times the average manufacturing employee. For the top tier of American
CEOs, the ratio is now 475:1 and would be vastly greater if assets,
not income, were taken into account. By way of comparison, the ratio
in Britain is 24:1, in France 15:1, in Sweden 13:1.[2] A privileged
minority has access to the best medical treatment in the world. But 45
million Americans have no health insurance at all (of the world's
developed countries only the US and South Africa offer no universal
medical coverage). According to the World Health Organization the
United States is number one in health spending per capita‹and
thirty-seventh in the quality of its service.

As a consequence, Americans live shorter lives than West Europeans.
Their children are more likely to die in infancy: the US ranks
twenty-sixth among industrial nations in infant mortality, with a rate
double that of Sweden, higher than Slovenia's, and only just ahead of
Lithuania's‹and this despite spending 15 percent of US gross domestic
product on "health care" (much of it siphoned off in the
administrative costs of for-profit private networks). Sweden, by
contrast, devotes just 8 percent of its GDP to health. The picture in
education is very similar. In the aggregate the United States spends
much more on education than the nations of Western Europe; and it has
by far the best research universities in the world. Yet a recent study
suggests that for every dollar the US spends on education it gets
worse results than any other industrial nation. American children
consistently underperform their European peers in both literacy and
numeracy.[3]

Very well, you might conclude. Europeans are better‹fairer‹at
distributing social goods. This is not news. But there can be no goods
or services without wealth, and surely the one thing American
capitalism is good at, and where leisure-bound, self-indulgent
Europeans need to improve, is the dynamic generation of wealth. But
this is by no means obvious today. Europeans work less: but when they
do work they seem to put their time to better use. In 1970 GDP per
hour in the EU was 35 percent below that of the US; today the gap is
less than 7 percent and closing fast. Productivity per hour of work in
Italy, Austria, and Denmark is similar to that of the United States;
but the US is now distinctly outperformed in this key measure by
Ireland, the Netherlands, Norway, Belgium, Luxembourg, Germany, ...and
France.[4]

America's longstanding advantage in wages and productivity‹the gift of
size, location, and history alike‹appears to be winding down, with
attendant consequences for US domination of the international business
scene. The modern American economy is not just in hock to
international bankers with a foreign debt of $3.3 trillion (28 percent
of GDP); it is also increasingly foreign-owned. In the year 2000,
European direct investment in the US exceeded American investment in
Europe by nearly two fifths. Among dozens of emblematically "American"
companies and products now owned by Europeans are Brooks Brothers,
DKNY, Random House, Kent Cigarettes, Dove Soap, Chrysler, Bird's Eye,
Pennzoil, Baskin-Robbins, and the Los Angeles Dodgers.

Europeans even appear to be better at generating small and medium-size
businesses. There are more small businesses in the EU than in the
United States, and they create more employment (65 percent of European
jobs in 2002 were in small and medium-sized firms, compared with just
46 percent in the US). And they look after their employees much
better. The EU Charter of Fundamental Rights promises the "right to
parental leave following the birth or adoption of a child" and every
West European country provides salary support during that leave. In
Sweden women get sixty-four weeks off and two thirds of their wages.
Even Portugal guarantees maternity leave for three months on 100
percent salary. The US federal government guarantees nothing. In the
words of Valgard Haugland, Norway's Christian Democratic minister for
children and family: "Americans like to talk about family values. We
have decided to do more than talk; we use our tax revenues to pay for
family values."

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