Tuesday, November 14, 2006

Economist post on European vs American Growth

Here is an interesting post on European Growth vs American Growth

The key thing here is that Europe has higher taxes and more generous benefits, which tend to slow growth. You can use your economics training to explain how this might be the case.

The big debate is whether it is worth it or not. On the one hand, it slows growth so their economies do not grow as fast as the US. On the other hand, the benefits do yield gains for citizens right now (in the form of higher unemployment benefits, more vacations, etc.) The counter-argument is: sure it works fine now, but in 50 years this means that the income disparity and growth in the US will be much, MUCH more than it is now. How appealing will be the current model then?

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