Comparisons between the United States and Europe can be confusing, but when comparing wealth, America is richer than most Americans assume.
The United Kingdom, the second most-productive country in all of Europe, would be poorer than Mississippi if it joined the United States as the 51st state.
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In fact, the OECD finds that median income in the United States is higher than all other countries except for Luxembourg, Norway, and Switzerland, according to the Mises Institute.
The average American, in other words, is richer than almost every average European–which could come as a shock to presidential candidate Bernie Sanders.
In the Democratic presidential debate, when Sanders posed Denmark as a model country for the United States, he was one of many Americans who assume that Denmark has found a way to create a more equal society with a strong welfare state and a strong economy. Denmark, however, is poorer than the majority of American states.
“We should look to countries like Denmark, like Sweden and Norway and learn from what they have accomplished for their working people,” Sanders said. It isn’t the first time he’s praised Nordic countries, saying that “their governments tend to represent the needs of their middle class and working families rather than billionaires and campaign contributors.”
Norway’s wealth is driven by large oil reserves from the North Sea, but otherwise, the hard economic facts don’t support Sanders’ insistence that the poor and middle class have more wealth in Denmark than the United States.
Using median income instead of GDP per capita is less liable to distortion from very rich and very poor people pulling the number up or down.
The OECD data account for taxes as well as state benefits for income calculations, and adjust for purchasing powers in member countries for the cost of living.
The facts on the ground surprise people, American and European alike. The perception gap grows from proximity, Fraser Nelson wrote for The Spectator, a British magazine:
Britain has no space for white flight, we’re forced to live closer together. And we fool ourselves into thinking that proximity has brought cohesion.
Wealth inequality in America looks more stark. The middle class fleeing for the suburbs, low-income black people restricted to certain clusters in the cities, poor whites in rural areas: Americans live in more concentrated pockets according to wealth, which obscures the actual wealth of Americans and actual levels of inequality.
While Americans could benefit from a richer examination of what other countries do well, an accurate understanding of wealth abroad might lessen the enthusiasm to become a Scandinavia of North America.
Mounting debt, an aging population, and a failure to adjust to an increasingly globalized economic system has hampered the growth of European wealth. For the average person, the American system has been much more economically beneficial than most European systems. Imperfect and sputtering, but nonetheless ahead, American wealth levels and the economy that drives them compare much more favorably with Europe than most assume.
