A simple model of Europe and America

Dictatorships are generally most brutal when the fear of being overthrown is strongest.  The most benevolent dictatorships, in relative terms, tend to have strong roots in the country’s social and economic power centers.  This would help explain, for instance, why the minority Sunni Saddam Hussein was so tyrannical against his potential opponents.  Without extreme oppression, he would have lost power and his life.

The optimistic scenario for Iraq was (way back when) that a Shiite autocracy, with broad-based public support, would be considerably less brutal.  Once in power, the ruling clique would find it much easier to stay in power without extreme brutality.  At least that is how the theory went.

In this view, the critical U.S. mistake was not disbanding the (largely Sunni) army, which was in any case inconsistent with the best available power structure.  The critical mistake was creating a government that had no real unity and no real chance of having power on the ground.

The pessimistic scenario is that there are no broad-based constituencies left, or perhaps there never were any in the first place.  Under the former case American policy has been far more harmful, in net terms, than under the latter case.  It is possible that our handling of the transition disbanded whatever broad-based groups were in place to eventually rule.  Or perhaps Saddam had already destroyed them.

Partition has a certain logic in this model.  But there is no one to effectively oversee the process of division and allocation, either for the population or the oil.  I would expect a good million or half million lives to be lost from the resulting slaughter and the forced migrations of population.

To repeat, I am not claiming this model is true.  But if it is false, it is worth thinking about what further assumptions should be added or which current assumptions should be dropped.

Addendum: Modeling the current Iraq is difficult for a few reasons.  It is rare for an occupying power to set up a democracy, so historical data are scarce.  In any case this is not the world of MacArthur and postwar Japan.  Nor is it the democracy of Anthony Downs or Arendt Lijphart.  For many unusual governmental forms, I start with the implicit models of Gordon Tullock’s Autocracy and the problems of stability and cycling autocratic coalitions.  But Iraq seems too far from stability for cycling to be the major problem.  The instability seems radically overdetermined, and that makes comparative statics difficult.

The closest parallel I can think of is Yugoslavia in the early 1990s, when relative stability gave way to bloodshed.  Fear encouraged a mental overinvestment in strategies of ethnic solidarity and many groups started launching pre-emptive attacks, leading to widening circles of violence and then greater fear.

There are many smart writers on Iraq, with varying degrees of knowledge and information.  I wish more of them would seek to provide a simple model of what is going on.

If you do leave comments, please focus on public choice issues rather than attacking or defending the war itself.


How is Europe government better than US government? Criteria and statistics please.

TC is becoming positively elliptical - but I guess he may be referring to Germany (and the Netherlands, Austria and Switzerland) as a bastion of good government (it doesn't seem to apply to France, certainly not Italy nor Spain - but Germany (along with Britain and the USA) have been the main exporters of good systems of micro and macro governance (over the past few centuries). Germanized central Europe has been the most modernized part of Europe for most of the time since the late Middle Ages.

However, I am one of those who believes that Germany, France and Italy are locked into a severe economic decline, which can only be reversed by the kind of market-orientated liberalization which the UK experienced in the 1980s, and which successfully reversed the long-term economic decline here.


I am not sure that the US caters more to the elites than Europe does. In fact I would argue the opposite. In terms of stability of the managerial class, control of the bureaucracy, and lack of turnover among the top companies, the evidence suggests that Europe is much friendlier to its entrenched elite. If the US were like Europe most of its CEOS would come from HYP. Ditto for cultural spending which reflects priorities of a small, influential elite. The stability of regional dominance (Paris or London uber alles) tends to favor the same groups. In contrast, I think that an America run like Europe would have seen the NorthEast squash Silicon Valley. They would never have allowed upstart California to become so important. In contrast, local elites -- esp in the South, Texas, and the Southwest often don't give a toss about what New York or Boston think of their ideas and tastes.

I'd say that because of this lack of social support, the US has to compensate its elites more directly in terms of cash and opportunities to make huge fortunes. Top CEOs bear greater financial and employment risk and enjoy less social deference. What they get in return is the chance to make the really big bucks if they back the right innovations.


First of all, most European countries are tiny. The smaller the population, the smaller the government the more efficient the government is at meeting the needs of its constituency. You also forgot a few things – like the fact that European socialism is subsidized by America. Because America spends so much on defense to protect Europe, the Europeans spend half as much or less on defense (as a % of GDP) than the US does. That’s quite a subsidy.

The zero-sum societies of Europe are having trouble (predictably) absorbing immigrants. The natural rate of unemployment is higher than in the US because of unions and total unemployment is much higher still. Then, there’s the whole problem the EU is facing now. Unelected bureaucrats are making laws that individual countries are adopting and this is causing much unrest in individual countries.

Neither Europe nor the United States government is more efficient at knowing individual tastes and preferences than the individuals themselves. And, as an immigrant who has lived both here and in Europe, I have no idea what you’re talking about when you say “catering to the elites† in the US. If anything, there is far more catering to the elites in Europe because the Elites are much more effective in using government to consolidate power. I, and many more people like me, immigrated to the US and worked our way up from the most menial jobs to the roaring professional careers with high incomes or from our own businesses. None of us could have done that in Europe. There are very few places on earth that provide the opportunity for mobility and where even the “poor† live so well that they are often unmotivated to increase their income.

If Europe is so great, then why, even with the defense subsidy, does the EU still have a smaller GDP/Capita, an aging population, higher cancer death rates, more pessimism and less innovation?

Because America spends so much on defense to protect Europe, the Europeans spend half as much or less on defense (as a % of GDP) than the US does. That’s quite a subsidy.

Do you think that were the US to cut that spending, Europe would spend more on defense? It seems to me more likely that Eupean countries would increase their military spending only a small amount if at all.

Not all free-riding is inefficient. Often is just a matter of people who value something more paying for it -- the epitome of economic efficiency. I suspect that the US military presence in Europe is such a situation -- far more valuable to the US than to Europe, so the US rather than Europe pays for it. Quite sensible, really.

"The cold war is over, who does Europe need protection from? Certainly no one it can't handle with its own militaries and secret services."

Based on Europe's performance in the Balkans, I'm not sure this statement is true.

I too wish Tyler would use more specific examples of how European government is superior. Based on the diversity of cultures American governments have to deal with, I'd say they do a pretty good job.

Good post, Prof. Cowen. We do need some evidence, but where we should look is not labor law or armies, but administration of old age pensions, road repair, garbage collection, and so forth, things with outputs easy to compare across nations (police wouldn't be good because the difficulty of coping with crime is hard to measure).

I'd always understood that fundamental attribution error applied to the individual, but this shows it equally operates at the level of national character.

Perhaps the best workaday advice to follow is to be found here:-


I know Sweden pretty well and I think Tyler's post applies to that case extremely well. I could tell many personal anecdotes about how reasonable and effective Swedish public services are, to American eyes. The thing is, so are the Swedish private services. Sweden works pretty well with social democracy, and it would work better with liberalism.

Western European cultures, almost without exception, are in a death spiral, and all for the same reason- the ever-increasing socialism is creating so much moral hazard- people increasingly trying to live off of the still productive- that it is already impossible to raise a generation that replaces previous one, and this is only going to get worse.

Collapses don't always occur in an instant (though weakened societies can be conquered and annihilated quite easily); the one occuring in Europe has the implacability of a glacier.

'Europe has more homogeneous nations'

This is the key to everything. The heyday of the U.S. welfare state, such as it existed, was between the immigration crackdown in the 20's and the reform in 65. Following 1965 massive internal migration of Southern Blacks to US cities and gradually increasing Hispanic immigration destroyed the ethnic homogeneity required for a functioning welfare state. People are less willing to trust or share with people unlike themselves, as Robert Putnam has conclusively proven and common sense would imply.

The European welfare states, while inefficient, can be maintained well into the future. However if immigration continues at present levels, as Vanya pointed out in the second comment, then it will bury the welfare state quicker than all the structural unemployment or healthcare waiting lists in the world.

Daniel - there are rivalries of that kind in most European countries. Corsicans vs Continental French, Catalans vs Basques vs Spain, Scottish vs Welsh vs English, Bavarians vs Berliners etc. But the degree of ethnic heterogeneity is not as explicit or obvious as it is in the US (black vs hispanic vs white), and boils down to minor regional rivalries more than anything else (like Southern Hicks vs Northern Yuppies). If Europe continues to import large numbers of Africans and Muslims, however, that will all change. Soon the social contract in Britain and France will be stretched to breaking point.

cb is right, and I would add that it happens faster than demographic tables would suggest, as they
tend to assume the productive won't just quit the system. Say the current tax/pension benefit is such
that quitting the system any age before 45 (call it the "worth it" age) makes you come out ahead. Well, some workers see that as a
bad deal and move to a "free pocket" in Europe (Switzerland, Lichtenstein, Luxembourg, Estonia, whatever) or perhaps simply revert to the underground economy.

Well, now taxes have to be raised and/or benefits have to be cut. The worth-it age becomes 47, pushing a few
more workers to leave, and so on. Eventually it becomes too rapid and must collapse. The question is, where does
the acceleration start to kick in? It won't be obvious until it happens.

Note that this closely parallels what happened in American unionized industries, where workers and customers flocked
to brands without legacy obligations.

I am Spanish and I lived in the US for a while. The American government works better and is less elite-friendly, and the American population is more homogeneous, urbanized and equal in ability, than their Spanish counterparts. I cannot comment on the "social cohesion" thing because I don't know what that is.

You are right that the US is better at resource mobility and private sector innovation. This is partly due to the fact that the US government is less elite-friendly. You are also right that Europe is not collapsing. You say that Europe enjoys "good governance," but that is as sensible as saying that Europe suffers from awful governance. Insensibly enough, I believe the latter.

The United States did fantastically well in the 20th century through creating the world's biggest market, welcoming all comers, and relatively speaking, keeping well out of military conflict. These virtues were rewarded by stunning success in any industry that benefited from economies of scale, investment banking, car manufacturing, the computer industry, restaurant chains. Although it serves people on both sides of the Atlantic to pretend that cultural and marginal economic issues are what make the difference, it is the difference in scale that marks the only significant difference in world terms.

As the twenty first century starts, Europe has begun to mimic the United States plan even as the United States gets drawn into militarism and tightens its borders, even with countries that distant foreigners can barely see as distinct and exceptionalism replaces the pragmatism that served it so well. So, although the US has continued to grow steadily the population of the EU has doubled in little more than a decade. Millions in formerly poor countries such as Ireland, Spain, Italy and Greece have already been lifted out of poverty and countries blighted by half a century of communism are blooming.

So far the trend has done little more than stem the rise of US advantages - aviation is now a draw and mobile telephony is the only clear victory for Europe so far but US ascendancy only came when Europe threw its advantages away with military adventurism. China also changes the situation in that its ability to manufacture anything with apparently unlimited scale means that the balance of development is different. Nevertheless the parallels are clear and the New American Century bears an uncanny resemblance to the Old European Century.

"I, and many more people like me, immigrated to the US and worked our way up from the most menial jobs to the roaring professional careers with high incomes or from our own businesses. None of us could have done that in Europe. There are very few places on earth that provide the opportunity for mobility"

Congratulations on your own good fortune, Methinks, but you are one of the exceptional few. Economists have known for years - and shown in studies too numerous to mention - that the US is at the bottom of the social mobility scale.

Compare this from a recent LSE study, with what you say:

"A careful comparison reveals that the USA and Britain are at the bottom with the lowest social mobility. Norway has the greatest social mobility, followed by Denmark, Sweden and Finland. Germany is around the middle of the two extremes, and Canada was found to be much more mobile than the UK."

source: http://tinyurl.com/9hj83

DM, they are still independent countries, and LSE takes the report seriously, even if you have reservations. In any case, it's entirely consistent with other studies, as any research on the subject shows.

I'm not aware of any study that suggests the opposite, but if you have one, I'll be more than pleased to read it.

Here are some numbers - if you look at big European countries (instead of the small ones which are the size of US states, or smaller) then the US looks much better than Europe on a range of measures, and the gap is widening.


Congratulations on your own good fortune, Methinks, but you are one of the exceptional few. Economists have known for years - and shown in studies too numerous to mention - that the US is at the bottom of the social mobility scale.

There is no dodging the fact that by any objective measure (man-hours dealing with bureaucracy, legal costs to incorporate, etc...), it is much easier to start a business in the United States than in Europe. See Cowboy Capitalism for the particular statistics.

Progressives and economic determinists tend to assume that work ethic, esteem for education, and marriage stability, is uniformly distributed across both the European and American populations. In reality, it is not. That is why some ethnic groups with strong cultures of hard work, education, and marriage outperform other ethnic groups. Civl Rights by Thomas Sowell is a good starting point to realize that not all cultures are equal.


Thanks for that link. I just skimmed that report. Are you at all bothered by the fact that they only studied sons and not daughters? Do you not think that this might skew the stats? I find that odd, since women have made a lot of progress during the period studied.

A couple things: Norway severely restricts immigration compared to Britain, America and Canada. In fact, immigration to America and Canada greatly exceeds immigration to the other countries in the other .

Most immigrants, like me, import our poverty into the United States. However, in the US – unlike in Europe - there are many ways to get a higher education, including community colleges (which are quite inexpensive). Granted, returns on a CC education aren’t as high but it can be a stepping stone. It’s also much easier to get a menial job to pay for school (which I did) as you don’t have to join a union, etc. Plus, you’re not pigeon-holed into a “track† in American high schools as you are in Europe. In addition, you don’t actually have to get much of an education to move along the spectrum here – you can just start your own business (although, I don’t know what percentage of people move along the spectrum that way). Much harder to do that in Europe.

What I’m saying is that there are far fewer BARRIERS to mobility than there are in most European countries. Whether you move up or not is up to you.

Check out the differences in education between the top and the bottom in the US and west European countries (excluding UK/IE), and then the poverty rates, and then the child poverty rates.

That is an intervening variable in that comparison. While Europe has comparable rates of out of wedlock childbirths to the US, it has much lower rates of teenage childbirths by a factor of 4 or 5. That will have a huge impact on both child poverty and entrenched generational poverty.

Of course, Social Democrats might claim that their system results in lower teenage out of wedlock childbirths. But given that the rates have been rising in both the United States and Europe, that is a difficult claim to sustain. A better explanation comes from Tyler: "Europe has more homogeneous nations with more urbanization, higher levels of social cohesion, and a more even distribution of ability. "

Well, in my earlier comment I did mention: "The cold war is over, who does Europe need protection from?" a flaw in the medium of blog comment threads I guess, those two thoughts got separated:P

So. after 1945, yes Europe was subsidized in its defense by America. I didn't mean to dispute that, preventing America from being isolationist was one of the major goals of Canadian and European policy immediately after the war. But, like I said, history did start anew in one sense in 1945 as well, due to the advent of the nuclear age.

And now: the cold war is over, but nukes still exist, making great power wars highly unlikely. Since the soviet threat receded, Europe no longer is at risk, and so additional US defense spending does not constitute a subsidy, as Europe would still be quite safe if America slashed its defense spending.

I most certainly did not mean to imply that Europe was not threatened during the cold war...lol

"What I’m saying is that there are far fewer BARRIERS to mobility than there are in most European countries. Whether you move up or not is up to you"

Methinks: the main barrier in the US appears to be general education, but even if this wrong, statistically one still stands less chance of improving one's lot in the US than in almost any other western country.

You have done well, but imagine you had been born in a deprived area of the US with distressed schools. Then it might have been different.

Thanks. That's exactly what I've been saying for about five years. Why have so few come out and said what Tyler and I say? One huge underlying driver of the differences between the two, the elephant in the living room of discussions of America vs. Europe that everybody gingerly tries to avoid talking, about is r-a-c-e.

What about the SAT?

The SAT is make or break if you want to go to an Ivy League. But a low SAT will not stop you from going to the less prestigious state schools. But in many European countries, low test scores means that you simply cannot go to college.

Oh, we left Western Europe because of the lack of Opportunity, Suvi. Also, the racism and extreme ethnocentricity.

You keep ignoring the immigration difference, by the way.

also, when are economists going to learn that there's no free lunch?

There's no such thing as "free education". Or "free health care", for that matter. C'mon, people.

State government here in Colorado seems far superior to that in Georgia or California. Any experience with the Department of Motor Vehicles, for example ... is dramatically different. But we seem to have less of state government here....how can that be?

The United States spends more money on education than Europe

Does this mean they are better educated?

"The United States spends more money on education than Europe

Does this mean they are better educated?"

Duh. Of course Americans are better educated than Europeans. Refer to the OECD for this. The fact that people even question this says a lot about the power of stereotype over facts.

Iraq is hardly the right test of whether or not the US is subsiding Europe. The interesting question is spelled R U S S I A.

Living in a suburb of Paris, where my garbage collectors are currently on strike, where my children's teachers were on strike a record number of times in the past couple of years, where strikes and slowdowns in mass transit are expected, not unusual--indeed can you imagine that you would need a site like Strikes.com?-- and where the government chews through a staggering amount of my income--yet where there are still (obviously) homeless people living in tents along the canals and riots in the train stations, I would beg to differ with Tyler on the superiority of European governance.

For an economics blog there is a lack of data and reasoned argument. Lots of opinions and just a lot of defensiveness. A cultural thing. Any number of data can support Tylers view. Say international math scores? Science scores? Paris schools on strike--wanna try Philly schools instead? Competence of Camdem New Jersey or Bronx Borough Presidents office are hardly legendary. An anecdote here and there and some casual empricism do not disprove Professor Cowens point. Find some data and or a cogent argument--otherwise C- to the lot of you. Find some DATA on the internet thingy you yanks invented--first of course agree on some criteria by which governance is compared. Essentially saying Um a Merican and a yuz foreners sux is not sufficient to disprove the good doctor C

"Oh, we left Western Europe because of the lack of Opportunity, Suvi. Also, the racism and extreme ethnocentricity.


I'm sorry to hear that, but glad that it worked out for you in the US.

when are economists going to learn that there's no free lunch? There's no such thing as "free education". Or "free health care", for that matter

You're dead right there isn't. When we say "free", we mean they're free at source, meaning there's no barrier at the gate when we go to college or to the doctor. We pay for it indirectly in tax, and like this method because it means we can give education and healthcare to everyone without personalising the expense for it.

"...that European socialism is subsidized by America. Because America spends so much on defense to protect Europe..."

This is a persistent canard. Americans spend money on defence because they want to, not because foreigners think it's necessary.

Strangely, the closer one lived to the Sovs or Sov-dominated countries, the less 'the threat' was perceived - and the further away one was, the greater it was perceived.

It's interesting that Joschka Fischer got a teeny, tiny clue:

'Europe is increasingly fading away'

The rest of the world will not wait for Europe while it bickers over institutional reform and external policy issues, says Joschka Fischer, ex-German foreign minister, warning that the risk of it becoming a "playground" for upcoming super powers grows by the day.

Tempered by his time in the US where politicians are already looking to China and India as the next powers to be, the former politician-turned-Princeton-professor has a very sober view of the European Union's position in the world as it dusts itself off from recent 50th birthday celebrations.

"Here in the United States, I hear 'who is Europe, where is Europe?' They are looking for China and for India. Europe is increasingly fading away beyond the horizon in the Atlantic," Mr Fischer tells EUobserver in an interview.

"This is a development which is definitely accelerating, so when you talk with the [US] political elite, the weaker Europe is, the less interest you will find."

Relating a recent incident where a former Indian foreign minister came to lecture at Princeton and said that the 21st century will see three superpowers – India, China and the US – Mr Fischer said "I was sitting there and I thought, 'why the hell is nobody in Europe realising what is going on!'"...


God all this whining about socialism on this thread, it is so bloody tiresome, been there done that a thousand times before. I expect the macho posturing anti-Europeanism of methinks from Gibson or O'Reilly ('French ingrates', my god how many times have we heard that before?) , but this site is supposed to be for thinking people. Newsflash guys - Europe ain't a bad place to live in.

The arc stretching from the Netherlands down through Eastern France to the Alps and into Northern Italy is one of the richest and most prosperous on the planet. Once we get our act together and remove some of the structural inefficiencies, and stop importing large numbers of Muslims, we will be back with a vengence.

Long live Europe!

Why do we want to avoid "personalizing the expense"? Usually "impersonal" has a negative connotation. That's why when you send money to some third-world kid the charity sends you cards with their picture on it.

"oooooh, small countries!!!"

Do you understand why the point you are ridiculing constitutes a valid criticism of the comparisons? (Evidently not, and if the previous comments haven't clarified it for you then there's probably not much I can do for you now.)


Gosh, I am just a moron who can't read.

BTW, do you live in Minnesota?

"Gosh, I am just a moron who can't read."

I've challenged you to demonstrate that you understand the point that you ridicule repeatedly, and you have not done so. I have a character flaw, and my character flaw includes that I respond to people who ridicule points that they evidently do not comprehend. I developed this character flaw over a decade of dealing with absolute morons on Usenet who substitute mindless ridicule for thoughtful engagement. It is my faint hope that by merely pointing out the error I may be of some small assistance.

"BTW, do you live in Minnesota?"

Irrelevant question.


Did not see any comments by you on this matter on this thread.
So, I guess you are on your high horse as some enforcer.

So, we are supposed to ignore small European countries because,
well, they are small, like states in the US, homogeneous, and
so forth. But, a) they have much greater powers than US states,
b) there is much greater variation in conditions, cultures, policies
and so forth across European countrie than across US states. There
simply is no equivalence at all between US states and small
European countries. The argument is thoroughly assinine and
has been defended by mere assertion with minimal evidence.

Regarding the Minnesota wisecrack, some of the louder proclaimers
of this argument have dismissed the "see how well the Nordic
social democracies are doing" by quoting stats on Swedish-Americans,
especially ones in Minnesota, the state with the highest life
expectancy in the US (and also one of the highest degrees of
equality, tax rates, and some other social democratic characteristics).
Hence, if you are fan of such arguments, it would not be completely
silly to assume that you would choose to live in a state that is
clearly so superior (unless you hate those high taxes or the cold
weather) than the others.

BTW, you can read my more detailed views and analyses of many of
these countries and these arguments in my _Comparative Economics in
a Transforming World Economy_ (with Marina V. Rosser), 2nd edition,
2004, MIT Press. After you do that, you can come back and point out
my moronic and ignorant nature further.

資金を増やそうとするのに不動産投資をするのが手っ取り早い。日本で不動産で東京 賃貸をさがすのはきわめて難しくシステム開発は日本の会社が良い。

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