September 06, 2021
It seems a strange concern, but I suppose it’s what we would expect from a political party that is determined to block every effort to contain the pandemic. According to a NYT article on opposition to President Biden’s plan to increase spending on various social program by $3.5 billion (1.3 percent of GDP) over the next decade:
“To critics, the legislation represents a fundamental upending of American-style governance and a shift toward social democracy. With it, they worry, would come European-style endemic unemployment and depressed economic dynamism.”
Many European social democracies have consistently had lower unemployment rates than the United States. According to the most recent data from the OECD, the unemployment rate in Denmark is now 4.3, in Germany 3.6 percent, and in the Netherlands 3.1 percent. It’s now clear what measure of “economic dynamism” these critics use, but using productivity growth, the measure most often used by economists, the dynamism of European economies is comparable to the U.S. economy.