The U.S.’s exorbitant and wasteful use of energy is another item that, if we adjusted for it, increases the gap even further between the European and U.S. GDPs. In 2000, the then fifteen EU member countries consumed 63.3 quadrillion British Thermal Units (BTUs) of energy. While this amounted to 16 percent of the world’s total energy consumption for the year, it was 35.5 quadrillion BTUs less than the U.S. consumed during 2000. In other words, the U.S. consumed 98.8 quadrillion BTUs of energy, or nearly one-third more energy than the fifteen EU countries, even though the combined population of the EU at the time was 375 million people, or 102 million more people than lived at that time in the United States.
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The U.S. continues to consume one-third more energy than the European Union, with energy expenditures in excess of $703 billion in 2000 (the most recent figure available). This means that one-third of the total, or $234 billion, is simply a reflection of the wasteful use of energy and, if deducted from GDP, would increase the gap between the EU and U.S. GDP to about $578 billion.
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If we were also to calculate the increasing expenditures for pollution abatement that result from the burning of one-third more energy than our European friends, the U.S. GDP would need to be adjusted downward again, to reflect the negative economic activity.
The U.S. also spends far more money on fighting crime and administering civil justice than any of the European countries. In 1999, more than $147 billion went into police protection, court administration, and prison maintenance, or 1.58 percent of that year’s total GDP.
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Again, if a portion of the $147 billion were deducted to allow for the gap in expenditures on crime in the U.S. and Europe, the GDP differential between the two superpowers would widen still more.
Other categories could be added to this list. What becomes clear is that the initial gap in GDP—with the United States running slightly behind the European GDP—turns out to be even more when adjustments are made for economic activity that is either destructive or does not contribute in any significant way to improving living standards.
Quality of Life
It’s when we turn to very specific benchmarks for measuring economic well-being and quality of life, however, that the European Union begins to shoot ahead of the U.S. When we think about criteria for determining a good quality of life—what an economy should be all about—what comes immediately to mind is access to a decent education, assuring our good health, providing adequate care for our children, and living in safe neighborhoods and communities. In most of these particulars, the European Union has already surpassed the United States of America.
Take, for example, education. Americans are rightfully proud of our public education system. In the seventeenth century, Massachusetts became the first colony in the New World to accord children the right to a free education. (In 1635, Boston Latin School became the first public school in America.) Universal public education is among our most cherished institutions and a signature for a country that has long believed in equality of opportunity. The American Dream is built on the idea that everyone in America, regardless of the station or circumstances to which they were born, ought to be assured an education so that they might make the most of their lives.
No wonder American educators were taken aback by the results of the International Adult Literacy Survey (IALS) conducted in the mid-1990s and designed to compare the cognitive skills of adults in countries around the world. The survey found that Americans with less than nine years of education “score worse than virtually all of the other countries.”
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In 2000, the OECD reported on a detailed global survey taken to assess reading literacy in various countries. The Program for International Student Assessment (PISA) “focuses on measuring the extent to which individuals are able to construct, expand, and reflect on the meaning of what they have read in a wide range of texts common both within and beyond school.”
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Again, Americans would be surprised to learn that our children rank fifteenth in the world in reading literacy, below eight Western European nations.
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Although the U.S. spends about the same proportion of our GDP—3.6 percent—on education as the EU countries, children in twelve European nations rank higher in mathematics literacy, and in eight European countries, the children outscored American kids in scientific literacy. Equally surprising, the average teenager in the EU finishes 17.5 years of education, while American teenagers, on the average, finish only 16.5 years of education. And, in nine European countries, more teenagers enter tertiary education (higher education) than in America.
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There is no better index of the well-being of a society than a nation’s health. Americans have come to believe that we have the best overall health-care system in the world, and the healthiest population to boot. Although many Americans lament the fact that millions of their fellow citizens cannot afford private health-care insurance and aren’t eligible for public assistance, we nonetheless believe that Americans still enjoy a health-care system second to none. Unfortunately, the facts don’t support the belief. A comparison of health in the European Union and the United States is enlightening.
In the European Union, there are approximately 322 physicians per 100,000 people, whereas in the U.S., there are only 279 physicians per 100,000 people.
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Not enough trained physicians is just the beginning of the health story. When it comes to ensuring health at the beginning of one’s life, the U.S. ranks a distant twenty-sixth among industrialized nations, at seven deaths per 1,000 births, and scores well below the average in the EU.
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The U.S. fairs equally poorly at the other end of the life scale. While the average life expectancy in the European Union—excluding the ten new countries—is 81.4 years for women and 75.1 years for men, for a mean life expectancy of 78.2 years, the U.S. life expectancy for women is now 79.7 years and for men 74.2, for a mean life expectancy of 76.9 years. When the ten new Central and Eastern European countries are added to the EU averages, life expectancy falls to slightly below that of the United States.
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Still, the fact that life expectancy throughout Western and Northern Europe is higher than in America would no doubt be greeted with incredulity by most Americans. Even worse, according to the World Health Organization (WHO), the U.S. currently ranks a dismal twenty-fourth in disability-adjusted life expectancy, far below our European friends.
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The WHO also ranked the countries of the world in terms of overall health performance, and the U.S. fell down even further, into thirty-seventh place. When it came to evaluating the fairness of countries’ health care, the U.S. ranked still lower, to fifty-fourth, or last place among the OECD nations.
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Sadly, the U.S. and South Africa are the only two developed countries in the world that do not provide health care for all of their citizens.
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More than forty six million people in America are currently uninsured and unable to pay for their own health care.
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The irony is that the United States spends more per capita for health care than any other nation of the world, according to the OECD—$4,900 per person in 2001.
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Most of the increased cost is attributable to the high administrative costs and margins associated with running a for-profit health-care system. Moreover, because so many millions of Americans are uninsured, they cannot afford preventive care and do not attend to an illness at the outset. Waiting until the illness has advanced to a crisis increases the medical costs significantly.
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The greater cost of health care is added to the GDP. Currently, more than 10 percent of the U.S. GDP goes to medical care.
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Again, this is a perfect example of the disconnect between the measure of pure economic activity, reflected in the GDP, and the quality of life a society enjoys. The high cost of medical care in the U.S. boosts the U.S. GDP by more than 10 percent, despite the mediocre quality of the health care and the poor health of the American people.
The GDP and the nation’s health intersect in many other interesting ways that are seldom discussed by economists. For example, obesity in the U.S. has now reached epidemic proportions, with more than 30 percent of all Americans now considered chronically obese. Worldwide, more than 300 million people are classified as obese.
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Much of the growth in girth is attributable to junk food and a snacking culture promoted in the U.S. and now being exported by U.S. companies around the world. Obesity is a major contributing factor in the onset of type 2 diabetes, cardiovascular disease, and cancer.
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Although Europe is catching up to America in the increased incidence of obesity—as fast foods become an ever more prevalent part of the European diet—the U.S. obesity rate is still more than twice as high. In the fifteen EU countries for which figures are available, the percentage of obese people is 11.3.
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Again, the more obese the American population, the bigger the GDP. Fast foods, junk foods, and processed foods account for an ever larger percentage of our total consumption of food. And the margins on these kinds of foods are much higher than for unprepared, unprocessed, raw foods. All of this jacks up the GDP still further. And then there are the medical costs. The World Health Organization estimates that obesity alone increases health-care costs by as much as 7 percent in some countries.
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So the U.S. GDP continues to expand along with our waistlines, but our quality of life continues to diminish.
The United States has long been considered the land of opportunity. But if opportunity means starting off in life with sufficient financial resources to have a chance to make something out of oneself, then babies born in the European Union are far better positioned to succeed, from the very get-go. Childhood poverty in the United States is among the highest in the developed world. The United Nations Children’s Fund (UNICEF) defines poverty this way: people in poverty are those whose “resources (material, cultural, and social) are so limited as to exclude them from the minimum acceptable way of life in the Member States in which they live.”
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The European Union defines poverty more specifically as “those whose incomes fall below half of the average income (as measured by the median) for the nation in which they live.”
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By these standards, 22 percent of all the children in the United States are living in poverty. U.S. childhood poverty now ranks twenty-second, or second to last, among the developed nations. Only Mexico scores lower. All fifteen highly developed European nations have fewer children in poverty than the U.S.
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Even if we consider absolute poverty, using the U.S. equivalent of what constitutes poverty, U.S. children are still poorer than the children of nine European nations.
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There are currently 11.7 million American children under the age of eighteen living below the U.S.-defined poverty line. And there are more poor children in America today than there were thirty years ago.
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Living in a safe environment is also one of the hallmarks of a good society. We have come to believe that the more affluent a society becomes, the more peaceful it is likely to be. If GDP is the standard, then the United States ought to be one of the safest nations on Earth. Yet Americans can tell you that it’s far more dangerous to be out on the streets anywhere in America than to walk virtually everywhere unaccompanied in Europe. The statistics are chilling.
Between 1997 and 1999, the average rate of homicides per 100,000 people in the EU was 1.7. The U.S rate of homicide was nearly four times higher, or nearly 6.26 per 100,000 people.
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More terrifying still, the U.S. Centers for Disease Control (CDC) reports that the rates of childhood homicides, suicides, and firearm-related deaths exceed those of the other twenty-five wealthiest nations in the world, including the fourteen wealthiest European countries. The homicide rate for children in the U.S. was five times higher than for children in the other twenty-five countries combined. The suicide rate among U.S. children was two times higher than all of the suicides combined in all the other twenty-five countries measured.
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It’s not surprising that the U.S. incarceration rate is so high compared to that of the European Union. As mentioned earlier, in chapter 2, more than two million Americans are currently in prison—that’s nearly one-quarter of the entire prison population in the world.
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While EU member states average 87 prisoners per 100,000 population, the United States averages an incredible 685 prisoners per 100,000 population.
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The European Commission has begun work on developing a “European System of Social Reporting and Welfare Measurement” with an eye toward establishing a more accurate mechanism for measuring the “real” economic progress of its 455 million citizens.
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The European Commission study group on the subject has laid out an architectural blueprint of the kinds of things that should go into a social accounting, beginning with the concept of “quality of life,” which it defines as the “immaterial aspects of the living situation like health, social relations or the quality of the natural environment.”
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Quality of life also should include “actual living conditions,” as well as “the subjective well-being of the individual citizens,” says one of the authors of the initial study papers.
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In America, while we assume that every person is endowed with “certain inalienable rights, among which are life, liberty, and the pursuit of happiness,” we believe that more economic growth will ensure the good life. In Europe, academics, policy people, and the public at large are skeptical. They say that growth, by itself, is no guarantee of a better life for the people. The European Commission is looking at a host of other indicators to measure happiness, including the extent to which social cohesion is deepened, social exclusion is diminished, and social capital is grown. It wants an economy that is sustainable, “that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
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