Europe Unrecognizable from U.S. Republican Rhetoric

Agenda-Setting Financial Insight.
April 3 2012 5:45 PM

Europe Unrecognizable from U.S. Republican Rhetoric

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Mitt Romney has said repeatedly on the campaign trail that “European socialist policies are not right for the United States” and has described President Barack Obama as having a “European social democratic vision.”

Photo by Patrick Smith/Getty Images

Europe is mostly unrecognizable from the U.S. Republican rhetoric. Presidential hopefuls Mitt Romney, Rick Santorum and Newt Gingrich, who face off again in Tuesday’s trio of primaries, often accuse Barack Obama of leading America to “European-style socialism.” The monolithic pejorative works to a point but conveniently overlooks the many economic achievements throughout the continent. On this matter, voters shouldn’t take the candidates seriously, and the candidates might do well to consider Europe more so. 

Certain features of the continent’s political economy are of course anathema to U.S. conservatives. For example, U.S. public spending of 42 percent of GDP last year was still lower than all but four of the 27 EU members. And while the mostly state-run healthcare systems in Europe are cheaper than in the United States, ones like Britain’s NHS limit available treatments and involve long waiting times for many procedures. The EU bureaucracy also has a tendency to micromanage in a way that would make Republicans run screaming. 

But the nominee wannabes either artfully or ignorantly miss the desirable aspects of Europe’s many and varied economies. Imagine the jubilation if the United States could attain the 4.3 percent growth experienced by Poland last year. Romney and Santorum surely would swap jobs pictures with the Netherlands, where the unemployment rate was 6 percent in February. And for austerity-minded Republicans, euro zone fiscal discipline as a whole is better than in the United States. The euro zone’s 2012 budget deficit is projected by the European Commission to be 3.4 percent of GDP, compared to the Economist’s consensus U.S. forecast of 7.8 percent. 

What’s more, a big slug of the GOP agenda seems to be something of a blueprint from Berlin. With a healthy current account surplus, inflation at around 2 percent, unemployment under 7 percent, a budget deficit of just 1.5 percent and a savings rate over 11 percent, Germany offers much to admire. 

With America still trying to find its economic way, U.S. presidential candidates ideally should seek ideas anywhere they can find them. The political expediency of making Europe a bad word doesn’t help.

Read more at Reuters Breakingviews.

Martin Hutchinson covers emerging markets and economic policy, drawing on 25 years of experience as an international merchant banker. He ran derivatives platforms for two European banks.

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