U.S. still ranks near top for national prosperity

July 10, 1995|By Hearst News Service

PARIS -- Americans may not feel as well-off as they once did, but they can take solace from the fact that they are better off than almost everyone else.

In terms of per capita gross domestic product (GDP) and what their money will buy them -- the usual ways of measuring national and individual prosperity -- Americans are in the front ranks, surpassing all others with the exception of the 750,000 inhabitants of tiny Luxembourg.

The news comes from the Paris-based Organization for Economic Cooperation and Development, an intergovernmental agency that tracks how the world's 25 top economies are doing.

According to the OECD, the United States has recently outscored even Switzerland, a small but rich nation that in the past often has led the prosperity league.

In 1994, the year covered by the latest statistics, the Swiss came in third.

In the 1970s and 1980s, as other nations began to challenge the overwhelming U.S. postwar industrial supremacy, the perception grew that the United States was losing ground, especially to Western Europe, in terms of the living standards and general economic expectations of its people.

"For at least two decades, the prevailing view in both America and Western Europe was that Americans, although still living well, were comparatively less well-off while the Germans, French, Scandinavians and even the Italians were fast overtaking them," French economic historian Philippe Corelli said in an interview.

Some evidence supported this view but never as much as many on both sides of the Atlantic believed, Mr. Corelli said.

"The U.S. economy remained inherently strong and flexible," he explained.

"Lower inflation and lower taxation [than most of its economic competitors have] offered a layer of protection for the living standard of Americans that, for example, the French, Italians and British did not possess during most of the past 25 years."

Nearly all the economic pressures felt in recent years by many U.S. families -- including the need for both spouses to work -- exist in other industrial societies, often to a greater extent than in the United States, he said.

Although Western Europeans have the advantages of state-subsidized medical care for everyone and higher education that is often free, they are handicapped by a heavier tax burden and much higher consumer prices than in the United States, Mr. Corelli noted.

"Altogether, the average Western European family experiences greater difficulty making ends meet than does its American counterpart," he said.

"What is undoubtedly true is that most Europeans, as well as the Japanese and some others, have tended to move ahead faster since 1970 than Americans have.

"But they've never caught up [with Americans]. During the past few years, they've tended to slip back slightly by comparison."

The 1994 OECD tables don't provide per capita income in terms of dollars or other currencies because of problems arising from fluctuating monetary exchange rates.

Instead, they put the figures in terms of a scale of 0 to 200.

U.S. GDP, the total output ofgoods and services produced in the United States, per person was 120. Luxembourg's stood at 130. Behind Switzerland, which scored 115, Japan ranked fourth at 108 despite the surge in the value of the yen. Tied for fifth place were Belgium and Norway at 106.

Germany, notwithstanding its reputation as an economic powerhouse, was only in 12th place, barely ahead of Italy. (Germany: 102 out of 200; Italy: 101).

Mr. Corelli said the key to the continuing U.S. economic pre-eminence lies in its industrial productivity measured by output for each hour worked.

He noted that OECD charts showed that the United States had maintained a lead in productivity over all its main rivals, including Japan.

"This lead is far less than it was 15 years ago when U.S. productivity was nearly one-third higher than Japan's," he said.

According to statistics for 1993 -- the last year for which complete figures are available -- the U.S. edge over Japan had slipped to an 8-percentage-point advantage.

"The United States has lost the clear productivity lead it once had over virtually every other economy," Mr. Corelli concluded.

"But it remains ahead. As long as that's so, Americans can expect to be relatively well-off."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.