You make one great mistake, when you think "and that includes a number of Eastern European countries that have never been in any sense "industrialized"". They have been industialized in any sense until 1998. Since then, their industries have been destroyed. The German Democratic Republic was not Central America, it was the 10th strongest industial country of the world.

Peter -- Okay, I'd say that some Easten European countries, like Bulgaria, failed to fully industrialize under the Soviets (or at least fell considerably short of OECD standards). Hungary has built up its industry since 1989. But you're right, other countries have gone the other way.

Comparing the GDR to Central America may be unfair, but the point is that it's presumably difficult for any country to assimilate a weaker economy without facing some hurdles...

I will respond tomorrow.

It is fascinating how many op-ed's, commentaries, speeches, and T.V. pundit's opinions have denigrated the performance of Europe (EU).

It's only fascinating because most either haven't been there or fail to include certain basic economic basics in the calculations which ultimatley lead to misleading conclusions.

Briefly, unemployment rates are calculated differently in various nations. One need not look any further than the various time-frames the U. S. has historically used to calculate unemployment. They are simply not to note that people are simply not counted after a relatively short period of time. European nations offer much longer benefits, therefore their numbers reflect a longer period of unemployment and are more accurate.

The U. S., with its short period of benefits, simply reflects that the unemployed don't exist after a brief period.

The conclusion then, is that number (unless another European nation uses the exact same calculation as the U. S.) is basically comparing apples and oranges.

Aside from the lifestyle choices made (health care, vacations, and other "quality of life" choices), a definitive shift in economic (and in certain cases- military alliance) power is evident. One need look no further than the amount of AMERICAN investment abroad rather than in the U. S. and the new kinship between Russia and China, the anger of the EU at the U.S. over economic issues, and the left- of- center fusion of Latin America to see that.

The value of the currency is generally based on the strength of the economy and the safety of the investment. Until 2000, the country was running a surplus. It also had a formidable military (no matter what partisans say- no country would dare challenge it) ensuring the investment.

Today, by any realistic measure, if accurate (both personal and public) U. S. debt to saving ratios were recognized (as they are beginning to be), the dollar would go the way of the peso in the 80's. Furthermore, any realistic reading of recruitment as a result of a war of questionable origin and the debt it has inflicted on the country, leaves both in doubt.

The value of currency is also largely based on oil. If oil producing countries (such as Venezuela and Iran) begin to turn to the Euro v. the dollar, then buy a wheelbarrow to load all the dollars needed to carry to the store to purchase a loaf of bread.

Don't forget how deep our foreign debt is. Everyone focuses on China, Japan, and Korea (and rightly so), but they should look at how much the U. S. owes E.U. countries. Most Americans are surprised by the amount of debt owed to them and/or investment by them in the U.S. (which means it can be pulled out at any time).

"Service economies", the promise to the young, do not exist. They are a figment of some crazy imagination. Anyone can perform any service from any distance at any time rendering local businesses, and the communities they support, useless.

Much like the sale of the contracts to run 6 major American ports to the United Arab Emirates (UAE), from which some members of the 9-11 hijackers emanated- it is dangerous to Americans- one physically, one economically.

As a vivid example, companies in India may have already, or may be (this year) doing your tax returns. Major accounting companies have been outsourcing the job there for years. A tax return. A social security number. An address. A job location and description. W-2's, 1040's, account numbers, etc.

Hopefully, that makes one pause for a moment and perhaps even consider whether the shredding of the monthly bills with all the personal information, like the cable account number on it was worth it. After all, what's the point? Your SSI is known in India.

Our ports will be run by the UAE.

And we mock the E. U.?

Naturally, there are a few services that can't be performed from a distance, but that group is so small that it cannot sustain a healthy ecomomy.

Look at the federal budget. The only part increasing is the military portion. It helps to sustain the rest. But that, in and of itself, cannot save the economy and will collapse under its own weight.

None of this is new. It is as old as dirt itself. Those that don't understand that must be students of "new math", "junk bonds", etc.

Isolationism and protectionism are not the answers. Neither is "outsourcing". Common sense is. Common sense dictates moderation and balance.

If anything has been clear in recent years, it is that the U.S. is in short supply on both.

International trade used to be, before fancy people started using fancy words like "outsourcing", called "the import/export business". It was never just called the "import business".

The EU lives and breathes the concept of "import/export". It would be a shame if the U.S. continued to feel superior using the current "import" model as an exclusive method for conducting viable economic policy.

It is much more complicated, but this is just a comment and that does not lend itself to further detail.

Best wishes to all.

Dalrymple writes beautifully; however, he fails to present any evidence to back up his assertions. There is a lot of rhetoric without any proofs. I would be interested to see a more logical analysis of the points in contention. For example: proponents of the "US is better off" theory usually use purchasing power as one of their key points (i.e. Americans have larger homes, nicer cars, more material possessions in general); I would be interested in seeing purchasing power juxtaposed with individual debt. If individual debt is significantly higher in the US, then a lot of the perceived difference in purchasing power would be effectually offset. Quite often we don't own our possessions; the bank does!

Interesting follow-up to all this at Counterpunch.

Paul Craig Roberts, who was Assistant Secretary of the Treasury in the Reagan administration (for those who think this is partisan), was Associate Editor of the Wall Street Journal editorial page and a Contributing Editor of National Review, wrote an article titled "Nuking the Economy" (http://www.counterpunch.org/roberts02112006.html) which should be mandatory reading for so- called "New Republicans".

The following are some excerpts:

1) Job growth over the last five years is the weakest on record. The US economy came up more than 7 million jobs short of keeping up with population growth.

2) The entire job growth was in service-providing activities--primarily credit intermediation, health care and social assistance, waiters, waitresses and bartenders, and state and local government.

3) US manufacturing lost 2.9 million jobs, almost 17% of the manufacturing work force. The wipeout is across the board. Not a single manufacturing payroll classification created a single new job.

Fields of work that suffered:

Communications equipment lost 43% of its workforce.

Semiconductors and electronic components lost 37% of its workforce.

The workforce in computers and electronic products declined 30%.

Electrical equipment and appliances lost 25% of its employees.

The workforce in motor vehicles and parts declined 12%.

Furniture and related products lost 17% of its jobs.

Apparel manufacturers lost almost half of the work force.

Employment in textile mills declined 43%.

Paper and paper products lost one-fifth of its jobs.

The work force in plastics and rubber products declined by 15%.

Even manufacturers of beverages and tobacco products experienced a 7% shrinkage in jobs.

The information sector lost 17% of its jobs, with the telecommunications work force declining by 25%.

Even wholesale and retail trade lost jobs. Despite massive new accounting burdens imposed by Sarbanes-Oxley, accounting and bookkeeping employment shrank by 4%.

Computer systems design and related lost 9% of its jobs.

Today there are 209,000 fewer managerial and supervisory jobs than 5 years ago.

Mr. Roberts accurately states:

"Economists who look beyond political press releases estimate the US unemployment rate to be between 7% and 8.5%."

He also points out the dangers of the trade deficit and the staggering numbers behind it:

On February 10 the Commerce Department released a record US trade deficit in goods and services for 2005--$726 billion.

Telling oneself that the country is doing fine and that all the indicators (unemployment, stock market, etc) are good is a lot like telling yourself that your relationship with your spouse is great as you're standing in your bedroom and seeing him or her in bed with someone else.

FOX, CNN, MSNBC, CNBC, and newspapers, as well as the President might be able to provide you some cover to hide what you see- temporarily anyway. But deep down inside you know something is wrong- very, very wrong.

The reaction of saying your relationship is better than the one the neighbors (EU) have (particularly when one knows nothing about it except what's written by those who have a vested interest in keeping your delusions) is just plain ... never mind.

The real issue is that Europe is committing collective suicide through its negative birth rate. It's population is shrinking.

For all we know, European population decline could very well allow the European Civilization to survive the coming catastrophic planet wide environmental and economic collapse. Less people in a given area will allow more resources for the resident population. The billions of displace starving masses won't be able to get to Europe by walking!

The root source of Conservative gloom and doom is pure racism. Their arguements fundamentally break down to one point. The "superiour white" race and culture of Europe will be supplanted by faster breeding "inferior colored" migrants from Asia, Africa, and the Middle East.

The difference between the way unemployment rates are counted in the EU / US is very true. This can be verified by looking at rates of Employment, that show the difference as being negligible and in some EU countries where the opposite is true.

Additionally, there are a number of Social Indicators that show a very disturbing picture of where the US is heading. From Poverty Rates, Infant Mortality Rates, Distribution of Income and on several other fronts the US sits well below the EU15 and regularly amongst so-called Developing Nations.

When a range of indicators are looked at, both Social and Economic, the question changes to: "Is the USA doomed?".

Theodore Dalrymple is presenting a set of assumptions as facts.........

They are not facts.

Surveys show, ( The most recent I've seen was published by the "Economist" that the USA is far more socially rigid then Europe.

If you are born into the poorest quintile of a population but have drive, ambition and intelligence, pray you are born any where but the USA.

The entrenched special interests in the USA now amount to a heriditary caste, an aristocracy that inherits it's position......not earn it.

Consider this...... George W Bush went to Harvard with a SATS score four hundred points below the average of his years intake.

Once there he was awarded a "Gentlemen's C ".

He got in on the "Legacy" program.... Since his father went to Harvard, he was "entitled" to the finest of educations.

He wasn't "entitled".... and the place he took, and squandered, was taken from someone who, by any standerd, deserved it more on merit.

Any nation that runs it's primary social structures on such a basis, quickly ossifies into an Aristocracy, awknowledged as such, or not.

The international data on social mobility ( Generational movement up and down the social scale )....... demonstrates that The USA now has the most rigid social structure of all major nations

If your born into a rich famiy, you'll stay rich, those born into poor families, will stay that way.... the outcomes are barely affected by factors such as hard work, intelligence and merit.

The only thing that gives Mr Dalrymples any and kind of propulsive thrust is it's underlying assumption ( Accepted as fact ). That America has a feely mobile social hierarchy based on merit as compared to Europe..... International surveys show that to be wrong.

Davegood

Can somebody explain to me, a simple man of the street, why it is necessary for economies to "grow"? Beyond the obvious need to cater for the improvement of poor people's lot and the eventual increase in population, why does an economy in which people already have more than they need have to continue growing? Is there anything beyond the answers that immediately come to mind: greed, larger dividends, power, sheer bloody-mindedness?

Perhaps Mr Dalrymple is only concerned and looking at the upper couple percent of the population, as that is the only really successful part of the American Population.

In real money the average income has stagnated, held up by the soring income of the top. At the bottom two incomes don't manage as well as one income did, and often there is only one income.

The lack of women in the EU workforce, in today's world has more to do with need than barriers.

But what was more stunning than his blather was his "Blog" that was no blog at all but only selective cut and paste from those who pointed to his page, including a misquote from here. He apparently lacks enough conviction in his own brilliance to expose it to actual conversation.

Actually the U.S./Central America analogy is accurate. East Germany was indeed fairly prosperous and advanced for an Eastern Bloc nation. But the income gap and technology gap between West and East Germany at re-unification was vast; roughly comparable to the gap between the U.S. and Central America. The fact is, West Germany was and is, along with Japan, the world's most advanced manufacturing nation. For a supposedly "unhealthy" economy, I find it interesting how Germany is in fact the world's top exporter (yes, they even out-export the likes of China and Japan). What's more, Germany is one of the world's top capital exporters. The fact is, the U.S. economy would collapse without the enormous inflows of capital coming in from Germany, Japan and China.

How very refreshing to see some sensible discussion on these issues. I for one feel better informed as a result. For what it is worth, I believe the key economic mistake with the integration of East Germany was that it was done at the wrong exchange rate - one East German mark to the Deutsche Mark - which may have been the 'official rate' but the black market rate was more like two to the DM. The result was that the East German economy was locked in with costs perhaps as much as 100% higher than they needed to be to be competitive. Not surprisingly many East German companies collapsed as a result. The challenge for the Germans since has been to manage costs down in the East - not easy to do quickly when you are starting from a level so far away from where the fundamentals were. Why did they do this? Helmut Kohl regarded it as politically essential to integrate at a one-to-one exchange rate because a more 'market-based' rate would have 'devalued' East Germans savings. So short-sighted political considerations won out.

How ironic that U.S. conservatives predict doom for Europe! American conservative ideology is only the CAUSE of European economic woes, which -- like
American economic decline
-- began circa 1974 with the worldwide adoption of free trade(globalization)as a replacement for protectionism
(a classic case of fixing the not-broken). Until roughly 1975, Europe was moving along swimmingly, refuting all of the dogmatic predictions by American right-wingers that welfare states collapse in the end. But as the French Nobel Prize-winning economist Maurice Allais has shown, the free-trade regimen subsequently introduced has led to unemployment and wage stagnation. Why? Because when all of the world's companies are hurled into a massive
competition, firms can reduce costs only by firing employees or freezing their salaries. When the scuttled or struggling employees spend little money, demand drops. (Allais deflates the enthusiasm over the growth of backward economies by reminding his readers that underdeveloped countries also
make fast gains at first.)

As the French historian Emmanuel Todd has noted, the proponents of globalization rave about free trade's heightening of productivity, but are typically silent about the catastrophic effect of globalization on DEMAND.

the truth is anything the boss says it is. if you work hard corporate thinking is to give you more work. why a six day workweek has not been imposed is due to high % of ( ) in our government and corporate management. yes we are allowed to vote but it's an illusion of power. we lost the cold war and we are told we won. none of the values of our nation remain and what is left of our greatness is risked in foolish ways. if the space launch had failed on the 4th of july we would have lost that holiday for a decade if not for good.