Friday, January 9, 2015

United States Versus Europe’s Economies and Health Care Systems

With last quarter’s 5 % GDP income growth, the United States has a much faster growing economy than any European country. Spain grew at 0.5%, Germany at 0.1%, France at 0.3% and Italy at -0.1%.

Why the difference? Probably because the 28 nation members of the European Union have high-tax, high-spending, high-regulation, high-social welfare states and business-restricting policies that reduce incentives to hire new workers, invest in new plants and equipment, implement new technologies, and start new businesses.

Consequently, U.S. growth via a via Europe is expected to be 2.5% to 3.0% over the next year, U.S. employment is projected at less than 5.8% vs 11.5% for Europe, and U.S. government tax rates will probably remain at 36% while Europe’s will be close to 49% due in no small part to their generous social welfare programs, which include, of course, universal health coverage. With the continuing recession in Europe, advances in medical technology, and the European’s increased Internet knowledge of what’s available in other countries, health care costs are skyrocketing in Europe, and many countries are scrambling to come up with private alternatives to government, including private insurance, retail urgent care centers, and concierge medicine.

Critics of ObamaCare fear the U.S. may become like Europe if present trends continue – a $500 billion increase in taxes secondary to health reform, cost overruns of more than $1 trillion over the next ten years, the burdens of 2500 new regulations, over 50 new federal agencies and programs to oversee the bureaucratic maze, unsustainable growth in entitlement programs ( 9.7 million or 16.5% in Medicaid enrollments thanks to the health exchanges).

In all of this the U.S. has certain undeniable advantages over Europe - a large uninhabited land mass rich in natural resources, a large growing population, robust capital investments, low unemployment, high consumer consumption, a relatively young population thanks to immigration, a stimulated and re-invented automobile industry. a vigorous entrepreneurial and innovation climate producing such things as fracking and the recent success of large scale start-ups – Microsoft, Google, Apple, Facebook, and Twitter. Two big things holding the U.S. back are its high health care and entitlement costs and the highest corporate income tax in the world at 35%.

According to the World Bank, by 2019 the U.S. will still have the world’s largest GDP at $17.4 trillion with China at $10.4 trilliomn Japan at 4.8 trillion, Germany at $3.8 trillion, France at 2.9 trillion, the U.K/ at $2.8 trillion, Italy at $2.1 trillion, Russia at 2.trillion. and India at 2.0 trillion. In terms of income, the projections are $67,396 for each U.S. citizen, $43,739 for each European, and $11,078 for each China person.

How much money will be left over after taxation for social welfare programs and how high health care costs are a matter left out of projections. But barring war, pestilence, and environment disaster, the United States promises to be the premier place to live with the best opportunities for economic growth and upper social mobility

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