Britain—Like France and Spain—Is Poorer than Mississippi
Over the past year, pundits and columnists have been forced to keep asking why Europe’s economy is stagnating and falling behind the US economy. Many of those asking the question are Europeans. One European headline reads “Why Europe is falling behind the USA,” and Le Monde tells us that compared to the United States, “The gap with European living standards has never been wider.”
The gap between US and European living standards has been noticeable for some time, and some European countries aren’t even keeping up with the poorest states in the United States. That is, when we look at measures of income, states like West Virginia and Mississippi compare favorably against European countries like France, Italy, and the United Kingdom.
This has led to what some observers of international macroeconomics call the “Mississippi Question.” The question goes something like this: “is my country poorer than the poorest state in the United States?” The poorest state is presumably Mississippi, and if your country is worse off than Mississippi, that’s evidence that your country has nothing to brag about in terms of its standard of living.
Whether deserved or not, the Mississippi economy has been deemed by some as a benchmark for what not to be, and the comparison has become more popular over the past decade. About ten years ago, British journalist Fraser Nelson suggested that when we compare foreign GDP per capita between European countries and US states, we find that the United Kingdom is poorer than Mississippi. This idea has never set well with British policymakers, of course, and the matter has been debated for years with pundits and researchers suggesting different measures that help give us insight into whether or not Country X is indeed poorer than Mississippi. The Financial Times in 2023 asked the question, and concluded that the UK is still richer than Mississippi, but barely.
Indeed, where the UK and other European countries place in this ranking depends on what measure is used. For example, one comparison using GDP per capita, published by Euronews last month, does indeed show Mississippi ranking well ahead of the UK, France, and the EU overall.
On the other hand, comparisons like these have led to debates over whether or not GDP per capita is an adequate measure that really reflects the actual income that residents of a country or state have to play with.
It’s a good question, but most everywhere we look, the more “nuanced” measures also show that much of Europe—including the comparatively rich countries of northern Europe—often rank behind the poorest American states. Even taking into account welfare benefits and income, American states like Mississippi, Louisiana, and West Virginia are registering higher incomes than much of Europe.
Median Disposable Income
Many critics of these international comparisons point to the allegedly generous welfare state and social spending of Europe as evidence that we can’t simply compare per capita GDP among these countries. The assumption is that if we count welfare benefits as income, then Europeans will clearly come in as much better off than the Americans. Aft
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