What good is
wealth if you don’t have time to enjoy it? Free time is certainly a kind of
freedom that can be readily enjoyed more than the drudgery of work. In a recent
article for People’s Policy Project, a social democracy/socialist think-tanker,
Matt Bruenig explores whether Europeans or Americans are richer. While I
disagree flat-out with many socialist policies, I agree with some social
democracy policies. I am somewhat in agreement with the socialists about taxing
the wealthy and universal health care, although I likely disagree on the means
to get there and how such policies should be organized.
Bruenig says that when the GDP data is adjusted for hours worked and inequality, two things that are much
higher for Americans than Europeans, the data show that Europeans are
wealthier than Americans.
The graphs below come from
OECD data. I am not sure if the original data was organized into the four
categories here: the U.S., the Angiosphere (UK, Australia, and Canada),
Continental Europe (France and Germany), and the Nordic countries (Norway,
Denmark, Sweden, and Finland). There are a total of ten countries compared. GDP
per Capita, not the whole story, puts the U.S. second, behind Norway. It should
be pointed out that Norway is a successful petro-exporting state with a small
population and a successfully invested large sovereign wealth fund.
When GDP per hour worked is
considered, the U.S. drops to fourth behind Norway, Denmark, and Germany.
The U.S. and Canada lead in hours worked per worker, which means workers there have less free time.
He notes that “there are two ways a country can work less than another: by having a lower employment rate or by giving its workers more time off.” Below, the data clearly show that the unemployment rate in the U.S. is much higher than in several of these countries. The U.S. ranks ninth out of the ten countries in share of population with a job. This confirms that many of these countries have higher employment rates but fewer hours worked.
Bruenig writes:
“Germany is the most extreme case in the group, as it
has a higher GDP per hour than America, the highest overall employment rate,
and the lowest number of hours worked per worker. Germany is not poorer than
the US. It has just chosen to cash out more of its productivity in the form of
free time than the US has. The other Western European countries have made
similar decisions.”
He argues that relying on GDP
per capita suggests that free time has no “value” when we know many people
value their time off from work, even those who work a lot. He makes another
argument:
“…a country with a more egalitarian distribution of
income is richer — has more utility — than a country with a less egalitarian
distribution.”
I would probably agree with
that statement, which suggests that reducing inequality by giving the poor more
(regardless of whether the wealthy are taxed more) makes the whole country
wealthier. To advance his argument, he cites the marginal utility of money, or
“the change in utility (pleasure or satisfaction resulting from the
consumption) of one unit of a good or service.” To explain, he notes that:
“…an extra dollar distributed to a millionaire is worth
far less than an extra dollar distributed to a low-income or middle-income
person.”
He also points out:
“On every conventional measure of disposable-income
inequality, the US runs far behind peer nations.”
He points out that he is using mainstream conventional economics to arrive at his conclusions in the article. It is hard to disagree. When we Americans say we live in the richest country in the world, there are a few caveats.
References:
Western
Europe Is Richer Than the US: Let’s put an end to the stupid GDP discourse. Matt
Bruenig. Peoples Policy Project. Evonomics. August 4, 2026. Western
Europe Is Richer Than the US — People's Policy Project
Marginal
utility. Wikipedia. Marginal
utility - Wikipedia
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