What Can We Learn by Comparing Relative Living Standards in OECD Nations?

October 8, 2022 by Dan Mitchell @ International Liberty

Because of my libertarian proclivities, I don’t like when people assert that the United States should have European-sized government.

But this is not merely a question of ideology.

I’ve repeatedly pointed out that there is a relationship between national prosperity and economic liberty. And I’ve shared plenty of data showing that ordinary Americans have significantly higher living standards that their counterparts on the other side of the Atlantic Ocean.

So why “catch up” with countries that are lagging behind?

One of my favorite ways of illustrating the gap is the “actual individual consumption” data from the Paris-based Organization for Economic Cooperation and Development.

Here are the latest numbers, with show that the United States is more than 50 percent above the average for OECD nations.

I’m not surprised that Luxembourg ranks second since it is a tax haven. And it’s also not surprising that oil-rich Norway is in third place or that market-friendly Switzerland is in fourth place.

But notice that Europe’s most famous welfare states, France (102.5) and Sweden (104.7), are barely above average.

More important, notice that the United States is nearly 50 percent higher than those supposedly more enlightened nations.

Seems like there’s a lesson to be learned about what type of economic policy delivers the best results for ordinary people.

P.S. The United States has been at the top of these rankings for as long as I’ve been sharing the OECD’s AIC data, but other countries have suffered big falls or enjoyed big increases.