America’s Advantage Isn’t an Accident
For decades, the political class in Europe and the global elite have told us that the European model — high taxes, massive welfare states, and armies of bureaucrats — is the future. They said America’s rough-and-tumble capitalism was outdated, unfair, and unsustainable. But the numbers tell a very different story.
Since the early 1990s, the United States has consistently outpaced Europe in growth, income, and innovation. The gap is widening. America’s per-capita GDP now stands tens of thousands of dollars higher than the European Union’s average, and that’s before you even adjust for taxes and purchasing power. When you do, the picture becomes even clearer: Europe’s “social model” comes at the cost of prosperity.
The Numbers Don’t Lie
Let’s start with the basics. Today, the average American produces significantly more economic output than the average European. The U.S. economy’s per-capita output, when adjusted for purchasing power, is roughly one-third higher than that of the EU as a whole.
That’s not a fluke. In the early 1990s, Europe wasn’t all that far behind. Over the next three decades, America’s economy surged ahead. From the rise of Silicon Valley to the shale revolution to a renaissance in advanced manufacturing, the United States kept moving. Europe stagnated.
In 1990, Europe’s largest economies — Germany, France, Italy, and the UK (then still part of the EU) — produced about 70 to 80 percent of U.S. output per person. Today, most of them barely hit 60 percent. The new member states in Eastern Europe have grown fast, but they’re still catching up from decades of communist mismanagement.
States vs. Nations: A Fair Fight?
To understand the real gap, compare individual U.S. states to European countries. It’s not even close.
California’s economy, despite its own regulatory excesses, produces more per person than France or the UK. Texas rivals Germany in total output, with a smaller population and lower taxes. The average income in Florida, adjusted for cost of living, is higher than in Italy or Spain. Even the middle-of-the-pack states like Indiana or North Carolina compete with the richer EU nations in household purchasing power.
And it’s not just the wealthy states. When you compare per-capita output from America’s Rust Belt — Ohio, Michigan, Pennsylvania — to southern Europe, the U.S. still wins. The difference is that Americans, even in lower-income regions, enjoy greater opportunity, flexibility, and upward mobility than Europeans living under rigid, bureaucratic systems.
The Tax Trap
Europe’s tax systems are designed to equalize outcomes by redistributing wealth. America’s tax system is designed — at least in theory — to reward creation and growth. The results are obvious.
Across the EU, governments take close to 40 percent of GDP in taxes. In the United States, the number hovers near 25 percent. That extra 15 points of GDP is the difference between a nation where private citizens drive investment and a continent where the state decides how resources are spent.
Europeans are heavily taxed on income, consumption, and labor. Value-added taxes (VATs) quietly drain purchasing power from every paycheck. High marginal income tax rates discourage ambition, while thick webs of regulation make hiring, firing, and expanding a business a legal nightmare. It’s no wonder that European innovation lags behind.
Regulation: The Great European Straightjacket
Europe’s political class calls its regulatory state “civilized capitalism.” In reality, it’s economic suffocation with better branding. From labor rules that make it almost impossible to fire employees to environmental directives that crush small businesses, Europe has created a system designed to prevent risk — and therefore, prevent growth.
The U.S., for all its flaws, still rewards risk-taking. When American entrepreneurs fail, they can try again. In Europe, one failed venture can mean financial exile. America’s regulatory climate is far from perfect, but its combination of flexible markets, property rights, and competition remains the engine of its success.
Freedom Still Matters
There’s another ingredient in the mix — liberty. The American model rests on the idea that individuals, not bureaucrats, should decide how to live and work. Europeans trade freedom for security, and they get neither.
In the United States, even with creeping government expansion, citizens retain a degree of personal and economic liberty that would be unthinkable under Europe’s dense administrative state. Americans can start businesses faster, move across state lines without bureaucratic permission, and keep more of what they earn.
Europeans, meanwhile, live under governments that regulate everything from energy usage to the size of a shampoo bottle. The result isn’t utopia — it’s stagnation dressed up as virtue.
Growth: Three Decades of Divergence
Since the early 1990s, the U.S. economy has grown faster than the EU almost every single decade. The compounding effect is enormous.
If Europe had matched America’s growth rate since 1990, the continent’s GDP would be trillions higher today. Instead, it remains reliant on U.S. innovation, U.S. defense, and U.S. consumer demand to keep its economies afloat. The eurozone crisis, the demographic collapse, and the obsession with climate regulation have all made things worse.
In contrast, America has reinvented itself repeatedly — from the tech boom to the energy boom to the near-shoring of manufacturing. While Europe debates carbon targets, the United States builds.
The Bottom Line: Two Models, Two Futures
The United States is far from perfect. Our leaders waste money, regulators multiply, and too many in Washington envy Europe’s centralized control. But America’s fundamental advantage remains intact — freedom, flexibility, and faith in individual enterprise.
Europe chose bureaucracy over dynamism, redistribution over production, and regulation over innovation. The result is a slower, smaller, and older economy. The American model — imperfect but still alive — continues to deliver higher incomes, greater mobility, and more opportunity for ordinary people.
The lesson is simple: if America ever decides to imitate Europe, we’ll end up just as stagnant. But if we double down on what works — liberty, competition, and responsibility — we’ll keep leading the world for decades to come.