In a recent blog entry, Paul Krugman wrote that perhaps"the productivity gap between America and Europe never happened" as much of the apparent US productivity miracle may have been nothing more than a statistical illusion created by the USA's bloated finance industry.
He writes this based on a recent report by Dean Baker and David Rosnick. In the paper they calculate the “usable productivity”, the productivity that can actually be used to raise living standards. They contend that the "usable productivity" offers a more accurate assessment of economic well being than simply relying on productivity data because it can be directly translated into improvements in living standards
When the "productivity performance" of the United States is compared to those of other OCED countries it is substantially worse than what the conventional data indicates in both the period 1980-1995 and in the period 1995-2005.
The consequences of this data for Irish and European economic and social policymakers are momentous as for the last 10 years, Politicians throughout Europe have looked at America's wealth and opulence with great envy.
Thus, many European politicians have adopted the American neo-liberal ideology in the hope of creating the same for their citizens wealth. For example Tony Blair, Gordon Brown , Sarkozy and Schroder were all elected on the back of neo-liberal market reforms and low taxation.
While specifically, in relation to Ireland Mary Harney declared in 2000, that "Geographically we are closer to Berlin than Boston. Spiritually we are probably a lot closer to Boston than Berlin."
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