Old World – New World

Since returning a day ago from a trip to Prague and Krakow, I have been pondering the stark contrasts between our country and the countries in Europe. The differences say everything about the drivers of our respective economies. I admit that I am oversimplifying the case, but I am trying to provide a little food for thought.

In Continental Europe there seems often to be a grand sense of calm, as though a higher being is overseeing and managing the place. (Of course this excludes all those strikes and demonstrations we have witnessed of late against the Governments. But I told you I was oversimplifying the case, so bear with me, please.) Europe is rule bound. There is order. The trolleys run on time; you can count on them to show up at exactly 11:05 and then at 11:11 and then at 11:17. The electronic clock on the trolley tells the exact time as the mechanical clock in the square. In Prague, the Astronomical Clock in the Old Town Square which dates back to 1410 strikes the months, days, hours and minutes to perfection.

Prague is an overwhelmingly secular city of 1.2 million people, more than 75% of whom say they are atheists. However, there is no hue and cry over the fact that a giant Christmas scene is erected on Government property. Political correctness doesn’t seem to be an issue. Tradition is important. It provides security. Change is not a good thing.

In Krakow, the streets are immaculately clean. There are people whose full time job it is to keep them that way. It gives one a sense of security to walk around in a tidy place. The Christmas market hums with hundreds of vendors selling everything from Italian gloves to kielbasa. The weather is frigid but no one is shivering for lack of warm clothes. Vendors sell their wares in a quiet and peaceful atmosphere; it is impolite to insult them by trying to bargain. The prices are reasonable and the experience is hassle free. There are a few beggars, but they are far outnumbered by street musicians whose talents are a pleasure to support.

Coal is still the fuel of preference in the countryside of Poland. It’s far cheaper than electricity. Despite the frigid weather while I was in the country, there was no sign of air pollution from the coal.

The invisible hand in all this calm and order is the Government. It is the overlord. And how does it achieve this apparent state of perpetual calm and equanimity? By taxing its citizens and redistributing that money into services for the benefit of all.

It sounds so wonderful. So what is the downside, one might ask. There is a downside and it is economic growth. The larger the Government’s piece of the economic pie (i.e. GDP) the less there is for the private sector. That is an economic truism. In the Czech Republic, the tax burden (i.e. Government’s share of the economic pie) is 36% of GDP and in Poland it is 35%. Contrast that with the U.S. where it is 27%. That is a vast difference.

Which brings me to the contrasting part of my rambling. When I landed at Newark Airport, I headed out into the balmy evening. As I waited for the WALK light to come on, I had to laugh as I observed that the two lights providing the countdown to zero for the WALK light were not even in synch. One was three seconds ahead of the other.

That’s the way it is in America. Our country is a messy place (at least compared to Europe). Americans chafe at too many rules. We are still young as a country – at least by European standards. The entrepreneurial spirit is the driving economic force in this country. That’s why high unemployment is such a loathsome blight. People want to be working. They don’t want Government support. They tolerate Government only to the extent needed because too much Government gets in the way of achieving their dreams.

And there is a price to be paid for living in the land of opportunity. The price is the uneven distribution of wealth. There are the very rich, the rich, the not rich and the poor. And the differences are vast. But before castigating the system, it is worth observing that Americans themselves are engaged in redistributing their own wealth. Of all the major countries in the world, the people in this country are by far the most generous. They give back without Government redistribution. Last year, charitable donations in this country reached $300 billion. That’s not a misprint – it’s $300 BILLION! And of that amount, more than 75% came from individuals. They supported their places of worship, hospitals, the arts, the poor, education.

The system is not perfect. No economic system is perfect. No political system is perfect. But for all the faults in our own economic system, its strengths seem to outweigh its weaknesses. That is why so many people want to emigrate from their own countries and live here.

Postscript: I was in Prague when the news came of the death of Vaclav Havel. It was evident how much the people of the Czech Republic revered him. And in Krakow, my hotel was directly across the street from the house where Pope John Paul II lived for a number of years. I felt close to two very great people.