Thursday, November 03, 2005

A stich in time saves nine

Britain slowly sinking por Richard Rahn

From the time of the Thatcher reforms in the early 1980s, Britain has been the star economic performer among the major European nations. The British went from having the lowest per capita income of the European big four (Germany, France, Italy and Britain) to having the highest one, but now there are signs the economic sickness in "old Europe" is beginning to infect the British.

The British economy had been growing an average of almost 3 percent yearly for the last two decades, which is quite respectable, given that French and German economies have grown much more slowly. Over the same period, the U.S. grew at an average rate of almost 4 percent, far higher than any of the major European economies.

When Tony Blair took office, he had the wisdom not to undo the Thatcher reforms. As a result, Britain has had the advantage of far freer labor markets, and a lower tax burden than most of its European competitors, along with a strong rule of law and relatively little corruption.


Many on the left like to argue that Europe, including Britain, has less poverty than America. But measures of poverty are relative, and constantly change. For instance, 36 percent of America's official "poor" own a dishwasher, 73 percent have cable or satellite TV, 75 percent own a car or truck and 75 percent have air conditioning.


Ireland, once a poor backwater, after radically cutting tax rates has a higher per capita income than England and the second-highest per capita income in Europe after Luxembourg. British economic journalist Allister Heath reported last week new research shows "ince 1995, Eastern European countries with a flat tax have enjoyed an average annual gross domestic product growth rate of 5.3 percent, compared with only 2.6 percent for eastern European countries without one...
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