J.D. Tuccille: U.S. getting richer while Britain, Europe and Canada are falling behind

Photo by Peter J. Thompson/National Post/Postmedia files

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We sometimes forget that the bad economic policy choices of U.S. politicians often pale in comparison to those of their counterparts in other countries. The result is that, despite the government’s best efforts, Americans are growing more prosperous at a faster rate than their peers elsewhere. The divergence is happening so rapidly, the U.K.’s Institute of Economic Affairs (IEA) recently pointed out, that Britons (among others) lose track of how quickly they’re falling behind Americans’ wealth and living standards. A return to free-market principles could help to once again even the score.

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“A majority of Brits wrongly believe that the average person in the U.K. is as rich, or richer, than those in Switzerland, the United States, Singapore, Germany, Australia, and much of Western Europe,” according to a recent paper by IEA’s Matthew Lesh and Michael Turner. “There is an even more extreme disconnect when participants are asked to rank the U.K. relative to the 50 states that make up the United States.”

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In terms of GDP per capita, which is a standard measure of comparative wealth, Britons tend to rank themselves between the residents of New Jersey and Connecticut. In reality, though, “the U.K. ranks last, behind every single U.S. state.” IEA pollsters described Britons’ reaction to learning that they’re poorer than the residents of even Mississippi, the least prosperous U.S. state, as “shock, embarrassment, anger, and a visceral sense that something had gone fundamentally wrong.”

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Britons should be forgiven for their bafflement, however, given how quickly the gap between Americans and Britons has widened. Nor are they alone. Drawing on World Bank data, EconoFact points out that “in the period 2008-2023, EU GDP grew by 13.5 per cent (from $16.37 trillion to $18.59 trillion) while U.S. GDP rose by 87 per cent (from $14.77 to $27.72 trillion). The U.K.’s GDP increased by 15.4 per cent.”

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That is, Britons and their former compatriots in the European Union are growing more prosperous, but at a much slower rate than Americans. This hasn’t put Americans at the economic summit as of yet — places like Switzerland and Singapore still offer their residents higher per capita GDP than does the U.S. But after 15 years of a widening gap, EU GDP went from 110 per cent of that of the U.S. to 67 per cent. That means a smaller share per person, and people in places like the U.K. falling behind the per capita wealth of even the residents of the poorest U.S. state.

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Last year, Aadya Bahl of the London School of Economics noted that “Americans enjoy a much higher standard of living compared to the British. When considering real GDP per capita, a key measure of living standards, the gap between the U.K. and the U.S. has not only persisted but widened significantly in recent years.” She added that “Britain’s economy has also become less dynamic,” with fewer business startups and less job mobility.

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Canada, it should be noted, is doing a bit better than the mother country. The World Bank puts per capita GDP at US$54,340 compared to US$53,246 for the U.K. But U.S. per capita GDP is US$84,534 with a growing gap. As The Economist reported two years ago, “Were Canada’s ten provinces and three territories an American state, they would have gone from being slightly richer than Montana, America’s ninth-poorest state, to being a bit worse off than Alabama, the fourth-poorest” between 2019 and 2024.