Comparative Performance

Comparing economic systems rigorously requires deciding what you are trying to measure. GDP per capita captures market output but misses distribution: a country in which average income is high but median income is low (the United States) looks very different from one in which the two are close (Denmark). Life expectancy, infant mortality, educational attainment, social mobility, and subjective well-being each tell a partially different story about which systems deliver for their populations.

On pure GDP growth, the United States performed comparably to Western Europe during the postwar boom and somewhat better during the neoliberal era -- but much of the American advantage reflected longer working hours and higher labor force participation rather than greater productivity per hour worked. French and German workers produce roughly as much per hour as American workers while working significantly fewer hours and retiring earlier, with higher rates of vacation time and more generous social provision.

On inequality, the comparison is unambiguous. The United States has the highest income inequality of any rich democracy, as measured by the Gini coefficient, and has seen inequality grow faster than any comparable country since 1980. It also has the lowest social mobility of any rich democracy -- the probability that a child born to parents in the bottom income quintile will reach the top quintile is lower in the United States than in Canada, the UK, Germany, or the Nordic countries (Chetty et al., 2014).

The United States is exceptional among rich democracies in its tolerance for poverty, its inadequacy of social provision, and its faith that markets, unaided, will solve problems that every other comparable society has addressed through public institutions.Adapted from Jacob Hacker and Paul Pierson, American Amnesia (2016)

On healthcare, the United States spends roughly twice as much per capita as comparable rich democracies while achieving worse outcomes on nearly every measure: life expectancy, infant mortality, maternal mortality, and preventable death. This gap represents, in aggregate, hundreds of thousands of premature deaths per year and trillions of dollars in excess expenditure -- the cost of a market-based healthcare system in a domain where market incentives are structurally misaligned with health outcomes.

The comparative evidence does not produce a simple verdict for or against any particular economic system -- all real economies are hybrids, and all have performed differently at different times and in different domains. It does, however, challenge the proposition that the institutional arrangements of the contemporary United States represent an optimum from which departure would reduce welfare. On most dimensions that directly affect the majority of the population -- income security, healthcare access, social mobility, working conditions -- the United States compares unfavorably to economies with stronger public institutions and greater redistribution.