Are Europeans Better Off?


Would you be better off, in financial and lifestyle terms, if you lived in Europe? This is the basic rhetorical question that Thomas Geoghegan raises in his book Were You Born on the Wrong Continent? (The New Press, 2010). Having lived in both the United States and Germany, I have been asked this question by several acquaintances (including an economist), so the book piqued my interest. Geoghegan, a labor attorney based in the United States, sets out on a series of trips to Germany to answer this question, with the middle class in mind and using a few hypothetical citizens as examples. He compares policies in the United States with those in Europe, focusing primarily on the German model of capitalism and social democracy. He also entertains the reader with stories from his travels and descriptions of the absurdities he observes in each system.

Geoghegan begins by comparing economic indicators for the United States, such as gross domestic product (GDP), national spending, and distribution of wealth, to those of the larger European economies. He asks a skeptical reader to contemplate the value of the total social package in each model and whether it represents a good value for the individual citizen relative to the taxes paid by that individual. Geoghegan goes beyond the dollar value of health care, education, or other services purchased by tax dollars in a country like Germany to draw attention to quality-of-life factors—for example, leisure time, vacation days per year, and length of commute. He also makes the case that, for the US middle class, increases in GDP or income may actually represent declines in quality of life. The prices of services such as education, he argues, are driven up by the wealthy to the detriment of the middle class, whereas, in the social democratic model, the state purchases these services in bulk at better prices overall.

He compares a couple of hypothetical citizens at different points along the socioeconomic spectrum, but his comparisons are more anecdotal than representative, and the tables of statistics are frustratingly oversimplified. The examples jump from one income group to another without clearly defining each group or where it fits into its respective country’s society. The author discusses expenditures on health care without stating what is included in the numbers (e.g., public and private insurance or out-of-pocket payments). Furthermore, Geoghegan’s comparisons of the health care systems and their costs neglect some important differences in quality of care between Germany’s public and private health insurance. Members of my own family found that with public insurance they faced weeks of waiting for a doctor’s appointment or MRI, while with private insurance they received appointments in a matter of days.

Geoghegan also stops short of attempting to quantify the total cost or value of these services to typical, comparable households in each country over an employee’s lifetime. Some of the most noteworthy benefits in the German model are specific to certain life stages, such as the birth of a child (benefits to stay-at-home parents), the college years (tuition-free universities), and retirement (pension system). As a result, a cumulative comparison would be a more meaningful approach to answering the title’s question. Based on my experience, I think such a comparison would bear out Geoghegan’s thesis that the German model is financially preferable for many households. He misses an opportunity to make his case more compelling.

The part of the book that is most rich for exploration is Geoghegan’s assessment of the German corporate model and his attempt to refute some of the conventional wisdom about globalization. Geoghegan argues that the German model is industry-friendly, not in promoting short-term profits but in fostering an industry that has withstood the threat of outsourcing more successfully than US manufacturing has. He highlights key aspects of corporate governance, worker training, and national culture that contribute to more effective relationships between employers and workers as well as between unions and government. Geoghegan also explains the critical role of the German works councils (local- and firm-level workers’ organizations) and the complexity and stability that they add to the employer-labor relationship.

At times, Geoghegan’s interviews and travel stories distract from his central message. While Geoghegan is an authority on labor policy, his travel accounts suggest limited firsthand experience with the German model. The language barrier may have prevented him from understanding some of the more subtle, cultural and attitudinal factors that provide the context for these policies. It also may have biased his conclusions, as many of his English-speaking German interviewees have considerable international professional experience and, therefore, describe experiences and views that are probably not representative of many of the workers who he discusses.

While the entire book showcases the European/German model as an alternative to the US model, Geoghegan leaves it to the reader to contemplate how to bridge the gap. He mentions and refutes many of the objections that readers may have—in particular, about recent changes to the German model— but these dismissals are not substantial enough to convince a skeptic. He does not address in any depth how the United States might most effectively borrow solutions from Europe, or how to overcome political barriers to doing so. But that is, arguably, not his purpose.

Geoghegan is effective in catching the attention of the casual reader, laying out a wide range of areas in which an alternative system might serve them better and challenging widely held beliefs about taxes, government, corporations, and the public interest. However, to the more policy-minded lay reader, this book is a tease that leaves the reader wishing for deeper analysis and more answers.