You consume like a European, wussie!

Front page news in last Friday’s Journal:

"Behind Slow Growth in Europe: Citizens’ Tight Grip on Wallets"

Hence, the hottest new insult of the U.S. holiday season:

“Ho ho ho! Economic girlie man, you consume like a European.” This refrain must, of course, be quipped in a virtually incomprehensible Arnold Austrian Accent.

The Journal blames (1) labor-friendly laws mandating early closing times,
(2) regulations to make the value-added tax administrable, (3) a living-within-our-means ethic, and (4) fears about the future insolvency of public pension funds for the positively unmanly state of Europe’s consumer outlays.

The E.U. would like to help Europeans consume more. The European Commission "has pushed unsuccessfully since 2001 for a liberalization of laws on sales promotion, to cut through national rules than inhibit cross-border competition." But national governments have not allowed any proposal to become pan-European law. Jean-Claude Trichet, head of the European Central Bank, said to the workers of Europe in a recent press conference:

"It is time for you to consume." But yet the stubborn Europeans refuse to put down the ciZash!

Some statistics: Europeans are spending more money all of the time, 1.2% more this year than last according to the OECD. But American consumers laid out 3.6% more this year than last. Americans save 0.8% of their disposable income, while Europeans save 10.5%. The "average American" spends $5500 a year with a credit card, while the average German spends $64. Europeans have only .27 credit cards per person, while Americans have 2.23 per person. (Personally, I have .75 credit cards, placing me considerably closer to the Europeans in this regard.)

By far the most interesting part of the article concerns the European laws that supposedly prevent the development of healthy shopping habits. "Europeans...elect governments that protect them from long, irregular work hours. Regulators have limited price competition between stores to stop out-of-town malls from wiping out the small shops that enrich the character of Europeans cities." Unions threatened to strike over extended work days and the self-employed supported them since, as a small-business minister put it, "there is no more social life for the self-employed if they have to open 24 hours a day to compete."

More subtly, VAT administration prevents retailers from drawing in customers with deep discounts on slow-moving items. All sales are taxed as if they were marked-up 50% above the retailer's purchase price.

It is an interesting question how much of the difference between the E.U. and U.S. can be explained in terms of tax policy and other regulations. (The Euro-phobic Bush administration is, after all, contemplating a massive consumption tax.) On the other hand, how much of it reflects thrift, fear of debt, or other cultural factors? The Journal would like to suggest that cultural and policy considerations link up, in that Europeans save because they do not trust the solvency of their pension systems and fear than they will have to provide for themselves in their old age. Is this fear more realistic in Europe than in the U.S.?