Friday, September 21, 2012

The Paradox of Life in Europe

For reasons explained below, the next Random Glenings will be published Monday, October 1, 2012.
My wife and I are heading to Madrid tomorrow night.

This is our second trip to Spain this year - we went to Barcelona in April - and we are very much looking forward to our week of travel.

Spain, of course, is in the epicenter of the euro crisis.  Over the last few weeks, the European Central Bank has produced billions in euros to try to help Spain's struggling banking system. Here's an excerpt from the New York Times on the latest bailout efforts:

Spain has also been promised up to 100 billion euros in aid for restructuring its banking sector...
Spain’s main problems — a stumbling economy and a broken labor market — have been compounded by fears of a euro breakup and capital flight from its troubled banks. The country appears unlikely to gain any short-term help from a pickup in the economy, a survey of purchasing managers in the euro zone showed Thursday.

But here's the interesting part. 

I was talking to a client earlier this week who had just returned from 8 days in Spain.  He and his wife traveled to several cities in Spain, including Madrid, Barcelona, Toledo and Granada.

It was puzzling, he said, to compare the dire economic reports in the media with the bustling streets that he saw firsthand. The restaurants were full, the shopping areas packed, and the streets full of people enjoying the beautiful early fall Spanish weather.

His experience was similar to our experience last spring.  Although Barcelona had experienced riots outside of the Barcelona stock exchange two weeks before our visit, the shops and restaurants were full and vibrant.  My wife and I even enjoyed a very pleasant cup of coffee at an outdoor cafe right outside the exchange, nary a protester in sight.

Now, to be sure, anecdotal evidence is very unreliable when it comes to making economic judgements.  We talked to a couple who live in Barcelona, and they said that under the apparently prosperous surface the local economy was struggling.

But there was a column in yesterday's London Guardian that questioned the assumption that life was hard for most Europeans.

Titled "Europe is Still the Closest Thing to Paradise on Earth", Remi Adeyoka discussed the paradox between the on-going euro crisis and the incredible lifestyle of many Europeans:

Listening to all the gloom and doom on the news these days, I sometimes catch myself actually starting to feel sorry for people living in Europe. Then I tell myself I must be mad. Even with a crisis, Europeans still enjoy just about the safest, healthiest and wealthiest lives on the planet.

According to the UN human development index (HDI), which measures life expectancy, literacy, education levels and standards of living in a country, six of the 10 most developed nations in the world are in Europe.

And when the HDI takes into account inequality, nine out of the 10 best-performing nations are European, proof that the old continent has been the most effective in creating the least stratified societies.

Americans, of course, are fond of saying that Europeans are enjoying a lifestyle they cannot afford.  And while this might be true, it is also true (quoting Mr. Adeyoka):

The US offers more opportunity to the gifted, the entrepreneurial and the rich than Europe does. But those who don't fall into those categories are better off here. Were the average American blue-collar worker to see how his German, Dutch or British peers live, and the quality of healthcare and education accessible to them, he might start wondering if his country is indeed "the greatest nation on earth", as American politicians love to say. And let's not forget that US national debt is more than 100% of its GDP compared to the 83% for the EU, even with its often derided "welfare state".

See you in October!