NCPA - National Center for Policy Analysis


January 7, 2005

Today, Europeans, particularly Germans, eagerly believe many negative economic and cultural stereotypes about America, says Olaf Gersemann of the Cato Institute.

Some of them, he notes, are plainly ridiculous. For example:

  • Myth: In America, living in decency and dignity requires an individual to hold two or three jobs.
  • Fact: The share of multiple jobholders in the United States is higher than in Germany, but this gap largely disappears when Germany's underground economy is accounted for; Germany also has regulated shopping hours and has extremely high marginal tax rates, giving citizens fewer incentives and fewer opportunities to moonlight.
  • Myth: The U.S. unemployment rate is lower than that of the European Union largely because America imprisons a greater proportion of its citizens.
  • Fact: Empirical findings suggest the growth in the number of inmates in the United States contributed to about 0.1 to 0.2 percentage points to the reduction of unemployment between 1985 and 1998; over the long-run, however, unemployment will likely rise because former felons have a harder time finding work.
  • Myth: America is a bi-polar society with a small handful of wealthy individuals and lots of low-income families, with no middle class in between.
  • Fact: Measured in 2002 dollars, the share of U.S. households that made $35,000 to $100,000 was 44.9 percent in 1982; by 2002 it had shrunk by 0.4 percent.

While these stereotypes are patently false, they nonetheless underscore the suspicions of American capitalism held abroad. Sadly, even after a quarter-century of sluggish economic growth and severe unemployment, Germans still do not look upon America's brand of capitalism and broadly enjoyed prosperity as a beacon for change, says Gersemann.

Source: Olaf Gersemann, "Bowling with the Truth," Cato Institute, October 11, 2004.


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