What do you think of the EU?

In what way do you think the US is more competitive then the EU?

• In terms of the competitive challenges faced by the EU in what way do you think the US is more competitive then the EU?

• Answer:

  There are a couple of ways of looking at things. You can look at the US and EU as the collection of conglomerates based in US/EU but including the plants overseas, and the subcontractors in th ethird world. Let's call that the extended model. Or you can look at only the domestic economies, the production that takes place within the borders of the US and EU. Let's call that the Domestic model. Extended Model: The US does much more in terms of outsourcing, overseas production than the EU does. The Labour laws in the EU, and basically the power of Trade Unions in general hamper the conglomerates in the sense that they think twice before closing shop domestically and setting up shop or signing a contract with overseas subcontractors. Secondly there is a question of culture. People in the US have absolutely no problems accepting that a CEO an get paid more than 200 times an average worker, whereas the gap is ten times less in the EU. The focus in the US is on profits, so outsourcing, 'downsizing'... are accepted, even cheered. In Europe, the focus is more on the people, this is reflected in the decisions of the top managements in terms of investments, plant closures... These apply on top of the differences on the domestic front. Domestic Model The US is much more active in terms of undermining the WTO by signing short term FTA agreements with a variety of countries, getting these countries to open up their markets to US-branded goods with very low tariffs (high tariffs still applying to the products from the EU). Therefore this causes US products to be 'artificially' more competitive (whether they are made in the US at 100% of 1%). The US economy is awash with 'cheap labour' from Latin and South America that gets no benefits, and therefore makes costs of production very low. EU is trying to do this, but the workers say from Poland are given equal rights and do get benefits too. Therefore, by using the 'grey' areas of legality, the US can have its cake - have a welfare system for its people - while eating it - not applying it to everyone who contributes to the economy. That said, the question needs to be asked about the sustainability of the two systems. Squeezing people whether they be trade partners or workers dry today, need not be the best solution in th elong run. Neither is getting rid of workers and replacing their earnings with a few pennies as dividends from shares they bought, and whose money was used to finance oversea ventures. The Domestic market needs to be kept alive too. Sooner or later the FTA will extend to the EU too, so the advantage the US has not will just fritter away. In sum, the US is more competitive because of the focus of the aparatus on profits now, whereas the EU seems to take the view that people matter more (than the US thinks). The US system leads to more competitiveness today, but whether that will be the case in the longer run is a different matter.