Eurostat graph. Sectoral structure of output for the year 2009 in the EU and the US. Selection of the main product’s groups.
The commonly recited rough theory, that Eurozone economy is less competitive than the US, is not confirmed by core statistics. The European Sting has repeatedly stressed that Eurozone is by far a net exporter of sophisticated products and services, while the US suffers of a chronic and probably structural, foreign trade deficit. In this respect, the foreign values of the euro and the dollar are based on completely different principles.
The common European Currency’s parity is based on solid foreign account surpluses. On the contrary, dollar values are anchored on US political clout on key regions of the globe, like the Middle East, the vast Pacific space and the south-east Asian seas. The US have thus imposed the dollar as the main reserve currency and a compulsory means of exchange in key markets like oil, raw materials and all kinds of financial transactions. Let’s follow the statistics.
Eurostat, the EU’s statistical service, has recently published a comparative analysis of the structure of supply, the use of GDP and input-output tables for EU/Eurozone and the US. The first striking finding is that EU and Eurozone are well structured industrial economies, while the US product contains mainly financial and public administration services.
What financial supremacy?
Speaking of financial services, the New York banks are key players. However, their supremacy in global financial markets is not based on competitive advantages or trust, but rather on dollar’s reign and the US military forces. Not to forget that the US invaded Iraq only after Saddam Hussein advertised that he will stop selling the Iraqi oil for dollars and invaded Kuwait. Until then, the butcher of Baghdad maintained very close ties with Washington, fighting against the then young Iranian revolution.
Leaving the marshlands of south Iraq and coming back to the solid earth of economic data, Eurostat informs us that “In 2009, industrial products and trade services represented 28 % and 18 %, respectively, of the EU’s total output while administration and other public services accounted for 14 % of total output. In the United States, industrial products and administration and other public services accounted for 22 % and 19 % of total output, followed by trade services with 16 %. The euro area had the same dominant groups as the EU as a whole, with industrial products and trade services accounting for 29 % and 18 %”.
It’s a revelation to know that, the much-advertised as hinging on the private sector US economy, produces one fifth of its output in the public sector (19%), in comparison to only 14% in the EU. On top of that, Eurozone produces almost one-third of its product (29%) in the industrial sector, compared to only 22% in the US. At this point it must also be stressed that Eurozone is a formidable exporter of up market sophisticated industrial products like German machinery and cars and highly competitive transport services offered by the Greek ocean-going merchant fleet.
American services sector; a joke?
According to Eurostat, the “US output in financial services and public administration is stronger than the EU’s. In 2009, almost 10 % of US output came from public administration services, while the EU figure was 4.8 %. Financial and insurance services and real estate services accounted for 8.9 % and 9.5 %, respectively, of total US output, which was much more than the proportions of 5.5 % and 7.1 % in the EU”. This is a quite convincing quote that the US economy is much more based than the EU on public administration services, a non-productive sector by default.
Eurostat graph. Sectoral structure of output for the year 2009 in the EU, the US and the euro area.
Now, in the clouds of the neo-liberal economic theories, money spent on/by public services is non-productive, yet the US ‘produces’ there one tenth of its product, while the EU only one twentieth. As for the financial and insurance services, where the US turns out again one tenth of its GDP, no need to repeat that the world supremacy of the American financial services hinge on paper dollar’s reign and the US armed forces.
Educated Europe
Last but not least Eurostat found out that, “There is a greater emphasis on education services in the EU than in the United States (3.2 % of total output as against 1.2 %)”. No wonder then, why Europe is going much better in industry and market services. On top of that, given that education guarantees better prospects for everybody, the European Union appears much better equipped to face up to the future, than the US.
In short, the myth that Europe lags behind the US in productivity and competitiveness must stop, because it is usually employed to serve untold and sneaking political targets.
Eurostat graph. Sectoral structure of output for the year 2009 in the EU, the US selection of the main product’s groups.
Eurostat graph. Sectoral structure of output for the year 2009 in the EU, the US and the euro area.
The dollar is not the compulsory currency for buying oil, that is completely false. Oil is bought in euros all the time. Oil is *priced* in dollars, that is a completely different matter. In practice oil is usually bought and sold in dollars because the countries selling the oil want dollars and because the purchasing countries have them, not because they can’t use a different currency.