Acton Institute Powerblog

The reason America’s poor are richer than most Europeans

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The U.S. has diverged from the OECD approach to economic and energy issues that critics called this weekend’s G7 Summit the “G6-plus-one.” However, a new study shows America’s less regulated, less regimented economy has generated such abundance that the poorest 20 percent of Americans are more prosperous than the average European.

“If the U.S. ‘poor’ were a nation, it would be one of the world’s richest,” writes Jim Agresti of Just Facts in a new article for the Acton Institute’s Religion & Liberty Transatlantic website. Unlike online fact-checking services that spend their time fact-checking parody websites, Just Facts is renowned for its rigorous and accurate analysis of complex data.

Agresti brings his gimlet eye to these global poverty data, noting that statistics of mass Western privation don’t actually measure poverty: They measure income inequality. For instance, the UK government considers anyone making less than 60 percent of median income as living in “poverty.” UN Special Rapporteur Philip Alston even derides the idea of “so-called ‘absolute poverty.’”

Instead of pegging poverty to a certain percentage of average salaries, Agresti measures the value of consumption: the amount of goods and services people actually consume. This is valuable because as our own departing Joe Carter recently noted, consumption is a superior measure of poverty, because “you don’t eat income.”

When Agresti looked at the proper metric, he confirmed previous analyses finding that several U.S. states are richer than leading EU nations. And he found the reason for the difference.

“In direct contradiction to the [New YorkTimes, a wealth of data suggest that aggressive government regulations harm economies,” Agresti writes. Among them are green energy initiatives, like the one the U.S. sat out at the G7 Summit. “High energy prices, like those caused by ambitious ‘green energy’ programs in Europe, depress living standards, especially for the poor.”

Agresti’s findings about the impact of American exceptionalism should guide those who wish to eradicate poverty by showing which policies create prosperity.

You can read his full article here.

(Photo credit: William McKinley’s 1896 presidential campaign poster. This photo has been cropped and modified for size. Public domain.)

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Rev. Ben Johnson Rev. Ben Johnson is Managing Editor of the Acton Institute's flagship journal Religion & Liberty and edits its transatlantic website.