Mismeasured

Why does Europe keep being told that it is the one in decline?

Inside an Amazon Logistics facility in Texas, 2020. Photograph released under CC0 via Wikimedia Commons.

Two men, the same age, the same job. I have changed their names; nothing else here is invented.

Dale is fifty-two and picks orders in an Amazon warehouse outside Chattanooga, Tennessee. Stefan is fifty-two and picks orders in an Amazon warehouse near Leipzig. The same company, the same handheld scanner, the same ten-hour day of walking concrete and lifting boxes to a clock that never stops counting. Dale’s paycheck is the bigger one. In dollars he out-earns Stefan and by the league table on which Europe is forever losing, his is the richer, freer, more dynamic country.

Now the wager. One of these men is far more likely to reach seventy-five. Bet on the richer one, and you lose.

In April 2025 four researchers published a study in the New England Journal of Medicine that followed more than 73,000 people, aged fifty to eighty-five, across the US and sixteen European countries, for about a decade, and simply watched who lived and who died. Mortality in America was higher at every level of wealth. In the starkest finding, the wealthiest older Americans had no better chance of surviving the decade than the poorest older people in Western Europe. It is observational — association, not proof of cause — but the association is brutal: Western Europeans, taken together, died at rates around 40% below their American counterparts. Dale earns more than Stefan. Stefan will probably bury him.

This is the exact reverse of what Europe is told every day. For two years now one word has hung in the Brussels air: decline. Europe is falling behind. The Americans are pulling away. We are the old world: sclerotic, over-regulated, watching the future happen somewhere else. It is the most powerful political story on the continent and it has Stefan’s Europe cast as the failure.

What the decline story is for

The story has a respectable source. In September 2024 Mario Draghi handed the European Commission a report on competitiveness that has since become scripture. Its diagnosis: Europe’s productivity gap with the United States is widening, the bloc has missed the industries of the future and closing the gap will take investment of nearly five per cent of GDP a year. The warning was blunt — “existential” for the European project. Almost two years on, a tracker finds only about one in ten of its proposals fully implemented. But the frame won completely. Decline is now the water Europe swims in.

A frame is never just a description. It is also a permission slip. Once everyone agrees the house is on fire, anything shaped like a fire hose gets waved through — deregulate faster, thin the rules on chemicals and data and working time, treat the paid holidays and the public hospital as weight. We cannot afford all this if we are losing. That is the sentence the decline story exists to make easy to say. Which is why it is worth asking: what exactly we are losing and at what?

Because the trouble starts with a single word. “Economy” answers two different questions we keep collapsing into one. How much a place produces. And how well its people live. Productivity, output per hour, measures the first. It was never designed to measure the second. The whole decline debate is an argument about which scoreboard counts and Europe has been shamed into reading the wrong one.

The serious case, at full strength

I want to put the other side as strongly as it can be put, because it is not propaganda. It is good economics.

Earlier this year Paul Krugman argued that Europe is barely behind at all: adjust for the fact that a haircut or a flat costs less in Lisbon than in San Francisco and Europe’s output per hour has held roughly level with America’s for twenty-five years. Philippe Aghion, with Antonin Bergeaud and Luis Garicano, answered him — and the title of their reply is the one I have borrowed and turned: The Mismeasurement of Europe’s Productivity. Their case: Track productivity properly, over time and a real gap in output per hour has opened since the mid-1990s. The reason is no mystery: Europe slept through the technology booms. It has no answer to Google, to Nvidia, to the frontier AI labs; the firms that defined thirty years of growth were born on the other side of the Atlantic. That is where the profit and the strategic leverage now gather and the gap compounds.

The deepest version of this worry is the one Europe must actually answer. Today’s long lives and long holidays rest on yesterday’s productive base. An ageing, slow-growing continent may, in time, find it cannot pay for the hospitals and pensions that make Stefan’s life what it is. His security is, in part, a dividend from past growth.

So grant it all. Aghion is right that the productivity gap is real and widening where the future is decided. The error is not in measuring productivity. It is in letting that one number stand in for the other question entirely — in reading a fact about output per hour as a verdict on how a person lives and how long. Hold both halves at once, because everything turns on them: Europe cannot defend its way of life by ignoring productivity; but it cannot raise productivity by dismantling its way of life.

What the number cannot see

Watch the ranking turn over the moment you stop counting output and start counting lives.

Start with the hours. Dale works far more than Stefan, weeks more every year (the cross-country tallies are rough, but the direction has never been in doubt). Most of that gap is Europeans choosing time over money. But the headline reads the whole of it as European weakness, when much of it is simply this: Stefan’s evenings and Augusts are his own and Dale’s belong to the company.

Then the body. Amazon’s American warehouses are brutal places: by the company’s own surveys more than four in ten workers report being injured on the job and most have taken unpaid time off for pain or exhaustion. When Dale’s back goes, the federal floor of guaranteed paid sick leave he can stand on is exactly nothing; for low-wage Americans, paid sick days are a perk, not a right. Stefan, in the same job for the same employer, is owed six weeks of full pay the first time he is hurt and his health care does not depend on his keeping the job that hurt him. Dale works injured because he must. That is not in anyone’s productivity statistic, but it is in the mortality tables.

And then the whole American machine around him. The United States spends 17.2 per cent of its economy on health care, against about 11.2 per cent in comparable rich countries; and buys shorter lives with the difference. A great slice of what makes American GDP so large is medicine that does not keep people alive as well as cheaper systems do. Output is high, but it does not equate with outcome. The hospital bills, the billing departments, even the bankruptcy lawyers, all count as growth, whether or not the patient walks out healthier. An economy can swell precisely by processing its own people; and when the system is bought by financiers it gets worse: at private-equity-owned hospitals, adverse events rose about a quarter after the deal closed. The “Missing Americans“ study counts the result: some 705,000 Americans died in 2023 who would have lived had US death rates merely matched other rich nations’, representing nearly half of all American deaths before sixty-five.

There is a final, colder twist in that data, and once you have seen it you cannot unsee it: American inequality appears to shrink in old age. It sounds like good news and is its exact opposite. The researchers behind the wealth-and-mortality study trace it to selection: the poor die earlier and in greater numbers, so the people left standing at the oldest ages are a richer remnant. The gap closes because one side of it is already in the ground. Dale is the kind of man it erases. Productivity, of course, records none of this: you cannot measure a man’s output once he is dead and the number simply moves on without him.

This is what the welfare economists mean with their cold arithmetic. In a much-cited calculation, Charles Jones and Peter Klenow folded life expectancy, leisure and inequality back into raw income and found that French welfare came out above 90% of America’s, even though French income was barely two-thirds. The thirty-point gap that so frightens Brussels is mostly the price of things the headline cannot see: Stefan’s extra years, his unstolen evenings, the fact that the distance between him and the man at the top of his country is a fraction of the distance between Dale and Elon Musk.

Where this argument is weakest

Let me now turn the cold light on my own side.

Europe’s advantage is neither clean nor secure. Its health systems ration by waiting rather than by price and in its poorer east people forgo care for cost and distance at rates that shame the European boast; life expectancy still swings by the better part of a decade between the continent’s best and worst corners. “Europe,” here, has mostly meant its west. And Americans are not poor: the US has one of the highest median incomes in the developed world, a high middle, not just a high average. The productivity gap is real. The mortality study is observational and weighted toward the old. All true; and none of it touches the core, which is the thing two-thirds of America’s extra money cannot buy back: the years.

But Europe really is in trouble

So this is not a lullaby and Europe is fine, relax is a lie. Europe’s problems are simply not the ones the decline story names.

Energy is the rawest: European firms pay two to three times the American price for electricity, four to five times for gas, a standing tax on everything the continent makes. Capital is the next: some 300 billion euros of European savings drain abroad every year, much of it to fund American firms, because Europe never built one deep market to put its own money to work at home. Beneath both sits the flaw Adam Tooze keeps naming: a shared currency with no permanent shared treasury, a body with one heart and no spine. There is another, slower fact under everything: barely three working-age Europeans for every pensioner, a ratio still falling. This is the real polycrisis, the word Tooze did so much to spread: troubles that compound.

But notice what fixes them. Stefan’s pension and his hospital depend on Europe building a real capital market, a serious energy policy, a way to invest at continental scale; not on abolishing the six weeks of sick pay that keep him alive. The decline story points the panic at precisely the wrong target. It would have Europe pay for its missing tech sector by thinning the very thing that lets it bury fewer of its people, as though the road to Silicon Valley ran through the American graveyard. Plenty of countries that pour money into research also keep their citizens alive; the two are not opposite ends of a see-saw. And the money to do both exists without touching Stefan’s clinic; Gabriel Zucman has shown that a floor under the taxes of the very richest, who often pay a smaller share than their own staff, would raise serious sums toward the bill. Not the whole of it. But the direction is the argument.

So measure again and measure both things. By output per hour at the frontier, Europe is behind, and should worry, and should build. But by the oldest measure there is, how long its people live and how many the system quietly fails, Europe is not the cautionary tale. America is.

Measure the wrong thing and you will fix the wrong thing. A continent shamed out of the one contest it is winning (keeping its people alive and unbroken) will not become America’s equal. It will only learn, slowly and against the evidence, to file its own survivors under cost.

The numbers were never neutral. They were always a question about who an economy is for. Europe’s task is not to stop being mismeasured by others. It is to stop mismeasuring itself.