Revision is in the air about America's economic miracle. Not only did America's bubble crash, but also it now appears that much of the US economic miracle of the 1990s never happened. When it comes to performance, Europe is king, not the US.
A study of the sources of economic growth by the OECD has brought together a formidable set of data and with it new views about who is doing well and who poorly. One new conclusion is that America's economic performance is not as glittering as previously thought. The accompanying table captures the central fact: true, the US had high growth in the 1990s, more than Europe's largest economies by a long shot. But the productivity part - the US as a productivity miracle - is wrong.
This is apparent at the conventional level of output per person employed. But it gets even worse when we recognize that in Europe many fewer hours are worked per person than in America. By the time we look at output per hour worked, Europe shows a full reversal. Suddenly a place thought dull if not worse - Germany - is the big winner. Germans don't work much, but when they do, it is with unmatched productivity, and the story gets better over time.
It might seem from these numbers that Europe has figured out a neat trick: work little, work well. In fact, not only was productivity growth better in Europe, but so also were productivity levels. West Germany or France produced absolutely more dollars worth of output per hour worked than the US. So, too, did Italy. By contrast, Japan, with its inefficient service sector, was way below the US or Europe, as was the UK.