Numbers show a second-rate US

The United States is the world's only military superpower and has the globe's largest economy. Yet, by some measures, the US is a second-rate industrial nation – at best.

"Compared to other advanced economies, our market-driven model yields highly varied results regarding the living standards of our citizens," notes a study by the Economic Policy Institute (EPI), a nonpartisan think tank in Washington.

It's an open question as to whether most Americans are better off than most Western Europeans.

"We leave a lot of people behind," says Sylvia Allegretto, an economist at EPI.

"We are a dynamic economy," says Timothy Smeeding, an economist at Syracuse (N.Y.) University. "A lot of people are doing well," he adds. But for those with median incomes ($40,000 a year) or less, it is a "second-rate" economy. They "are not getting much help."

Many Americans – self-confident and rightfully proud of their nation's economic accomplishments – don't believe that other rich nations beat out the US in a number of areas. But statistics say that's the case.

In terms of the percent of its population living at or below the poverty line, for instance, the US ranks worst among 16 wealthy countries, according to the Luxembourg Income Study. That study found that 17 percent of Americans are poor. As for child poverty, the US also sits on the bottom, with 21.9 percent.

Finland has the lowest overall poverty rate, with 5.4 percent.

On Tuesday, the US Census Bureau is scheduled to release data indicating whether poverty last year increased for the fifth year in a row. The official US poverty rate in 2004 was 12.7 percent – that's 37 million Americans.

"Many would argue that it isn't how well off the affluent are in a society that matters most of all," the EPI study says, "but how the most vulnerable fare...."

Christopher Ruhm, an economist at the University of North Carolina, Greensboro, attributes the relatively poor performance of the US in many social areas to a matter of choice.

His research finds that many rich nations are "more family friendly." For instance, most West European governments (not employers) provide six months or more of paid leave from jobs for mothers after childbirth.

Among the choices the US makes: It spends more than all other nations combined on defense. It spends relatively little on alleviating poverty. It chooses a private health system rather than a socialized, or partly socialized, system.

"The idea that we have the perfect economic model is erroneous," says Ms. Allegretto. "We could learn something from these more interventionist economies."

Americans, with their faith in free markets, have their government intervene in the economy less than do Europeans. Nonetheless, the US still has what economists term a "mixed economy" – a free market, plus some government intervention. US economic intervention tends to favor business more than the poor.

Some other comparisons:

•The US has about the same or worse income mobility between generations. The poor have a slim chance of escaping their parents' poverty, says Professor Smeeding.

•The US has an educational system that is "not terribly great," says Smeeding. International tests indicate that the "outcomes" for US students are about average for rich nations.

"Our smartest kids do as well as smartest kids anywhere," he says. But that's not the case for low-income families. The odds of their children entering or graduating from college are not good.

•The US spends more on healthcare per capita than any other rich nation. Americans with adequate health insurance get good health care. But about 16 percent of Americans have no insurance.

For all that spending, the life expectancy in America shares with Denmark the bottom ranking out of 16 wealthy countries. Denmark spends about half as much per capita as the US does.

The usual comeback to such comparisons is that the US has a marvelous job-creation economy. But the EPI study find this claim "exaggerated." US job growth since 2000 has been "lackluster" and "far worse" than several other well-to-do nations belonging to the Organization for Economic Cooperation and Development.

"Countries should not assume that the highly deregulated, high-inequality US model is the most successful economic model," concludes the study. Nations with less inequality and more regulated markets have "impressive" economies.

Citizens in these countries "have a deep respect for the role of the government in their lives," the study notes. "They look at the US model with a more jaundiced view than policymakers touting the US model."

How America stacks up

Here are a few ways the US compares with other members of the Organization for Economic Cooperation and Development, a group of rich industrial nations:

Military spending: US is No. 1 (by far)

Income per capita: No. 2 (Oil-rich Norway is No. 1)

Poverty (proportion of people living at or below poverty line): Worst

Productivity (per hour): No. 5 (2004)

Annual weeks worked: Most

Unemployment rate: No. 5

Source: Economic Policy Institute, 2006.

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