GDP per capita is the most useless indicator in this: Imagine you have 5 billionaires and 5 without any money, starving.... GDP per capita would be great.

What is interesting and useful:
a) social mobility (I) income II) education)
b) male/female rate in higher positions
c) wage gaps among rich and poor
d) life expectancy, both average and among the poorest 20% of society

Forgot to add: What about different price levels?

The only countries doing "better" by this measure are Norway and Luxembourg. Oil and Natural gas exports make up at least 20% of GDP, which is hardly comparable to the U.S., and Luxembourg is a tiny country dominated by the financial sector.

Comparing to the U.S. to the 5 most populous countries in Europe is perhaps not optimal, but population is probably a good proxy for finding similarities between the U.S. economy and other countries'. It's certainly better than comparing the U.S. to Luxembourg.

If you think social democracy is on balance a good idea well fine, but I don't think you're going to be able to twist the economic data to make it look like it will be good for the economy.

There are good reasons for picking the 5 largest countries; one of the biggest concerns I've heard regarding social democracy in America is that it "wouldn't scale". It's frankly a load of crap, but it's a familiar load of crap frequently shoveled out there to buttress America's gross free market fetishism.

What this graph doesn't show, very deliberately by using GDP per capita, is income inequality in America. Anyone familiar with Krugman and other liberal-friendly economists is probably also familiar with Larry Summers' (of all people) semi-famous comments on how the lack of income growth equality over the last 30 years is the biggest problem facing America right now. When you consider the effects of an increasingly rarefied elite and an increasingly suppressed middle class, and all of the centralization of power and disenfranchisement of the masses that that entails, he's probably right.

How big would that GDP be if you took out all of the sleight-of-hand financial "products" out there that are really nothing more than economic landmines waiting for some hapless too-big-to-fail bank to stumble upon?

GDP per capita is one of the worst metrics for this sort of comparison, and any honest economist knows that. Mankiw is either lying or stupid, or perhaps a combination of the two. No wonder he was such a welcome fit for the Bush administration.

Kat: the measure adjusts for prices ("purchasing power parity").

Nominal analysis can be very misleading. If you look at actual consumption, the picture is entirely different. This NYT article from 5 years ago addresses this point.

The misleading nature of nominal analysis is also responsible for the impression of widening inequality in America. The richest may have more money than the working poor, but the differences in actual quality of life is the smallest it has ever been. Even the working poor today have access to goods and services that in times past were either available only to the richest elite or unavailable to anyone at all. Certainly, I'd rather be my own working poor self today than a billionaire of 50 years ago.

what a silly chart. to actually compare how wealthy people in different countries are, you'd have to take the average after-tax income, minus things like education, health care, etc.

Since in most European countries these things are either free or heavily reduced, even the higher GDP and the lower tax-rates aren't going to save the U.S. from sinking to the bottom.

Europeans don't start their working lives with hundreds of thousands of dollars in debt, they don't declare bankruptcy because of illness on a regular basis, and they have actual savings rates (10% in Germany, 13% if France, IIRC).

Comparing the U.S. to Luxembourg is comparing apples to oranges. Luxembourg has less than 500,000 people and, as someone noted, is dominated by the financial sector. It's roughly analogous to Upper Manhattan. This is a city, not a country.

And Norway is blessed with oil, unlike its Scandinavian neighbors who also have social democracy but less impressive GDP figures

Those Commie Anti-Capitalist Europeans...

I think this is an interesting and important discussion. I think the GDP stats are somewhat informative, but the question really should be how that income per person is spent. I suspect conservative types will always think we should keep more of income, and certainly it works in the US for the super rich, the merely rich and even somewhat for middle class. We are able to buy big things for ourselves, big TV's, big SUV's, big houses. Sometimes we have to go into debt to buy them, but that is the nature of America. The thing is, if the merely rich and especially the middle class lose their income (even if it is only half the families income) there is not much if anything that protects us. And I am not even mentioning the poor because no one actually cares about them.

I think the idea in Europe is that if things go bad, there are agencies that are available to help you. Certainly we know that if you get sick your payments are handled differently, and at least sometimes more reliably, in European countries. But you often have less disposable income than your American counterpart, so you are somewhat discouraged from buying bigger things.

I will say that I believe the US have been consumers and the Europeans have had been social welfare types for a while. So there are issues in making comparisons. I think Americans have problems with living frugally, and I think Europeans might be alarmed if they found that extra income meant their jobs and health insurance can be disposed of at the drop of a hat.

I will say I think the Europeans care a bit more about the poor than we do. A bit.