The weakness of the US$ against the Euro doesn’t change fundamentals – Europeans are still much poorer than Americans.
Living standards in Europe are one-third lower than in the US – a gap that is as wide as it was in the 1970s.
The OECD thinks Europeans are poor because of unreformed labor and product markets, but that’s only part of the story.
In my experience the main difference is psychological – European businesses (mine included) tend to be pessimistic and risk-averse, whereas American businesses tend to be the reverse. Thus Europeans invented the Precautionary Principle:
The February 2, 2000 European Commission Communication on the Precautionary Principle notes: “The precautionary principle applies where scientific evidence is insufficient, inconclusive or uncertain and preliminary scientific evaluation indicates that there are reasonable grounds for concern that the potentially dangerous effects on the environment, human, animal or plant health may be inconsistent with the high level of protection chosen by the EU”.
American optimism and risk taking can lead to great failures – Enron for example – but many more successes, such as my pet hate Google.
Unfortunately, mind-sets are much harder to change than laws, so Europe is set to stay relatively poor.