America: July 4th Created the Most Generous Country on Earth

The rise of populist Bernie Sanders obscures an important truth this July 4th: America is a generous superpower that spends more money on social spending than any other country. Sanders would have us believe that our capitalistic-leaning system (which is by no means perfect–we can do more to promote economic freedom and ensure equal opportunity) is stingy and deprives lower-income families. He would have us be more like continental Europe, which is certainly no paragon of stability these days.

But even beyond the Brexit turmoil, a Sanders narrative doesn’t square up with the facts. Data from the Organisation for Economic Cooperation and Development (OECD)–a gold standard authority on the developed economies that Sanders likes to compare us with–show just how America stacks up. From its November 2014 report on social spending using 2011 data (the most recent available), we see this chart:

What this chart shows us is that America lags behind many other developed countries on social spending in pure nominal terms. That means at pure face value we are more miserly than places like Denmark, Netherlands, Japan and many others. But this is a basic and incomplete, superficial comparison.

Once you throw in private-sector social spending (most notably, privately-sector healthcare insurance) and also adjust for taxes (especially the consumption or value-added taxes (VAT) so common in Europe, which hurt the poor the most because they are more evenly distributed), things look much different.

With the proper adjustments, America comes in second place behind France only in what we spend on social spending as a share of our economy. However, because our economy is much bigger than France’s, we actually spend way more per person than France and anyone else.

Economist Edward Conard, my former boss and a scholar with the American Enterprise Institute, crunches the numbers using a prior OECD report with similar findings:

Despite popular misconceptions, Organisation for Economic Cooperation and Development (OECD) data confirms America spends more on social welfare than any other country—$13,500 per capita in 2009. This is nearly 25 percent more per capita than the second largest spender, France, and 35 percent more than Germany, Sweden, and other high-spending Scandinavian countries.

Several factors obscure this truth. Europe taxes benefits more heavily, whereas benefits are often tax-exempt in the United States. The private sector finances a much greater share of social spending in America, particularly healthcare. While France spends more than America as a share of GDP—32 vs. 29 percent—the much larger U.S. GDP per capita—$47,000 vs. $34,000, $36,000 and $38,000 in France, Germany, and Sweden respectively—yields much greater spending per capita.

A counterargument to this point is that private-sector social spending in America doesn’t equal health better outcomes. Yes we can do more on the preventative healthcare front, especially in terms of how American culture accepts obesity and sedentary lifestyles that improve health. But that is an entirely different argument than pure stinginess as Sanders would have us believe.

So as you’re sipping a cold one under the glimmer and boom of Independence Day fireworks, don’t forget that July 4th unleashed the most socially-conscious country this world has ever seen.