From 2001 onwards growth has been funded mostly by military deficit spending and debt. This shouldn't count as real growth, but because the figures are massaged - especially the unemployment figures - the real picture is a lot less healthy than simple-minded indicators like GDP can indicate.

For the 95% of the population that matters, wage growth has stalled, layoffs are more and more common, and real inflation - in the sense of everyday living costs, driven by health insurance, housing and utility prices - has spiralled towards the stratosphere.

Effectively most people are living in a highly inflationary environment, where income is buying less and less because prices are increasing. But because this isn't being acknowledged by lenders, debt costs aren't necessarily dropping accordingly. So there's an inflationary trap waiting for many people - and many are falling into it as bankrupts.

The top 5% of course are doing better than ever, which is skewing the statistics just a little.

What the EU can learn from this is not to let criminals run its political and financial systems, and that a mix of free markets with intelligent regulation - as opposed to pointless and bureaucratic regulation - seems to be the most reliable way to create real prosperity.

Ummh - wages have been stagnant for much of the population for a very long time. If you're in the bottom forty percent or so the past few decades of growth have given you nada. Next forty percent not much. Top 20% it's been good. Top five percent it's been very good. Top 1 percent it's been incredible.

The other thing is that the price for all this creative destruction is never paid for by the people on the top of the companies that fall victim too it - they get their multimillion dollar severance packages.

The trick is to get both growth and to make sure that most people get the benefits of that growth. Without the first you can't have the latter, without the second who cares how the economy is doing.  

You'd think the neoliberals would get this, considering their hostility to high marginal tax rates.  For your average European looking at the US it's as if they're being told - do this and your income will increase but that extra money will be taxed at a ninety or hundred percent marginal rate.  You'll also get more economic insecurity. And this is supposed to be appealing?  How inclined would executives be to adopt policies that would increase the profits of the company but would not give them any more money while increasing the chance of losing their jobs?

Europe should certainly learn from the US experience. Policies of the past 30+ years are an example of what not to do.

My gloomy forecast:

Coming Crash

Policies not Politics
---- Daily Landscape

Now it looks like the US has labor productivity growth back up to 2% to 2.5% per year for the foreseeable future.

Although some of this may be due to data manipulation, there is also something of a consensus that information technology and associated reforms of organizational practices to promote decentralized decision making and employee involvement have also boosted productivity.

So some of the European problem may be in how corporations are run. I'm not an expert on this, and I would like to hear from people with more knowledge and experience on this topic. Do European firms tend to be run in a top-down centralized manner?

It also seems that social partnership and codetermination institutions would help European firms unlock productivity gains from investments in info technology that are starting to be made now.

The other thing the US might have is a propensity for "early adoption" of new techniques. Maybe the "tipping point" for new technologies comes faster in the US than in Europe?

For example, it is often said that European-style universal health systems are barriers to innovation, but this view does not seem to be entirely accurate:

High-technology medical equipment is frequently cited as the main driver of escalating health spending. Although the United States tends to be an early adopter of medical technologies, it does not acquire medical technology at high levels once the technology has diffused widely.

So again the "advantage" of the US is in early adoption of new medical technologies, but not in overall diffusion.

Is this the result of some cultural difference between the US and Europe?

Meanwhile, time has been transformed throughout the economy as the security net of benefits has torn. Thirty years ago, industrial labourers were menaced when plants went bust; today uncertain pensions and healthcare have become middle-class problems. The risks of space have compounded those of time. A generation ago the work exported to low-wage countries were routine, manual jobs; today, computer programming and architectural engineering can be profitably exported to India, China and Brazil.

Instability can be an opportunity - if you have real wealth to invest, or are young and unattached, or an immigrant exploring cracks in the labour force. If you are dutiful but not brilliant at work, if you have children and a mortgage, if you are worried about old-age hardship, then instability does not equal opportunity.

How did the middle slice of workers wind up in this fraught position? After the breakdown of the Bretton Woods agreements in the early 1970s, a sea of capital flooded the world and it was "impatient capital", in the words of Bennett Harrison, the economist, capital looking for short-term returns on share prices rather than longer-term dividends on profits. (...) To turn a business around quickly, the command centre must be able to act decisively without bureaucratic muffling. Modern technologies have helped companies strip out their middle layers of bureaucracy, and so shorten the chain of command.

(...) More important, the short-term, lean, high-tech company has become the sex symbol of the business world. Mid-level, middle-aged, stable workers detract from the allure: they appear in managerial manuals devoted to the new economy as "ingrown bureaucrats" who are "resistant to change". A company can sex itself up practically by replacing mid-level bureaucracy with technology, by exporting technical work to low-wage countries, or simply by enforcing a work ethos in which all employees are treated as young, unencumbered and driven.