Per-Capita GDP: U.S. States vs G7 Countries

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The Cautious Optimism Correspondent for Economic Affairs stumbled across this chart with rankings that come as no surprise.

49 of America’s 50 states produce a higher per-capita GDP (economic output) than every non-American nation of the G7. And #50 Mississippi has a higher per-capita GDP than every member except Canada and Germany.

Read on for more details, including the "no surprise" part.

The Economics Correspondent wrote last month that nominal GDP and nominal per-capita GDP are the best measure for comparing the productivity and output of nations and their people, and that’s what this chart does.

Despite all the cries that European socialized democracies, or semi-capitalist European welfare states with high taxes and heavy regulation, are just as wealthy and productive as the USA, the data say otherwise.

The results are also no surprise given data from past analyses.

Back in 2015 the Ludwig von Mises Institute published data comparing the USA and European countries but included three adjustments, all of which served as handicaps to boost the European case.

First, instead of per-capita GDP the article used per-capita income. So instead of looking at economic output the article looked at how much income citizens receive in the ostensibly more “equal” European states.

Second, the income data included all the freebies so many citizens receive in each European country like healthcare and college education, setting aside how long cancer-stricken Europeans wait in line for a chance to use their free healthcare but giving European citizens an “income” boost that Americans don’t get.

Third, the data used “median income” which addresses the criticism that U.S. “average per-capita GDP” is skewed upwards by a small number of mega-rich earners who hoard all the income from the trounced-upon masses.

The result after all these adjustments?

Median per-capita income for the United States was still higher than 22 of 25 European countries plus Australia, Canada, Chile, Israel, Japan, Mexico, South Korea, and New Zealand—basically 30 of 33 OECD countries. Even vaunted Sweden’s median per-capita income (again, including all the freebies for citizens) was lower than 38 states placing it in the poorest quartile, poorer than Georgia, Missouri, Kansas, South Dakota, and Wyoming among others.

Click chart below:

Even red-state Texas, which liberal progressives try to frame as a conservative failure, ranked higher than the same 22 of 25 European countries including Germany, France, Sweden, Finland, and the UK.

As for those three European countries with higher median per-capita income—Switzerland, Norway, and Luxembourg—they had populations smaller than Virginia, Atlanta, and Fresno, CA respectively while the United States is the third most populous country in the world after India and China.

Two also rank far higher than the United States in the Heritage Index of Economic Freedom, both placed in the world’s top five (Switzerland and Luxembourg at #2 and #5), The third, Norway, is world’s #4 largest natural gas exporter and #8 oil exporter—all for the world's #116 population, smaller than Atlanta metro.

So it should come as no surprise that when shedding the combined handicaps of “median,” per-capita “income,” and “government benefits,” and looking solely at “economic output” the USA and 49 of its states would outperform all the G7 countries.

ps. It should also come as no surprise that Washington, DC is the “state” with by far the highest per-capita GDP. Since GDP includes the dollar quantity of government purchases the nation’s capital comes out on top despite not really producing as much as most other states. Washington’s outsized role of government within its economy artificially inflates its ranking.