The US – and to an extent, Britain – have traditionally favored a hands-off approach to economic policy punctuated by risk-taking, a basic trust in financial institutions, and a preference to react to markets rather than influence them. Continental Europe is more cautious, favoring national regulation and oversight and choosing, philosophically, to side with social welfare and job security over corporate culture.
The difference can be seen in how each is responding to the financial crisis. The US passed a $700 billion bailout fund. European countries have acted to save their own banks, but on an EU level there is little agreement on a similar fund, and debate has centered on the extent to which the bloc should guarantee private bank deposits – with several countries deciding to back them 100 percent.
"The EU approach mostly has been directed at rescuing the small saver first and worrying about the big financial institutions later," says Peter Ireland, an economics professor at Boston College. "There's a sense that the United States did it the opposite way, where, from the beginning, it was all about the institutions and only after did they think about small savers."
There are drawbacks to Europe's economic model, says Stefan Bielmeier, an analyst at Deutsche Bank. He says a penchant for regulation has kept Europe's economy less nimble and less able to recover than America's.
Olaf Gersemann, author of "Cowboy Capitalism: European Myths, American Reality," agrees.
"In the old industrial age, discipline worked better," Mr. Gersemann says. "In an age that supports flexibility over discipline and professionalism, the American way might be a better way to do business."