[moki]

from: http://www.brusselsjournal.com/node/356

.....

EU Economies: Poor Reporting

From the desk of George Adair on Sat, 2005-10-15 18:36
It is always interesting to see our friends on the left hit the roof when data is presented. The beauty of data can be summed up quite easily, it is what it is. The number 7 is 7. There is no “yes, but”, there is no Lakoffian reframing of 7 as 6.2, there is no getting around the true fact that 7 is and will always be 7. It is this certainty in an oft-cited “world of grays” by the extreme Left that seems to be so repellent.

In visiting some of my favorite blogs I noticed one component was missing from my recent “dead and dying in America” series, the series should have been “dead, dying, and poor in America”. These anti-US themes are part and parcel of the mainstream media (MSM)’s core beliefs on both sides of the Atlantic, a template if you will. Dead, dying, and poor Americans fits the MSM template far better than “alive, vibrant, and prospering” Americans. But are the anti-US pronouncements by the MSM true? As it relates to the “dead and dying” portion of the anti-US template fostered and advanced by members of the MSM, obviously not (here and here).

The third pillar of the MSM template, poverty. What about the MSM generated perception that 99% of all Americans are living in a subjugated state of poverty many steps below serfdom? Fortunately for our friends on the extreme Left and the MSM, poverty and economic trends are quantifiable. Despite the attempts by many bloggers to provide actual facts and data (my own here), the MSM seems to be too busy in their world of grays to notice reality. Some time back a friend provided me with an excellent and factual report of poverty in the US and the EU courtesy of Timbro. What does the report find about economic comparisons between the two?

As you can see from the chart on your right (sources: Eurostat and the Bureau of Economic Analysis) on a strictly per capita GDP basis EU-15 countries generally rank near the bottom when compared to the individual US states and the District of Columbia in Purchasing Power Parity (PPP). Per capita GDP is of course no measure of poverty, but it is a clue.



So often the US is portrayed as a nation with a tiny sliver of 1% at the very top enjoying all the spoils of a free-market. The other 99% are left to fend for themselves in a Hobbesian jungle of death and despair. Why do MSM outlets continually perpetuate such stereotypes? Must fit the template.

What about so-called creature comforts? The poor in the US are often written about as though they have nothing in terms of material goods and will never even have the dream of possibly ever owning anything. Again, creature comforts are not a sign a wealth, not a sign of poverty, just yet another clue. Some of the creature comforts we all enjoy, some we do not (microwave ovens and automobiles in my case), but that is part of the joy of individuality. Take a look on page 16 of the Timbro report. Some of the number look a little dated, but a rough idea in most categories can be gleaned (I am doubtful of some of the numbers, others comport with data found elsewhere).

High ownership of vacuum cleaners is no great sign of wealth or poverty. But, how can vast majority of the US population own such things as television sets and vacuum cleaners? According to the MSM the vast majority of US citizens are busy foraging for food in landfills when not being exploited at their hamburger-flipping jobs.

What about defined rates of poverty? Per our friends at the BBC referenced above, the US defined rate of poverty is currently 12.7% of the population. Horrifying. According to Eurostat the EU-15 defined rate of poverty was 16% of the population in 2001. To be overlooked.

In quantifiable terms, a look at the officially poor in the US (feel free to make your own comparisons):



A look at just the US poor in micro. Again, creature comforts are not a sign of wealth or poverty, but home ownership? automobiles? satellite tv?!

Finally, a look at living space comparisons between our US and EU friends. A sign of wealth/poverty, no. Yet another clue, yes.



Proof of anything, nope. Will the MSM recognize any of the above as clues that the vast majority of people in the US are not “dead, dying, and poor”? Doubtful...

Please be sure not to read this post as a “US is better than the EU post”. The facts are what they are. 7 is still 7. This post is designed to wonder out loud why the MSM perpetuates the template they do when it comes to life in the US.

Just a few things to remember when you hear about those poor, pitiful Americans. It is not healthcare, wealth, or material things which make the US such a terrible place for it’s citizenry. Perhaps it is all a load of rubbish. Always check for yourself. However, any suggestions as to what makes the US so “poor” in the eyes of the MSM are welcome

[NYCFarmboy]

yes, even the poorest Americans are better off than "average" Europeans.

socialism = shared misery

[Doofy]

Hilarious.

Stupid EU.
Stupid socialists.

[Dakar]

Dp.

[Dakar]

Originally Posted by NYCFarmboy

yes, even the poorest Americans are better off than "average" Europeans.

I wouldn't consider living space a great signifier of being better off. Land is a much rarer commodity there than it is here.

[NYCFarmboy]

Originally Posted by Dakar

I wouldn't consider living space a great signifier of being better off. Land is a much rarer commodity there than it is here.

I just pointed that fact out to my brother who happens to live in Germany and he said that Americans are much fatter than Europeans so of course we need more space here.

I thought that was pretty funny actually.

and true.

LOL

[Peder Rice]

The frightening bit of data put forth was the surprisingly low percentage of the poor with internet access. I tend to favor laissez-faire economics (Badnarik, charisma aside, rules), but the growing disparity of connectedness will likely translate into a more solidified separation of the classes as time passes. Carnegie believed in providing equal access to information for all people, and that access is growing limited to the poor, and so they will find themselves further and further away from the rich. Not a drastic situation yet, but a generation from now the digital divide may have been a retardant to growth of the American economy, ultimately affecting us all.

[BRussell]

Oh look, it's yet another anti-European spam thread from moki, going against the posting guidelines for this forum.

I don't really give a damn about what happens in Europe, all I know is that the US has an economic system rigged by politicians so that the wealthy get wealthier and the rest remaining stagnant for cheap labor. The top 1% have increased in income by over 100% in the past 20 years, while the bottom half have increased their income by about 10%. That is wrong. It should be exactly the opposite.

[Peder Rice]

To be fair, let's not say that this is maldistribution of wealth, for the United States has many structures that require a great disparity of income to fund large financial projects. In other words, it is beneficial to the whole of our society to allow a few an absurd level of income and general wealth, so long as balance is maintained. At present, I think we still maintain our balance, for consumer goods continue to fly off the shelves, and usually at lower costs than previously. However, if the balance tilts any further, we may begin to see the effects of to few consumers, potentially meaning deflation, and to counteract that, a decrease in interest rates, which will mean a lower-valued dollar, and for the most part, != good.

[NYCFarmboy]

Originally Posted by BRussell

Oh look, it's yet another anti-European spam thread from moki, going against the posting guidelines for this forum.

I don't really give a damn about what happens in Europe, all I know is that the US has an economic system rigged by politicians so that the wealthy get wealthier and the rest remaining stagnant for cheap labor. The top 1% have increased in income by over 100% in the past 20 years, while the bottom half have increased their income by about 10%. That is wrong. It should be exactly the opposite.

H O G W A S H

there is nothing stopping anyone in the US of A from getting off their @ss and making a fortune in America.

Crying about that being "unfair" is absurd...

What would your solution be? Kill off the top 1% and redistribute that wealth? What would you do after that gets spent?

Do you realize how absurd it is to cry about rising incomes for everyone?

[Dakar]

So let me get this straight... if someone in the bottom was making 10,000 20 years ago, now they're making 10,500 and if someone in the top was making 500,000 20 years ago they're now making over 1 million?

And no, i won't be surprised if I misinterpreted this... I suck at math.

[BRussell]

Originally Posted by Dakar

So let me get this straight... if someone in the bottom was making 10,000 20 years ago, now they're making 10,500 and if someone in the top was making 500,000 20 years ago they're now making over 1 million?

And no, i won't be surprised if I misinterpreted this... I suck at math.

It's inflation-adjusted, so it would be even greater than what you stated. And I wouldn't apply it to a single individual, because individuals' earnings tend to rise over time. But, yeah.

[BRussell]

Originally Posted by NYCFarmboy

H O G W A S H

there is nothing stopping anyone in the US of A from getting off their @ss and making a fortune in America.

Crying about that being "unfair" is absurd...

What would your solution be? Kill off the top 1% and redistribute that wealth? What would you do after that gets spent?

Do you realize how absurd it is to cry about rising incomes for everyone?

I like how you say "hogwash" to simple factual information. I don't understand why people defend this. Don't you want people's earnings to increase? This doesn't happen by accident. We have a system that makes this happen.

[NYCFarmboy]

Originally Posted by BRussell

I like how you say "hogwash" to simple factual information. I don't understand why people defend this. Don't you want people's earnings to increase? This doesn't happen by accident. We have a system that makes this happen.

hogwash.....


yes...incomes are up, FOR EVERYONE...

........and you are moaning in agony about the unfairness of it all.

[Dakar]

Originally Posted by BRussell

It's inflation-adjusted, so it would be even greater than what you stated. And I wouldn't apply it to a single individual, because individuals' earnings tend to rise over time. But, yeah.

Okay, then that IS absurd.

[Dakar]

Originally Posted by NYCFarmboy

hogwash.....


yes...incomes are up, FOR EVERYONE...

........and you are moaning in agony about the unfairness of it all.

Yeah, so if I throw a penny at you and a c-note at him, don't complain, you're both 'richer.'

[Don Pickett]

Originally Posted by NYCFarmboy

Do you realize how absurd it is to cry about rising incomes for everyone?

Except incomes aren't rising. Adjusted for inflation, wages in the U.S. have been stagnant or falling for years now. Not only is real median household income falling:



But change in real average income is down as well:



What this means is that any gains in income are being eaten by increasing prices. The average cost of health care is expected to increase by about 12% next year, neutralizing any income gains for 95% of the population all by itself. Add to this higher energy and home costs, and you begin to understand why almost all of the economic activity of the past five years has been driven by asset inflation and asset inflation alone.

[BRussell]

Originally Posted by NYCFarmboy

hogwash.....


yes...incomes are up, FOR EVERYONE...

........and you are moaning in agony about the unfairness of it all.

Incomes are only up about 10% for half of the US population in the past 20 years. My America can do better than that. I guess you and I just have different sets of expectations for our country. You have low expectations, I have high expectations.

[Dakar]

Originally Posted by Don Pickett

E

No wonder the middle class is feeling the squeeze.

[NYCFarmboy]

Originally Posted by Don Pickett

Except incomes aren't rising. Adjusted for inflation, wages in the U.S. have been stagnant or falling for years now. Not only is real median household income falling:



But change in real average income is down as well:



What this means is that any gains in income are being eaten by increasing prices. The average cost of health care is expected to increase by about 12% next year, neutralizing any income gains for 95% of the population all by itself. Add to this higher energy and home costs, and you begin to understand why almost all of the economic activity of the past five years has been driven by asset inflation and asset inflation alone.

those graphs are from the lunatic left wing "economic policy instutute"...

lol.....credible evidence please.

[NYCFarmboy]

Originally Posted by BRussell

Incomes are only up about 10% for half of the US population in the past 20 years. My America can do better than that. I guess you and I just have different sets of expectations for our country. You have low expectations, I have high expectations.

Oh I agree that everyone could be doing better, it just takes effort to build something rather than to sit around tearing down others for doing better than oneself.

A rising tide lifts all boats, n'est pas?

[Don Pickett]

Originally Posted by NYCFarmboy

those graphs are from the lunatic left wing "economic policy instutute"...

lol.....credible evidence please.

Are you able to dispute the data with data of your own, or are you merely able to deliver ad homenim attacks? What is your argument for an economy based on asset inflation? Etc.

[NYCFarmboy]

Originally Posted by Don Pickett

Are you able to dispute the data with data of your own, or are you merely able to deliver ad homenim attacks? What is your argument for an economy based on asset inflation? Etc.

well the facts were clearly stated at the beginning of this thread no?

[Peder Rice]

For the record, boys, economists don't disagree on this one; America has an increasing disparity in incomes, as do nearly all European nations experiencing growth. I've never seen a statistic that does not suggest that the gap is widening. The point is not that all Americans are getting richer, it is that some are getting disproportionately wealthier, and soon, if not already, their power will become so situated that they will have basic powers like an oligarchy.

When the power becomes situated in the hands of too few, a balancing counter movement will come about that will equalize things as necessary, either by traditional economic forces like the Invisible Hand or by a socialist uprising in the electorate.

[Don Pickett]

Originally Posted by NYCFarmboy

well the facts were clearly stated at the beginning of this thread no?

Actually, the "facts" state almost nothing, and I'm surprised that anyone arguing economics would take them seriously. The figures quoted in the first table, "GDP by State and Country, per capita" is merely a measure of the number of people in the country versus the size of the country's economy. You will notice that the list doesn't include the U.S. as a whole versus EU economies, and there's a reason for this: The EU wins. Luxemboug has the highest GDP per capita in the world ($77,595 as of 2005).

By breaking up the data in that table, the "data" is able to show that states with small populations (D.C., Alaska) or high GDPs (New York, New Jersey) sit high on that list, thanks to the meaningless simplicity of the math. You will notice that California is only at number ten, it's high gross product offset by its high population. Were we to compare per capita GDP incomes, and my country consisted of one person making $1 million a year and ten people making $1 a year, and your country consisted of ten people making $95,000 a year, I would be able to claim a higher per capita GDP. Furthermore, if we were able to break those country totals into a chart, one would be able to point out the fact that the highest entry in my chart would be $1 million, while the highest in yours would be $95,000.

To extend this analogy, your economy would be much healthier, as you would have ten people paying taxes on reasonable incomes and pumping money into the economy to support ten households, while I would have one person paying taxes (and, given the U.S. tax code, very probably paying less in taxes than those making $95,000 a year) and supporting a household and ten people contributing nothing to the economy.

The second table (Percentage of Poor U.S. Household Ownership of. . .) is meaningless for two reasons. One, the table doesn't not define poor. Does it mean at the poverty level? Does it mean making a certain percentage under the median household income? Without anything to tell us what "poor" means, we have no basis of comparison. Two, the table does not take into account the means by which those items were acquired, i.e., is the person who owns them assuming a huge debt load in order to own them. Considering that the average U.S. consumer has $7,000 of revolving credit card debt, this is a serious question.

The third chart is almost laughable: please explain what size of house has to do with economic activity.

[Don Pickett]

Originally Posted by Peder Rice

For the record, boys, economists don't disagree on this one; America has an increasing disparity in incomes, as do nearly all European nations experiencing growth. I've never seen a statistic that does not suggest that the gap is widening. The point is not that all Americans are getting richer, it is that some are getting disproportionately wealthier, and soon, if not already, their power will become so situated that they will have basic powers like an oligarchy.

When the power becomes situated in the hands of too few, a balancing counter movement will come about that will equalize things as necessary, either by traditional economic forces like the Invisible Hand or by a socialist uprising in the electorate.

That is only the tip of the iceberg: the current U.S. economy is driven by asset inflation, namely the inflation of housing prices. Look at where job growth is coming from: construction, building and finance. With interest rates set to rise in order to curb inflation, we are looking at the end of easy credit for those houses.

[NYCFarmboy]

Originally Posted by Don Pickett

That is only the tip of the iceberg: the current U.S. economy is driven by asset inflation, namely the inflation of housing prices. Look at where job growth is coming from: construction, building and finance. With interest rates set to rise in order to curb inflation, we are looking at the end of easy credit for those houses.

I have mixed fews on the housing bubble. Had you asked me a year ago I would have said yes its a bubble and prices will fall... now I think they might just be leveling off.

Buying a house is different than maxing out your credit cards and declaring bankruptcy... when you buy a house you are building security for the rest of your life, so I'm not sure that I would treat the housing market the same as the "easy credit" fiasco's that the credit card companies only recently admitted were completely out of control...and curbed by the bankruptcy protection laws being changed..

which I disagree with, if the banks were stupid enough to have loaned money out they should not be whining to the federal government for legislation to stop people from whelching on their debt.

[moki]

Originally Posted by NYCFarmboy

I just pointed that fact out to my brother who happens to live in Germany and he said that Americans are much fatter than Europeans so of course we need more space here.

I thought that was pretty funny actually.

and true.

LOL

Believe it or not, Australia passed the USA for "fattest citizens on average" last year. I do agree though, obesity is a problem here, as it is in England.

[moki]

Originally Posted by BRussell

Oh look, it's yet another anti-European spam thread from moki, going against the posting guidelines for this forum.

First of all, given that what goes on in here is mostly a bunch of America bashing from people outside of the USA (as well as a number of people inside the USA who are practicing self-loathing), consider it a turn-about in fair play.

But the main thing is... look at the source of the article. It's FROM Europe -- how is this a Europe-bashing article? It's a "Main Stream Media (MSM) in Europe" bashing article from the Brussels Journal that points out the fallacies of "accepted thought" in said media. Sheesh...

[CRASH HARDDRIVE]

Originally Posted by Don Pickett

By breaking up the data in that table, the "data" is able to show that states with small populations (D.C., Alaska) or high GDPs (New York, New Jersey) sit high on that list, thanks to the meaningless simplicity of the math. You will notice that California is only at number ten, it's high gross product offset by its high population. Were we to compare per capita GDP incomes, and my country consisted of one person making $1 million a year and ten people making $1 a year, and your country consisted of ten people making $95,000 a year, I would be able to claim a higher per capita GDP. Furthermore, if we were able to break those country totals into a chart, one would be able to point out the fact that the highest entry in my chart would be $1 million, while the highest in yours would be $95,000.

You’re right, but I’ve pointed out this very sort of thing when the opposite equation is used (almost constantly) when the anti-US stat-mongers line up and play shell games with numbers to prove how bad they want the US to seem. IE: cherry picking European nations to compare with the entire 290 million+ population of the US in order to say “Gee, look how bad the US is!”

They do it with crime and poverty stats, and they do it whenever they want to try and float the case that the US is ‘stingy’ compared to far smaller individual EU nations. But notice they’ll NEVER compare 290 million Europeans of equal background to 290 million Americans. THAT comparison would actually mean something, rather than comparing say, Sweden to the entire US.

I’ve also made the case before, that if you want to reverse this tactic, you can cherry pick US states and compare them to Europe and create the same lop-sided comparisons to shore up your preconceived point. (And indeed, that’s what you’ve noticed someone has done.) Sure of course, DC and Delaware probably have better living conditions than France and Germany. And hey, I’ll bet they’re ‘more charitable’ and better looking to boot.

And to continue down the path the EU stat-mongers use whenever they delight in pointing out that a small cherry-picked part of Europe outpaces to the US, I can claim that since this small portion does: ALL of it does! IE: “Delaware =part of the US, therefore the US = better than Europe!” On the flip side it’s: “Sweden= part of EU, therefore EU =better than US” Yay!

Welcome to the world of useless stat comparisons.

Both sides of the pond pull these numbers shell-games to say that one is better than the other. (More often the anti-US side of you get right down to it however).

The fact is, -and anyone who is honest realizes it- the US and Europe are fairly equal in reality. There’s a broad range of good and bad in both, and all told, this pretty much balances out to make sweeping comparisons of which is ‘better’ than the other moot. Neither is better, both are just different.

The bottom line is, unless you’re comparing an equal number of people with equal living conditions (and I’ve NEVER seen a US vs. Europe poll that actually does this) ALL of these comparisons with cherry-picked populations are COMPLETELY MEANINGLESS.

[Don Pickett]

Originally Posted by NYCFarmboy

I have mixed fews on the housing bubble. Had you asked me a year ago I would have said yes its a bubble and prices will fall... now I think they might just be leveling off.

Buying a house is different than maxing out your credit cards and declaring bankruptcy... when you buy a house you are building security for the rest of your life, so I'm not sure that I would treat the housing market the same as the "easy credit" fiasco's that the credit card companies only recently admitted were completely out of control...and curbed by the bankruptcy protection laws being changed..

Buying a house is not necessarily about adding adding security anymore. Look at the numbers of people buying houses with AMRs. Those people are only able to afford those houses so long as they appreciate higher than the rate of inflation. Given the changes coming in credit card balances and steadily rising interest there are a lot of people who are on the cusp. The large uptick in foreclosures in the past three months is a troubling sign. Additionally, given the inflation in the housing market, there is a good chance that many houses are overvalued.

[Don Pickett]

Originally Posted by CRASH HARDDRIVE

The fact is, -and anyone who is honest realizes it- the US and Europe are fairly equal in reality. There’s a broad range of good and bad in both, and all told, this pretty much balances out to make sweeping comparisons of which is ‘better’ than the other moot. Neither is better, both are just different.

The bottom line is, unless you’re comparing an equal number of people with equal living conditions (and I’ve NEVER seen a US vs. Europe poll that actually does this) ALL of these comparisons with cherry-picked populations are COMPLETELY MEANINGLESS.

There is a difference between the two, though, and it's an important one. It's a philosophical difference in how economies are structured. Generally speaking, EU governments spend more on their citizens – health care, pensions. This leads to higher taxes, but their citizens get to keep more of their after tax income because their cost of living is less. I think most of the arguments about economies are really about this split: is the purpose of an economy to create the most wealth for those who can make it, or to have as many of the people in the country enjoy the country's wealth?

[CRASH HARDDRIVE]

Originally Posted by Don Pickett

Generally speaking, EU governments spend more on their citizens – health care, pensions. This leads to higher taxes, but their citizens get to keep more of their after tax income because their cost of living is less.

This is absolutely untrue and is just another meaningless assertion supported by nothing. Cost of living in either the US or EU is a lot more varied than sweeping generalizations with the silly pretense that EU socialism is a panacea. It most certainly isn’t, nor is it in any way a given that it produces the lowest cost of living. This simply depends on where you live -in a city, or a rural area, which city or rural area, your income vs. the local economy/cost of living, etc. It’s highly varied in both the US and EU. Again, sweeping generalizations are useless.

[tie]

I don't dispute moki's argument, because there is here neither any evidence supporting it, nor any real evidence against it. Exactly what am I supposed to divine from the microwave ownership percentage in the US versus nowhere? Does nobody in Europe own a microwave? Everyone? How should I know??

What about defined rates of poverty? Per our friends at the BBC referenced above, the US defined rate of poverty is currently 12.7% of the population. Horrifying. According to Eurostat the EU-15 defined rate of poverty was 16% of the population in 2001. To be overlooked.

I would like to know what the different poverty definitions are, and how comparable they can be made. I am not sure why also the US statistic is "currently" while the EU statistic is "in 2001." With more details, this might be interesting.

But as is, it might as well be one of those 99% of statistical figures (that are made up).

[Doofy]

Originally Posted by Don Pickett

Generally speaking, EU governments spend more on their citizens – health care, pensions. This leads to higher taxes, but their citizens get to keep more of their after tax income because their cost of living is less.

[BRussell]

Originally Posted by moki

First of all, given that what goes on in here is mostly a bunch of America bashing from people outside of the USA (as well as a number of people inside the USA who are practicing self-loathing), consider it a turn-about in fair play.[/b]

You need to look in the mirror. You show just as much "anti-Europeanism" and EU-baiting as any anti-American on MacNN. If you don't like it, don't do it yourself.

But the main thing is... look at the source of the article. It's FROM Europe -- how is this a Europe-bashing article? It's a "Main Stream Media (MSM) in Europe" bashing article from the Brussels Journal that points out the fallacies of "accepted thought" in said media. Sheesh...

I bet that author is as American as they come. "Main Stream Media (MSM)" is the epitome of American conservative blog terminology and the guy's bio says he lives in DC.

[CRASH HARDDRIVE]

An interesting article that cuts across this whole subject- anti-Americanism, US vs. Europe, cost of living, incomes, the myths of EU socialist panacea vs. eeeeevil greeeedy America, etc:

When we try to understand the bitterness with which some Europeans have come to view the United States, it would be foolish to ignore this factor. How big is the difference? Consider the latest data only for Old Europe (the wealthier Western European countries) and leave aside the much poorer New Europe still recovering from the devastation of communist policies and the difficult transitions to market economies. Even with this handicap built in, European real purchasing power is quite sorry. Between 1995 and 2004, European per capita income ranged between 70.1 and 73.7 percent of U.S. real income. With that in mind, anti-Americanism begins to look very much like basic human greed and envy.

To be sure, one might counter that even Old Europe includes some exceptionally poor regions (such as Greece and Portugal) that bias the results. Country-by-country comparisons provide a more detailed picture. According to United Nations statistics, per capita purchasing power in the United States in 2002 was $35,750, which was surpassed only by Luxembourg, Norway, and Ireland among E.U. nations. The two most vocal opponents of U.S. foreign policy are way down the list: Germany ranks 14th at $27,100, and France comes in 16th at $26,920. The average French citizen, in other words, earns 75.3 percent of what the average American earns. Despite the ambitions of the Lisbon Process, there is no indication that this difference is going to narrow. On the contrary, given the inability of the Europeans to carry out significant structural reforms, the gap may grow larger. Even the poorest 20 percent in the United States enjoy a higher real income than do the poorest in Italy, Spain, the United Kingdom, Greece, and Portugal.

The Social Welfare Myth
A common explanation for the difference between the European and American economies is the claim that European nations provide much greater social benefits: the so-called “safety net” of various payments for health, unemployment, and retirement. American liberals typically look with admiration at this European generosity, while conservatives focus on the deleterious consequences of the welfare state. However, this explanation of the productivity gap is not fully convincing.

A recent study by the Chamber of Labor in Vienna—surely an unexpected source, as Austria is one of the most established and elaborate of the European welfare states—yields some surprising results. If one considers gross spending, it is true that European states spend much more than the U.S. federal government: whereas European states dedicate on average 29 percent of GDP to social welfare, Washington contributes only 16 percent. As soon as one factors in direct and indirect taxes and private charitable sources, however, the difference dwindles very quickly. Taking into account all levels of government, including the states, the difference shifts considerably in favor of the United States. Because European countries are typically much more centralized than the United States, the regional administrative units—the corollaries to our state governments—are of much less significance. Similarly, the nonprofit sector has always been less developed in Europe than in the United States. In the United States, considerable social welfare payments come through the states and nonprofits. Therefore the caricatured contrast between the socially generous European states and a neoliberal America lacking in compassion turns out to be untenable.

In fact, the comparison between Europe and the United States becomes especially interesting when the different tax structures are taken into consideration. The European states may generously pay out greater percentages of their national income in the form of social welfare benefits than does the United States, but because European tax rates are so much higher, the benefit of the higher welfare payments is sharply reduced. In fact, after factoring in the impact of the higher European taxes, and including the value of private social spending, the United States comes out slightly better. In Old Europe net total social spending comes to 24 percent of GDP, whereas in the United States the corresponding figure is 24.5 percent.

http://www.hooverdigest.org/051/berman.html

[Don Pickett]

Originally Posted by CRASH HARDDRIVE

This is absolutely untrue and is just another meaningless assertion supported by nothing. Cost of living in either the US or EU is a lot more varied than sweeping generalizations with the silly pretense that EU socialism is a panacea. It most certainly isn’t, nor is it in any way a given that it produces the lowest cost of living. This simply depends on where you live -in a city, or a rural area, which city or rural area, your income vs. the local economy/cost of living, etc. It’s highly varied in both the US and EU. Again, sweeping generalizations are useless.

You're putting words into my mouth.

I never said it was a panacea. However, the different government approaches to social spending do have quantifiable results. Take health care: average health care costs for the consumer are expected to rise 12% in the coming year, which all but eliminates any increases in income for most American workers. Add to this that one of the reasons GM chose to locate its new plant in Canada was the overall lower cost of providing health care for its workers. Those two points alone are evidence that greater governmental health care spending has real world macroeconomic implications. If we take "old world" European countries – England, Germany, France, Spain, the low countries – you will find 1) lower health care costs to the consumer and 2) lower health care costs to companies.

This is not an argument which pits the U.S. against Europe. It is a point in a discussion about the most efficient use of government resources, and touches on the point I made earlier about how one values wealth creation within a regulated economy.

[Sky Captain]

FED EX may not expand into Europe

[NYCFarmboy]

Originally Posted by Don Pickett

You're putting words into my mouth.

I never said it was a panacea. However, the different government approaches to social spending do have quantifiable results. Take health care: average health care costs for the consumer are expected to rise 12% in the coming year, which all but eliminates any increases in income for most American workers. Add to this that one of the reasons GM chose to locate its new plant in Canada was the overall lower cost of providing health care for its workers. Those two points alone are evidence that greater governmental health care spending has real world macroeconomic implications. If we take "old world" European countries – England, Germany, France, Spain, the low countries – you will find 1) lower health care costs to the consumer and 2) lower health care costs to companies.

This is not an argument which pits the U.S. against Europe. It is a point in a discussion about the most efficient use of government resources, and touches on the point I made earlier about how one values wealth creation within a regulated economy.

maybe you are onto something, in those countries health care is rationed according to what the governement feels are its own priorities, not that of the patients.

So... perhaps it is cheaper for GM to locate factories where healthcare is provided "in name only".

[Athens]

Originally Posted by NYCFarmboy

H O G W A S H

there is nothing stopping anyone in the US of A from getting off their @ss and making a fortune in America.

Crying about that being "unfair" is absurd...

What would your solution be? Kill off the top 1% and redistribute that wealth? What would you do after that gets spent?

Do you realize how absurd it is to cry about rising incomes for everyone?

Model your society on Canada lol, most of our population is middle class with a unemployment rate only slightly higher then yours, and far lower then in Europe

Your system is unfair, if nothing is stopping any one from making a fortune, why isn’t more of your population making a fortune and in reality is it even possible for every one to make a fortune, is there enough consumers to make everyone rich, nope. There is always going to be that small rich population in every country, the difference with the US and other countries is that small rich population is sucking up to much wealth not leaving enough for the next class to break that barrier.

My analogy on this is this, you have 30 hockey teams, you can only have 800 players making a million dollars, but you have 5000 people trying to be that 800. No matter how hard some one people work there is still only 800 spots and of those 5000, and only the best, most fit of those 5000 will get in regardless of how hard you work. The same concept goes for society you have a X number of CEO’s, X number of actors, X number of professionals, X number of sport super stars and X number of business owners the society can maintain.

[Railroader]

Originally Posted by Athens

My analogy on this is this, you have 30 hockey teams...

Your analogy is typical working class mentality.

You'll always be left out when you never realize that the one on top isn't a "hockey player", but it's the hockey team owner.

Eh.

[Athens]

Originally Posted by Railroader

Your analogy is typical working class mentality.

You'll always be left out when you never realize that the one on top isn't a "hockey player", but it's the hockey team owner.

Eh.

Argh, I cant argue that

[SimeyTheLimey]

Originally Posted by Don Pickett

The figures quoted in the first table, "GDP by State and Country, per capita" is merely a measure of the number of people in the country versus the size of the country's economy. You will notice that the list doesn't include the U.S. as a whole versus EU economies, and there's a reason for this:

Actually, the table does include that information. Item #22 is the US average. Item #61 is the EU 15 average. There is your comparison.

However, Crash's wider point is legitimate. Those figures don't tell the entire story. Delaware, for example, scores high on the list because it is the place where many enormously wealthy corporations are nominally headquartered. Anyone who knows the state knows that doesn't translate into an especially high living standard because the actual industries aren't physically located there. Something similar applies to Washington, DC. It's an outlier because of all the highly-paid lawyers and lobbyists in the capital city. But it also has some extremely poor wards.

Something similar can be said for Luxembourg. It's a phenominally wealthy statelet, but it wouldn't be so wealthy if it wasn't a financial center for a larger European economy that is much less wealthy. It's economy isn't diversified enough to stand on its own. It's basically a financial center, and like many financial centers it is wealthy, but by itself a real economy that ought to be compared to larger, self-sufficient economies. So in other words, you do have to look at a broad average if you want to try to make a comparison. You can't cherry pick your outliers.

But that still begs the question how you do the comparison. The only reasonably objective way to do it is per capita GDP using a large enough sample to include your entire income distribution. That tells you how much you have to spend on an individual and removes all of the variables about taxation, wealth distribution, private versus public spending, and so on. After all, it doesn't matter how you divide it up, you only have so much money per person. The more you have to spend per person, then the objectively wealthier you are. There is no arguing with that, so long as your samples are reasonably equivilent.

But that doesn't tell you what the cost of living for an individual is because for that you need to even out all the other variables to compare like with like.

Really, what you arrive at if you remove a lot of the nationalistic chest beating is fundamentally different preferences. The central European economies have shown a marked preference for a higher taxation, higher stability, lower growth, higher and longer unemployment, and more relaxed working pace model that puts safety over economic performance. The US has a marked preference for a higher growth, lower unemployment, longer-hours-worked, freer labor force model that has higher growth but with a much greater tolerance for individual economic risk. Americans also have a higher preference for individual choice and by and large would not tolerate the kind of political stagnation and control evident in countries like Germany.

You can see these different preferences in the politics of the different countries. Germany (to pick an obvious example and the largest economy of Europe) just had their election, and essentially they voted for stagnation and gridlock, essentially because there is no consensus for change in the direction of US-style "cowboy capitalism." By contrast, in the US, there is little interest in the social model of state wealth redistribution advocated by people like Robert Reich and his group the Economic Policy Institute (which BRussel tried to palm off on us as some kind of neutral source). What I conclude from this is you have two very different political cultures. There are Europeans whose economic preferences are more like the US than Germany. And there are plenty of Americans like BRussell and Robert Reich who would really like to follow the German sort of model. But by and large, there is consensus that makes it unlikely that either side will change places with the other.

Of course, a separate question is how sustainable either model is. Here, I think it is the case that the US preference for a more laissez faire economics is the winner. But even making that statement requires a value judgment and people's values vary.

[BRussell]

Originally Posted by SimeyTheLimey

By contrast, in the US, there is little interest in the social model of state wealth redistribution advocated by people like Robert Reich and his group the Economic Policy Institute (which BRussel tried to palm off on us as some kind of neutral source).

I believe that was Don Pickett - my data were from cbpp, a different liberal group. But both sets of graphs are uncontroversial and directly based on CBO data. I don't think there's any question about the fact that the American economic system over the last 25 years has been very good to the wealthy and not the middle or lower classes.