Great post. A couple points. First, Norway's natural resource wealth per capita is ridiculously far above the US. Even Australia kills the US in this metric. Second, do you think the reason there are so many more German immigrants to the US than the other way around is just language? But I think the best counterargument is that there's never been a sustainably rich country, a society with broad-based prosperity and the sense that yea, we definitely can keep this going. We don't know how to set it up yet. The US certainly is not one (CO2 emissions, constant threats to democracy). But neither is Germany, or the EU more broadly. If you repeat your calculations above 10, 20, 30 years ago, you'd see the German advantage shrinking over time. It's plausible that in ten years Germany won't be winning any more. Putting aside defense spending (which is definitely a meritorious argument), the US is dominant in science and tech, the two 'fields' that determine future economic growth. It can't be all about scale drawing investment as the EU is richer and bigger. I would be more convinced that the US should look at Germany and think, how do we get more like them, if Germany was actually at the frontier of building the future we need vs being an aging, shrinking society. Right now the average German lives a better life, but like the US it's clearly not sustainable and no one knows why, so we should be careful drawing broad conclusions about economic systems. We don't know which pieces are load-bearing.
There's also the issue that we have state's rights. There are things you can do from the federal level but each state gets to make its own rules. Glomming us all together in one stat isn't reflective of how the US works. Probably the same for Australia, I'd think.
Also, Europeans often think of the US in terms of being one place. Anyone who lives here knows it is not one place. I personally (with tongue in cheek) view people from other US regions as 'foreigners' - this is because where I live we do have a rather specific but subtle sort of way of being and living that they often do not understand.
Also, geographically, we have some unique issues that 'foreigners' do not understand, and when they don't understand them, these people make trouble for us. We don't like that.
Also, people from other regions (looking at you, eastcoasters) come out here and think they are superior to us, act superior to us, and expect us to be in awe of their sophistication. We hate that. We really hate that. Go back to your sophisticated, overtaxed eastern state. We'd love that.
At the end of the day, a lot of people love the place they come from. Love of country (and I mean your area or region - like countryside) is important and valuable.
I love, in a way that I cannot describe, the high and empty, windswept plains of Wyoming. Every day is a bad hair day, but I love my state.
While I love telling my European friends/family to cope and seethe that Mississippi has greater raw gdp / capita than they do, I do think the quality of living in germany is higher.
But the claim that germany is materially better off than the average american to me is suspect. What america gives its people is material goods: bigger houses, nicer cars, more space, cheap goods from across the globe, etc. Your calculations on work hours & health are about quality of life, not material wealth.
Last piece: coastal liberal America is richer/healthier than the rest, and Germany is roughly the size of California economically with double the population. California and germany both benefit from brain drain from other nearby polities with open borders / skilled immigration, and benefit from selling within those markets.
Finally, martin is completely correct that europe's material wealth has not increased the same way America's has in the 21st century.
Americoping done, back to regularly scheduled complaining about my country.
Yeah, I'm sure you saw that Michael Malice meme. Basically, on an average day he's ready to overthrow the government. When a european trash talks the US, he's Uncle Sam.
I grew up in and lived in the US until moving to Sweden in my nid 30s. I also travel around Europe a fair bit for work. Whatever the numbers may say, it is clear that most of northern and western Europe feels richer than the US. There is not trash and homeless people everywhere, and people are generally well dressed and relatively fit looking compared to the US. You will never convince me that the US is a richer society; this is evident in the ppp comparisons of EU countries and US states where only a small number of US states come out better than any cou5in western Europe.
My general opinion on the US-Europe comparison is that both places have welfare states (good) which are funded by income taxation instead of taxes on land, externalities, & consumption (bad). At the margin, the EU countries have more generous welfare states, which are in turn funded by higher income taxes, making them better on the distribution of wealth in direct proportion to how much worse they are on economic output.
Looked at in a single frame, it's better to be Europe because utility is a function of log consumption. But in the long run, Europe is doomed to stagnation and will certainly fall behind the US. On this note, realizing that the income tax deadweight loss // welfare state tradeoff is not a necessary economic reality but a political reality should radicalize one in favor of Georgism! (And against conservatism/Lockean whiggism for defending the private capture of land rents, but also socialism, which, being a tax on the opportunity cost of capital, is an implicit tax on income)
Higher wages are useless if your country's infrastructure and tax system is so piss poor that you need to spend more on basic necessities. We have economic metrics that account for some of this, such as the difference between income and discretionary income. Free-market proponents always point to the US having high income, but the same can not be said for discretionary income. I don't know the numbers for Germany, but I do know the numbers for the neighboring Netherlands (which is probably similar to that of Germany). If we compare the two, we see that the US median disposable income is 41K while in the Netherlands it's 36K. But let's compare how much you have to spend in your day to day life and calculate the discretionary income based on that:
________________________US_______Netherlands
income________________41k_______36k
food___________________5.1k_______3.7k
shelter_________________13.2k______13k
clothing________________1.2k_______1.5k
transport______________6.3k_______3.4k
health__________________3.2k_______1.8k
student debt___________2.1k_______0.8k
discretionary income__9.9k_______11.8k
As you can see, once we convert disposable income, the case for collectivist programs strengthens and it looks like the dutch, not the americans, are better off.
I think the inequality things should be removed. You should be comparing per income decile. My view is that 50% of Americans have better lives than 50% of Germans. So if you are educated, and are decent at your job, you are way better off in the US.
Hum........ there are a few more very appropriate tweaks one could suggest that would largely (oh strike that, they would all only) work in favour of Germany. None of those really matter compared to the elephant in the room - turning GDP into general utility index with adjustments for life expectancy inequality and imprisonment. Living in Germany and with some awareness of us society it seems to me utterly obvious that living in Germany is far better for the average person - just like any other including much poorer western European country, I just would not frame it in those terms, as GDP for me is just one indicator of overall wellbeing. Don't think many people disagree about that perspective here, by the way. And the one's that maybe see it different, at least for them personally.... well they tend to see it from an at least upper 5% er by inheritance view.
In general we Europoors consider USA to be roughly somewhere halfway between the poorest countries and the EU (+ some other countries) on the scale of political and economical equality, welfare and wellbeing.
I think this is overdoing it. America is doing worse than Germany, but it's probably comparable to other European countries doing a bit worse than Germany - it's in the UK/Italy tier.
Despite my often-right-wing commentary, if I had the choice I would be born in Germany. I'm very risk averse, and pursued a career I wasn't fond of due to fear of being poor and dying on the street. If I had a national healthcare system and stronger unemployment supports I would have given more thought to what I actually enjoyed doing in terms of career choice.
There's also the possibility I might have started a family, since I'd be less afraid of getting hit with alimony and child support payments I wasn't able to make due to my career being obsolesced by technological change. However, we know this is not true at an aggregate level, since the EU has lower fertility than the US. It's just a me thing.
Of course, now that I've sacrificed an estimated 1/2-2/3 of my life to this and have (some) money but not happiness I have to defend the system. Sure, you'll help more people on a net-utilitarian basis, but *I'll* lose big time.
The catch is that there are more like me than you would think. A not-often-commented-upon problem with redistribution is that the system isn't *so* unequal that everyone would gain--just going after billionaires doesn't get the average person all that much. For example, as a rough estimate, redistribution favors anyone with less than the average income, because if you level inequality off you move everyone towards the average. (Probably slightly fewer people would benefit as you lose *some* efficiency with more equality, but ignore that for the moment.)
Personal income is about $40K median and $70K average. Depending on which set of numbers you look the average is at about the 67th-75th percentile, which means you have a natural 1/3-1/4 of the population that would lose from greater equality. That's easily enough to oppose a fairer system when you throw in American-specific cultural factors like people believing they're temporarily embarrassed billionaires and conservative women who'd prefer to be home with the kids rather than working. (Ah, but a proper Scandinavian0-style system paid for by taxes would pay for childcare, right? Theoretically, but in this country we have a lot of social programs that don't pan out--they'd rather take their chances with the status quo.) And, of course, our infamous four-century-old racial divide.
I don't live in a country that plunged the world into two massive wars, so there's that.
A friend lived in Germany when she was a young mom. Perfect strangers were always telling her what to do with her kids. We are from a homeschooling community and she was basically told that she wasn't even allowed to think that way when she lived there. F that.
I'd never live in Germany, regardless of the benefits. And I'd never live in a lot of the states in my own country. My guess is that, as in most D measuring contests, it's not the size but what you do with it, or what you are allowed to do with it.
Great post. A couple points. First, Norway's natural resource wealth per capita is ridiculously far above the US. Even Australia kills the US in this metric. Second, do you think the reason there are so many more German immigrants to the US than the other way around is just language? But I think the best counterargument is that there's never been a sustainably rich country, a society with broad-based prosperity and the sense that yea, we definitely can keep this going. We don't know how to set it up yet. The US certainly is not one (CO2 emissions, constant threats to democracy). But neither is Germany, or the EU more broadly. If you repeat your calculations above 10, 20, 30 years ago, you'd see the German advantage shrinking over time. It's plausible that in ten years Germany won't be winning any more. Putting aside defense spending (which is definitely a meritorious argument), the US is dominant in science and tech, the two 'fields' that determine future economic growth. It can't be all about scale drawing investment as the EU is richer and bigger. I would be more convinced that the US should look at Germany and think, how do we get more like them, if Germany was actually at the frontier of building the future we need vs being an aging, shrinking society. Right now the average German lives a better life, but like the US it's clearly not sustainable and no one knows why, so we should be careful drawing broad conclusions about economic systems. We don't know which pieces are load-bearing.
There's also the issue that we have state's rights. There are things you can do from the federal level but each state gets to make its own rules. Glomming us all together in one stat isn't reflective of how the US works. Probably the same for Australia, I'd think.
Also, Europeans often think of the US in terms of being one place. Anyone who lives here knows it is not one place. I personally (with tongue in cheek) view people from other US regions as 'foreigners' - this is because where I live we do have a rather specific but subtle sort of way of being and living that they often do not understand.
Also, geographically, we have some unique issues that 'foreigners' do not understand, and when they don't understand them, these people make trouble for us. We don't like that.
Also, people from other regions (looking at you, eastcoasters) come out here and think they are superior to us, act superior to us, and expect us to be in awe of their sophistication. We hate that. We really hate that. Go back to your sophisticated, overtaxed eastern state. We'd love that.
At the end of the day, a lot of people love the place they come from. Love of country (and I mean your area or region - like countryside) is important and valuable.
I love, in a way that I cannot describe, the high and empty, windswept plains of Wyoming. Every day is a bad hair day, but I love my state.
I desire to live nowhere else for any reason.
Except maybe western Montana or northern Idaho.
Germany is also a federal state.
But a lot smaller and geographically less diverse.
My Americope:
While I love telling my European friends/family to cope and seethe that Mississippi has greater raw gdp / capita than they do, I do think the quality of living in germany is higher.
But the claim that germany is materially better off than the average american to me is suspect. What america gives its people is material goods: bigger houses, nicer cars, more space, cheap goods from across the globe, etc. Your calculations on work hours & health are about quality of life, not material wealth.
Last piece: coastal liberal America is richer/healthier than the rest, and Germany is roughly the size of California economically with double the population. California and germany both benefit from brain drain from other nearby polities with open borders / skilled immigration, and benefit from selling within those markets.
Finally, martin is completely correct that europe's material wealth has not increased the same way America's has in the 21st century.
Americoping done, back to regularly scheduled complaining about my country.
Yeah, I'm sure you saw that Michael Malice meme. Basically, on an average day he's ready to overthrow the government. When a european trash talks the US, he's Uncle Sam.
I grew up in and lived in the US until moving to Sweden in my nid 30s. I also travel around Europe a fair bit for work. Whatever the numbers may say, it is clear that most of northern and western Europe feels richer than the US. There is not trash and homeless people everywhere, and people are generally well dressed and relatively fit looking compared to the US. You will never convince me that the US is a richer society; this is evident in the ppp comparisons of EU countries and US states where only a small number of US states come out better than any cou5in western Europe.
My general opinion on the US-Europe comparison is that both places have welfare states (good) which are funded by income taxation instead of taxes on land, externalities, & consumption (bad). At the margin, the EU countries have more generous welfare states, which are in turn funded by higher income taxes, making them better on the distribution of wealth in direct proportion to how much worse they are on economic output.
Looked at in a single frame, it's better to be Europe because utility is a function of log consumption. But in the long run, Europe is doomed to stagnation and will certainly fall behind the US. On this note, realizing that the income tax deadweight loss // welfare state tradeoff is not a necessary economic reality but a political reality should radicalize one in favor of Georgism! (And against conservatism/Lockean whiggism for defending the private capture of land rents, but also socialism, which, being a tax on the opportunity cost of capital, is an implicit tax on income)
Higher wages are useless if your country's infrastructure and tax system is so piss poor that you need to spend more on basic necessities. We have economic metrics that account for some of this, such as the difference between income and discretionary income. Free-market proponents always point to the US having high income, but the same can not be said for discretionary income. I don't know the numbers for Germany, but I do know the numbers for the neighboring Netherlands (which is probably similar to that of Germany). If we compare the two, we see that the US median disposable income is 41K while in the Netherlands it's 36K. But let's compare how much you have to spend in your day to day life and calculate the discretionary income based on that:
________________________US_______Netherlands
income________________41k_______36k
food___________________5.1k_______3.7k
shelter_________________13.2k______13k
clothing________________1.2k_______1.5k
transport______________6.3k_______3.4k
health__________________3.2k_______1.8k
student debt___________2.1k_______0.8k
discretionary income__9.9k_______11.8k
As you can see, once we convert disposable income, the case for collectivist programs strengthens and it looks like the dutch, not the americans, are better off.
I think the inequality things should be removed. You should be comparing per income decile. My view is that 50% of Americans have better lives than 50% of Germans. So if you are educated, and are decent at your job, you are way better off in the US.
Hum........ there are a few more very appropriate tweaks one could suggest that would largely (oh strike that, they would all only) work in favour of Germany. None of those really matter compared to the elephant in the room - turning GDP into general utility index with adjustments for life expectancy inequality and imprisonment. Living in Germany and with some awareness of us society it seems to me utterly obvious that living in Germany is far better for the average person - just like any other including much poorer western European country, I just would not frame it in those terms, as GDP for me is just one indicator of overall wellbeing. Don't think many people disagree about that perspective here, by the way. And the one's that maybe see it different, at least for them personally.... well they tend to see it from an at least upper 5% er by inheritance view.
USA is in decline now. You will have to update those figures.
In general we Europoors consider USA to be roughly somewhere halfway between the poorest countries and the EU (+ some other countries) on the scale of political and economical equality, welfare and wellbeing.
I think this is overdoing it. America is doing worse than Germany, but it's probably comparable to other European countries doing a bit worse than Germany - it's in the UK/Italy tier.
Yeah, in my youth when I was a bigger advocate for the Scandinavian social model I saw the USA as roughly medial between Europe and Latin America.
Why do you start off with using GDP per capita which is a measure of production and not consumption?
Why not use median income? The premise itself is wrong in my opinion.
Hi,
What do you mean by “However, if this is true, this is already factored into America’s total GDP”?
Existing levels of inequality are required for future efficiencies. Your approach seems to have errors.
Yesterday in some post saw that disperency in proportion of working age population produces higher gdp per capita on the us side
Surprised no one posted that you should adjust for the demographics of the two countries too
This is great. I've made all these points at different times, but never got around to combining them in this way.
I agree.
Despite my often-right-wing commentary, if I had the choice I would be born in Germany. I'm very risk averse, and pursued a career I wasn't fond of due to fear of being poor and dying on the street. If I had a national healthcare system and stronger unemployment supports I would have given more thought to what I actually enjoyed doing in terms of career choice.
There's also the possibility I might have started a family, since I'd be less afraid of getting hit with alimony and child support payments I wasn't able to make due to my career being obsolesced by technological change. However, we know this is not true at an aggregate level, since the EU has lower fertility than the US. It's just a me thing.
Of course, now that I've sacrificed an estimated 1/2-2/3 of my life to this and have (some) money but not happiness I have to defend the system. Sure, you'll help more people on a net-utilitarian basis, but *I'll* lose big time.
The catch is that there are more like me than you would think. A not-often-commented-upon problem with redistribution is that the system isn't *so* unequal that everyone would gain--just going after billionaires doesn't get the average person all that much. For example, as a rough estimate, redistribution favors anyone with less than the average income, because if you level inequality off you move everyone towards the average. (Probably slightly fewer people would benefit as you lose *some* efficiency with more equality, but ignore that for the moment.)
Personal income is about $40K median and $70K average. Depending on which set of numbers you look the average is at about the 67th-75th percentile, which means you have a natural 1/3-1/4 of the population that would lose from greater equality. That's easily enough to oppose a fairer system when you throw in American-specific cultural factors like people believing they're temporarily embarrassed billionaires and conservative women who'd prefer to be home with the kids rather than working. (Ah, but a proper Scandinavian0-style system paid for by taxes would pay for childcare, right? Theoretically, but in this country we have a lot of social programs that don't pan out--they'd rather take their chances with the status quo.) And, of course, our infamous four-century-old racial divide.
I don't live in a country that plunged the world into two massive wars, so there's that.
A friend lived in Germany when she was a young mom. Perfect strangers were always telling her what to do with her kids. We are from a homeschooling community and she was basically told that she wasn't even allowed to think that way when she lived there. F that.
I'd never live in Germany, regardless of the benefits. And I'd never live in a lot of the states in my own country. My guess is that, as in most D measuring contests, it's not the size but what you do with it, or what you are allowed to do with it.