The U.S. Is Lagging Behind Many Rich Countries. These Charts Show Why

https://www.nytimes.com/interactive/2020/07/02/opinion/politics/us-economic-social-inequality.html

by MilnerRoute • 6 years ago

61 47 6 years ago

coldtea4• 6 years ago

To move forward as a country you need to care about and build public infrastructure - from roads, and science, to health all the way to city parks and internet.

Companies and private moguls wont create good infrastructure out of charity, and what little they will create, it will be created to be milked as much as possible, and milked as much as possible. Think cost-cutting and short/mid-term profit, not vision and future thinking.

And having the state "incentivizing" private companies to build such infrastructure (paying, cutting taxes, letting them reap the profits, create oligopoliges, etc), as opposed to build it itself or pay companies to do it (but design, control, and run it as a public infrastructure) is even worse... Kind of like why Korea or some such countries have the fastest internet on the world, and places like New York despite 10+ million densely packed citizens don't, after trillions given from the state to telcos...

onepointsixC• 6 years ago

Companies and private moguls wont create good infrastructure out of charity, and what little they will create, it will be created to be milked as much as possible, and milked as much as possible. Think cost-cutting and short/mid-term profit, not vision and future thinking.

How is that meaningfully different to what NYC and NY have been doing themselves with regards to infrastructure? Crossing the George Washington Bridge costs $10.50. There's so much congestion all throughout but legislatures are happy to sit on the laurels of infrastructure investments many decades ago instead of aggressively building more, thus deepening income inequality.

sameers2• 6 years ago

This is essentially what Marc Andreesen's point was in his "build" essay. Most local governments have gotten stuck in a perfect storm of rentier interests, environmental regulation barriers, union disputes, lack of public interest, etc. I guess it's a kind of short-termism, with each interest group looking out for its constituents. And there are too many interest groups at too many levels.

There's a great analysis of transportation infrastructure costs that came out in the New Yorker, as part of a story on the new head of the NYMTA, Andy Byford (Bynum?). The bottomline is that we can't blame any specific political section, like saying that it's all the unions' fault, or all because we regulate the environment too much. Other OECD countries have the same concerns, in terms of protecting worker safety and the environment. But in the US, the number of competing groups has gotten past some critical point that it's making the whole system move way too slowly.

coldtea4• 6 years ago

In the "you need to care about and build public infrastructure" part.

Merely not having private interests build them is not enough - it's just the second, different, point I've made.

koheripbal7• 6 years ago

The correlation between public spending and the metrics lagging in the article doesn't really exist. The areas of the country that lag behind the most, have huge investments in these social welfare projects and infrastructure.

I'd like to see an accurate correlative model that demonstrates high correlations within the US to see what the winning strategy is.

jhbadger• 6 years ago

Do they? Places like Mississippi that are lagging behind on metrics aren't particularly known for their social welfare or infrastructure.

jeffbee6• 6 years ago

The counterexample to your claim is New York's Central Park, which has been funded by private donors since 1980.

coldtea4• 6 years ago

It's easy to do that near prime real estate, where the park (existing, already reserved and cleared up as an area, and built by the city) helps prop property values (managed or owned) by many of the same beneficial donors...

Less easy to do so for roads to working class neighborhoods, school districts in Mississippi, and so on...

jellicle• 6 years ago

The city hired a non-profit to manage the park. The vast majority of funds spent in Central Park come from the taxpayer. The main reason for the setup is so that the city will have plausible deniability when rich people want to use part of the park for their own endeavors (weddings, galas, etc.). You certainly aren't pretending that Central Park is some sort of privately provided amenity, are you?

washadjeffmad• 6 years ago

Not that the rich are incapable of long-term thinking or charity, but the Conservancy is a non-profit that gets 25% of it's $65M funding from taxpayers and does a lot fundraising.

Where I'm from is a monument to private works. There are signs showing what areas looked like through the decades, and while barren for most of it, great parks and buildings once existed for the local wealthy who razed swathes of the city rather than allow them to be converted to public use by blacks and the poor.

The names of the neighborhoods are the only remains of those times. Parks and Halls and Clubs downtown sit with no parks or halls or clubs nearby them, roads torn up or blockades built to cordone off access.

One park that the rich didn't eat is nice, but I wouldn't run out to put any utilities or infrastructure in their hands because of it.

controversy2• 6 years ago

The article didn’t really articulate a causal relationship. It appears to be more “here are some differences, therefore they explain it”. I’m not discounting the validity of these being the cause, but at the same time this article doesn’t prove or really infer it from the graphs.

MilnerRoute• 6 years ago

I thought it pinpointed at least a few specific causes for the differences...

"The share of Americans in unions has plummeted from 35 percent in the mid-1950s to about 10 percent today. The rate is even lower — about 6.2 percent — for private-sector workers. The decline has happened largely because employers have become more aggressive about keeping out unions and government policy has made it easier for them to do so. The decline in unionization is one reason that the share of total national income flowing to corporate profits has risen — and the share going to worker pay has declined. The trend is starker in the U.S. than in Europe."

controversy2• 6 years ago

That’s more an assumption. Some fields over that time have seen a sharp increase in wages.

Another thought on unions is that it doesn’t look at qualitative differences between US and E.U. unions. For example US unions tend to protect drunk members from punishment. EU unions don’t (at least not on the same scale as the US). Did unions decline due to power struggles or because they were worthless and workers though they’d fair better on their own. All the article says is “here’s a graph” and “trust me”.

lend000• 6 years ago

There are so many things that have changed from the 1950's until now and coincided with wealth inequality -- obviously, not all of them are causal, and many of them are only partially so, so they need to do a better job of describing cause and effect mechanisms. That isn't to say that pointing out correlations is useless.

For example, my pet theory on wealth inequality is that it is largely attributable to the rise of the "investor class" after Bretton Woods was invalidated and your average mom and pop could no longer grow, or even maintain their wealth by simply saving cash [0][1].

[0] https://www.pewsocialtrends.org/2020/01/09/trends-in-income-... [1] https://en.wikipedia.org/wiki/Nixon_shock

koheripbal7• 6 years ago

That conclusion the article makes is not supported by the data - it's just speculation.

In my opinion, the decline in worker unions has been largely due to the relocation of factories abroad.

A nation without its own manufacturing based and non-existant import protections will of course lose union jobs.

Europe has high import tariffs that protect their own agriculture and manufacturing base (as well as raise the cost of goods). ...but that's the trade off.

Blaming some sort of corporate culture seems agenda-driven speculation.

js2• 6 years ago

Unions were also a source of funding for the Democratic party. As it lost funding from unions, the party became increasingly dependent on the wealthy and corporate benefactors. This caused it to side with policies that further hurt blue collar workers. Wither the New Deal coalition.

https://en.wikipedia.org/wiki/History_of_the_United_States_D...

https://www.theatlantic.com/magazine/archive/2017/07/whats-w...

Game_Ender• 6 years ago

Does anyone know why articles like this don't start all their graphs at 0? The information is persuasive enough without fudging things with poor axes. For example health expenditure as share of GDP graph starts at 8% and goes 18%, bounding the data very closely and magnifying the difference by several times.

A graph that start at zero

         Italy     USA
  0        *        *

How it was presented in the article:

  Italy     USA
    *        *

tryptophan• 6 years ago

I know why -> its because the NYT wants to make things look as bad as possible, and like you said, not starting at 0 makes the difference look much bigger, and therefore worse.

koheripbal7• 6 years ago

Because they are trying to push an agenda - and work their graphs and data backwards from the conclusion they want you to draw.

danols• 6 years ago

The U.S. is the modern & real life version of the emperor has no clothes. It will be a grim day when the majority of the population wakes up and has no choice but to accept this reality.

koheripbal7• 6 years ago

...well that's the agenda point the article is certainly trying to spin.

It doesn't really establish that, since the causality between these data points is entirely speculation.

DeonPenny5• 6 years ago

From this article I got the impression from Europe not America.

koheripbal7• 6 years ago

These charts most certainly do not show why.

They throw a lot of numbers around, but they don't establish causality anywhere.

sameers2• 6 years ago

Part of the reason you can't show a _why_ at this level is that each of these graphs have too many confounding factors. The lower level of life expectancy for example is owed partly to how the demographics of the US are different because of the more open immigration policies relative to some OECD countries (like Japan and Korea, e.g.) The greater expenditure on healthcare is owed partly to higher levels of obesity, which is a complex outcome from levels of wealth, hours worked, access to food, availability of childcare etc.

One simple way of saying this is that the US is a much bigger, more diverse, country than at least some of the countries it gets compared to. So the comparisons are not entirely "fair."

I'd be interested to see a comparison of the individual (US) states interspersed with the OECD countries - at least some states might break out and compete with the higher echelon of OECD countries on some of these metrics.

What is "fairer" is to compare the US to itself, across generations. The work that Robert Gordon did in this regard is extremely powerful, showing how, post-1970, the US has not been able to maintain various economic equity indicators. As someone else commented, this could be attributed to a shift in buying power from the "consumer class" to the "investor class," a shift that, contrary to the myth of "trickle down economics" does not lead to more accumulation of capital. Instead, it tends to flow to financial assets and international investment which don't raise domestic demand as much as if you had put that money into individual paychecks.

Then there's the gradual decline in new firm formation as well, which adds to this mess - again, this is a comparison within the US, and is "fairer" in assessing what's going wrong.

eddhead• 6 years ago

So the article basically says how much less socialist the US is, when it never made such claims. Hooray!

LatteLazy• 6 years ago

The charts do not show why.

DeonPenny5• 6 years ago

These seem to very much cherry picked states.

Like CEO pay ratio. How does that in anyway correlate to a better life. if you look at gdp per capita growth in places like germany who have only grown from 45k to 47k since 2008. The US grew from 45k to 62k. Thats an insane jump and its lead is getting bigger not smaller..

The US also has more CEO per capita, more startups per capita, more unicorns per capita which is a more apt reason CEO pay is higher. The CEO in the US are generally better and their companies make more money than European counterpart especially startups.

You can apply this to shares of economy going to workers pay too. Is the US pie just bigger. If so why does share matter.

Whats the annual average wage? If the minimum wage is low but the average wage is high which is is why does it matter where the bottom is.

Some of this is correct like incarnation rate, but a lot of seems to point to where other first world countries have got it wrong when you look at the results you really care about.

jeffbee6• 6 years ago

The manner in which GDP per capita goes up is not helpful: rapid inflation of health care and housing costs. GDP per capita is not increasing over a short term in Germany and Austria but everyone has a home and health care.

DeonPenny5• 6 years ago

I think GDP matter in that it reflects the ability of a country to create resource. How ever how each country feels like using it is their prerogative. I doubt German citizen would complain if they had another 20k per year on average.

I think the issue is that values in those different countries are very different.

Theres much less freedom in terms of housing and income in Germany which makes it easier to have equality of outcome. By the very definition of a free society the free-er you are to succeed, the free-er you are to fail and to the sadness of most people, the distribution of success is a pareto distribution and not a normal distribution .

The usually doesn't want to do this mostly because 1. limiting freedom comes with Germany's very obvious downside. 2. The belief of a lot of Americans is a Government of the US scale typically implements those things poorly. We have states that would comparable but in general the idea is the bigger the governmental body the dumber it and simpler their tasks need to be so that it can't mess it up.

thaumasiotes• 6 years ago

if you look at gdp per capita growth in places like germany who have only grown from 45k to 47k since 2008. The US grew from 45k to 62k.

I did a Google search for "germany gdp per capita 2008" and Google actually displays a graph of gdp per capita in USD since 1970 comparing the US, Germany, and some other country.

The US is a smooth line that hiccups in 2008, at the same time German gdp per capita spikes. So that's an interesting year to pick as the point of comparison.

But I'm also intrigued by what doing the comparison in USD appears to show. Smooth, managed growth for the US. Weird, jolty growth for Germany. This seems likely to be an artifact of the fact that US dollar-denominated GDP is fully controlled by the US, while German dollar-denominated GDP is controlled by, among other things, the exchange rate between dollars and Euros. (Or, if you go back far enough, dollars and deutschmarks.)

This actually makes me think that you'd get a better picture of what's going on by comparing them in gold or some other commodity.

yokaze• 6 years ago

How does that in anyway correlate to a better life. if you look at gdp per capita growth in places like germany who have only grown from 45k to 47k since 2008. The US grew from 45k to 62k

If you adjust PPP and inflation with your chosen starting point (https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?end=2...), Germany grew from 47.6k to 53.7k USD (+13%), while the US grew from 55.4k to 61.5k USD (+11%) until 2018 (which is the latest endpoint and makes an even decade).

But why not look another decade back further (1998-2018) (https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?end=2...): Germany (+115%), US (+91%).

DeonPenny5• 6 years ago

In a globalised world I don't think PPP is good measure personally but thats just my 2 cent.

Also from 1998 is bit hard cause germany was moving from a way lower base. Germany just became a whole country in 1990. The east germans had to do with a lot of that growth because there was basically so much to improve.

mnm1• 6 years ago

This is to be expected for a country and empire in massive decline. The US should be compared to countries like Brazil and Argentina, not European nations and Canada. That would be a much more apt, apples to apples, comparison at this point. The US was an outlier in the western hemisphere in terms of prosperity. Argentina, at one point, was too. It seems to me that western hemisphere countries (maybe to a lesser extent Canada) have similar problems: vast inequality, massive corruption (including legal corruption in the US), racial tensions, immense poverty, etc. Some like the US and Argentina managed to be massively wealthy at points but were unable to solve their underlying, foundational problems. If we are to look anywhere for our future, it would be a country like Argentina, that was once one of the richest nations in the world but no longer is. That seems to be the inevitable future in the US also due to its intractable political system, anti-intellectualism culture, the lack of empathy or compassion in the culture, the rising cost of all necessities, the falling life expectancy, massive racism, horrific legal (as opposed to justice) system, etc.

In the US, you can't always get what you need (healthcare, decent job, etc.), but if you try sometimes, you might just get what you want (a big screen TV, iPhone, etc.).

mdgrech23• 6 years ago

so what would you recommend US citizens do to protect their livelihood?

fortran77• 6 years ago

Aren't Greece, Italy, Spain, Portugal, etc "countries and empires in massive decline?" They've been in massive decline for several hundred years, but once were great (i.e., vast, large) empires.

jeffbee6• 6 years ago

The question this makes me ask is how can California, or any state, separate itself from what is obviously the ongoing decline of the nation.

NovemberWhiskey• 6 years ago

This is really a terrible article; the worst kind of anec-data.

e.g. Yes, the U.S. does spend a large GDP share on health care; and you can make legitimately make the argument that it gets poor value. However, the single comparandum relied on is overall life expectancy.

Union membership dropped from over 30% in the early 1950s to about 12% by 2000, during which time the U.S. labor share was pretty much range-bound - but the article ignores that and simply asserts that the change in union membership is the cause.

That chart on "hours worked per year" is based on OECD data published with the following health warning: "the data are intended for comparisons of trends over time; they are unsuitable for comparisons of the level of average annual hours of work for a given year, because of differences in their sources and method of calculation" ... emphasis is mine.

Original source here: https://data.oecd.org/emp/hours-worked.htm

camgunz• 6 years ago

A lot of people are saying these charts don't support the claim, but they do. Time and money are political power in the US, and if you're working longer hours for less money, while also paying for more health care, you have less political power.

What's interesting is that no one's disputing the premise, that time/money = political power. That's deeply anti-democratic, but here we are.

voisin• 6 years ago

Nearly every one of these charts shows the inevitable result of “me thinking” overcoming “we thinking”. This is a feature, not a bug, of very specific values that have informed decision making for nearly 40 years.

The U.S. Is Lagging Behind Many Rich Countries. These Charts Show Why

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