Why America's economy is soaring ahead of its rivals

https://www.ft.com/content/1201f834-6407-4bb5-ac9d-18496ec2948b

by kvee • 2 years ago

481 2013 2 years ago

ft.com

pfooti• 2 years ago

https://archive.is/vt7sY

WalterBright50• 2 years ago

the improvement was largely down to reconstruction efforts partly funded by the US via the Marshall Plan

Most of the improvement was in Germany, which received far less MP money than Britain and France.

Postwar prosperity correlates with the level of free markets. Germany embraced free markets up until 1970, Britain and France did not.

WhereIsTheTruth• 2 years ago

They served as bases to spread the American culture through music and cinema and later with the industry through the coal and steel community, to create a single and unified market

The US did not want to create competition, but to break monopolies and to create a unified market for its industrial complex

The remnants of that goal are visible today with Big Tech

ashoeafoot4• 2 years ago

That manchester capitalism with different decorations rhetoric does not hold up to scrutiny. In particular when you hold it against current examples of economic colonialism like the chines lend & own campaign in Africa .

WalterBright50• 2 years ago

My dad was part of the occupation of postwar Germany.

The bases were there to protect Germany against the Soviets.

I remember once on the autobahn around 1970, and a fighter came by hedgehopping at high speed. He was a few feet off the ground, and looked like just under Mach 1. The citizens didn't particularly like the noise and disruption, but they understood the need for the Air Force to train hard.

I also remember touring East Berlin (yes, East Berlin) in 1969. Going through Checkpoint Charlie and seeing the Wall is plenty convincing of the need for the US military being there.

France, on the other hand, didn't much care for the US military bases and wound up pushing them out.

BTW, the US Military was pretty thorough in making sure US personnel and military families behaved like guests in Germany, as they were invited guests. Ever since the Berlin Airlift, the US was friends with Germany.

The Americanization of Germany came later. I recall visiting a shopping mall in Germany in the 2000's, and you could not tell you were in Germany rather than in any suburb in America. Shopping malls did not exist there in 1970.

danielbln2• 2 years ago

Saying Germany embraced the free market is not correct. Germany under Erhard had a social market economy (even during the "Wirtschaftswunder*, the economic miracle). While some free market principles were followed (price liberation, free trade) and it was certainly more market liberal than France at the time, it still came with substantial protection (universal healthcare, strong labor protections and unions, anti monopoly regulations etc.)

The situation back then was decidedly _not_ what the term "free market" (of the libertarian variety) would imply today.

WalterBright50• 2 years ago

Nobody claimed it was a 100% free market. But it was quite a bit more free than the other MP recipients. And the results showed.

nitwit005• 2 years ago

East Germany did better than its peers in the Soviet block, and West Germany did better than its peers outside of it.

People love to point at policy, because it's a thing we can control, but the most important factors are often cultural issues we both don't control, and don't entirely understand.

nativeit• 2 years ago

I assume you’re referring to West Germany? Can such comparisons even be drawn for only half of an otherwise largely occupied nation?

shiroiushi5• 2 years ago

The US is a great place to make a lot of money if you're lucky and successful, but a terrible place to retire.

CalRobert4• 2 years ago

How so? Healthcare? FIRE seems much more attainable in the US

sameoldtune2• 2 years ago

Healthcare is just a word until you get into your sixties, then it is a lifestyle

shiroiushi5• 2 years ago

Housing and healthcare costs are insane. When you're older, you need a lot more healthcare (and you won't have that nice insurance plan you had at your big company job when you were working), and housing keeps getting more expensive, which is a problem if you're on a fixed income. You could move to much cheaper locales (i.e. rural areas), but those are "healthcare deserts" where there's no competent doctors left and hospitals are all closing left and right, plus when you're infirm how exactly do you drive yourself? Living in a walkable city (or any city really) is much more doable when you're older for these practical reasons (less need to drive, healthcare providers close by), but then you can't afford the housing there.

Jensson32• 2 years ago

How so? Healthcare? FIRE seems much more attainable in the US

Much easier in Europe, go work in Switzerland or some high paying country then go retire in a low cost area with healthcare.

WalterBright50• 2 years ago

If you save & invest for retirement, you'll be fine.

dymk2• 2 years ago

And have no major health issues/accidents, and be quite lucky, and start with a lot of money in the first place, and be born in the right place in the country.

EZ-E• 2 years ago

Terrible place to be poor more like. Being poor is not enviable in any country, but you're better supported in some countries compared to others. Obviously this comes at a cost for the economy as a whole. At some point you need to think about what kind of society you want to live in.

kiba7• 2 years ago

I wouldn't necessarily make the assumption that welfare support "costs" the economy as a whole.

It's really expensive to support homeless population since they use up critical important resources such as emergency care, compared to just giving them a home. They may recover faster and become a productive member of society again.

For sure, it costs real dollars in a national budget, but it isn't necessarily a bad thing for the economy.

anon29111• 2 years ago

I honestly think this idea just needs to die. So many people I know don't even bothering applying for welfare because they think they won't get it.

In reality, most US states are insanely generous.

I recall once my mom had to help a friend's dad who was uninsured and dying of prostate cancer simply apply for benefits. He didn't think the state would pay for it and had just resigned himself to death. My goodness, how silly... Instead, he applied and it was paid for.

I myself have fallen into this trap. When I was laid off, I was going to pay COBRA, instead of just biting the bullet and applying for medicaid. There's almost always a free government provided option if you need it. Literally people don't even bother.

almaight2• 2 years ago

Because people have been liberated from the quagmire of handicrafts

grecy2• 2 years ago

Make no mistake, the US is a fantastic business. It makes a lot of money, and some people get fantastically rich while others toil for life and hover at the poverty line.

With a vastly higher percentage of its citizens in jail than any other developed country, much higher crime and violence than developed countries and many other very bad indicators it is, however, not a good country. It does not provide for or look after its citizens in the ways other developed countries do, and does not appear to be a healthy society.

throwaway8754aw2• 2 years ago

There's 365 million Americans vs. Europeans countries none have more then about 85 million.

stephen_g2• 2 years ago

No US state has more than 40 million people...

sp5272• 2 years ago

It does not provide for or look after its citizens in the ways other developed countries do

It's worth asking why.

NATO nations have cut back on troops and military hardware since the Cold War. But Europe has cut far deeper than the US. Defense budgets have become a pot that could be raided to fund more pressing priorities, such as treating and caring for aging populations. As a result, much of Europe’s military has become, in the view of some US defense experts, a “Potemkin army” that is ill-prepared to wage and win a prolonged war.

https://www.bloomberg.com/graphics/2024-nato-armed-forces/

sofixa10• 2 years ago

If we take a look at the % of US forces stationed in Europe, and assume all of them are there only out of the goodness of the US' heart to protect Europeans, and subtract them from total US military costs, it isn't even a drop in the bucket. It's less money than the Pentagon doesn't know what happens to.

https://www.defense.gov/News/Releases/Release/article/307805...

(This only covers the running costs; even an unfair assumption that the US would need less F-35s and troops if they weren't deployed in Europe, it would still be a drop in the bucket compared to the $916 billion yearly budget).

Cumpiler6933• 2 years ago

It's worth asking why.

Because taking care of people is not profitable. Why are people still looking for the answer when it's obvious?

roenxi3• 2 years ago

This is an interesting take, because it contrasts with GDP PPP [0] which is suggesting that America is in fact being overtaken by its rivals although it has managed to outpace the EU. China is claiming to already be ahead and India is well on track to gain absolute economic ascendancy relative to the US. And I expect that Asia is going to start developing some serious military muscle on the back of that because they have access to the history books and have a pretty good view into how Western leadership thinks.

If the US is benchmarked against Europe then all is well. The problem is that Europe is now a distant 3rd in terms of economic power - it can't face up to China. Arguably, if we put China in its own category and India into "Asia" then the EU might be pushing towards 4th. Everyone is still ahead of Africa I suppose.

[0] https://ourworldindata.org/grapher/national-gdp-wb?tab=chart...

spiderfarmer6• 2 years ago

The EU is number one in quality of life and that’s all that matters to me. If we work just hard enough to maintain and maybe even improve it, other countries can do their pissing contest.

ragebol2• 2 years ago

Quality of life costs money, and if we're not competitive, sooner or later that money will run out.

egeozcan• 2 years ago

Life in the EU is amazing for me, and probably for you too, as well as many others enjoying it here. However, we can't overlook the struggles of those who are turning to radical populist parties.

zpeti• 2 years ago

Which country? This matters a lot. I doubt you are in Greece, or Italy, or Portugal.

Did you know on GBP PPP Warsaw and Budapest are now better places to live than Madrid, Lisbon and many other Mediterranean cities?

It’s crazy. Perhaps Berlin and Copenhagen are still ok, but even France is on a completely unsustainable path that will explode in the next 10-20 years.

dachworker4• 2 years ago

Where does this notion come from? Many Europeans cannot even afford proper AC in summer and heating in winter.

mytailorisrich8• 2 years ago

Quality of life is the result of economic prosperity.

If the economy falls behind then quality of life will follow at some point. In fact quality of life is already not so great and decreasing.

ms30• 2 years ago

Declining/Aging Population becomes the issue. Solutions will probably come from Biology/Nature.

Human Quality of life seems to flip the natural "evolutionary script" wrt to population growth. Shrinking population = shrinking landlords/bankers/labor/traders/military/scientists etc

In nature, where there is environmental instability/resource scarcity you see a Quantity over Quality reproductive survival strategy (which is similar to what we see poorer regions of the world) that fuels population growth.

On the flip side, where there is resource abundance and stability there is growth in population. But we don't see that happening in the richer/higher developed regions with humans.

Its like advanced human society/culture has worked out how to override biology.

We currently work around falling population(and the shrinking factors of production) with tech/automation, financial/military arm twisting and immigration which gives rise its own social and cultural instability.

Nature has found other population models though. Ants(Eusocial insects) have solved their population/survival issues by have a single Baby factory. There are theories that the Haplodiploidy it produces makes ant societies function smoother. While Meerkats have collective breeding model which is similar to what certain Feminists talk about when they say Make Kin not Babies.

It will take a couple generations of futzing about in unnecessary directions before we solve these issues. So patience with the people who don't know what they are doing is key.

JohnFen• 2 years ago

As a US citizen, I look with envy on the quality of life in many EU countries.

RestlessMind4• 2 years ago

The EU is number one in quality of life and that’s all that matters to me

Probably it is time for you to learn the plight of fellow Europeans then. The society is stewing for quite some time now, for example https://en.wikipedia.org/wiki/Yellow_vests_protests

The symbol has become "a unifying thread and call to arms" as yellow vests are common and inexpensive, easy to wear over any clothing, are associated with working-class industries, highly noticeable, and widely understood as a distress signal.

Rise of far right parties across Italy, Germany, Hungary, Poland, France and many other countries is another clear signal that EU's quality of life may not be great for everyone there.

loxodrome• 2 years ago

I’m an American living in France for the past two years and cannot wait to move back to the USA. The taxes are so extreme and salaries so low that no one can even invest in the stock market. If I stay here, I will be able to leave virtually nothing to my kids when I die. The EU can take its 5 weeks of vacation and go fuck itself.

asdasdsddd• 2 years ago

That's what the chinese thought in the 18th century :).

A fun quote for the europeans here:

"Our land is so wealthy and prosperous that we possess all things. Therefore, there is no need to exchange the produce of foreign barbarians for our own." - The emperor at the height of Qing China

bjourne• 2 years ago

Though it has very much decreased in recent years due to rampant inflation. My real wage has decreased since increases have been lower than inflation. For unemployed and low earners it is even worse.

voidfunc2• 2 years ago

Enjoy it while it lasts, your social programs are a gift from the US historically subsidizing your defense.

naming_the_user4• 2 years ago

This feels like a huge generalization to me.

The US, UK, EU and realistically most developed countries I would say have fairly similar quality of life within margin of error. I've travelled a fair amount and everywhere is basically the same.

For an individual it's really going to come down to lifestyle and what you prefer. Some people like urban living and walkability, if that's you then you probably want Japan or old world metropolitan European cities. Some people want a house on a few acres and national parks the size of countries, if that's you then you probably want the US.

Working cultures are different but then there is no average on that either. People on HN tend to assume everyone is an office worker or something which is actually a fairly narrow slice of the middle of the spectrum.

Equally though, online (you can see it in this thread) there's sometimes a weird focus on the absolute worst outcomes which I've always found baffling. If you're planning to become a poor fentanyl addict then yeah, don't go to the US, find a country with a safety net, it'll be more fun.

jandrewrogers8• 2 years ago

The higher quality-of-life was likely true at one time but I think it is quite arguable now in much of Europe. There is a palpable sense of decline that weighs too heavily on everything. How "quality" is a life without meaningful optimism for the future? It is the quality-of-life of a pensioner waiting for the graveyard.

An underrated benefit of the markedly higher standard of living in the US is that people can choose to trade standard of living for quality of life if they wish. American culture seems to preference maxing standard of living but that is optional, and there are plenty of people that make other choices.

YetAnotherNick2• 2 years ago

Even within EU there is a clear correlation between economy and quality of life between countries. While yes more social policy improves quality of life, it can't compensate if the economy difference is too high.

cynicalsecurity• 2 years ago

This quality of life can disappear in a matter of seconds. EU is still not actively working on protecting itself from the Russian threat. The moment Russia attacks which is going to happen since this is what the fascist Russian dictatorship wants, we could kiss our quality of life goodbye.

fakedang5• 2 years ago

The EU could be a powerful neutral third block, focused on providing the best for its citizens, but for that they would have to keep up economically. The EU is currently a massive laggard, worse than China in a lot of metrics, yet having dalliances with some levels of Chinese authoritarianism. Not to mention the current unsustainable state of its welfare state.

rdm_blackhole8• 2 years ago

You forgot to mention that this quality of life is bought with debt and deficits that have been running for the last 30 years.

Look at what's happening in France for proof that this is just not sustainable. The US has a massive advantage tough,their currency is the global currency accepted and needed everywhere that is backed by the US army. Much less so the Euro.

The cost of all these social programs has to come from somewhere and currently the majority of these costs are shouldered by the middle class that is being squeezed to the max and speaking as someone from the middle class, I can assure you that having a couple of extra weeks of holiday and more job safety (if you are into that sort of thing) is not worth 55% to 65% of my gross income.

Even universal healthcare is crumbling now.

At some point the EU will need to get it's productivity up and become competitive once again or all this quality of life will have to go as it won't be financially possible to continue on this path.

eikenberry• 2 years ago

This is assuming nation-state conquests are out of the picture.

roncesvalles5• 2 years ago

The EU is number one in quality of life

I feel like this is only the case for a very narrow demographic - the young, bicycle-riding, sex-having mid-20s college grad still trying to figure out their calling in life while living frugally without a care.

It really sucks being 40 and still earning like 57k EUR or whatever.

mmmBacon3• 2 years ago

Given European demographics and the changing political landscape, it's hard to imagine that the quality of life in Europe can remain as it was through the 1990-2010's. Additionally, many European cities are essentially museums, riding on what was built centuries ago, with little innovation. If you don't believe this, just go to a German city that was completely destroyed during the war.

I'd imagine that Europe is at or near the peak in terms of its quality of life.

At least some of the European lifestyle has been due to peace on the Continent. Up until now peace in Europe has been funded by US taxpayers. The situation in Georgia and in Ukraine is what you get when European affairs are left to Europeans. Without the US providing military aid to Ukraine, Ukraine would have fallen and you'd have Putin banging on your back door.

Additionally, the EU's inability to supply Ukraine with basic military equipment such as artillery shells is indicative of how Europe is devoid of industrial capacity and couldn't rally in its own defense if it had to.

clarionbell2• 2 years ago

The reason for that is that we have offloaded defense to americans and have century of accumulated capital (legacy of colonialism) to spend. How long do you think it's going to last? Even Brussels is getting concerned and that's telling.

roncesvalles5• 2 years ago

PPP is an increasingly irrelevant notion in a globalized, digital, and immigration-friendly world. An iPhone or a Toyota Corolla costs the same in the US as it does in China. There is no remarkable arbitrage with real estate either - you're paying for the location and everything that comes with it. There is no secret city where the rent is low, there are plenty of well-paying jobs, you enjoy freedom of speech and can be reasonably sure the milk isn't tainted with melamine (tangent: due to strict US immigration policies and corporate RTO, the Bay Area comes close).

PPP suffers from the same problem that "basket of goods" CPI suffers from in that it doesn't account for differences in quality:

- of course a car costs more today than it did in 1980, it's a far better car

- of course a loaf of bread costs more in California than it does in India - I have certain guarantees about the pesticide levels in the wheat, the accuracy of the labeling, and my ability to seek damages from the legal system in case I chip my tooth on a stone, that I don't have in India

At best, PPP tells you something about the differences in cost of labor. But labor isn't everything you buy.

pg314• 2 years ago

An iPhone or a Toyota Corolla costs the same in the US as it does in China.

A maxed out iPhone costs RMB 13999 in China, which is about USD 1925. The same iPhone costs USD 1599 in the US. In Brazil it costs the equivalent of USD 2565. PPP is still very much relevant.

DiogenesKynikos3• 2 years ago

How often are you buying iPhones and Toyota Corollas? PPP conversion rates are based on what people actually spend their money on. Easily tradeable goods, like iPhones and cars, make up only one component of GDP.

kwanbix3• 2 years ago

When I hear "America’s economy is soaring," I can’t help but think it probably just means the rich are getting richer.

Don’t get me wrong—I’m not a communist. But it’s clear to me, especially when you look at how the middle class is struggling worldwide, that capitalism in its current form isn’t sustainable.

What we need is some kind of “Capitalism 2.0” or “Capitalism++”.

It makes no sense that someone with 300 billion dollars pays less (or even nothing) than a person that makes 100k per year. And this happens on ALL countries.

EDIT for those downvoting: just watch this video: https://www.youtube.com/watch?v=QPKKQnijnsM and then tell me why I am wrong.

matwood5• 2 years ago

Covid and the subsequent recovery was and is definitely K shaped. Someone with a house and assets has crushed it. Those without have only fallen further behind.

sanp• 2 years ago

GDP PPP is based on assumptions that - 1) People indifferent countries have the same basket of goods - probably not true for someone living in US vs Chine vs India 2) Accurate pricing data is available (which is not true for big categories like real estate in India and China - a large part of the price is under the table and unaccounted)

TeaBrain8• 2 years ago

PPP is only useful for measuring regional purchasing power within a country. As a metric for comparing the relative strength of global economies it is irrelevant.

Leary2• 2 years ago

Just the opposite. PPP is less useful when comparing intra-country than inter-country. It's only relevant because there are barriers to trade, especially in services.

bloppe3• 2 years ago

PPP matters on an individual level, but not at all on a national level. GDP at market exchange rates is what actually matters in terms of what a country can accomplish on the world stage.

And even on an individual level, PPP struggles with accuracy, because things are only ever roughly equivalent. There's a reason why so many individual people are trying to move from China and India to the US and EU, despite all the personal financial disadvantages of doing so.

Leary2• 2 years ago

Wrong. People move from China to India despite the higher prices in America precisely because the increase in wages is more than enough to offset the higher prices.

paganel2• 2 years ago

PPP matters on an individual level, but not at all on a national level. GDP at market exchange rates is what actually matters in terms of what a country can accomplish on the world stage.

That's demonstrably false cause the global super-powers (i.e. the US, Russia and China, maybe India, too) mostly depend on their internal markets only when it comes to their war industry and to paying their soldiers. When it comes to that PPP is a lot closer to the truth on the ground.

deaddodo5• 2 years ago

because things are only ever roughly equivalent.

This is what people seem to misunderstand about PPP. PPP applies for daily/internal market goods. The cost of milk, eggs, clothing, etc. Which is definitely important. On a more macro scale it also compares a VW Vento in Mexico with a VW Jetta in the US...two particularly different cars with ~6000usd gap in price.

In other words, it compares basic goods for living; fudges some basic "luxury" goods, and pretends that that's representative of lifestyles. It ignores (in Mexico, for example) the fact that consumer electronics are ~20-40% more expensive (if available at all), access to truly equivalent basic luxuries (a VW Jetta for a VW Jetta) is still slightly more expensive, access to equivalent security/infrastructure/business guarantees nigh impossible to receive, and just the vast gulf of wealth inequality that exists, etc.

georgeecollins2• 2 years ago

A lot of macro economic statistics should be taken with a grain of salt, or more literally: approximations with a measurement error.

PPP GDP is useful to compare, particularly politically because if the cost of goods in a country is lower people are more likely to be healthy / comfortable with less income. I think it is a little dubious when you use PPP to compare th3e size of two economies because 1) you are taking two approximate measurements and multiplying them 2) countries with lower GDP / person typically have higher relative purchasing power.

In "rich country" (high GDP /person) you can charge a lot for a cup of coffee. In "poorer country" you are likely to charge less. Therefore you can say that person in the poorer country is not as badly off as the absolute numbers suggest. However, if "poorer country" got to the same GDP / person purchasing parity might end up being almost the same. Or, countries with lots of poor regions will have a better PPP, but the cost of living in the places where people have high income may have similar costs.

And in general the most valuable purchasing power differences don't happen for the most valuable and traded goods. An equivalent airplane is going to cost as much in India as the USA, on average. At some point the absolute number is also important.

dragonelite• 2 years ago

gdp is really bad, countries don't even use the same counting methods. I think in the Netherlands they started using criminal activity to pad up gdp growth. Also money printing and inflation is a good way to up gdp.

I like energy production and consumption a lot more, modern economies pretty much come down to using energy to either transfer or modify goods, services or data.

wtcactus2• 2 years ago

Europe is willingly self sabotaging their industry and energy production, in the name of some completely irrational environmentalist ideology that states that saving the planet is achieved by making Europe poorer while allowing China, India and a few others to pollute without any restrictions.

So yeah, we are getting poorer by the day and on the brink of a major economic crisis. Just look at what is happening in Germany.

NotSammyHagar3• 2 years ago

European auto makers are failing because they can't make EVs that the market wants. And the market doesn't want their ICE vehicles either. They over-focused on very expensive high end EV vehicles. That's why they are hurting, it's not because it's EVs.

European ICE vehicles are losing out in China because people there don't want to buy any more gas vehicles, at least most people are getting there. VWAG is losing marketshare in every segment that I see. It's not green power that is killing them, it's not many good cheap vehicles that are killing them - gas or EV.

newyankee2• 2 years ago

On a per capita and historic basis the emissions of developing countries are dwarfed orders of magnitude by Europe and Western countries. Not to talk about all the land conquered by the same countries.

m4rtink2• 2 years ago

I still think the real goal is achieving energy indepedence, so that Europe does not have to import fosil fules from some very questionable and problematic countries.

Currently this also simulatenously gives those contries more money, so they can be even bigger pain in the ass in the future.

The sooner this flow can stop, the better.

encoderer2• 2 years ago

“Find some way to present the data so the bigger number is actually worse”

PPP is cope.

34573457• 2 years ago

Who cares? I'd rather be #1 in disposable income for my people personally: https://en.wikipedia.org/wiki/Disposable_household_and_per_c...

NotSammyHagar3• 2 years ago

What's this conspiracy of the US and Europe to destroy developing large economies world wide? If your plan is take over your neighbors, say you'll wipe out democracies and kill people and it's your destiny to win, then eventually the US & Europe will do something.

Russia literally talks about taking over the countries around them, bites off pieces and then subverts the countries that are left. That was all before the first piece of Ukraine was taken, Crimea.

NK - goal to destroy SK, has a big army and nukes. Worth trying to stop them.

China - Chains says the mere existence of Taiwan is worth destroying them. Also taking over the south china sea on the stupid dashed line that says they own the ocean down there. Dictatorships can't stand a functional democracy right next door.

India - if they don't plan to destroy the countries around them and take them over, then good on them. The US has been basically ignoring the fact that India is on a slow road to make their Muslim and other non-hindi citizens fail in every way in their society.

India said FU to the world and has been happy buying a lot of Russian oil that's under embargo. No one attacked them. The world isn't so simple as "western countries destroy all large growing competitors".

newyankee2• 2 years ago

Well Bangladesh is already killing and destroying Hindu citizens now where the coup was orchestrated with US blessing.

z2• 2 years ago

Two if not three of these examples are very much related to civil wars or civil-war-like dynamics. If anything, yes, I agree that the world usually isn't so simple to unconditionally take any single side.

throw__away73912• 2 years ago

I've spent a lot of time in a lot of different countries/cities with wildly different economics and I have a very different view of things.

PPP in the real world is a bit of a fraud, at least in the way people commonly use it. A lot of things you compare between two countries are in fact very different in reality. You might actually end up paying a lot more in nominal dollars for a lot of things in countries which are supposedly "cheap" to get not even the same quality. I find that the cost to maintain the same quality of life between different countries ends up being much more similar between countries than the statistics would have you believe.

I'm in a relatively poor country at the moment. On paper meat costs a fraction of what it does in the US, but what you get at the local market tastes absolutely terrible, uneatable to my spoiled western standards. I think they literally feed the animals trash. To get quality meat you need to go to specialty stores in the rich neighborhoods that caters to the country's elite. There it's actually about 10% more than what I pay at a US supermarket and it still is not as good. The same thing goes for housing, household goods, clothes, etc. In many countries you pay a huge premium for goods imported from the west, and the selection is often quite limited.

This has been my experience everywhere in the world. Excluding a few cities where you pay a premium just on the basis of the local job market, you more or less get what you pay for no matter where you go. The differences that don't fit into spreadsheets are quite significant and almost fully account for the pricing differences from location to location.

jltsiren4• 2 years ago

This is the common expat mistake. Your cost of living can grow very high, if you try to replicate your old lifestyle in a country that doesn't support it. With the same approach, you can also find that living in the US is 2x to 3x more expensive than in Western Europe. (I personally settled for 2x by making some compromises.)

adverbly• 2 years ago

PPP is closer in some ways, but it's not the best... It tends to be biased against strong currencies. The USD has been extremely strong since the pandemic.

mensetmanusman2• 2 years ago

PPP is a measure of how easy it is to afford home servants (I.e. the amount of income inequality near the low end).

nradov9• 2 years ago

There has certainly been huge GDP growth in China but their specific claims about GDP can't be attempted to be believed. Their numbers have never been independently verified and most of the raw data is treated as a state secret. There is reason to suspect that some of what they're reporting is just made up. Party officials are evaluated based on meeting certain economic targets so there's a lot of incentive at the lower levels to falsify data. The same thing happened in the USSR before it collapsed (I'm not suggesting that China will collapse any time soon, just pointing out that this is a common pattern in single-party authoritarian governments). External estimates based on resource utilization indicate that real GDP might be significantly lower.

cscurmudgeon4• 2 years ago

https://mishtalk.com/economics/purchasing-power-parity-silli...

GDP PPP is meaningless for both geopolitical power and what it means for the average citizen.

The average citizen in EU is much better than the one in China/India despite what the PPP numbers suggest as GDP per captaincy matters more.

China and Russia resort to bartering due to US sanctions because GDP matters, and not GDP PPP [1].

PPP should be used to compare only similar countries like USA/Canada/UK or those in EU. Or countries in SEA.

[1] https://www.intellinews.com/china-russia-to-reintroduce-bart...

dukeyukey6• 2 years ago

The average citizen in EU is much better than the one in China/India despite what the PPP numbers suggest as GDP per captaincy matters more.

I mean, the PPP numbers say the average citizen in the EU is way better off thant he average in India or China, so eh?

janalsncm4• 2 years ago

I think generic metric metrics like GDP PPP have to be put into context. When I was in China I was shocked by how much stuff there was. Not even nice things, but stuff to the point most westerners would consider cluttered.

Rent was also super cheap.

On the other hand iPhones were pretty expensive. Enchiladas were super expensive too.

These aggregated stats have to guess what you’ll buy and base their estimate off of that. Your actual financial situation will be very dependent on what you need to buy.

0xDEAFBEAD21• 2 years ago

And I expect that Asia is going to start developing some serious military muscle on the back of that because they have access to the history books and have a pretty good view into how Western leadership thinks.

The history books say Western countries abandoned conquest many decades ago. The leaders who initiated colonialism are long dead. Nowadays all we have are handwavey analogies to colonialism when someone wants to be provocative.

Countries aren't people: https://www.youtube.com/watch?v=AXz0kbMKPu0

didibus3• 2 years ago

I'm never able to get to the "so what?" with these. Productivity growth sounds nice, but then it mentions that there's more inequality, higher cost of living, and more workers struggle in the US than other developed countries. How do I reconcile this?

They make a point that eventually the other countries' economies would shrink and won't be able to afford those benefits, but also the US doesn't have those benefits even now.

Anyone can elucidate me?

WalterBright50• 2 years ago

How do I reconcile this?

I'm curious why you care that some people have more money than you do? If you want mo' moolah:

1. upgrade your job skills

2. minimize spending (like get a roommate, eschew restaurant food, buy a used car)

3. invest the money you save

If you really want to make big money:

1. start your own business

didibus3• 2 years ago

Not sure I understand how you're reconciliating it? Maybe I'm missing the link you are making with caring or not about other people being richer than oneself, how is that relevant here?

What I'm asking is more, what conclusion should I take from the article?

adamc6• 2 years ago

I thought the question was "why should I care about productivity if it doesn't necessarily make my life better?". The article didn't really make the case that average workers were benefiting from this.

criddell2• 2 years ago

Income inequality is strong predictor of unhappiness in a population.

You ask why I care about income inequality? It's because I want more happiness in my community.

UncleOxidant5• 2 years ago

If you really want to make big money: 1. start your own business

I'm pretty sure that in my case that would be a fast way to lose a lot of money, but YYMV, I guess.

mytailorisrich8• 2 years ago

This has been the case for decades now.

The US economy is much more dynamic than Europe's and the US government is actually more willing to intervene (and can afford it because of US dollar).

In Europe it is austerity and general less support for economy-boosting policies.

croes2• 2 years ago

So the US economy is built on debt

mytailorisrich8• 2 years ago

Europe has massive debts, too, and growing. But this is a downward spiral.

Edit:

Average government debt-to-GDP ratio in the EU was around 60% from 2000 to 2008. It is 88% now and worse in many major countries. No lie here...

stephen_g2• 2 years ago

All economies are built on debt... It's basically how money works...

tossandthrow16• 2 years ago

There are a lot of perspectives. Eg. that the US due to it geopolitical situation hasn't seen any real adverse events in the past century. Ie. privileged on the risk side.

As other people also mention: The US' growth seems to be debt driven, which will also have to halt at some point.

However, it would not seem like it is US dynanisism that is the reason for the current success of the country - especially taken into account that it is a small subset (eg. the magnificent 7) and very high valuations that drive the current success.

All in all, my personal view is that there is significant risk in the US market currently - thus also high returns. But I do think that it is safer to harbour some money outside of the US.

Personally, I am happy to have US stocks in my portfolio, I am also happy not to live there.

thomassmith655• 2 years ago

That's an excellent summary of the economic state of the world. This excerpt is depressing...

  The challenge for other advanced economies is not just replicating America’s dynamism. It is to do so while retaining their cherished social safeguards.
  For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions.

The pessimistic take is that American FA*NG 'enshittification' and cheap Chinese plastic junk will continue to eat the world, while other nations abandon consumer- and labor-friendly policies.

WalterBright50• 2 years ago

endure unstable employment conditions

It's also correspondingly easier to get another job. In Europe, making it hard to fire people means it becomes equivalently harder to get a job in the first place.

dachworker4• 2 years ago

Yep, and crucially, getting a first job from which you can build a career is relatively (to the US) hard in places like Germany because companies are super risk averse.

tossandthrow16• 2 years ago

While it sounds great to add some zero-sum game to it, it is not entirely precise.

For all its economic power, the US has the largest income inequality in the G7.

Had the job market been a zero-sum game like you propose, then the income inequality would not have been so dire in the US.

doctorpangloss2• 2 years ago

American FA*NG 'enshittification' and cheap Chinese plastic junk

Another POV is that the services and software that does the design, marketing, logistics, testing, certification and etc of the plastic junk is more valuable than the plastic junk, and all that stuff is made in the US. It’s still labor, sometimes it’s even bespoke one off software labor which might as well be manufacturing, the thing that it is not is factories. I don’t know why factories above all else are glorified. There is lots of labor in services.

thomassmith655• 2 years ago

What I was driving at there is that we have seen a general shift (probably due to market consolidation, monopolisation, etc) away from quality and customer satisfaction. The plastic goods are just one tangible artefact.

ossobuco3• 2 years ago

cheap Chinese plastic junk will continue to eat the world

That's a thing of the past. Check the consumer electronics produced today in China. Mobile devices, EVs, infrastructure, newer products are simply incredible, and I'd argue ahead of western technology on many fronts. Cheap plastic stuff now gets produced in other less developed countries.

threetonesun• 2 years ago

A quick skim of Amazon for literally any product would prove this comment entirely wrong.

Do they produce quality goods now? Sure. But it's also still where most of your just barely above garbage quality goods come from.

7thpower• 2 years ago

This is a fact that most in the US refuse to confront.

China has mastered making high quality goods at scale.

It does not matter how they got there, the fact is they did, and there are some pretty staggering military implications that are not really being discussed.

rendang• 2 years ago

Textiles seem to have heavily moved toward Vietnam, Bangladesh, etc, but I don't see a lot of cheap plastic toys and so on produced outside the PRC.

thomassmith655• 2 years ago

I expressed myself poorly. I implied that the plastic goods would be okay if they weren't cheaply made. I grew up in an era where stores sold furniture made of wood and steel. That was like... less than one human generation ago. So what I actually meant is: the plastic goods inherently are cheap garbage.

r_hanz• 2 years ago

Very much this. One of the best accounts of this progression I’ve read is the “AI Superpowers..” book by Kai-Fu Lee. China held the “Knock-off/cheap copycat” moniker in the 90s, 00s, and early 1Xs, but the tides are shifting in terms of the quality of goods they produced. They’ve also taken a page from American business and begun outsourcing “cheap labor” to other third-world nations, in addition to playing loan-shark to the likes of Africa… You have to hand it to the way the Chinese have gained their footing in “capitalism” since the 1980s.

fxtentacle2• 2 years ago

It's thanks to innovative business models, of course!

Increasing you investment efficiency with FTX. Reducing farmer idle time with Deere. Sharing your otherwise unused car with Uber. Revolutionising office productivity with technology, like those beer taps that WeWork had. Spending less time on your savings with Yotta. Not reading long emails with AI.

I wonder how high productivity actually turns out if you remove every scam that inflated GDP or earnings numbers.

spiderfarmer6• 2 years ago

Also, ask the poor how satisfied they are with the GDP.

fxtentacle2• 2 years ago

Or ask farmers about the DRM technology that locks them out of their tools ...

croes2• 2 years ago

Simple answer. The US don’t fear high debts like for instance Germany does.

Cumpiler6933• 2 years ago

Germany can't print the world reserve currency. They did for a bit towards the end of WW2 though but that time is passed.

dachworker4• 2 years ago

Germany suffers from bad leadership in industry and government above all else. The lack of investment is downstream of that. And I guess upstream is their conservative mindset on how and who to appoint as leaders. Lots of nepotism and corruption and not a lot of competence.

rich_sasha2• 2 years ago

One thing this article doesn't touch on is the soaring government debt, which is now really quite big: 120%, and IIRC if you add municipal debt, it's more like 140%. That is high. It also seems like much of the recent growth has been fueled by this debt.

It's unclear how this is going to unwind. America can afford, apparently, to run their deficit hot, but not forever and without limit. So at some point they have to start cutting expenditure and paying that debt off. What happens then? Or will they somehow default on it? Or, will they manage to deflate it via growth. But it is a bit of a sword of Damocles hanging over the economy, like ZIRP over VC successes of the 2010s.

The crazy thing is just how much the debt increases in living memory. Under Clinton, it was as low as 60%, which is considered a really low level.

dlcarrier• 2 years ago

My theory is that other countries' trade is so closely tied to the US Dollar that when the Federal Reserve prints money it's not just diluting the US Dollar but all currencies. The US is effectively taxing the world, to pay for its own spending.

As evidence that the US Dollar plays a large enough role for this to be the case, half of the banks bailed out in the TARP program were foreign to the US (https://www.europeaninstitute.org/index.php/ei-blog/106-augu...) and trading is US Dollars.

tossandthrow16• 2 years ago

It seems like other people also buy into this. Eg. Trump.

I also think that the USD is currently under attack as the reserve currency and running these deficits is a way to protect its position.

We will see in a couple of years how things play out.

matheusmoreira4• 2 years ago

My theory is that other countries' trade is so closely tied to the US Dollar that when the Federal Reserve prints money it's not just diluting the US Dollar but all currencies. The US is effectively taxing the world, to pay for its own spending.

Yes.

The BRICs economic group has been trying to launch their own currency for a while now. This is one of the reasons for it. Trump has threatened to impose 100% tax on them and on anyone else who ever tries.

https://www.msn.com/en-us/money/markets/trump-threatens-100-...

https://www.bloomberg.com/news/articles/2024-12-02/south-afr...

0xDEAFBEAD21• 2 years ago

It's a little more complicated than that. US inflation is actually good for emerging economies which borrow in dollars, because it eases their debt burden.

amrocha16• 2 years ago

Government debt doesn’t matter. It’s literally fake.

bdangubic13• 2 years ago

the largest expediture of the US government now is fake interest payments on fake debt then? or we pay that with fake money fake Americans pay with fake taxes? :)

mywittyname• 2 years ago

So at some point they have to start cutting expenditure and paying that debt off.

They don't have to cut expenditures at all. Since the Fed controls rates, they can manage the debt by adjusting interest rates. There's nothing preventing them from driving interest rates below 0% and being paid to accept money. And the Fed can buy T-Bonds at below market rates and slowly destroy excess money in the economy in a controlled fashion.

Something to keep in mind is that US government debt is integral to the economy. It's a stable way for entities hold US dollars as cash, and it's the only mechanism for them to hold large sums of US dollars in cash.

It's fine (and expected) for US government debt to continue to increase forever, it's just a number in a spreadsheet. The only real risk is the potential for a default. But even then, if you have $4 trillion dollars, what are you going to do with it instead of buying t-bonds? Exchange it for Euros and risk the impacts of currency fluctuation? And what will the buyers do with those dollars? At some point, someone is going to want to bank those dollars in savings, and that means buying t-bonds (directly, or indirectly), and the risk of default merely becomes a factor in an equation for the holder.

rich_sasha2• 2 years ago

You can do all this at an accounting level. But ultimately US government is buying things with debt, ie paying for goods and services from third parties with an IOU, and can only do it if people think they are getting a good deal.

The way you get shafted with debt is inflation. Barely a few years ago bond yields were around 0. If you lent money to the government then, you're already very behind because of inflation - you're not getting any interest, and by the time you are repaid, the money is worth far less than before.

Furthermore, the Fed can't really let interest rates diverge too much from inflation, since the mismatch drives inflation further. That's why the rates are around 4% now, even as the economy is slowing. They have to be up to contain inflation.

So then, as the election was playing out, you could see bond yields fluctuating in line with inflation expectation. Whenever Trump said something that sounded inflationary, like tarrifs, bond yields jumped up. That's not the Fed doing it, that's lenders demanding more interest from the US govt.

Now I agree the US can get away with this more than other places. They aren't far off Italian levels now, and that would be considered teetering around crisis levels. But it's fantasy to conclude the US can keep magicking money every year with no consequence.

greenthrow2• 2 years ago

Government debt only becomes a problem when it becomes a problem to pay it. We're nowhere near that point in the US.

harrall• 2 years ago

US debt has been this high before.

You lend someone money based on whether you think they can pay you back. People still buy US debt because the US is good with its promises.

It’s the same reason the US dollar is the reserve currency… the US govt knows how to keep it reasonably stable and has decades of success at it.

Does the US use this to their advantage? Sure. But it doesn’t matter… you just need to be better than the next guy. Just observe the 100 year history of many countries: their institutions 100 years ago are much different from today. No one likes uncertainty.

kwere• 2 years ago

the last time debt was this high was WW2, after it millions of working age men came back contributing to the economy. today the opposite is true, millions of people are exiting the workforce to retire, draining resources like Social Security. It's not sustainable, but US can tap into immigration policy to kick the ball down the road for decades

dyauspitr5• 2 years ago

As long has the US has military supremacy it won’t unwind because the military backs the dollar. As soon as that is gone then it’s all one big free fall.

thuanao3• 2 years ago

US will unwind like all declining empires in history have. The rich will move their wealth out of the currency while the currency is debased via inflation (the debt will be "monetized" in contemptory econspeak). It's already happening.

Hilift• 2 years ago

The US administration of the next four years has no intention of making a principal payment on the debt. They borrowed $7 trillion before, they can do it again. If a country dumps their US treasury bonds, the administration will impose tariffs on them.

I think it's interesting to compare other countries. 120 years ago the UK was the most powerful empire in history. Now 36% of UK children live in poverty, and 43% of single parent families and families with three or more children live in poverty. Over 40% of UK families from Asia/Caribbean live in deep, persistent poverty.

Many in the US are really close to that, and describe it as a "poor economy". They may have an iPhone, but they can't afford it.

Tiktaalik4• 2 years ago

I find this part funny to because in Canada we want to have it both ways. We endlessly compare ourselves to the USA and wring our hands about whether our taxes are too high or our productivity isn't good enough, because we can't match what the USA has, but at the same time we also wring our hands about deficit and debt and are incredibly hawkish compared to everyone else.

You can't have it both ways!

Somehow it is never raised that the USA is doing absolutely incredible amounts of deficit spending that Canada dares not match, not even under this relatively more inclined to deficit spend current government.

Never raised that maybe some of their good metrics stems from the incredible amounts of deficit spending that is verboten.

DataDaemon• 2 years ago

You are so lucky to be born in the USA:

- Easy to do business - Great economy, high salaries, and funding - English native speaker, so you can speak with everyone and everyone can speak with you

The EU is in a deep hole, with socialism and green communism next.

tokioyoyo3• 2 years ago

I swear, I’ve been hearing that since 2010. That and big Chinese collapse. It’s like the US just wants everyone else to fail just because they don’t share the same attitude towards life. It’s been almost 15 years. That’s a lot of time!

I’m mostly annoyed by the recent “Canada should just become an American state” talks, otherwise I would ignore such takes. Apologies for that.

indoordin0saur• 2 years ago

Canada should just become an American state

Canada is a really interesting take that I ctrl-f'd hoping I'd find a discussion on. It was doing a great job keeping pace with the US but seems to have really stagnated since the last 8 years or so.

timomaxgalvin2• 2 years ago

The EU is not in a hole. The US is just doing very well.

bookofjoe• 2 years ago

https://news.ycombinator.com/item?id=42311318

wslh2• 2 years ago

My two cents: the U.S. owes much of its economic strength to its robust legal framework. It provides a system where complex business disputes can be handled and enforced effectively, creating trust and predictability for investors and entrepreneurs. This institutional strength is often overlooked but is critical for fostering innovation and long-term economic growth. Incidentally, recent Nobel laureates in economic sciences have focused on the role of institutions in shaping economic outcomes, underscoring how pivotal they are to success.

alephnerd3• 2 years ago

the U.S. owes much of its economic strength to its robust legal framework

Pretty much. This is the mainstream institutionalist view which won AJR a Nobel Prize.

This is also the reason why China began the Guiding Case Project with Stanford Law before it got shut down due to Xi 2's crackdown.

ein0p3• 2 years ago

The US owes its "economic strength" to the ability to print $2T/yr in perpetuity and buy stuff with that money. Once that tap ceases to function (which eventually it will, though not anytime soon), the US is going to be fucked beyond any recognition.

georgeecollins2• 2 years ago

That's irrational and alarmist. Any time I hear someone talk about "printing money" I figure I am hearing from someone who doesn't have a great grasp of finance. For those that are interested, the supply of US currency or purchasing power of the government is not controlled by printing.

A steelman of this argument is the USA has too much debt and can't keep issuing this much. Maybe true. But the world holds that debt and it's denominated in USD. Also, just the simple wealth of US households grows a lot faster than the debt so its still pretty clear that if the US wanted to pay all its debts it easily could. (https://fred.stlouisfed.org/series/BOGZ1FL192090005Q) We could be heading for inflation like in the late 70's early 80's. Not good but you don't have to doomsday prep.

wslh2• 2 years ago

Even if you are correct, it might be worth mentioning that the US is the top military power, which adds strength to the equation.

UncleOxidant5• 2 years ago

Doesn't the EU also have a robust legal framework?

rootusrootus11• 2 years ago

I would have thought so. But on the other hand, it seems to me like there is a lot more appreciation on the part of EU for laws to be enforced more in spirit than in letter. That might not be a good legal environment for businesses.

DoingIsLearning3• 2 years ago

There is EU law, which is enacted across all EU members. But there is no such thing as a EU legal framework, neither is there a fiscal one if we are focusing on business.

A debt dispute could be resolved in less than 4 months or dragged for close to a decade depending on which EU state you have a business.

Same goes for fiscal law. Some countries have had pretty much the same rates and taxation arrangements for decades. Some countries change their fiscal load on businesses as much as twice in one year. Both cases are technically 'the EU'.

bpt328• 2 years ago

Yes, and it is generally hostile towards wealth generators. And then they wonder why nearly every economic metric has been stagnant for decades at this point...

YetAnotherNick2• 2 years ago

One thing that I believe is overlooked is that two party system helps in the sense that both party knows they are here in the long run, and while both party talks extreme economic plans, they just don't go forward with anything, just some tariff here and there. In lot of other countries you don't know how extreme the ruling party would be in next few decades.

ginko• 2 years ago

The headline is about America's rivals but then talks mainly about EU and other G7 economies.

Do Americans consider Europeans their rivals? Occasional competitors sure, but rivals?

monetus• 2 years ago

Rival in the same way two American football teams are rivals maybe.

cjs_ac• 2 years ago

The Economist is a British magazine, originally marketed at devotees of classical liberalism, which was also called economism at the time. Its readership is largely British, and therefore seeks comparisons between the British economy, European economies and the US economies, because they are seen as peers of the UK.

losvedir2• 2 years ago

This is Financial Times, not the Economist, but is also British.

ysofunny2• 2 years ago

when you control the measuring stick (USA dollar)

you'll always be the tallest of them all

anon29111• 2 years ago

Globally, the top R&D spenders are increasingly concentrated in software and computer services

I always find these sorts of statements strange because most software is not intended to be software but rather something else. For example, Adobe's suite should be classified under 'art supplies' or 'video production'. While true that it's software, in my mind, it's like classifying a car builder as a metal fabricator.

The truth is software and computers are pervasive today. There's rarely any software (other than development tools) that are truly aimed at computers themselves. Almost all software today is used for other industries and ought to be classified under that.

Under this taxonomy, I think things would seem much more diverse.

doctorpangloss2• 2 years ago

Adobe's suite should be classified under 'art supplies' or 'video production'... Under this taxonomy, I think things would seem much more diverse.

Will someone who has shopped at Blick for 20 years be able to develop a Photoshop plugin? It would be a stretch.

anon29111• 2 years ago

It's clearly not just software etiher though

bluGill10• 2 years ago

Most people who shop at Blick don't make their own canvas, clay. Many of them wouldn't know how. They could learn and some do, but many never will. Likewise they could learn to write software but most won't.

bluGill10• 2 years ago

Software is a tool, so it should have some count toward that economy. Same as any other tool is a hammer part of real estate or iron?

forth_throwaway• 2 years ago

Anecdote of shitty AI company raising a fuckton of money
Mention of GDP with no other metrics
No mention of inflation
No mention of QE
No mention of interest rates

This is propaganda. When your central banks control the world's reserve currency it's pretty easy to make sure that the line goes up every year. The British Empire didn't have their wealth because of their superior system, they got it from imperialism.

Before you downvote please just reflect on what I'm saying a little bit. Do the changes you see on the ground reflect this narrative of economic growth? I see a little bit locally, mostly from the CHIPS act and infrastructure acts, but it doesn't correlate with an improvement in QOL and certainly infrastructure projects are not unique to American capitalism.

anon29111• 2 years ago

Thomas Sowell says that equality of opportunity leads to inequality of outcome. And this is the main difference between America and the rest of the world. The articles cites innovation-growth v cost-cutting as sources of increased productivity, and this parallels this dichotomy.

People interested in equality of outcome and a level playing field have to compete on cost. There's a social stigma against sticking out and achieving more, lest you become unequal, and the governments are well aware of that.

Meanwhile, innovation literally desires to reward disproportionately he who comes up with the new product. The entire purpose of the American economic system is to produce inequality.

This, combined with America's relative freedom from prejudice, is an unstoppable juggernaut. It is absolutely insane how easy it is in the United States to be handed money with limited liability to go and do whatever you want with it. This is a true blessing, and we see it not just in venture capital, but in the plethora of small businesses, as well as the plethora of credit (for better or worse).

Yes, there are problems, but I think history will show that this model is ultimately more sustainable. While true that America's productivity growth has only really taken off over the last century or so, even before then, it represented a formidable economic player.

hmmm-i-wonder2• 2 years ago

This, combined with America's relative freedom from prejudice, is an unstoppable juggernaut. It is absolutely insane how easy it is in the United States to be handed money with limited liability to go and do whatever you want with it. This is a true blessing, and we see it not just in venture capital, but in the plethora of small businesses, as well as the plethora of credit (for better or worse).

I was with you until then. America was build on prejudice and inequality as much as any other country has been and suffers from it today. That translates to how the last half of that paragraph doesn't apply to a significant amount of American's who struggle to access the resources they need to survive let alone innovate and thrive..

anon29111• 2 years ago

As the child of non-white immigrants to this country... I simply disagree. We faced more discrimination in the country my parents left than we did here. My father was unable to be employed due to his skin color and social status in his native country, and became successful mid-level exec here in America, was given a mortgage, etc.

Capital is available for people here without reference to social standing.

Is it perfect? Of course not. I literally said that.

However, if you want capital and aren't whatever platonic ideal your country has decided you ought to be to access that, America is literally your best bet.

That translates to how the last half of that paragraph doesn't apply to a significant amount of American's who struggle to access the resources they need to survive let alone innovate and thrive..

I'm not going to claim every american is able to thrive, because obviously that's not the case. But even the poor American is able to access credit, which is what my entire post was about. You are changing the goal posts a lot.

bluecheese4524• 2 years ago

America was the number one economy while having state enforced segregation.

badpun2• 2 years ago

Not a single word about shale oil and gas revolution, that started around 15 years ago? The US now has the one of the cheapest energy on earth, and probably the cheapest among the countries that matter. Pour all that cheap gas and oil onto an economy that was already a leader and you get lots of impressive growth.

paganel2• 2 years ago

That's the gist of it, especially since the "IT revoluion" (for lack of a better word) seems to have cooled off in the early 2010-ish, i.e. exactly when the shale revolution started doing its thing (and, no, I don't count the recent AI hype as being worthy of getting called as "revolutionary"). That shale revolution has also come with big opportunity costs reductions, because the US didn't have to geo-strategically care about the Middle East and the oil there all that much, at least not as much as to send real feet on the ground there, with all the associated costs.

With that said, there's also the danger of the US following on Britain's steps from the 1980s up until the 2000s, i.e. to rely on this shale/oil bonanza and not care about (internal) structural reforms that are in dire need of being enacted. At some point the shale money will not be there anymore (the shale gas will have run out, the world's car-fleet turns to electric en masse etc), and if the Americans don't carry out the necessary reforms sooner rather than later then that future "no more shale-gas money" moment will come at a very, very bad time for them. I said it's similar to Britain's situation because things started going downhill there as soon as the North Sea oil&gas money started thinning out.

greenthrow2• 2 years ago

It's not brought up because this is not the source of the growth whatsoever. It has only served to keep our gasoline and methane costs low compared to the rest of the world. That's nice for people but does not create massive economic growth in the 21st century of the kind being discussed. That is all coming from the tech sector. If you want to talk energy to power the server farms, the growth in energy is happening with renewables which are and far cheaper than any fossil fuels.

badpun2• 2 years ago

That's nice for people but does not create massive economic growth in the 21st century of the kind being discussed. That is all coming from the tech sector.

Do you have the stats that back that up?

scythe• 2 years ago

The price of a kilowatt hour of electricity is not determined by the cheapest power plant operating when you buy it, but by the most expensive. You buy the marginal kilowatt. And solar+wind continues to be a relatively small fraction of the US energy market. The DoE did a report when Biden took office in 2021 and the progressive wave was in full swing:

https://www.energy.gov/fecm/articles/economic-and-national-s...

Eliminating [fracking]... a ripple effect of severe consequences to the Nation's economy, environment, and geopolitical standing.

Making energy cheaper and the dollar stronger helps all businesses which depend on energy or imports, particularly manufacturing, and US manufacturing output currently exceeds the UK, France, Germany, Italy and Spain combined. And all over the thread you'll find people arguing over nominal GDP versus PPP, but what's not in doubt is that the balance of nominal GDP versus PPP is related to the strength of the dollar. Imports are vital to US industry — we thrive on buying less processed inputs from cheaper countries and producing high-value outputs. All of this is affected by the US oil and gas industry.

kansface• 2 years ago

Can't we consider the cost of energy as a general tax on the economy? If all economic output is N% cheaper in the US, we'd expect compounding effects.

pelorat3• 2 years ago

All industrial sectors requires energy, and the prices here in the EU are obscene compared to the USA.

Renewables are actually making it worse. We now have the "problem" that renewables cause spikes and saturation of the grid, and instead of causing low prices, the energy companies penalizes their customers. Claims it's due to renewables driving up grid maintenance costs because it was not built to handle the amount.

After all, energy produced _must_ be used or it will inevitably cause damage somewhere. For instance, you can't leave solar panels in the sun while they are not connected. If you don't use the energy, it will be turned into heat.

It's getting to the point where you actually are penalized for having rooftop solar. Most solar installations in the EU doesn't have a home battery, so either you have to give back surplus energy (electricity providers in some countries will actually charge you for this), or you can disconnect your solar if you overproduce but that will slowly damage your installation. Even if you don't plan to give back any energy, you still have to notify your provider that you have rooftop solar, if you don't it's a breach of contract, and if you do, they will charge you an extra maintenance cost.

It's funny because the government are pushing rooftop solar, but the energy providers are quietly telling their customers to fuck off with it.

But still even though the grid is absolutely full of cheap energy, and you should in theory pay very little, you still have to pay double or triple what those in the USA would ever pay.

Renewables are great, but also a shitshow because while we're building solar and wind installations, we're not building nearly enough grid storage.

rsanek3• 2 years ago

They did bring up energy -- "The US may have been less affected by the war in Ukraine than Europe, owing to its abundant domestic energy supplies"

lifeisstillgood• 2 years ago

Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market.

Take tech out of the equation and the US is pretty much on par with EU, and China and India are just burning the coal for everyone else.

jebarker3• 2 years ago

Can you expand on this? What do you mean by "monetized in the US stock market"?

tiffanyh• 2 years ago

I'm not GP, but they probably meant "realized" (not "monetized")

jventura• 2 years ago

I think the parent poster means that tech companies such as Apple, Nvidia and others are traded in US stock exchanges..

francisofascii2• 2 years ago

From a stock market perspective, if you look at a graph of Vanguard FTSE All World ex US ETF (ticker VEU), it looks like normal growth, but looks vastly different from say Vanguard Total Stock market (ticket VTI) which shows phenomenal growth. This is because VTI includes US tech stocks and VEU doesn't. Take out the tech stocks and maybe VTI would look like VEU.

nradov9• 2 years ago

How is that a "problem"? What is preventing other countries from building tech winners? The USA isn't launching missiles to destroy the next foreign Nvidia or Meta competitor.

stcroixx3• 2 years ago

I don't think it's a problem. What's preventing other countries from building something similar to the US tech companies is a combination of regulation and culture.

lern_too_spel• 2 years ago

You could just as well ask what is preventing every other state in the US from building tech winners.

codr74• 2 years ago

I don't know about missiles, but there's no lack of sanctions.

seydor2• 2 years ago

Tech is not a 'problem'. It has replaced Finance in the pecking order of power relationships. Since US controls it , it can exert control everywhere where its tech goes. China shielded itself from it early on.

staunton• 2 years ago

Tech [...] has replaced Finance in the pecking order of power relationships

Not at all obvious to me. Is there any particular measurable thing you're referring to, or is this just your personal feeling?

slibhb2• 2 years ago

Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market.

I don't really understand what you mean. While their reach is global, it's largely American companies that are creating the tech value, no?

chmod7753• 2 years ago

They're creating "value" the same way the British Empire did for China around 1800. It's almost 1:1 the same dynamic. Bad decision-making of individuals is exploited to make them act against the best interests of their country and ultimately themselves, causing money to flow outwards in exchange for virtually nothing, which is then used to import things of actual value from the hapless victims. A modern twist on this is also using that money to buy up anything of value in the victim country and renting it back to its citizens, taking the exploitation to a whole other level.

China was wise to this trick already, which is why they've shielded themselves from the very beginning. Most countries haven't learned the lesson yet, but slowly the EU is waking up as well and pushing back.

corimaith7• 2 years ago

This is non-mainstream marxist-influenced economics we are talking about here, only certain activities are regarded as having "value" alongside with a zero-sum view of the economy.

epolanski7• 2 years ago

If excel makes billions in Asia, and provides more value than it takes (otherwise why bother buying it?) who is benefitting more of it?

The companies it empowers or Microsoft's (global at the end of the day) shareholders?

eduction2• 2 years ago

Take tech out of the equation and the US is pretty much on par with EU

Disagree. It's not just the nature of the technology itself but the whole ecosystem -- including VC and education -- in Sillicon Valley that develops cutting edge computer tech, plus generally looser business regulation in the US and a culture of greater optimism nationally, especially relative to EU.

Certainly having a unified market (not just in regulation, government, and currency but also linguistically) has helped too especially given the network/winner-take-all effects of tech you mention. Yes the nature of technology is part of it. But it's not everything. It's a whole gestalt.

I mean, consider where we are right now, who set it up, who hangs out there, etc.

RajT883• 2 years ago

The US has the highest disposable income per capital out of the whole world:

https://en.m.wikipedia.org/wiki/Disposable_household_and_per...

For all the workers are living paycheck to paycheck, they are sitting on a gigantic monetizable pile of money.

Consider this: the most popular languages in YouTube videos are English and Spanish. And did you ever notice how most videos, when they talk about units, talk about Dollars, Miles, Inches, Pounds and Degrees Fahrenheit? That is why...

To be a wealthy YouTuber seems to mean catering to people in North America (the US specifically).

layer82• 2 years ago

English and Spanish

Part of the causality is the other way around: The largest language communities attract the most monetization. Europe being compartmented into 24+ languages is one reason that it’s harder to monetize.

forgotoldacc5• 2 years ago

Disposable income is the money people have after taxes.

You can have 10000 dollars of monthly disposable income and be well above the global average. You can have 9999 dollar rent with only a single dollar left. A single basic peanut butter and jelly sandwich could cost 100 dollars. Your disposable income is still massively above the average. Your discretionary income would be very low, though.

gruez5• 2 years ago

China and India are just burning the coal for everyone else.

The actual effect of this is far less than you think. While it's true there's some amount of "exporting" of emissions from rich countries to china/india, the effect is small. Consumption based emissions (ie. accounting for imports) for US is only 11% higher than territorial emissions. Meanwhile the difference for China is also 11% (in the opposite direction, of course).

https://ourworldindata.org/consumption-based-co2

thuanao3• 2 years ago

If you remove non-industrial and financial activity from US GDP, the economic picture is bleak. US and G7 have been steadily deindustrializing while BRICS have been doing the opposite.

US GDP is misleading in the sense that it increasingly includes a large portion of economic activity that isn't actually producing tangible wealth.

epolanski7• 2 years ago

But as an average European I realistically have all I need and most of my needs are either food/commodities or non-industrial services.

zeroonetwothree7• 2 years ago

That’s not how a global economy works (comparative advantage etc).

An analogy would be that if you remove employment activity from my household finances then our economic picture is bleak.

dyauspitr5• 2 years ago

China and India are just burning the coal for everyone else.

India has 19 nuclear reactors it is planning to complete by 2030. 7 under construction now to be completed by 2026.

dartharva6• 2 years ago

..which is still a ridiculously smaller number than what it should be aiming for.

boulos2• 2 years ago

The article discusses this and disagrees. Even in the same sectors and with the top 7 companies removed, sectors in the US have higher P/E ratios due to higher projected growth rates.

rsanek3• 2 years ago

The article quotes Draghi as saying “If we exclude the tech sector, EU productivity growth over the past 20 years would be broadly at par with the US,” so I think it agrees.

anon29111• 2 years ago

all industries today are 'tech'. It's silly to continue this 1970s classification of everything.

Google should be reclassified under the equivalent of Dewey Decimal system publishers and magazine printers.

Netflix is a movie producer.

Adobe is an art supplies producer

Few companies today: apple, microsoft, etc qualify as tech.

0xDEAFBEAD21• 2 years ago

The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market.

This argument could be made for many industries. E.g. Boeing and Airbus together control almost 100% of the global passenger jet market. "Passenger jet value creation is being experienced everywhere, but being monetized in the US and EU stock market."

sourcepluck2• 2 years ago

I think it was in the book "Cypherpunks" (the one with Julian Assange, Jacob Appelbaum, Andy Müller-Maguhn and Jérémie Zimmermann) where one of them said something about the last few decades with the move to total dependence on digital technologies in so many ways, and it being the largest transfer of power in the history of the species.

If someone has the exact quote, I'd welcome it...

Anyway, the idea stuck with me. Anyone who wants to reject the point will have an easy time as it's such a broad claim, but I think it's worthy of reflecting on, and perilous to ignore.

There's a lot of ink splattered about technology these days, of course, but it's still rare enough that the larger picture of what's going on historically in terms of power structures is seriously reflected on.

DrBazza• 2 years ago

These articles also gloss over the US market is 400m English speakers with one set of legislation, more or less. Europe is 20+ languages and 20+ sets of legislation. That’s a colossal advantage. And any clicks and mortar business gets the benefit of absurdly cheap shipping costs compared to Europe.

ifwinterco2• 2 years ago

There are counterexamples in Asia though like South Korea, Taiwan etc. that have massively outperformed Europe over recent decades despite not having those advantages.

Having said that, not sure the SK model is something to emulate given the social problems it seems to have caused

treis2• 2 years ago

In growth, yes but GDP per capita in South Korea is still 3/4s of France.

timomaxgalvin2• 2 years ago

This is false. The EU I more harmonised that the US in terms l trade rules.

0xBDB4• 2 years ago

Business law is a state issue in the U.S. The reason that the U.S. has one set of legislation (more or less) is that 50 states (well, 49) have voluntarily adopted the Uniform Commercial Code. There is absolutely nothing stopping Europe from doing the same or similar except lack of political will.

pests4• 2 years ago

Which state hasn't? I thought all states have adopted it with their own variations / changes.

zeroonetwothree7• 2 years ago

We also have the “dormant commerce clause” as a key protection. Europe doesn’t have anything like that AFAIK

dukeyukey6• 2 years ago

Turns out political will is a hell of a lot easier in a single country like the US, than 27 like the EU. Especially when the US has fucntionally one language, and the EU has who-knows how many.

amadeuspagel• 2 years ago

I like 'click and mortar business'. Much better then 'bits and atoms'.

jamil7• 2 years ago

It’s mentioned in the article and the referenced document from Mario Draghi a few months ago on the plan for EU reforms.

dartharva6• 2 years ago

India alone has 20+ languages within itself. It manages perfectly well as a unified economic entity.

athrowaway3z• 2 years ago

It is frankly absurd to make a case with only one line mentioning

owing to its abundant domestic energy supplies,

Energy is wealth. In so far as I can tell we have better data, going back further, and being more strongly correlated to outcomes of interests, than the data we have on monetary systems. I have my doubt the FT will ever dare to entertain that position.

Energy has an enormous cascading effect. But it pops up directly as well. ChatGPT could not run at 5x the base energy costs and no suppliers able to scale to more demand.

If you're looking to explain the US upward trends always include their shale output in your graph as well. You'll find you rarely need more explanations.

It has been blessed by their resources, an enormous size granting a low population density, and a functioning liberal state to use those well.

The rest is pandering and ideological pleas for less tax and less regulations.

And i mean... if you're going to pander, you're going to pander to the people with the cheapest energy.

mesk2• 2 years ago

I'm thinking a lot lately about which country would be best for my future, and somehow US is never there. Maybe for me without family yes, but otherwise I see it like there, I would be one illness away from bankrupcy, one crazy kid with a gun away from family tragedy, one <what if> away from <unsolvable problems>. Sure, being in top 10% is cool, but will my kids be also so lucky? And the middle class in the US already thinks they are struggling (hence the last vote) - as someone said numbers can't feed you. But, hey, I'm maybe too old ;)

sirbutters• 2 years ago

"hence the last vote".

You are implying that logic fits the results. It doesn't.

aftbit• 2 years ago

Anywhere in the world, you might be "one <what if> away from <unsolvable problems>." That's not a US-specific thing. The US is better at some things and worse at others. Obviously we all make these choices on different merits, but IMO don't live in fear.

Being in the group of people who has a choice of countries to live in _and_ being in the top 10% in the US puts you in the top 0.1 to 1% globally. Enjoy it while you can!

eitally4• 2 years ago

This is the kind of comment written by someone who only knows a country from its headlines. The US, as a resident, skews wildly from the popular narrative in many ways much of the time -- regardless who is in charge.

mesk2• 2 years ago

The US, as a resident, skews wildly from the popular narrative in many ways much of the time

Much of the time, thats it, you named it. To me the worst case scenario (I work in IT, so I often think in the worst case scenarios) in few relatively common situations, _seems_ to be much worse in the US.

Common, like being ill, visiting hospital, going to school, being stopped by the police.... (headlines again).

majormajor3• 2 years ago

The thing about the US is that it's very unevenly distributed. So it depends on what you'd be doing and how much money you'd be making / already have.

If you have a professional-class job the US is often the best place in the world to be for illness. You'll have a fairly high salary (especially comparing globally) and an insurance plan with an out of pocket max that is probably 10-15k per year (or much less, for most tech employers). If REALLY concerned with illness, filter for places with good supplemental long-term disability insurance and live in a state that has some of their own like CA.

The US spends A LOT on healthcare per-capita. So your access to doctors / specialists / hospitals in major US metros is generally excellent and rarely has the sort of waits that you see in a lot of countries that spend less on healthcare.

The problem with US healthcare is that it's usually either (a) fucking great for you or (b) fucking terrible for you. Very non-uniform.

keybored2• 2 years ago

The thing about the US is that it's very unevenly distributed. So it depends on what you'd be doing and how much money you'd be making / already have.

The Veil of Ignorance, anyone? Even invented by an American.

People here need to consider the state of a society without spending 80% of the bytes on the what-if of being a 135+ IQ individual with a passion that coincides with the work tasks of amazingly successful megacorporations based on the West Coast. At least when we’re supposed to be talking in the abstract.

indymike3• 2 years ago

And the middle class in the US already thinks they are struggling

Middle class financial issues in the US are age related. College debt, cost of raising children, buying a home combined with low entry wages put young people in a hole it takes 10-30 years to crawl out of. But when they do they quickly accumulate wealth. There are also a lot of people who choose to not save. That is a choice you don't have to make.

shafoshaf4• 2 years ago

Not to mention that A LOT of millenials are about to inherit a ton of money from the Baby Boomers. The Boomers are just lasting longer because of advances in health care, all of whom are on Medicare which is government funded health insurance. In fact, about 40% of Americans on are federal healthcare between Medicare and Medicaid.

tjahsg• 2 years ago

These opinion pieces are so tiring. Talking points:

- The sanctions induced energy crisis exists, but is not the reason.

- The lazy Europeans are the problem.

- We need more tech.

- Trump will ruin everything.

All of this is false. There is no mention of the dollar status as the reserve currency, which enables the reckless U.S. deficit spending while shielding it from the consequences.

There is no mention of German industries, which had been productive, closing or moving abroad after the Nord Stream sabotage by one of Germany's "allies".

There is no mention that tech is overvalued and not a panacea. Russia does have Yandex as a Google replacement and it does not help. China has Baidu. So tech in the U.S. has been inflated by printing money, which the EU and China cannot do.

I expect more from a European newspaper than just telling Europeans to work harder.

lotsofpulp12• 2 years ago

There is no mention of the dollar status as the reserve currency, which enables the reckless U.S. deficit spending while shielding it from the consequences.

This isn’t a given. People around the world like to use USD because they trust USD to buy the things they want in the future.

tossandthrow16• 2 years ago

Oh boy, you should pick up a history book.

luizfzs• 2 years ago

But is the majority of the population thriving?

It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck.

A handful of companies are thriving, but barely any of its employees.

nightski3• 2 years ago

We need to differentiate living paycheck to paycheck out of necessity vs. choice. It might be surprising but there are a lot of people who choose to do so because why save when you could die tomorrow.

codr74• 2 years ago

Judge much?

It's more like, how save when you need the money right now.

boringg• 2 years ago

Or they get caught up living a lifestyle that they feel like they need to give the appearance of success!

makk2• 2 years ago

As if those are the only two choices. And as if those choices are ones that most individuals can independently make.

newhotelowner2• 2 years ago

my employees have no problem doordashing Chipotle or tim Horton or Starbucks.

It's 5 mins of driving. It's also not having any financial sense.

sokoloff7• 2 years ago

I know plenty of people making $250K/yr or more who are living paycheck to paycheck.

At that point, it's not really the company that's the problem...

DonnyV12• 2 years ago

Here come the "its an individual's problem not a systemic problem" anecdotes. But when you look at all the data....its a systemic problem.

saagarjha• 2 years ago

Maybe you know too many people who make $250k/year.

notJim2• 2 years ago

The living paycheck to paycheck stat is meaningless. It generates headlines, because bad news wins, but if you dig in, even the surveys that ask about this reveal that a large percentage of people living paycheck to paycheck are very financially secure, both objectively, and according to their own assessment. I don't have time right now, but I'd encourage anyone reading this to go find the actual source for this stat and read their full report. Last time I looked, it was freely available.

Many of those people living paycheck to paycheck have a budget where they're saving or investing a significant amount of their money, and accordingly, money feels tight. This is the financially sound way to avoid lifestyle creep, but it doesn't mean you're in a precarious position. Or alternatively, they're paying for really expensive, but optional things like private schooling and expensive cars or vacations.

Obviously some people are struggling, but this paycheck-to-paycheck stat is not an accurate way to quantify that. It's best IMO to look at objective metrics like the poverty rate, or people's objective financial picture (available via surveys.)

jakefromstatecs• 2 years ago

I know plenty of people making $250K/yr or more who are living paycheck to paycheck.

How?..

eduction2• 2 years ago

Article: "For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions."

That's pretty stark. But the U.S. outperformance on GDP growth and productivity growth is very real over the last 5-15 years especialy and has been documented in numerous stories like this. The looming questions seem to be

1. can Europe maintain its social benefits and living standards with such anemic growth (that is, is the goal of more humane and equal society compatible with a robust economy)

2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc.

makk2• 2 years ago

3. Can the US endure at all when the current path feels unsustainable for most of its citizens?

bpt328• 2 years ago

1. can Europe maintain its social benefits and living standards with such anemic growth (that is, is the goal of more humane and equal society compatible with a robust economy)

This is already being answered by reports like the one in the FT

2. can the U.S. preserve its competitiveness and overall GDP performance if it imposes more regulations/taxes designed to reduce income disparities, provide more social services, etc.

No, because it will turn the US into a country like all the ones mentioned in question 1

ajross• 2 years ago

a good chunk of the population live paycheck to paycheck.

Is that not true in other economies? Was that not true at some (mythical?) point in the past? What number, specifically, would you like to see before you're willing to declare "The Economy is Good"?

Basically the point you made is an example of the Economics of Vibes. It's non-falsifiable and allows you to justify any position you want. We're about to start a global trade war, it seems, based on those vibes.

In point of fact household savings rate as a proportion of household income is not particularly low right now. In fact it had a huge spike during the pandemic (lots of assistance and nothing to buy, same thing that caused the inflation burp).

DonnyV12• 2 years ago

Family needs to make $107,700 a year to own a home.

Apartment in a moderate-cost area is about $70,000-$100,000/year.

Median salary in the US is $59,300

What considered poverty level in the US for: 1 person: $15,060 2 people: $20,440 3 people: $25,820 4 people: $31,200

According to recent data from the U.S. Census Bureau, around 50% of Americans make $70,000 or more annually.

That means about 50% of the US can not afford a place to live.

sangnoir9• 2 years ago

But is the majority of the population thriving?

Looking at the numbers: low unemployment, strong consumer spending, average income increasing at a rate higher than inflation, I'd say the majority is doing better than most years. They might not feel that way though, and we've been in a continuous vibes-cession since COVID.

buffet_overflow• 2 years ago

strong consumer spending

I’d like to see that plotted against average consumer debt

DonnyV12• 2 years ago

Family needs to make $107,700 a year to own a home.

Apartment in a moderate-cost area is about $70,000-$100,000/year.

Median salary in the US is $59,300

What considered poverty level in the US for: 1 person: $15,060 2 people: $20,440 3 people: $25,820 4 people: $31,200

According to recent data from the U.S. Census Bureau, around 50% of Americans make $70,000 or more annually.

That means about 50% of the US can not afford a place to live.

webdood904• 2 years ago

low unemployment

I feel that this is pretty well established as a misleading metric https://www.investopedia.com/financial-edge/0609/what-the-un...

strong consumer spending

how does this track against consumer debt?

average income increasing at a rate higher than inflation

but has it caught up? https://www.bankrate.com/banking/federal-reserve/wage-to-inf...

I'd say the majority is doing better than most years

most years being the past 2 or 3? because I feel like we were all doing a lot better before 2020

lolinder4• 2 years ago

HN in particular has a deflated view of the economy because our sector was going through such a big bubble from 2014 on, which got even bigger for a brief window around the pandemic. We in particular had a long way to fall back to reality, so our personal economic outlook is worse than it's been for a while, even if the rest of the economy is looking up.

coliveira4• 2 years ago

Well, let's go:

low unemployment

In an economy where you can easily deliver packages or drive uber, there will always be close to zero unemployment. This number stopped making sense a few years ago.

strong consumer spending

In a high inflation environment, one has to consume "strongly" just to maintain the same standards of living.

average income increasing at a rate higher than inflation

If you underreport inflation, then the average income will increase faster. But even if not, average is not what you and I receive, and it is determined by some people making lots of money while others have stagnating salaries.

majority is doing better than most years

You cannot prove this from the above points. Average income doesn't mean that the majority is doing better. Something called inequality will not allow that to happen.

They might not feel that way though

That is pop psychology at its worst. Nobody cares about feelings, you just need to look at the numbers in a critical way.

narski• 2 years ago

Looking at the numbers

I'm reminded of this excerpt from 1984:

But actually, he thought as he re-adjusted the Ministry of Plenty's figures, it was not even forgery. It was merely the substitution of one piece of nonsense for another. Most of the material that you were dealing with had no connexion with anything in the real world, not even the kind of connexion that is contained in a direct lie. Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head. For example, the Ministry of Plenty's forecast had estimated the output of boots for the quarter at 145 million pairs. The actual output was given as sixty-two millions. Winston, however, in rewriting the forecast, marked the figure down to fifty-seven millions, so as to allow for the usual claim that the quota had been overfulfilled. In any case, sixty-two millions was no nearer the truth than fifty-seven millions, or than 145 millions. Very likely no boots had been produced at all. Likelier still, nobody knew how many had been produced, much less cared. All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot. And so it was with every class of recorded fact, great or small. Everything faded away into a shadow-world in which, finally, even the date of the year had become uncertain.

---

Of course, I'm sure none of that would ever apply to our numbers, only to those of our opponents.

bbqfog2• 2 years ago

Looking at the numbers the interest rate is almost 7% making most things very unaffordable for people who can't buy things like houses and cars with cash. Until that number dramatically goes down, regular people will suffer.

grogenaut• 2 years ago

People seemed to vote on how they felt not what these numbers said. So the vibes seem more valid than the stats at least on their real world impact in many ways.

Continuing to yell at people about the numbers doesn't seem to be an effective strategy, maybe try a different approach?

TeaBrain8• 2 years ago

Real wages (adjusted for inflation) have fallen since November 2020.

https://www.statista.com/chart/32428/inflation-and-wage-grow...

ricardobayes2• 2 years ago

Some of the population is definitely thriving.

Although, does that reflect in higher quality of life? Some statistics say no. The best quality of life is where there is good access to quality healthcare, education, clean air and water, culture, and low crime. When taking into account all the above, somewhat surprisingly, Austria and Switzerland come as top places to live. https://en.wikipedia.org/wiki/City_quality_of_life_indices

SideQuark5• 2 years ago

The most recent report ranking country quality of life has US at #3

https://www.forbes.com/sites/laurabegleybloom/2024/09/10/new...

And the US is massive and diverse, with many states larger than those other countries. If you look at quality of life across US states, it’s likely the best states (think New Hampshire versus Mississippi) would outrank all those countries, since the average across all states ranked #3.

umvi2• 2 years ago

It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck.

This is oft repeated by politicians (including Bernie Sanders recently), but I've seen some good arguments why this can be a misleading claim. Ex. https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...

benreesman• 2 years ago

Asset prices are extremely high. When politicians or business journalists say “the economy is doing well” they mean asset prices. The stock market is high on a number of metrics, which is great if you own a bunch of equities. Housing prices are soaring, which is great if you own real estate.

Food, housing, energy, healthcare, education. Real wage growth and job security measured against the prices and durations of those things. That’s what matters to people who don’t own significant real assets, those are the things that can get extremely bad (someone tries to murder the CEO of United Healthcare on the street bad) without showing up in the numbers you see in the press.

Simon Kuznets himself, the inventor of GDP as a metric sternly cautioned policymakers about treating it as a summary statistic.

bpt328• 2 years ago

Food, housing, energy, healthcare, education. Real wage growth and job security measured against the prices and durations of those things. That’s what matters to people who don’t own significant real assets, those are the things that can get extremely bad (someone tries to murder the CEO of United Healthcare on the street bad) without showing up in the numbers you see in the press.

You're correct that they do matter and can get bad, but are not bad currently as regularly reported in the press.

Lower income households in the US did better than everyone else by these metrics coming out of COVID.

hammock• 2 years ago

But is the majority of the population thriving?

Which country is that true of?

bpt328• 2 years ago

It is very misleading (at best) to say the economy is strong when a good chunk of the population live paycheck to paycheck.

By every metric, the economy is strong.

A large portion of the households living "paycheck to paycheck" are either doing so by choice or don't understand what the term means and are ignoring things like retirement savings when they make that statement.

divbzero• 2 years ago

But is the majority of the population thriving?

This is a good point. Aggregate GDP is definitely not the right measure for this, and even GDP per capita adjusted for inflation and PPP does not account for economic inequality.

Median household income adjusted for inflation and PPP would probably be the least bad option if we had to choose a single statistic:

https://worldpopulationreview.com/country-rankings/median-in...

mullingitover• 2 years ago

But is the majority of the population thriving?

It's important to understand that the stock market is a leading indicator.

Everyone doesn't immediately get laid off when the stock market tanks. Everyone doesn't immediately get a raise when the stock market is roaring.

A lot of people are just now experiencing the stock market mini-crash of 2022, when the pandemic helicopter money dried up. In two years a lot of people are going to be experiencing the investments that are being made in the market right now. Most of them are going to wrongly ascribe those good times to the person holding high political office even though that person had nothing to do with it. This won't be the first time it has happened.

canadaduane• 2 years ago

This is such a great, succinct insight. I've heard various pieces of it, but you put it all together, thank you.

Now I wonder, are there historical exceptions to this general rule? Also, does the "lead time" grow and shrink substantially?

01100011• 2 years ago

the stock market is a leading indicator

I don't think so. It is probably loosely correlated with the economy at best.

The stock market can soar in times of cutbacks which hurt non-asset owners but which benefit profit margins. The stock market can boom on liquidity surges that do not translate into economic investments. The stock market can crash while the overall economy does fine(wasn't 2000 basically this, with the economy not really suffering until after 9/11?).

icedchai3• 2 years ago

The "mini-crash" is already a non-event for any medium or long term investor. Anyone who invested since the beginning of 2021 is still up 50%. I'm assuming VTSAX or similar index fund. It's not even a blip.

thrance2• 2 years ago

The good health of the market is ultimately meaningless if there are no mechanisms in place for redistribution.

Historically it's been done through wages, but those have been de facto frozen since the 1970s.

jandrewrogers8• 2 years ago

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck.

There is another 25-30% of households that spend all of their income on ordinary expenses beyond necessary expenses. This includes things like car payments on a new BMW or a mortgage on a big house; "ordinary" is determined by expense category, not expense necessity, so a lot of spending on luxury goods is classified as "ordinary". By implication, there is effectively no ceiling to ordinary expenses.

By contrast, the median US household has >$12,000/year in excess income after all ordinary expenses. Technically these households could have expanded their lifestyle to consume that income, but in many cases they are spending it on things that are not classified as "ordinary" and therefore not saving it. The categories of "non-ordinary" expenses (which have a sensible objective criteria) are almost entirely obvious lifestyle flex things, so not particularly controversial.

The implications of these statistics are pretty wild. The median household can easily accumulate a million dollars in inflation-adjusted net worth, not including their house, over a 40 year career. And they can do it without being particularly thrifty, since ordinary expenses covers a lot of luxury spending.

Americans have very high incomes, both in theory and practice, they just would rather spend it than save it.

savingsPossible• 2 years ago

Can you provide some links?

Searches understandably are finding more 'ordinary/necessary' expenses for business than for families

BobbyJo• 2 years ago

This includes things like car payments on a new BMW or a mortgage on a big house

This also includes car payments on a used honda, and a mortgage on a small condo no? Why the exaggeration?

giantg25• 2 years ago

Are retirement savings considered ordinary expenses? If not, that could be a huge gap in this understanding.

bmitc3• 2 years ago

US Federal Reserve studies indicate that the percentage of US households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%. This definition roughly matches most people's intuition of what "living paycheck-to-paycheck" means. That isn't nothing but it implies 85-90% of Americans are not actually living paycheck-to-paycheck.

There is absolutely no way I believe those numbers unless they have defined necessary expenses to be unreasonably narrow.

nielsbot3• 2 years ago

So is your argument that there's no "affordability crisis" in the US?

onemoresoop• 2 years ago

Or people crushed by student loans, rent and high costs of living could with a salary of say 100k end up living paycheck to paycheck more or less.

standardUser2• 2 years ago

The median household can easily accumulate a million dollars in inflation-adjusted net worth, not including their house, over a 40 year career.

That sounds like barely enough to retire on.

uhtred• 2 years ago

Half your comment reads like chatgpt generated it. What's the point?

swat535• 2 years ago

Does this also account for things like Healthcare costs?

lmpdev• 2 years ago

How about the same statistics but for working age population

dgoldstein0• 2 years ago

... And is $1 million enough to retire on?

Practically what probably matters is "how many years do you have to work to take care of your basic needs after you retire, and how does this change if you (a) have medical problems (b) want kids (c) [add your other variants of ordinary life choices people should be able to make]"

amluto• 2 years ago

IMO a major deficiency in this calculation is children. Raising children costs money, and families without enough income may not feel that they can afford to raise children, and they may therefore not have children. This means that their income looks better than it really ought to, and it also reduces the birth rate. And, while the US’s birth rate is not catastrophically low, it is below replacement. This may have some negative long-term consequences for the economy.

harimau7774• 2 years ago

The problem that I see is that a million in net worth isn't enough to have a good retirement anymore now that rent is $2-3k a month in most major cities.

PittleyDunkin10• 2 years ago

households with no excess income after necessary expenses (as distinct from "ordinary expenses" as a term of art) is on the order of 10-15%.

Any chance to translate to plain english? The keywords "neccesary" and "ordinary" indicate rhetorical bullshit is afoot.

ulfw• 2 years ago

I'd be careful with statistics like this.

Who defines what car is "necessary" (or is no car necessary in car-centric America?) vs "ordinary"?

abenga• 2 years ago

Why would we assume that "people across the economy reduce spending" == "people across the economy will have more money"? Don't at least some (I would say many) of the people in the economy make income from this unnecessary spending?

dataflow• 2 years ago

There is another 25-30% of households that spend all of their income on ordinary expenses beyond necessary expenses.
This includes things like car payments on a new BMW or a mortgage

So you're not accounting at all for how much of your income goes toward e.g. interest on the loan vs. the principal? Isn't that kinda important?

Also, do car loans for cheaper cars somehow not fall in this picture? Why do you portray people as buying new BMWs when all cars in general have gotten so expensive?

ProxCoques3• 2 years ago

Also by the Fed: 4 in 10 Americans lack enough money to cover a $400 emergency expense:

https://fortune.com/2023/05/23/inflation-economy-consumer-fi...

rbanffy2• 2 years ago

If 10-15% of American families live from paycheck to paycheck, it means pretty much everyone knows someone who’s struggling.

Another aspect of these numbers is how much of the ordinary expenses are not luxury items but things like a car (because public transport is terrible), childcare (because people need to work to pay for it and the car that’s needed to shuttle kids around) and some healthcare (because public healthcare is nonexistent).

Americans pay a lot of money for things other developed countries would say is a basic human right.

michaelmrose3• 2 years ago

Paycheck to paycheck means what it says on the tin that these households consume as much as they earn. Its unlikely that necessary per the government actually captures all that is truly necessary let alone what folks consider necessary to live a reasonable life much of which is certainly either uncaptured or classified as ordinary.

Redefining pay check to paycheck to a definition literally nobody but yourself uses and then concluding few fit this definition isn't useful.

insane_dreamer9• 2 years ago

A car is not a luxury in America, but a necessity, due to the way US cities are constructed and low availability of public transport.

corimaith7• 2 years ago

If America isn't doing well, what does that make the rest of the world? An absolute metric isn't going to be objective, but from a financial and jobs perspective America certainly has it alot better. Which is what the article is about.

You're working harder perhaps, but many in other places have straight up no jobs or millions applying just for the most basic jobs. Many of those people would kill to get into America.

8f2ab37a-ed6c• 2 years ago

Article from a couple of days ago on the "most Americans are living paycheck-to-paycheck" myth: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...

davidklemke• 2 years ago

The article addresses this directly, arguing the point that the social safety net has a cost which is what is curtailing the economy in some respect:

For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions.

Europe’s social safety net needs to be paid for, warned Christine Lagarde, president of the European Central Bank, in a speech in November. Boosting competitiveness is necessary for long-term prosperity, she argued: “Failure to do so could jeopardise our ability to generate the wealth needed to sustain our economic and social model.”

samirillian• 2 years ago

It’s funny because right after Trump was elected there was an ft article about all the metrics that showed that poor people were doing worse in real terms. One ft author uses one index to prove one point another uses others to prove another point. I’ve noticed that divide in particular between ft standard sub (40/mo) and ft premium (80/mo)

How much must I pay to not get consistently bullshat?

Clubber• 2 years ago

How much must I pay to not get consistently bullshat?

You can't because you aren't the customer of news, you are the product.

qudat• 2 years ago

Based on what I’m seeing on YT from financial influencers, people are burning cash by purchasing cars they can’t afford

thedougd• 2 years ago

From what I see on the road it’s pickup trucks they can’t afford.

epistasis4• 2 years ago

More of the economy is thriving than ever before.

50% of the population has enough cash savings for three months of expenses

The median amount of cash in bank account is $8k

The median US household networth is $193k.

Further, the wage increases in recent years have happened mostly at the lower end of the income scale, not at the top!

When polled, the US population is very happy about their own economic situation, yet still believes that we are in some sort of terrible economic downturn.

IMHO, the reason for this disconnect is housing. We haven't built enough, it's made people very unhappy, and restrictive zoning prevents fixing it. The housing theory of everything could even extend to the current political situation in South Korea...

cyberax• 2 years ago

But is the majority of the population thriving?

Objectively? Yes. People are living better than before the pandemic.

However, incessant propaganda works. Fox News and AM talk radio convinced people that the prices went up by like 10x and the country is on the brink of collapse.

dgfitz2• 2 years ago

I dunno, doesn’t feel like we ever saw the ass-end of that “bullwhip effect” does it?

jacobr1• 2 years ago

Noah Smith recently wrote a good blog post on some of the nuances here:

https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...

There are too many people living in poverty in the US, or 1-step removed from it, but much less than are commonly believed.

deadbabe• 2 years ago

The population is not the economy.

johanneskanybal• 2 years ago

That's true of course and an important part why everything is so polarized. Without getting too political I don't believe the current direction is sustainable and that the start of the down spiralling already has happened.

bastloing2• 2 years ago

Everyone I know is doing well and looking forward to the next 4 years. Just look at the stock market, which anyone can invest in. I started back when I was making $4 an hour, now doing very well.

yurishimo• 2 years ago

Not everyone can invest in the stock market… at least not in a way that is helpful. Sure, I might be able to put $20/mo in if I’m working poor and over a few years it will double if I’m lucky.

$4/he starting wage makes you around my parents age (50+) so I’m guessing you easily earn six figures now since you hang out on HN. The crowd here does not represent poor people very well (which is fine!) but you can’t extrapolate your experience to everyone. Yea the stock market is great, but it says nothing about the single mom working two jobs to put food on the table with no energy left to tinker with ETFs.

Buttons8403• 2 years ago

There's a lot of debate over the true state of the economy, but it seems that, one way or another, pessimism abounds.

Consider, the top voted comment on an article about how good the economy is a disagreement.

I wonder how many of the negative effects of an actual bad economy can also be caused by widespread pessimism? Is it better to have a bad economy filled with happy optimists, or a good economy filled with unhappy pessimists?

chasd00• 2 years ago

It’s tied to politics. If your team isn’t in power was just voted out then the economy sucks or is teetering on the brink of disaster. However, if your team is in power or just voted in then things are looking great or will turn around soon.

abe94• 2 years ago

the living "paycheck to paycheck" claim isn't quite true, this article does a good job breaking it down: https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...

blackeyeblitzar• 2 years ago

A handful of companies (Microsoft Google Amazon Meta) will end up taking all the gains from the AI revolution as well. Capital wins because they don’t have to work as hard or worry about risks or access to talent. The playing field is tilted deeply against all entrepreneurs and really anyone lacking capital. I say this as a pro capitalism person. Something will need to change to give everyone enough influence and power.

analog312• 2 years ago

Something I wonder, along these lines, is whether we're measuring the right thing. For instance, does "thriving" depend on things like life expectancy, infant mortality, maternal mortality, quality of health care, pollution, crime, incarceration, traffic deaths, and so forth? The way I think about it, "economics" is supposed to study the quality of life, not just a few isolated numbers that happen to be in units of dollars.

Do any of our "rivals" have entire regions with the levels of poverty seen in places like Mississippi, southern Ohio, or northern Michigan? I grew up in an area with patches of poverty like that.

0xDEAFBEAD21• 2 years ago

Things are not bad in Mississippi: https://www.nationalreview.com/corner/its-great-to-live-in-t...

luxuryballs• 2 years ago

The metrics they use to measure this appear to show productivity growth when it’s just an inflation bubble.

ETH_start• 2 years ago

This is a common trope, but it's wrong. Americans' hourly wages and the disposable income is far higher in the median than that of people in the EU.

switch007• 2 years ago

I also dislike this narrative that if your economy isn't as good as the US then you're failing. And, well, that's exactly where the US wants your economy

madeofpalk• 2 years ago

If you could live in any country, but you don't get to pick who you are or where you live in that country, which country would you pick?

gigel82• 2 years ago

All these statements about the "booming economy" are triggering for a lot of people because this "economy" they're talking about is just an abstract notion that has absolutely nothing to do with people's financial situation.

I don't know if we need a different term entirely to make this distinction.

HellDunkel3• 2 years ago

When younger, i often thought about moving to the US because it offered so many amazing and creative places to work. Most of these places seem to have gone completely or are in a somewhat unhealthy state (hollywood, video games). Boring tech companies took over and often times they stared with just a website - for gods sake- this is so lame! I‘m so happy i didnt go back then- I think it would have depressed me to experience this first hand but who knows.

deaddodo5• 2 years ago

What do you mean by "unhealthy state"?

Hollywood (the location) has always been skeazy/decrepit location (at least, after the 60s). Hollywood (the idea) is still going fine...other places have just developed their own media output too. One thing getting stronger doesn't mean the other is now sick, unless your only mental model is "defeatism". If anything, the US not being the only media producer in the world has made it easier for smaller/more indie/more culturally significant media to thrive in the US again.

As to Video Games, I don't even know how to tackle that. The US and Japan still dominate the video game market and have since the 80s (with the US solely dominating it before). And the American-led Independent/art games scene has been in it's golden age for about a decade now.

It's impossible to defend/explain something without a comparison point; but just your vague abstract comments are falsifiable on their face.

pests4• 2 years ago

I think you are debating whereas OP was just sharing a memory.

francisofascii2• 2 years ago

I took "unhealthy state" to mean a toxic work culture, with long hours and low pay. If you work as a low level actor/writer, you have to audition all the time and are about to get replaced by AI.

UniverseHacker• 2 years ago

The US still is absolutely an amazing place to do creative work. Most of the fun innovative stuff is done in small companies, startups, and academia. Big organizations find it hard to not stifle creativity with bureaucracy- so they’ve taken to just buying the creative work once it’s out there.

zeroc8• 2 years ago

Same here, I've even lived in the States for a while. For me, Europe is the place to be. While we might not have as many opportunities as our counterparts in the States, life is generally pretty great over here for the average Joe. They have more money, but we have more free time for ourselves. Since life is short, time is more valuable. At least for me.

dyauspitr5• 2 years ago

The US is still definitely one of the top places for creative work. China might be coming up fast on that due to the sheer vertical manufacturing capability they possess.

wg0• 2 years ago

It is basically soaring because there's a drive to pull things from China. That is posting lots of economic activity for sure.

Others in contrast aren't in that race to cordon off from China.

loufe• 2 years ago

It's also the distorted ability to rack up ungodly amounts of debt without facing the normal consequences of doing that. The US economy is booming, but it's borrowing from two decades from now to fuel the moment. When their debt gets unmanageable, the world's economy will enter a depression, IMO.

skybrian2• 2 years ago

Maybe, but low interest rates have been over for two years and so far, so good.

Also, not exactly borrowing from the future (this is impossible without a time machine). More like borrowing from others based on expectations about future income.

Entalpi• 2 years ago

Does anyone know of a more accurate economic measurement of growth rather than GDP?

Building bombs a la Russia and paying a lot for healthcare is great for GDP but are those money well spent to grow the economy?

Kon5ole• 2 years ago

Being poor is really terrible in the US, being rich is really great. Everybody learns this from day 1 and get reminded of it almost daily.

There are downsides to such a society but it creates a strong incentive to get rich, or at least to never become poor, and thus more economic activity.

skybrian2• 2 years ago

Krugman pointed out [1] that 10% of US GDP is in tech counties and Manhattan, with 4.4% of employment.

I wonder if productivity growth is mostly there too?

[1] https://bsky.app/profile/pkrugman.bsky.social/post/3lcii6zna...

spaceguillotine• 2 years ago

I've never known more homeless people before in my life in America, seems like its only the rich getting richer and the poor getting poorer and less healthy.

bpt328• 2 years ago

And I know zero homeless people. Anecdotal observations are meaningless with respect to a multi-trillion dollar economy with hundreds of millions of participants.

atoav3• 2 years ago

What are you talking about?

Anecdotal evidence alone is worthless, but paired with statistical evidence it isn't. And we have that evidence.

Also: you "not knowing" a homeless person is itself anecdotal and not only that: it is actually worse than the evidence you attacked.

The critiqued evidence is about how many of X a person sees. That isn't perfect, as it depends and how observant that person is and how much they go out (and where). Your counter of "not knowing" is by magnitudes worse, since on top of the previous flaws your number now also depends on how sociable you are towards homeless people (given the sentiment displayed I guess: not at all).

So not only is your criticism wrong, you are actually at fault of the very method you critizised — only to a much higher degree.

buckle80172• 2 years ago

The homeless is just more visible than it used to be.

https://www.statista.com/statistics/555795/estimated-number-...

redeux4• 2 years ago

From my perspective all that chart shows is that it’s been pervasive issue for at least the last 2 decades. I don’t think that homelessness is any more or less visible now than it has been, at least in my lifetime.

TrapLord_Rhodo3• 2 years ago

the chart shows an absolute surge? Are you we looking at the same chart? also, if we are thinking from first principles here... there's no way to actually count that... Maybe you can give a sample area, and go around counting that specific area? and just do that for every major city? still pretty shaky data at best... so in this case i think anecdotal evidence is better evidence. There is obviously WAY, WAY, WAY more homeless, and they are WAY, WAY, WAY more cracked out.

gruez5• 2 years ago

seems like its only the rich getting richer and the poor getting poorer and less healthy.

At least in the past decade, the opposite has been happening.

[...] Even after taxes and transfers, the average real income of households like his grew by 110% from 1990 to 2019, according to the Congressional Budget Office (CBO). But most of that growth took place early in the time period: in 2019 he was probably doing worse than his equivalent in 2007, before the global financial crisis.
By contrast incomes in the lowest 20% of households, in which the fast-food worker resides, surged in the tight labour market of the late-2010s. By 2019 she was enjoying after-tax-and-transfer household income 25% higher than those like her in 2007, in part thanks to “Obamacare”. Even over the full period since 1990, the bottom quintile’s after-tax-and-transfer income growth was 77%, the same as for the highest quintile—thus, excluding the highest-earning 1% from the top 20% would show the poor enjoying faster income growth than the upper-middle-class. [...]

https://www.economist.com/special-report/2024/10/14/is-highe...

redeux4• 2 years ago

Here’s a nice visual to put that into context (spoiler alert, while the bottom has seen gains, they’re laughable in the overall context and are not rising at the rate the top is seeing)

https://www.visualcapitalist.com/wealth-distribution-in-amer...

mym19902• 2 years ago

Percentages are not enough to get a full picture. If I make 100k a year, the person making 50k will need to see a 2x increase in their percentage gain to see the same amount gained in currency. I would take a small bump of a large number over a large bump of a small number any day. And the reality is that the disparity is much higher when you’re talking about the bottom 20 and top 20, and just gets exponentially worse from there.

IncreasePosts3• 2 years ago

That really depends where you go. Many places you will see zero homeless. Other places you can't throw a dirty syringe without hitting a homeless person.

tills132• 2 years ago

Unnecessary demonization of the unhoused as only drug addicts. Have some empathy.

Many places simply ship their unhoused elsewhere (I'm Canadian and I remember reading about Calgary paying for one-way bus tickets to Vancouver). In other places, the winters are literally unsurvivable outside.

downboots• 2 years ago

Makes me wonder about the ratio to empty hotel rooms and the homelessness cost to society (opportunity loss, reinstatement, relocation, maintenance, health)

redeux4• 2 years ago

The results of the last election tell a much different story. If the economy was soaring for the average person then I don’t think control of the government would have changed or at least not as dramatically.

mattnewton• 2 years ago

https://www.pewresearch.org/politics/2024/01/25/views-of-the...

Views of how the economy is doing are also highly correlated with political party and where you get your news. I’m not sure where the casual relationship begins but it could be where you get your news determines how you think the economy is doing and where you get your news is from political voices you agree with

Gibbon1• 2 years ago

The St Louis fed has a plot of units of housing over the last 25 years. Since 2008 we're short about 15 million units of housing. Which is how everyone that works for a living is getting squeezed. Rents and mortgages have sucked up all the disposable income.

TrapLord_Rhodo3• 2 years ago

The economy can be soaring and the average person still struggling... Alot of the economy has been more and more centralized. Stocks and real estate might be at all time highs, but thats not liquid to the average joe.

refurb9• 2 years ago

The economy was but one of many issues that help decide the election.

theowwnanan• 2 years ago

Keeping stock market healthy is good for all

nextworddev• 2 years ago

It’s called having world’s reserve currency plus leader in tech platforms and AI.

indulona• 2 years ago

because of uncontrolled money printing, duh.

epolanski7• 2 years ago

Because America has the right mix of ingredients of greed, capital, culture, know-how, regulations, etc to thrive in the age of IT and finance.

Those who replicate the formula may not have the ingredients and those who do have the ingredients use different formulas.

locusm• 2 years ago

Australia has gone backwards in the last 3 years - I think we sit around 20th in the world now.

karaterobot• 2 years ago

I knew that if I clicked into this thread, I'd learn about how this was actually bad news.

qwerpy• 2 years ago

Between the self-hating Americans and the smug Europeans, there were a lot of people who just had to voice their displeasure.

TriangleEdge• 2 years ago

America is so prosperous that there's armed guards in grocery stores here in Seattle.

joejohnson• 2 years ago

One of America’s biggest rivals is in fact the EU and a unified Eurasian continent. But luckily the ties connecting this continent literally blew up, the price of energy in Western Europe skyrocketed and it sent Germany (and thus the whole EU) into a recession. Even better, these “allies” are being forced to fund their own demise.

jaco63• 2 years ago

You’re right. If I were European I’d be wondering why we don’t team up with Russia in our own alliance and leave NATO to the Anglos.

wezdog1• 2 years ago

An undemocratic despot nation? Keep up the great ideas.

PittleyDunkin10• 2 years ago

I realize we must reason in terms of states, but the real players make moves that states will go iut of their way to avoid recognizing. We MUST move beyond states and into mayor holders of capital as primary entities of meaning in this world. The state's peak was sometime between 1995 and 2005.

laidoffamazon• 2 years ago

And yet, exit polls said ~67% thought the economy was in bad shape.

I tend to agree with the objective data showing economic strength here. I think a big cross section of the country was just struck by nothing less than a mania.

sriram_malhar• 2 years ago

I like Vinod Khosla's take (on Twitter):

   Stop measuring GDP and instead measure the total income of the bottom 50% of the population and optimize policy for that. Additions and exits from this group can also be tracked. We get what we measure. Will this raise income inequality?

RcouF1uZ4gsC• 2 years ago

This the guy that illegally keeps fencing off public beach?

janalsncm4• 2 years ago

I would say this is a pretty good example of an ad hominem attack.

https://en.m.wikipedia.org/wiki/Ad_hominem

If the standard is that someone has to be unimpeachable before they can suggest a well-being metric than no one can.

KennyBlanken• 2 years ago

It's not just income. Corporate America has turned "prey upon the poor" into a science. Nobody really cares about protecting the poor from that sort of thing. So they'll have to deal with BS like, say, getting paid via a debit card, whose bank charges fees for nearly anything. Then there are the astronomical credit card rates/fees. There are no limits on credit card APRs.

Even government has been highly optimized for the ultra-weathly and tries to fuck over the poor. The poor get audited at a rate orders of magnitude higher than people who make $1M+/year, despite audits on the poor rarely recovering much in the way of unpaid taxes, but audits on the wealthy tend to make the IRS giant piles of cash, because rich people love to cheat on their taxes.

Then there's court fees. Get arrested, you're suddenly on the hook for a bunch of expenses. If you don't pay them - jail.

Further: look at the ease with which you can get hundreds of thousands of dollars in tax writeoffs for owning a bizjet.

Compare and contrast to the hoops a single mother has to go through every 6-12 months to keep "re-certifying" their children as qualifying for about ~$25 in monthly benefits for food for said kid. The appointments are only 9-5, M-F. Which means you have to take a day off from work; that means you lose at least $100 in income, which is a huge amount of money for a single mother working a minimum wage job.

The appointments are typically at state offices nowhere near major metropolitan cities or public transit, which means you need a car, or to take a taxi, or get a friend to drive you.

Apparently we need to be really concerned about single mothers just giving away their kids and still taking advantage of WIC at the tune of...$25/month?

Then there's all the administrative busywork generated by legislators who demand it so "taxpayers aren't ripped off."

Meanwhile, that bizjet sure does make a lot of weekend trips to Vail and the Bahamas in the winter...

DanielHB7• 2 years ago

The "prey upon the poor" is just as bad, if not worse, in Brazil. Growing up there you don't really realize, but after living abroad for a while it is painfully obvious.

Just a small example, stores that sell anything >30 USD don't put the real price of goods when they advertise them. They always put "<h5>x12</h5> <h1>{REAL_PRICE/12}</h1>" (show the price of the installment, while putting how many installments really small)

I had a data scientist friend who worked at a bank optimizing how much credit he could give out to people (while staying legal with the regulations). Like his goal was to get people to get more credit (usually credit card). My Bank app constantly bombard me with notifications about taking loans and getting credit cards.

This friend was not the most moral person I ever met and even him was disgusted after a few years working there, he was making a ton of money but he left anyway.

throw4847285• 2 years ago

That's just Rawls's Original Position but restated poorly.

That would make a great sci-fi story: somebody wakes up with amnesia within a John Rawls thought experiment. I'm not smart enough to write it, but I'm giving the idea away for free.

anon29111• 2 years ago

I would have thought Khosla to be quite intelligent, but then he says this:

additions and exits from this group can also be tracked. We get what we measure. Will this raise income inequality?

I'm not that smart but I'm pretty sure that X = Y here, and X - Y = 0.

janalsncm4• 2 years ago

Reminds me of the Sacha Baron Cohen bit where he suggested to Bernie Sanders that we move the 99% into the 1%.

I think a generous reading is Khosla was referring to capital rather than people, which is something similar to Gini coefficient. Very generous.

On the other hand, maybe people like that, who for no reason aside from their massive personal fortune have a huge megaphone, deserve less generosity and should give everything they write a sniff test first. Idk.

tossandthrow16• 2 years ago

Yes? It sounds like it is the churn rate he wants to measure. Which could be used as a proxy og social mobility.

dlkf• 2 years ago

If we did this fifty years ago, we’d be having this discussion by snail mail.

shskdnxnxj• 2 years ago

No, we might be having this discussion on mars instead of iPhones.

None of our elites care about: a) 99% of us living a meaningful life b) technologically moving humanity forward (supports bullet a)

Install elites that care about those and then you can use any measure you want, any system you want, etc. Instead we’ve replaced god with money. Only an upgrade for the 1%.

AdamN• 2 years ago

Email was invented gratis by government and university employees who were largely paid by the public. Email worked fantastically for decades before the private sector monetized it with spam and CTAs to drive more interactions.

insane_dreamer9• 2 years ago

And so what if we did, if it meant Americans were better off economically?

insane_dreamer9• 2 years ago

And so what if we did, if it meant Americans were better off economically?

I can tell you I am no happier now that I have email than I was back in the snail mail days. In fact, if anything it's a negative.

yabatopia• 2 years ago

Oh boy, here we go again. It's like the pre-2008 financial crisis all over again.

Growth is nice, but one look at the debt charts (public debt, credit card debt, car debt, mortgages, student loans, ...) and the trends in defaults and you know what's coming. Add the upcoming tariff plans and the gutting of financial regulations and consumer protection in the mix and you start asking yourself: in 10 years time, will we talk about the financial crisis of 2025 or 2026?

dependsontheq• 2 years ago

There are only a few factors driving this and they are very hard for Europe to solve: - the Bay Area an industrial cluster not comparable to anything we had before due to the scalability and the capital requirements of the products - the US market, the most powerful consumer market in history allowing massive economies of scale at companies, companies can work with a much higher productivity level - capital markets that can finance the most outlandish ideas - better demographics - less crisis and russian intervention (Brexit, Syrian war, Ukraine war are all part of Russias attacks) - bureacracy and regulations are totally overvalued as a factor, definitely something we should solve, but the EU would not be a tech leader without GDPR

_1tem3• 2 years ago

If you go to the doctor with a problem and get a blood test and they say that everything looks fine, but you don’t feel fine, then you don’t say: “well the numbers are right, I should feel fine”. Rather you try to find what the numbers aren’t capturing, because you know something is wrong. Same with the economy. The perception of the economy being bad is really pervasive as demonstrated by the last election, and perception matters, because selective numbers don’t tell the whole story.

0xDEAFBEAD21• 2 years ago

My understanding is:

* Perception of the economy depends tremendously on whether the president is of your preferred party. Whenever the presidency changes hands, you see a massive and rapid flip in which party supporters are satisfied with the state of the economy.

* If you ask Americans about how they are doing personally, as opposed to how they believe the economy is doing, their response is much rosier.

See also: "vibecession"

immibis12• 2 years ago

AFAIK the former effect has been found to be much stronger among Republicans, though it exists in both parties. It was something like a 50% swing in approval rating versus 10%.

throwaway203715• 2 years ago

I never saw the term vibecession before. Wiki has a separate page for it!

I wonder if this trend also appears in other highly advanced economies. Example: When UK switched from conservative to labour, was there a similar sentiment swing? My guess: Yes.

Netherlands also moved much more right in the last election after PM Mark Rutte stepped down after 8 years. However, broadly, the NL economy is doing much better than UK economy. Maybe the vibecession effect is stronger when the economy is weak? Could be.

ithkuil5• 2 years ago

Perception can be manipulated in many ways.

People get used to things and give for granted things that used to be luxuries a few generations back (see "hedonic treadmill")

Combine that with active participants who control the media landscape and have a vested interest in painting a bleak picture so they can be the ones fixing it.

And then of course there is the fact that things are of course objectively hard for many people because not everybody can be the average person.

So in a sense it's correct to say that these numbers don't capture reality while being technically correct. And that's because reality is much more complex than the things those numbers measure.

The question is: are those indicators useful? Provided you understand what they actually measure, can that be used as a control signal to help make choices that will go in the right direction and improve quality of life for everybody?

Perhaps the improvement will be marginal and not everybody's problems will be fixed, but is it unreasonable to think that problems cannot be fixed by a quick single intervention and that instead they will compound over time?

Look at the progress humanity has made in so many fronts. Ask anybody to pick a time in history where they would like to travel back and have a better life. The most frequent answer is either now or a few years ago when they were young and everything was better (likely because of nostalgia for youth or childhood).

Very few people would really want to be the average person in an era with poor sanitation, corporeal punishment, no education, illiteracy, expensive and faint artificial lighting, widespread diseases, non-existent dental care, low life expectancy

_1tem3• 2 years ago

Perception can be manipulated in many ways.

Numbers are even easier to manipulate.

portaouflop2• 2 years ago

So the people who are fed up with how things are currently going are according to your argument here either

- manipulated / brainwashed - entitled / spoiled - outliers (the few who have it bad are too loud). - the problems can’t be fixed anyway - don’t realise how much worse it was in the past ?

I disagree that the sentiment of the general population is not a useful indicator of how good things are going for the general population. I think it is the best indicator, but people in power (and I would count most on this forum among then) don’t want to see anything that threatens their status quo.

b112• 2 years ago

Tangently, being poor in a wealthy area is far different than being poor in a poor area.

An example being "cast offs". In my early 20s, I moved from a poorer rural area, to a well to do city suburb.

Walking to various places, I noticed things cast aside that would never, ever be thrown away in the area I grew up in.

Examples being:

* an expensive propane bbq, with damage to one of the hoses. A $10 repair and I had a bbq worth hundreds.

(Even looked brand new)

* A set of cutlery, and plates. One of 8 plates had a crack. The cutlery was missing one fork out of a set of 8.

(For a young man eating off of one plate, this was a big bonus)

* a coat rack, mild discolouration

(10 cents in paint out of a spray can to fix)

Anyhow, you get the point. Very usable items cast off, and I would never have found this treasure trove in a poor neighbourhood.

Just being surrounded by a society of greater wealth, means better access generally.

RobotToaster• 2 years ago

not everybody can be the average person.

Averages are often misleading.

If one person is a billionaire, and 999 have nothing, the average person is a millionaire. That average is of little comfort to the 999 however.

harimau7774• 2 years ago

It feels like the opposite is true. Things that used to be fairly common like owning a home or living in a major city have now become luxuries.

renewiltord• 2 years ago

This is exactly what I tell software engineers. They’re always like “but the software is complex and it’s not straightforward to do what you’re saying” and they gave some nonsense metrics for what complex is. It’s as easy as adding a button to a webpage to create an XML that integrates with this other tool we use but they can never explain why it’s hard. They come up with some “cyclomatic complexity” but it’s obviously easy: a single button. If it’s so easy, as my perception shows, then any numbers they’re coming up with are obviously wrong and they should just make numbers that match what I feel. And once those numbers show that it’s easy, they can just do it instead of making numbers that show it’s hard.

shermantanktop5• 2 years ago

I really hope you forgot the /s?

StackRanker30002• 2 years ago

And sometimes the reason you don’t feel fine end up being anxiety, and reframing your experience can make the problem go away. I visited the emergency room with chest pains several times before it actually sunk in that it was my neuroticism getting the better of me

In the US, look at how sentiments about the economy shift depending on party affiliation and who happens to be in power at the time. I do not think it’s as straightforward as saying ”if people think things are worse than they used to be, they definitely are”. There are way too many variables affecting people’s subjective experience

vasco6• 2 years ago

perception of the economy being bad is really pervasive as demonstrated by the last election

How does the election tell you anything about the economy? Are you injecting a bunch of your reasons why you think people voted for X or Y or is there a factual argument behind that sentence?

yccs27• 2 years ago

There was a poll asking "what was your motivation to vote the way you did", and "the state of the economy" ranked pretty high among Trump voters (don't remember where I saw it though, sorry).

bormaj• 2 years ago

There is an argument that elections can be understood as a referendum on the previous 4 years. E.g. voting for the incumbent candidate/party means more of the same.

foldr• 2 years ago

Exit polling asking voters their reasons for voting the way they did.

Arkhaine_kupo• 2 years ago

How does the election tell you anything about the economy?

He didnt say it said anything about the economy, just the perception of it.

Now to answer that question, there is the simple old adage of "its the economy, stupid" that won Clinton his campaign. But the reality is that economy perception is always asked in polls, all year round. So trends can be established wtih decades of data. Secondly, voting attitudes can be understood through economic perception, when people perceive the economy is thriving incumbents do better seeing Biden's poll numbers anyone could tell that the economy perception was not good.

vishnugupta2• 2 years ago

More so when the blood test is measuring something that was deemed important 100 years ago and doctor is ignoring all the advances in the field since then.

weberer2• 2 years ago

Its entirely because you're looking at different numbers. When the average person complains about grocery prices doubling in the past few years, they're not looking at the GDP. People take "How much money do I get in my pocket at the end of each month?" and compare it with "How much does it cost to buy what I need?". The first answer is generally tracked by the Employment Cost Index. The second is by the Consumer Price Index. If the second increases at a faster rate than the first, then people get angry.

yapyap• 2 years ago

a good economy ≠ a good lower or middle class, just means the rich people got richer

throwaway203715• 2 years ago

When you see a headline GDP growth figure, remember that this number does apply equally to all people. The US and its economy is vast, like all 50 countries of Europe put together. Recently, we are seeing that middle class and below really suffered in the last few years from high inflation, but the economic groups above fared much better. Also, new immigrants (usually unskilled) are doing better than natives. To be clear, I don't any of this post with spite for those doing well.

paulryanrogers5• 2 years ago

Also, new immigrants (usually unskilled) are doing better than natives

Is this true in the US?

Havoc• 2 years ago

That’s also not a US phenomenon.

Hearing the exact same in UK too. The stats say things are ok but people standing at grocery checkout disagree

Strong divergence of 1% and rest

adamc6• 2 years ago

As someone doing OK economically, when I go to the grocery I see the same thing they do: Prices are going up on key items much faster than income is rising. I didn't vote based on that, but that doesn't mean they are wrong that it's a problem. It's easy to imagine that if you were barely making it, things are worse now.

Rising income isn't a phenomenon that hits everyone equally.

matthewdgreen• 2 years ago

I'm not saying the economy is good. But according to polling, many folks who said the economy was "poor" before the November election now believe it's doing great. All in a very partisan fashion, of course: https://jabberwocking.com/wp-content/uploads/2024/11/blog_mi...

commandlinefan• 2 years ago

Not to put words in your mouth, but this comment seems to imply that politicians successfully painted a negative picture of the economy that didn't reflect reality and used that to win the last election. While I wouldn't put that past them, why was it successful this time and not every time? Nobody even tried to pretend the economy was bad when Clinton, Bush or Obama were up for re-election, because it obviously wasn't.

ToDougie2• 2 years ago

I don't know a single person in my sphere who feels this way. I think the common sentiment is things will probably improve and the stock market is up. Would be curious to see how UoM did their polling. Does answering truthfully about the state of the stock market indicate that you think that the economy is doing better?

Pigalowda4• 2 years ago

Polls were very wrong - again. Their methodology is clearly flawed. I owe my friend an expensive steak dinner because I believed the polls.

In the crisis era of non-reproducible science and bad data collection is it any surprise the polls are wrong too?

codexb3• 2 years ago

Just to clarify, thats a poll about future "expectations" about the economy. Many of the people that voted for Trump based on his economic policies now have good expectations for the economy because they expect him to implement those policies.

coding1234• 2 years ago

That says "expectations index"...

I do not think it means what you think it means.

diatone• 2 years ago

Not exactly a watertight metaphor as https://en.m.wikipedia.org/wiki/Hypochondriasis and anxiety exist, but I certainly agree that it’s possible to lie or mislead with statistics.

codexb3• 2 years ago

Typically, loans and credit being more difficult and costly to obtain, higher prices for everything, and a growing number of large layoffs aren't signals of a booming economy. Inflation has a tendency to well, inflate productivity metrics. If we're spending twice as much for the exact same stuff as we did 5 years ago, we haven't doubled productivity.

kabaka• 2 years ago

The unemployment rate is very low in the US while tightening of money supply is happening, it is a weird thing to witness as a new comer to the US. But one has to admit Jerome Powell did accomplish something significant given what his detractors like Summers were painting was going to happen given the covid bonus US citizens got.

lowkey• 2 years ago

While unemployment rate is relatively low this measure masks deeper problems felt by those working to try and make a living.

Specifically, labor participation is near an all-time low so discouraged workers, who aren’t counted in unemployment numbers, are excluded.

Also, there has been a marked and ongoing shift from full-time jobs with benefits to part-time, casual, and gig work.

Finally, the widely cited consumer price index is a very politicized and skewed measure of the true inflation facing consumers. It ignores the real cost of home ownership via owner equivalent rent measures. It uses a process called substitution to replace suddenly expensive goods with cheaper goods. It includes arbitrary adjustments for improved quality of goods that aren’t always perceived by purchasers who only see the higher prices and these adjustments only work in one direction to skew CPI lower. That’s why consumers often perceive inflation to be higher than the CPI measure.

Tiktaalik4• 2 years ago

An idea I've seen floated is that during the pandemic a lot of people got a lot of support from the government and under Biden a lot of that was phased out.

So even if "the economy is doing fine" there would have a been a large number of people who would have had something taken away.

People got a glimpse of a more interventionist social democratic government during the pandemic and then it disappeared. So yea for people who benefited from that absolutely everything got worse after.

PittleyDunkin10• 2 years ago

The perception of the economy being bad is really pervasive as demonstrated by the last election, and perception matters, because selective numbers don’t tell the whole story.

Well saying "the economy is good" or "the economy is bad" out of context is simply moronic. Good for whom? Bad for whom? It's no secret our entire society is stacked to favor investors and owners rather than workers. The market certainly treats people extremely differently based on where they are in society. Much of the population never economically recovered from the 2008 crash at all—something that won't be reflected by GDP, stock performance, "jobs created", or how many people are collecting unemployment (which is, confusingly, a wildly different figure from counting people who want jobs but can't find one—as best I can tell, a metric not reported by the federal government at all, but appears to be about twice as large as the "unemployment" metric pimped: https://www.richmondfed.org/research/national_economy/non_em.... And this isn't even touching underemployment). The CPI is a little better, but only by a small amount.

And you'd have to be blind to not notice a minimum wage job is no longer sufficient to afford rent in most major metro areas.

lumost• 2 years ago

I also wonder how much the USD's role as the reserve currency plays into this. If I build a home for 1 MM USD today which used to cost 150k USD in 2008 - this looks like economic growth, despite the home largely being the same between the two periods.

Certain categories of the CPI have experienced extreme inflation over the last 16 years, this gets reflected in the wages of the economically mobile and in turn raises the GDP - however we don't really price housing into the CPI in a sensible manner, and due to USD dominated trade - imports and products which compete with imports don't inflate.

The discrepancy between PPP and nominal (USD) GDP seem to be telling a story.

tjwebbnorfolk2• 2 years ago

True, it's moronic if you expect to discuss the details of a complex economic system. But in a political context, the finer details aren't interesting

danans• 2 years ago

And you'd have to be blind to not notice a minimum wage job is no longer sufficient to afford rent in most major metro areas.

Either blind, or detached enough that you think that it's a good thing, as long as the value of your home also goes up and you have access to relatively cheap service labor.

digital-cygnet2• 2 years ago

A couple of points:

- Headline unemployment _is_ "people who want jobs [enough to be looking for them] but can't find one". The metric you linked to is including people outside the labor force and then weighting in a fairly opaque way. Between labor force participation being at the same point as it was 2014-2016 and unemployment being lower, I don't think it's fair to say unemployment stats are misleading. The point about underemployment is still definitely valid though.

- I'm with you that minimum wage should likely be higher, but federal minimum wage has never been intended to be "comfortable wage in a major metro". Major cities have their own minimum wages -- e.g., NYCs is $16/hr. Making $32k a year in NYC would of course not be comfortable, but is doable (eg you can rent a room in an apartment for $1k/mo, live off of oats and rice, etc). It's not intended to be a "head of household" wage, but "the least amount you can ever pay anyone"

Other than these nits I'm with you that stats don't cover the lived experience of all Americans and there's more too it than simply vibes. However I also do think that some of the vibecession is due to increasingly effective media manipulation to squeeze money from consumers. I (coincidentally just now) wrote a blog post explanding on this hypothesis here - https://medium.com/@digital-cygnet/manipulated-into-malaise-...

tlogan3• 2 years ago

We currently lack comprehensive metrics to effectively capture critical factors that normal people consider when asked “is economy doing well”. Here’s what we need:

Home Rent Affordability: Analyzing affordability by profession and location to reflect real-world dynamics.

Home Price Affordability: Assessing how accessible homeownership is across regions.

Education Costs: Understanding the burden of education expenses on families.

School Quality: Measuring the actual quality of education available.

Healthcare Cost Affordability: Evaluating access to essential healthcare without financial strain.

Drug crisis.

Crime.

Vacations and similar things.

Developing such metrics would provide a more accurate picture of economic well-being and social equity.

alwa• 2 years ago

Luckily smart people have resources and a mandate to study each of those questions at scale. You might be interested in the work that the US Bureau of Labor Statistics (https://www.bls.gov/) does on the economic side of labor conditions, and that the Census department’s American Community Survey (https://www.census.gov/programs-surveys/acs) does on the demographic and social side. Both of these groups study questions like those you asked in ways designed to be broadly comparable over time.

The Housing and Urban Development department calculates fair market rents at the county level to support their rent assistance programs (e.g. [0]), although that starts to get at part of the complexity: for your metric do you care about the economic cost or the amount families actually have to pay after assistance?

On the NGO side, groups like the NBER (https://www.nber.org/) disseminate more exotic socioeconomic studies, and there are others.

And of course you can find a mountain of data at data.gov, the federal portal for such things.

I think the harder part (and the part the policy community specializes in) is grappling with the nuances of those kinds of numbers. What do such high-level observations actually mean in something as complex as a continent-wide collection of 10^9 people, and how much human messiness polluted their measurement?

[0] https://www.huduser.gov/portal/datasets/fmr.html

beepbopboopp• 2 years ago

whateveracct3• 2 years ago

political propaganda via the skinner boxes in everyone's pockets is probably the reason for the disconnect

let's not act like people's feelings inherently reflect the truth

tshaddox3• 2 years ago

Are you suggesting that it's impossible to have mistaken feelings about the economy or about one's own health? I'm pretty sure it's possible for people to deliberately deceive other people about the state of the economy or even the state of their own health.

tomrod• 2 years ago

Yeah, stop excluding food, housing, and energy from the CPI basket, they are the largest items people purchase!

jimkleiber• 2 years ago

Or they go to the doctor thinking they have a heart attack and it's really a panic attack and despite all the tests for physical ailments, it is an emotional one.

pie420• 2 years ago

You're describing hypochondria

EasyMark• 2 years ago

I’m pretty sure it’s combination of most of the money flowing uphill to millionaires and billionaires, and people in general are also being fed a ton of propaganda that the USA is falling apart which is BS. We have issues but so does every country. It’s hard to feel great if you have no free time to enjoy life, and as a society for some reason we have become very very consumerist, not taking (or even worse not having any) time to smell the roses, and the world is falling apart every night on the internet and/or television even thought it isn’t really.

araes• 2 years ago

The perception of the economy being bad is really pervasive

Because the economy is bad, and this is a "drank the Silicon kool-aid" article.

In the most recent tax filing season data available, there were tax returns of:

                                        Top 1%       Top 5%      Top 10%       Top 25%       Top 50%   Bottom 50%  All Taxpayers
  Number of Returns                  1,535,899    7,679,495   15,358,991    38,397,477    76,794,954   76,794,954    153,589,908
  Average Income Taxes Paid           $653,730     $187,468     $108,251       $50,963       $27,891         $667        $14,279 
  Adjusted Gross Income (Millions)  $3,872,395   $6,182,180   $7,745,525   $10,613,602   $13,191,209   $1,531,038    $14,722,247

If we then break those into the actual groups, and numbers per group, then we find their Average Per Capita Income

                                             1            5           10           25           50          100
  Number of Returns                  1,535,899    6,143,596    7,679,496   23,038,486   38,397,477   76,794,954
  Income Taxes Paid (Millions)      $1,004,063     $435,594     $222,966     $294,234     $185,068      $51,225 
  Adjusted Gross Income (Millions)  $3,872,395   $2,309,785   $1,563,345   $2,868,077   $2,577,607   $1,531,038 
  Average Tax Rate                       25.9%        18.9%        14.3%        10.3%         7.2%         3.3%
  Average Per Capita Income      $2,521,256.28  $375,966.29  $203,573.91  $124,490.69   $67,129.59   $19,936.70

This entire "booming" part, is the 1-5%. Out the rest of America, there are 38,397,477 making $67,129 on average and 76,794,954 making $19,936 on average. The filing thresholds are "single, under 65 = $12,950" and "head of household, under 65 = $19,400". Most of the bottom 50% of America "barely" would even qualify to file based on the Average Per Capita Income stated on their tax forms. 76,794,954 tax filers "barely" qualify to even file taxes they make so little money. Half.

How about, lets look at it a different way. Anybody notice what happened to McDonalds over the last decade and a half? Corporate McDonalds used to have 465,000 employees, now, McDonalds has 150,000. 300,000 employee reduction. 1/3 remain. [1] Btw, they're also -5,000,000,000 under water in equity [2] while they keep making happy meal financial reports. 2/3 reduction in workforce, barely even covered by the news.

The situation looks very similar with almost every peer company. Notably, some of the main jobs where people in the bottom 50% work. Jack in the Box (-$851,798,000, 45,700 -> 1,090 employees), Papa Johns (-$430,933,000, 23,100 -> 13,200), Yum Brands (-7,674,000,000, 90,000 -> 25,000), Dominos (-3,976,640,000, 14,500 -> 11,200). They all went submarine on equity and started shedding employees, yet all anybody will write about is the "booming" tech sector.

[1] https://tradingeconomics.com/mcd:us:employees

[2] https://tradingeconomics.com/mcd:us:equity-capital-and-reser...

falkensmaize• 2 years ago

The numbers are FAKE. How else can you describe a 30% downward revision in jobs numbers this year?

michaelcampbell• 2 years ago

"The map is not the territory"

hunglee2• 2 years ago

GDP is a measure of the marketisation of society.

If I go visit my grandma over the weekend, my activities do not register on GDP. If I hire a care assistant for $800 per day to do so, that's $800 to national GDP. The encroachment of the market into society correlates with record levels of mental and physical health crisis. US life expectancy has declined over the past three years, even as 'the economy' has surged ahead. The measures are wrong - and we all know it - apart from the financial press it seems

fooker• 2 years ago

US life expectancy has declined over the past three years

Do you have a source for this ?

Terr_• 2 years ago

There was a big dip in 2021, but it has started rising again, and it's possible it might rendezvous again with the old trend. This means parent-poster might be technically correct in the sense of "between T to T+3 it decreased", but I would not jump straight to blaming the the longer-term background horribleness of US health insurance for it.

It's far more likely to be that teensy-weensy COVID-19 pandemic, both in terms of direct damage and also reduced care for everything else.

https://www.politico.com/news/2024/03/21/cdc-us-life-expecta...

tekkk• 2 years ago

Quick googling shows that WHO/World Bank at least.

reedciccio• 2 years ago

https://www.google.com/search?q=us%20life%20expectancy%20&ie...

nnechm• 2 years ago

Feels more and more like it's the best of times and the worst of times...

Things feel off,but you have (mostly well-off) people talking about how great things are going to be and are. I suspect a lot of this correlates to the stock market.

For the median millenial atleast, whatever you were taught growing up is just the wrong guide to understanding the world today.

I think social media by its very nature, has to be understood inverted. A high number of posts about how great things are suggests otherwise. Comparisons with Europe have gone exponential that tells you more about how the posters feel than anything else...

vladgur• 2 years ago

As I complete my travels through Argentina and a layover in Lima I realize that differences between poor and rich are much less stark in my opinion in the US and these LatAm countries where the percentage of population living below the local poverty line is 3 to 5 times higher than that of the USA

So whatever you feel - it’s all relative

immibis12• 2 years ago

It's also a measure of price level. If I pay $100 for a doctor's visit that's $100 to GDP. If it costs $1000 that's $1000 to GDP.

If it "costs" $1000 but that's just to get $100 from insurers who only pay 10% and I only have to pay 10% too? Still $1000 to GDP - I think.

pas5• 2 years ago

GDP is C + G + ... and the C is personal consumption, so I guess if you pay 100 USD that's what gets added, and the premiums (and whatever your employer pays for you)

logicchains2• 2 years ago

That's incorrect, it's explicitly adjusted for inflation/change in price level, although of course this adjustment isn't perfect.

mrtksn14• 2 years ago

Seriously, just looking at the examples of "stagnated and failing economies" like Japan should be a give away that this measure is total BS.

In Germany a life saving brain surgery creates 5K USD of economic activity and the same surgery creates 500K USD of economic activity in the USA.

True story, a YouTuber I'm following recently had her mother operated in Germany and then again in the USA and she made a video about the experience and the numbers: https://www.youtube.com/watch?v=G-p1nP6hH6U

This obsession with GDP isn't healthy, among other obsessions like the "Number of gigantic companies" which is supposed to show that you are falling back in technology if you don't have extremely large companies by market capitalization metric.

It worries me because it's BS and BS can last just till a point. What happens if at one point in the future people start demanding benefiting from all that riches and success? I'm worried because I don't believe in(goodness of?) revolutions and the situation makes me anxious that the west with the US in particular is headed to some kind of revolution. They had one with the last election I guess but the revolutionaries appear to be pushing for the extreme version of the same thing which eventually might collapse with another revolution with the opposite thing like what UK ended up getting as a Labour landslide after Libertarian landslide.

penguinburglar• 2 years ago

What happens if at one point in the future people start demanding benefiting from all that riches and success?

With any luck, what will happen is that future people will benefit from all those riches and success.

trolleski• 2 years ago

100% agreed, especially when you print money the GDP is evaluated in, there's no ceiling! What can be bought for money and in what quality, that's a different story... Purchasing Power of Money is what really matters. It's still good in some European countries, but with the current policies, EU has set itself up for times of poverty.

vasco6• 2 years ago

I'm worried because I don't believe in(goodness of?) revolutions

That's strange, revolutions have been the some of the most acute moments that improved things for the world population and brought rights to the common people. I'd definitely not want to live through one because it sucks for those during it, but it's great for those that come after.

rdm_blackhole8• 2 years ago

Revolutions are neither good nor bad, they just are.

It's what you do after that matters. If you keep on repeating the same mistake and never change the systems that led to the political instability in the first place, then you are bound to have the same results.

refurb9• 2 years ago

In Germany a life saving brain surgery creates 5K USD of economic activity and the same surgery creates 500K USD of economic activity in the USA.

It doesn’t because the insurer doesn’t pay $500k.

Not to mention that if something costs $10k in the US that costs $5k in Europe, that $5k that doesn’t get spent on something else (which would also increase GDP)

INTPenis2• 2 years ago

Very good point because in my country elder care is free. Daily visits by an assistant is on the municipality. We're not a leader in GDP, but we take care of our citizens, whether they be sick or old.

gregshap• 2 years ago

Municipality spending is part of GDP

tsimionescu• 2 years ago

That is not the point GP was making. The assistant you mention is still paid by the municipality, so they show up in GDP numbers just as much as if you paid them yourself.

What doesn't show up in GDP numbers are cultures where people take their elderly relatives into their own homes and care for them themselves. Same as hiring someone to look after your kids, or taking them to day care, shows up in GDP; while having their grandparents or other family care for the kids while you're off to work does not.

Guthur2• 2 years ago

And if you borrow that money is even better because they just created the money for you to add to the GDP, and now it will have lots of sweet service fees and interest in top of that.

And on a side note because US dollars are the reserve currency and only created in one country they can go shopping around hovering up every asset and resource.

lotsofpulp12• 2 years ago

The US produces a lot of things others want to buy, including stability and security, and that is why non Americans want USD and hence others give Americans purchasing power.

jumping_frog9• 2 years ago

Consider this scenario. Dollar holds value for the next 1 year. FED prints dollar. It gives them to BlackRocks of the world. And these vehicles go shopping around the world in emerging markets buying up ownership. Similar to Cantillon effect, others and emerging market are left holding the bag.

Here’s How America Really Runs Britain | Aaron Bastani meets Angus Hanton

https://www.youtube.com/watch?v=uK7DINiVuPA

DanielHB7• 2 years ago

I was thinking the same thing the other day. Like how much of the US GDP is tied to their suburb-living car-dependent lifestyle. What percentage of the GDP is all that infrastructure (sewage, heating, power plants, power transmission, car production, road maintenance)?

Sure that create jobs, especially lower-skilled jobs which are important for society. But at the same time they didn't really need to exist. It feels like much like defense spending, it create jobs, but it doesn't create value.

clarionbell2• 2 years ago

Defense spending is necessary, if you want to keep your globalised markets and reasonable level of international security. Europe is now experiencing what happens if drop the "useless" defense spending too low.

jasode2• 2 years ago

much of the US GDP is tied to their suburb-living car-dependent lifestyle. [...] , but it doesn't create value.

The "value" is for the citizens that prefer suburbs style living.

People who prefer dense city living with mass-transportation and walkable errands like European cities or downtown NYC/Chicago are missing the fact that there's another group of people (possibly the majority) that actually prefer the suburbs. Yes, I know it seems illogical.

But don't suburbs have the dependency on cars, and those ugly "stroads", and the "parking lot deserts", and "soulless cookie-cutter housing", etc, etc?!? Yes, all of that is true and detractors can keep piling on more derogatory labels but it still doesn't change the fact that many people really like the suburbs. A lot of USA college kids living in dorms in the middle of a "walkable city" have aspirations of buying a nice house out in the suburbs and hope they can land a high-paying job so they can afford that dream. Why do so many of these young people who have actual experience of living in the city want to get away from that and live in the suburbs?

avidphantasm• 2 years ago

I would like you to explain why you think the creation of infrastructure involves low-skill jobs.

qeternity2• 2 years ago

It feels like much like defense spending, it create jobs, but it doesn't create value.

This is the safest period in human history by a huge margin. It may not feel that way given the ultra connected, headline consuming nature of most people these days. But it is true.

Global trade has lifted more people out of poverty than anything else, and that was first enabled by maritime trade which was implicitly secured by the US Navy post WW2. The Internet is the second coming of that, the invention of which was a result of US military spending.

You may think that US defense spending is too high, or take other faults with the US military industrial complex. But to say that it provides no value is uninformed.

jaco63• 2 years ago

Sewage, heating, and power plants are included in GDP figures. Government spending is a GDP subheading. And such things certainly create value. I derive significant value every day from my warm, insulated, suburban bathroom.

Furthermore, your assertion that the defense industry doesn’t provide value is questionable. Until you can convince the various state governments of the world to unite in a global superstate, defense spending is a necessary deterrent to invasion and exploitation by other states, so it is, in fact, valuable.

And while I agree that suburbs aren’t the ideal form of urban organization, they aren’t actually the cause of all the social ills that you imagine them to be. Depression and addiction are driven by loneliness, and loneliness is almost as high in urban societies as suburban ones. Obesity may be slightly aggravated by car dependence, but it is still historically high and a major problem in the walking/public transport countries of Europe.

So no, the demon of suburban car dependence does not provide the explanation for all ills.

dmschulman• 2 years ago

hmm what could have happened in the last 3-4 years that would impact US life expectancy? also a huge part of that decline is preventable death due to drug overdose.

TacticalCoder• 2 years ago

How's that related to the magnificent 7 and then SpaceX/StarLink and the AI revolution (which is nearly virtually only happening in the US: even if there are a few models in France, China, etc. it's a US game)?

I don't think you realize what's going on in the EU (failing into a third world continent at an alarming rate) or in China (where "little" cities of 30 million inhabitants are all about tech and feeling like you live in the future: not that everything is rosy in China).

EU carmakers are all in big trouble while Chinese EVs and Tesla are soaring. The EU has nothing to answer the mag 7, let alone SpaceX (the ESA was already way behind NASA).

That the US is growing at a faster rate than most other nation and continents is a fact and it's got nothing to do whether you or a care assistant goes to visit your grandma.

Retric11• 2 years ago

You’ve got an overly rosy view of what’s happening in the US and underestimating Europe. AI is big in the tech world, but it’s hardly moving the needle on the overall economy. Every 1% GDP growth roughly requires the equivalent of adding a new Google sized company every year, or as actually happens a more widespread increase.

Just as an example, Tesla’s 2024 Q1 deliveries where below 2023’s Q1 deliveries hardly a sign of rapid growth. https://www.statista.com/statistics/502208/tesla-quarterly-v...

SpaceX is facing the limits of how much people want to send into orbit. Plenty of growth in the next few years, but Starlink is only generating ~6 billion a year in revenue and not much else really wants to put that much stuff into orbit. Worse, Starlink is facing ever increasing competition from cheaper ground based providers especially cellular internet, so that business may start to shrink.

skirge3• 2 years ago

if you hired care assistant then you have time for some other activities like work which is more profitable than cost of care assistant thus economy has more goods. Life expectancy lowers when young people die, most often in work accidents which is related to low unemployment.

ThunderSizzle• 2 years ago

My wife had a good job. She made the median household income in the area on her salary alone (my salary was still better, but that's beside the point).

When we had our second kid, the hustle wasn't worth it. Two kids in daycare took 90% of her take home pay. It was costing us more for her to work than to stay home with the kids.

Also, kids need their parents. An infant being away from their mom for that long is unhealthy for the infant

jprete4• 2 years ago

You're completely missing the problem. The care assistant, being a fungible and commoditized service provider, can never provide the kinds of illiquid unmeasurable goods that are generated by long-term and durable relationships.

badmintonbaseba• 2 years ago

Your argument hinges on my work being more profitable than a care assistants. While that's maybe true, the difference showing in GDP is not the difference of profitability or "value" in our work. What if I'm a care assistant myself? Imagine two care assistants and two scenarios:

1. They are working from Monday to Saturday. They can't take Saturday off, so they hire a care assistant to take care of their grandma on Saturdays, they happen to hire each other.

2. They are working from Monday to Friday. They take care of their own grandma over the weekends.

Scenario 1 adds more to the national GDP.

jack_riminton• 2 years ago

The problem is that countries who don't want to compete on the marketisation of everything will lose out eventually.

In your example of elderly care, an extended family in Italy may care for their own grandmother (and they'd probably live longer). But the market in Italy isn't so bouyont so the younger generation can't get high paying jobs and move out even if they wanted to.

The high spending and marketisation in the US skews the game for everyone whether they like it or not.

(no moral judgements here, just observations)

ak_1112• 2 years ago

You highlight and try and predict the eventual problems of non-marketisation but you don't seem and try and do the same to the eventual problems of marketisation.

These things are difficult to predict, but already for example we notice some problems with ultra-marketisation in the UK where house prices are now 10-12x average annual salary (it used to average 6-8x for the last two decades), and all the social strife this is causing in society. For example it can eventually lead to mass violent protests against migrants or electing extreme political parties.

Another example is that it has seriously degraded public services, since nurses can barely survive on their salary there is huge shortage of medical employees leading to huge waiting list for medical, even critical, operations.

lm28469• 2 years ago

The problem is that countries who don't want to compete on the marketisation of everything will lose out eventually.

It goes both ways though, when shit hits the fan if your economy is based on airbnb and food delivery you're fucked.

Look at Russia, half the GDP of Germany but twice the steel production, 4 times the wheat production, 1st producer of fertilizer, huge amount of gas, &c. They had roughly the same military budget as Germany in 2020, yet the german army virtually doesn't exist.

It depends if you think our current mass productivism/consumerism practices are a bubble or the end game of humanity, history seems to prove that it goes in cycle of good and bad times. Poor countries would probably even fare better than most in case of major events, the bigger they are the harder they fall.

jprete4• 2 years ago

The problem of marketisation is that it's a shredder for human values. The economic machine doesn't care what the constituent parts are, as long as they move correctly.

smegger001• 2 years ago

My ideal world we would pay a reasonable wage to people to take care of their own children and the eldarly relatives. These are real valuable and nessasry jobs that end up being an economic drag on those that can least afford it. So instead of paying a stranger to help grandma do household chores make meals and drive her to her medical appointment why not pay her granddaughter to take care of her instead taking a second job to pay for the assured living facility? Why have both parent work two job and pay for all day daycare when dad can stay at home clean house and watch the kids? We fear population colapse as younger generation put off or decides not to have kids and yet child care cost so much that they cant aford to have kids instead pay people to be parents and nurture and raise children.

throwaway203715• 2 years ago

    > and they'd probably live longer

Is there evidence for this? In wealthy, developed European countries, I would bet in the southern ones, they are less likely to live in elderly homes, and vice versa with northern ones. I guess that this trend is more about culture than ability to pay.

    > skews the game

What does this mean?

akudha• 2 years ago

Financial press knows it too, they just don’t care. They gotta fill their pages with something, right?

valval• 2 years ago

I also like the example where if you break someone’s window and they fix it for $300, that’s at least an extra $300 in GDP.

adammarples• 2 years ago

But they would have spent the 300 on something else

grecy2• 2 years ago

The best example is:

I give you $10,000 to eat a pile of shit.

You give me $10,000 to eat a pile of shit.

What's the result?

Two shit-eating grins and $20,000 added to the GDP.

tarkin2• 2 years ago

Any metric that most directly relates to military spending ability seems the most pertinent these days. But of course GDP doesn’t relate to quality of life—I don’t think anyone suggested it did but of course many think it should.

divan• 2 years ago

If you marry your fitness trainer, GDP goes down :)

There are some good talks of Mariana Mazzucato about it (and questioning of what we consider value in economy) [1]

[1] https://www.youtube.com/watch?v=bzZSdgQB99w

slibhb2• 2 years ago

If I go visit my grandma over the weekend, my activities do not register on GDP.

Yes they do. How do you visit her? What do you do while you're together? Eat some food? There's almost no way your visit doesn't register on GDP.

In reality, economic growth makes peoples lives better in simple, concrete ways. Ironically, we've started to question this only because we've become so rich due to so much growth that we're no longer dealing with "simple" problems (hunger, cold, etc).

Jensson32• 2 years ago

What do you do while you're together? Eat some food? There's almost no way your visit doesn't register on GDP.

People typically eat food even when they don't visit someone as well, the total amount remains the same. It is really common to just cook food and eat together, your life doesn't get better if you go out to eat eating your parents home cooking doesn't register on the GDP.

crazygringo2• 2 years ago

That doesn't really matter if all you're doing is measuring the relative change in GDP though, and the amount of activity that doesn't register on GDP isn't increasing.

In other words, if you assume non-GDP activity is constant, then GDP does genuinely and accurately reflect economic growth.

Indeed, this is one reason why economists recommend GDP as a useful measure of growth in a country year-over-year, but not for comparing different countries' GDP directly -- the ratio of activity not counted as GDP may be quite different between countries.

Now, if you think that a massive social transformation is underway of non-GDP-registering activities to GDP-registering activities -- e.g. people used to care for their grandmas, now all those people have gotten jobs to pay for care assistants to do it instead -- then yes GDP will show "false growth" in productivity.

But that really doesn't seem to be a major factor. We really are seeing massive amounts of innovation in the economy that improve people's lives. Economists don't just look at GDP -- they look at lots of measures that all tell the same story. Productivity really is going up. GDP growth may not be 100.00% accurate, but it is mostly.

dartos2• 2 years ago

We really are seeing massive amounts of innovation in the economy that improve people's lives

Name some?

The issues people care most about atm seem to be getting worse (housing prices, cost of living, etc)

jprete4• 2 years ago

The GP's point matters quite a lot, because the ratio of GDP to non-GDP value is going up. Terms like "financialization" or "commodification" describe a process that makes things visible and measurable. I think this is also what the book Seeing Like A State meant by "legibility".

And the whole reason it's a bad thing is that the human values that can't be converted to a measurable, tradeable commodity are often thrown away, because they're invisible to the commodification process.

massysett3• 2 years ago

Now, if you think that a massive social transformation is underway of non-GDP-registering activities to GDP-registering activities -- e.g. people used to care for their grandmas, now all those people have gotten jobs to pay for care assistants to do it instead -- then yes GDP will show "false growth" in productivity. But that really doesn't seem to be a major factor.

But isn't that the issue?

Before: one working-age person in the household worked part time, or did not work at all. She (it was usually a she) could get the kids off to school, pick them up after school, check in on grandma, do the shopping, cook a simple meal.

Now: the working-age person goes to work, perhaps because the family fell apart, perhaps because other rising costs (e.g. health care) forced it. Before and after school care is paid for. Someone is paid to check in on grandma. Walmart+ or Amazon occasionally delivers heat-and-eat meals.

GDP went way up! Amazon contractor has a job delivering boxes. Someone is paid to check in on Grandma, and someone else to watch the kids. Someone works in the factory making heat-and-eat meals.

But are we really better off? Is it better to staff out the kid- and Grandma-watching and to heat up a dinner in the microwave? I'm not sure anyone knows the answer to that question, but I'm certainly not sure that "we really are seeing massive amounts of innovation in the economy that improve people's lives."

mapt2• 2 years ago

You can assume what you want if it makes you feel better, but assuming that I am both seeing Grandma at 2PM and working for wages at 2PM is going to disappoint someone.

One of the ways we seem to be absolutely destroying the social fabric for younger people is by eliminating ("privatizing") every last public space and time in which they're allowed to exist without driving there and paying a fee for a structured transactional recreation. We have privatized the commons in an analogous way to the Enclosure Movement in industrializing Great Britain.

crawshaw2• 2 years ago

Enormous amounts of valuable activity is not captured in GDP and never has been. This makes it dangerous to take two GDP numbers from different polities (or even GDP PPP) and compare them to compare their wealth.

However, change in GDP can tell you something broader about a society. It is a compounding value, which means only a trivial amount of GDP change can be explained by moving some of a society's value into or out of the GDP measure. Over a century, the compounding effect eclipses the non-measured component.

So if two societies, over the long term, have different GDP growth numbers, one of those societies will end up rich and the other end up poor.

Slow down GDP growth even a little and you will impoverish your grandchildren. They will have to choose between becoming doctors in their poor society, or emigrating and waiting tables in the rich society.

MichaelZuo7• 2 years ago

Perhaps growth rates in GDP PPP would be even better for comparing between countries?

For example in the case of Ireland people might be misled if they looked only at nomial GDP growth…

konschubert• 2 years ago

Are you saying that the US has gotten poorer even though GDP has risen?

Are you saying that you visiting your grandma one weekend is the same as someone washing, feeding and walking her every day?

s1artibartfast11• 2 years ago

This is the worst possible interpretation of the comment. No and No.

jayd16• 2 years ago

If I go visit my grandma over the weekend, my activities do not register on GDP.

How do you mean? There are travel expenses and you were also doing that instead of consuming. Saving shows up in the numbers so I'm really not following what you mean here.

startupsfail• 2 years ago

There are no travel expenses, if grandma lives in a walking distance (or a couple of bus stops away, not that uncommon in Europe). She is also fine watching her grandkids from time to time, to everyone’s delight.

s1artibartfast11• 2 years ago

If you pay someone to clean their room or watch their kids, that becomes part of GDP, whereas if they simply do it out of love or social obligation, that isnt part of GDP.

Savings isn't part of GDP.

mvdtnz• 2 years ago

Are you implying that GDP has only been measured for the last 3 years? Because I think it has been much longer, over a period where physical health has improved greatly.

seizethecheese• 2 years ago

This is a good point, but at the same time GDP correlates with many metrics of national wellbeing. The USA isn’t the destination of choice for migrants for no razón

eevilspock• 2 years ago

The marketing dollars spent by the care assistant service is additional GDP.

Using GDP to measure the health or rank of a company is like rating writers by the number of words they produce.

tomcar2882• 2 years ago

that plus, the CPI is completely messed up.

Housing accounts for easily half of people's spending these days, especially the younger generation.

So, here's how you calculate standard of living: Nominal GDP per capita / Case shiller housing index.

Chart this and you'll see that we peaked in 1998 and have been in decline ever since then. We're actually down about 34% since that peak.

arkh• 2 years ago

Why America's economy is soaring ahead of its rivals

Because young people are not taxed to pay for retired people vacations. And because there is less of a credential obsession for most jobs.

So you get people starting to work younger: they create value earlier instead of being a pure weight on the system.

They're taxed less so they keep more of their money so they're established (house, business etc.) earlier and can spawn a new generation earlier.

Most of the socialized states have become gerontocracies where most of the GDP is funneled from the young actives to the retirees. Be it from socialized healthcare (old people use the majority of it), cushy retirement benefits or the simple fact they own most property and can rent it and lobby to keep prices high.

In France, median retirees have enjoyed better revenues than median working people for multiple years already. What was created so old people who can't work would not be destitute has become a life goal because it's "when you can start to enjoy things". 50 years ago, we had 3 active people paying for 1 retiree. Now those 3 people? We only got 1.7 active people paying for each of them.

Either the current working generation decides to stop the cycle and sacrifice themselves by continuing to pay for baby boomers and they forego their own "end of life vacation" so their rare grand children can benefit from their own work. Or the country is a third world economy next century.

goodpoint• 2 years ago

"rivals"?!

sharpshadow• 2 years ago

The DAX reached this year a new record of over 20000. Is Germany doing good right now? On the news reports they even have to mention that it’s how the investors predict the future market, because everybody here know the economy is shit atm.

If I’m not mistaken most of the growth in the capital market comes from the continuing money „printing“ right?

Lionga• 2 years ago

DAX companies make 90% of the money outside of Germany. Thinking the DAX reflects the german economy is uninformed at best.

pelorat3• 2 years ago

Us Europeans are more 'detached' from the economy than people are in the USA. We basically coast along. We don't live on credit, but debit, and most people have zero investments outside their house. We're content and risk adverse and don't care much for the stock market (even though many people's pensions are tied to it).

In places where higher education is cheap, or even sometimes free (like Sweden), there's less pressure to perform after graduation. It's quite common to study some field, but after graduation you go do something completely unrelated. A degree is just a means to an end, something to put on your CV to get an edge over those that does not have a degree. Those who study for the purpose of using their knowledge to create a successful business are very few.

And when it comes to starting a business, the EU market is rarely the target, instead the focus is the domestic and much smaller market.

It's also difficult to start a company that targets a larger market from the get go, because it means you need to advertise in multiple countries, target different languages, set up offices and contacts, and all of that costs money that startups do not have.

The EU single market is largely a myth from the perspective of wanting to start a successful company that can compete internationally. It's not any easier now than it was before the EU existed.

The EU is still a collection of different countries, with different languages, and the people in one country doesn't really care about what happens across their border or which new and up-and-coming company they have to offer.

EU citizens like American companies, because we here about them on the news constantly, but we are completely oblivious to companies from our European neighbors.

sajithdilshan• 2 years ago

This is so true. I’m a software engineer in Berlin, and I’m from Sri Lanka. It amazes me how many young people are still pursuing bachelor’s or master’s degrees in business management or related fields instead of specializing in STEM fields, where they’d have a better chance of securing a high-paying job and making a meaningful impact. It seems like everyone wants to work for big four audit firms, but they often end up doing poorly paid internships in companies unrelated to their higher studies field.

As you mentioned, the EU single market is just another bureaucratic monster. If you want to expand your business to other countries, you’ll need to apply for passporting. Then, if you ever want to provide services related to local taxes, you’ll have to have a physical office registered in the respective country. Each country also has its own nationalistic preferences regarding which services and products they use. For example, the French tend to prefer French companies over any other company that provides the same product, or even a better version from another European country.

In essence, the EU is simply a massive tax burden on European citizens, benefiting only a handful of countries within the continent.

Gravityloss2• 2 years ago

I think EU simplifies things a lot and accelerates the economy.

I'm from a small country. Almost whatever business you do, you usually start thinking export really fast. One thing to say about EU is what they say about Africa. It's not one, there are different places in there. If you've been in one, then that might not apply somewhere else.

I don't think EU countries have that many domestic businesses anymore. Companies operate in multiple countries and have supply chains crossing borders. People can freely just go and work wherever they want just like that. EU has removed so much friction and middlemen.

Maybe German and French people could learn English a bit better and it would be smoother for business. And taxation of work could be harmonized and simplified so it'd be easier to buy labor (and not just products or services) from anywhere. That's a hard problem though because of the different societies and services and thus different taxation.

What would you improve?

kergonath4• 2 years ago

In essence, the EU is simply a massive tax burden on European citizens, benefiting only a handful of countries within the continent.

The tax burden is absolutely not "massive", either in relative or absolute terms. Money going to underdeveloped parts of the EU is by design. Helping them helps everyone. It creates a huge internal market and companies and people benefit, even from net contributing countries. There sure are issues to solve, but in pure monetary terms, the EU is a no brainer, just look at the UK.

oblio5• 2 years ago

In essence, the EU is simply a massive tax burden on European citizens, benefiting only a handful of countries within the continent

Ummm... The EU budget and workforce is smaller than that of a big European city, let alone a country. If you look at the numbers, the actual EU machinery is very small for what is basically a government institution.

flkenosad3• 2 years ago

It really is an eternal September.

pmb2• 2 years ago

The EU single market is largely a myth from the perspective of wanting to start a successful company that can compete internationally. It's not any easier now than it was before the EU existed.

[citation needed] because I think this is extremely false.

It is easy to underestimate the pain caused by having all the pre-euro currencies and pre-EU tax laws (yes there was the Schengen zone and EEC, but the EU uniformity helps a lot) and pre-EU borders.

Source: me, who is a middle-aged American founding a tech startup in the EU and visited Europe many times before the EU existed.

oblio5• 2 years ago

They're most likely talking about digital.

Look at Netflix, a different catalog in every country.

mrweasel• 2 years ago

The current EU laws (especially tax laws) aren't helpful for businesses. If you want to do business in every EU country you basically have to register a business in each of them.

Sure, you can sell goods for €10.000 - €20.000 to another EU country without much trouble, beyond that you need to setup a business in each country, sometimes you even need employees or at least an office in a country to be able to do so. I worked for a company that shipped to a number of EU countries, from an EU country. It has taken them 15 years to expand from shipping to three countries to nine. Every time they want to enter a "new market" it is years of planning and insane fees or doing business in a supposed "single market".

The current situation is better than before the EU, but it's by no means good. Certainly no where as good as a Nebraska company wanting to sell their product in New Mexico. EU business will never grow to the size of American companies if they cannot bootstrap themself in a true single EU market. An American business immediately have a potential customer base of 350 million consumer, an EU business have at most 80 million if they start in Germany and will have to add an insane bureaucracy if they want to expand.

EDIT: My information is out of date: In 2021 a solution was introduced where you can pay your VAT locally, and the tax authority in your own country will handle the transfer of VAT to the other EU countries.

There are still some taxes (e.g. taxes on tobacco or alcohol) you may need to handle for each country, and to do some you may need to be a registered business.

mfld2• 2 years ago

I think it is getting better year after year, in small steps. For example, B2B taxation within the EU (by use of the reverse-charge mechanism) has become quite easy in recent years. Of course, depending on the product, diverse local rules may apply.

vishnugupta2• 2 years ago

[citation needed]

Of the top of my head.

Uber, has to do all sorts of gymnastics to make rides work across different EU countries. And still they are routinely asked to stop serving in a country for some reason or another.

Amazon. It took them years to launch across EU, they went country by country and didn’t launch across EU at once.

senko3• 2 years ago

I think you're both correct.

EU Single market is a massive improvement, but it's not yet really single market like in the States (although there can be a bit of legislation/tax barriers between states there as well, depending on your location and line of work).

Also, it's hard to understate just how open the US is. For me, an European living in the EU, it's as easy, or easier (larger wallets, single language) to sell (digital/online products/services) to Americans. For digital goods, might as well skip the EU.

Slartie• 2 years ago

The EU single market is largely a myth from the perspective of wanting to start a successful company that can compete internationally. It's not any easier now than it was before the EU existed.

That's not exactly true. The single market has been a great thing for companies producing physical products. That's also what was in mind of the people who designed the single market. They wanted to unify standards for physical stuff. Because back then, there were no digital services to speak of. "Analog" services were naturally limited in their scaling capability so they weren't in focus, but mankind had back then just learned to scale up physical production, and the single market for physical goods has largely worked out great to shape global standards and stay competitive in the area of anything that's traded and touchable.

What's been created is a bad fit for digital products and services, unfortunately. The legal frameworks covering purely digital services are far less unified than the standards for physical goods. And digital services are way more reliant on localization than physical stuff is. No amount of EU single market legislation will ever be able to eliminate the language barriers, much less other cultural barriers that are often hindering digital services successful in one EU country from being adopted in neighboring EU countries.

Therefore, for those digital services that benefit greatly from network effects, it'll be hard for European variants to ever beat their US counterparts on the domestic turfs, and virtually impossible on the global market. However, not all digital services are dependent on network effects, so there are good reasons to continue trying to make the EU single market more applicable to digital services and to foster domestic offerings whereever possible, even if that strategy will probably never lead to the next Facebook or Instagram or Amazon to be built by a EU company.

anovikov6• 2 years ago

Simple way to eliminate language barriers is to introduce English as main language of schooling, thus making all next generation bilingual. It's done by middle and upper classes anyway so idk why commoners are intentionally left in the dust by the System.

Let's face it: our culture (all across the EU), is American, anyway. It's stupid to pretend otherwise.

blibble2• 2 years ago

the fact there is no EU single market for services is why I was not concerned on a long term basis for the UK economy as a result of leaving the EU

the UK is a service based economy, all growth from the next century is going to come from services, not by increasing cheese exports or trying to compete with the Chinese on battery production

almost all UK startups branch out to the US before they try the continent

no single market legislation is ever going to change this

klohto• 2 years ago

Read up https://www.eu-inc.org

caseyy6• 2 years ago

The EU single market is largely a myth from the perspective of wanting to start a successful company that can compete internationally. It's not any easier now than it was before the EU existed.

This is simply not true. There is freedom of movement for workers which means it's easy to recruit top talent across the continent. Remote work is also much simplified. There's no friction moving goods and company assets across borders. The regulatory environment is significantly unified under the EU so there are few regulatory risks for companies growing outside their country within the region. Every EU company also has access to the entire continent's consumer base – 450 million residents, which is 50% more than the US.

This benefits many EU tech companies – Spotify, Revolut, Klarna, Bolt Mobility, Wise, N26, and so on and on and on.

EU citizens like American companies

As an EU citizen, I don't bank with an American company, I don't drive an American car, I don't shop in American grocery stores nor is importing many American foods allowed on safety grounds, I don't buy American fuel, my private health insurance isn't American, and so on and forth. I only buy American tech where there isn't a more competitive Chinese alternative. I'm not against the US in any way, shape or form. I just don't think we think about the US in the EU as much as you think.

You are right in the sense that the European way of life is very different from the US way of life and we don't care that much for the economy. Yet Europe is still home to some of the largest stock markets in the world including LSE, Euronext, FSE, SIX Swiss, etc. We just don't value it as highly as other aspects in life – there is a strong sentiment of rejection of the rat race, growth of shareholder value at all costs, and other such American things in Europe.

Perhaps it would benefit you to first examine the evidence on the ground, and then re-evaluate if your belief in American values (which I respect – totally great values in many cases) blinds you to European culture around capitalism. Europe is quite socialist, after all. Naturally, less effort will be spent on capital, more on society.

mathverse• 2 years ago

This is absolutely not true. Moving across Europe is significantly harder than in US. On top of that companies hiring across Europe need to go B2B or EoR. The countries are absolutely not harmonised in terms of regulations, labor law or employing people.

I am sorry but you absolutely have no clue what you are talking about.

rdm_blackhole8• 2 years ago

This is simply not true. There is freedom of movement for workers which means it's easy to recruit top talent across the continent. Remote work is also much simplified. There's no friction moving goods and company assets across borders.

There is absolute friction for people to even move across the borders. I moved to Sweden a few years ago and it took 8 months before I was fully part of the system. Now I am looking to move to Norway, and it's going to be the same ordeal.

There are countries where you can just show up with your bags and start living there but it doesn't apply to all of them.

So good luck recruiting talent, when the talent has to jump through hoops to get an ID card or open a bank account or even rent an apartment.

The regulatory environment is significantly unified under the EU so there are few regulatory risks for companies growing outside their country within the region. Every EU company also has access to the entire continent's consumer base – 450 million residents, which is 50% more than the US.

It's not about regulatory risk but about overheads. The rules for selling cross border are vague and opaque and you need a PHD just to make sure that you comply with all the regulations or a good lawyer.

Yes, in theory you can reach 450M customers, in practice much less so.

I just don't think we think about the US in the EU as much as you think.

Maybe you don't but I can assure you that our leaders think of the US for the simple reason that the EU is not in position of strength at the moment.

Case and point, the EU leadership is scrambling to avoid Trump starting a trade war with the EU while also trying to placate China who is also starting to show it's strength.

If we were in a position of strength, things would be different but the EU simply does not have the muscle to put up a fight.

The EU has stopped investing it's its armies and can barely help Ukraine. It has some tech companies but an order of magnitude less than the US. It is currently losing the space race against the US and China and it obliterated it's industrial base.

All of this is going to come back to haunt us at some point and not in a good way.

Spotify, Revolut, Klarna, Bolt Mobility, Wise, N26,

You have to realize that most of the businesses you mentioned are completely dependent on American infrastructure. Where do you think that Klarna et al are deploying their applications? On Hetzner? No on AWS or GCP or Azure.

How do you get access to those applications? Through the app store or Google play which both belong to American companies.

Who is driving the innovation in AI , self driving cars, robotics? No the EU.

You are right in the sense that the European way of life is very different from the US way of life and we don't care that much for the economy. Yet Europe is still home to some of the largest stock markets in the world including LSE, Euronext, FSE, SIX Swiss, etc. We just don't value it as highly as other aspects in life – there is a strong sentiment of rejection of the rat race, growth of shareholder value at all costs, and other such American things in Europe.

You don't care about the economy until your government services start shutting down because the economy is in the dumpster due to 20 years of under-investments and over taxation.

If productivity does not go up, if people don't care as you said then the outcome is stagnation and a decline of quality of life.

The services you rely on are paid for by the taxes raised on the companies of Europe. Who is going to fund the European lifestyle when companies decide to leave the EU taking their profits and taxes elsewhere because the EU is smothering them with rules and regulations?

chewz• 2 years ago

Yet Europe is still home to some of the largest stock markets in the world including LSE, Euronext, FSE, SIX Swiss, etc.

Total valuation of LSE Euronext is laughable compared to NYSE or Nasdaq. (5,7 vs 30 + 16 trillion USD). Not to mention that largest European company is producing scarfs and handbags vs Nvidia, Apple or Amazon. It is XIX century vs XXI century comparing EU to US.

vv_2• 2 years ago

There is freedom of movement for workers which means it's easy to recruit top talent across the continent.

It might be possible, but it’s not easy and is rarely done outside a few select countries, such as Switzerland. I’ve received offers from recruiters in Poland and Germany, but most of them seem to be trying to cut labor costs since hiring a foreign worker is often cheaper than employing a domestic one. However, when factoring in cost-of-living adjustments, these opportunities aren’t very appealing. The same principle applies in reverse; for instance, a German wouldn’t move to Lithuania for work because the wages there are significantly lower.

Remote work is also much simplified.

If I’m employed in Lithuania and want to work remotely in Germany, I can only do so for less than 50% of the calendar year. Otherwise, I’d need to be employed in Germany. As far as I know, this restriction doesn’t apply in the United States.

The regulatory environment is significantly unified under the EU so there are few regulatory risks for companies growing outside their country within the region.

The same applies to the United States, which is the point of comparison for the EU in this case. Additionally, this is highly dependent on the industry you’re targeting, as the requirements can vary significantly for certain products.

Every EU company also has access to the entire continent's consumer base – 450 million residents, which is 50% more than the US.

In theory, Germans will buy German products, and Poles will buy Polish products. This used to be true for digital services too, such as contracting, until companies started cutting costs by looking for cheaper labor in Eastern Europe.

Cumpiler6933• 2 years ago

Remote work is also much simplified.

No it isn't. Or more exactly, not my experience. Nobody hires remote workers in Austria for example due to labor and tax laws discouragin this.

If by simplified remote work you mean B-2-B contract from rich countries hiring cheaper labor in Poland, Bulgaria, etc then sure.

senko3• 2 years ago

Mostly agree, but this is not entirely correct:

Every EU company also has access to the entire continent's consumer base – 450 million residents, which is 50% more than the US. This benefits many EU tech companies – Spotify, Revolut, Klarna, Bolt Mobility, Wise, N26, and so on and on and on.

Here are two examples:

Spotify, a Swedish company, had to go country-by-country to cover the EU because each country has separate regulatory bodies (eg GEMA in Germany,ZAMP in Croatia, etc...). It was in the US a lot earlier than in some EU countries.

Klarna is still not available in my country (Croatia). The banking union is not there yet and Croatia is too small a market (understandably). So, by mere fact of being in the EU, Klarna does not cover the entire EU.

rdm_blackhole8• 2 years ago

The EU is not a federal state (yet) so the problem of having a EU wide company that could operate in all the member states is who gets the money and what do they do with it.

If I live in Portugal but my customers are mostly located in Ireland, what share does Portugal get of the corporate taxes? What share gets Ireland? What about the other countries? What if my country of residence changes in the meantime?

dartharva6• 2 years ago

All the points you listed apply to India as well, with its multilingual states and conservative scarcity-driven mindset. Yet entrepreneurship is growing here at rates never witnessed before.

stcroixx3• 2 years ago

Indians don't coast like Euros. Average standard of living is much lower in India which motivates them to do things to raise it.

k__• 2 years ago

"The EU single market is largely a myth"

People in the UK might disagree now.

throw646577• 2 years ago

The Leave campaign was significantly duplicitous about post-Brexis access to the Single Market; they've always known it's a real thing or they wouldn't have had to lie about it.

ben_w• 2 years ago

The EU single market is largely a myth from the perspective of wanting to start a successful company that can compete internationally. It's not any easier now than it was before the EU existed.

Everything I've heard from small UK businesses post-Brexit says that the EU single market is actually pretty useful.

guerrilla• 2 years ago

We don't live on credit, but debit, and most people have zero investments outside their house. We're content and risk adverse and don't care much for the stock market (even though many people's pensions are tied to it).

This is a contradiction. We all have pensions, and in many cases multiple pensions, up to three or more in Sweden.

PittleyDunkin10• 2 years ago

Us Europeans are more 'detached' from the economy than people are in the USA.

I think you're referring to "finance" or something. As to why we americans mostly speak in economic terms relating to the stock market—I honestly think we're just a really dumb people incapable of expressing our needs.

semiquaver2• 2 years ago

This seems incongruous:

  > most people have zero investments outside their house.

  > stock market (even though many people's pensions are tied to it)

To the extent the average American has any non-house investments, they consist of retirement savings in (defined contribution) pension accounts. How does this differ from your description of the average European?

senko3• 2 years ago

While the underlying mechanics are similar (pension funds), the average European (at least in my corner of the EU) is completely unaware. They know some (government-mandated) amount is withheld and paid out to the government (which then routes it to appropriate mix of pension funds), and that's it.

While you can be aware of the details (and make your own pension fund choice), most people are blisfully unaware.

croisillon• 2 years ago

not much to say except that i agree very much with it in general

TomK32• 2 years ago

The EU is still a collection of different countries, with different languages, and the people in one country doesn't really care about what happens across their border or which new and up-and-coming company they have to offer.

14 million EU citizens who live (as of 2020) in a EU country other than their own beg to differ. I'm one of them and know about the plentiful of rights that I enjoy as a EU citizen to live in another country. There are dozens and dozens of cities that attract students and workers from all EU countries.

Regarding the single market, well the Brits are learning the hard way how easy the flow of goods and wares was when they were still part of it.

insane_dreamer9• 2 years ago

It's not any easier now than it was before the EU existed.

Perhaps you don't remember how it was before the EU existed. Compare a Polish company doing business with France before Poland joined the EU vs today.

antrperspective• 2 years ago

The EU and Globalism is a mechanism for corporations/companies to get constant cheaper labor. The other implications are not important for the parties that make these decisions.

amelius• 2 years ago

Meanwhile US infrastructure is crumbling down.

lifeplusplus• 2 years ago

Housing and rent say otherwise

_1tem3• 2 years ago

For some reason I can’t help but think of the analogies of our current situation to the last years of the Soviet Union, when on paper it looked like a juggernaut albeit with decrepit leaders, but the numbers were lies, more lies and statistics. The elites were filthy rich but the situation on the ground was unraveling - basic services were starting to fail (analogies to Private Equity ruining everything in America from clinics to plumbing). And then you have Gorbachev who recognized the situation and attempted a “perestroika” (analogous to Trump and his reformist policies including DOGE) but that led to the final collapse. The analogies are just too many, even the failure in Afghanistan.

TheJoeMan• 2 years ago

Perhaps you're onto something regarding the "vibesession"... right now, if I had to call a plumber, I would feel immense dread. I would undoubtedly be fleeced with no recourse and still receive substandard work. What's the difference between this and the socialists where you figured you'd get crap service for "free"?

RationPhantoms• 2 years ago

I think I'd pay a premium to ensure the company I'm dealing with is not run by private equity. Is there a way to see that as a common citizen in the US?

PeterStuer2• 2 years ago

Why does America still have anything that resembles an economy??

Two word answer: reserve currency

leokennis• 2 years ago

And yet, mysteriously, somehow, as a European, I am pretty glad not to be a US citizen right now. I earn more than enough to live while working only 36 hours per week and my government is not run by lunatics.

Toine• 2 years ago

my government is not run by lunatics

Oh my sweet summer child

jokethrowaway3• 2 years ago

I'm glad for you and vehemently disagree.

Taxation is ridiculously high, public service has abysmal quality so I need to pay for private care to get healthcare in time and crime runs rampant on the streets. Albeit it's still not as bad as the US.

Our politicians are completely deranged.

The only thing keeping me in EU is the fact that taxes in the US is still pretty high tax / high cost of living, too many people are woke and crime is too high. Landscapes, history, culture and food in Europe are also unbeatable.

gadders• 2 years ago

We have a strange situation in the UK where GDP is going up (thanks to immigration) but GDP per person is actually going down (thanks to immigration).

loftsy• 2 years ago

I long for a US-like entrepreneurial attitude here in the UK. Business people here think that they are playing zero sum games. Everyone looks to the govt for funding and direction.

I am reflecting on Deepmind. This company saw the AI revolution before anyone else. London based. They did an amazing job. Sold to Google. The problem is that long term the growth and money now goes back to the US. Maybe the UK is just too small to produce world leading companies.

dukeyukey6• 2 years ago

The UK already has world-leading companies (as do many smaller countries), but it's very very hard to produce planet-scale wide-appeal consumer companies dur to market size. Even if it does happen, the temptation to appeal more and more to the US market is irresistable.

March_Hare2• 2 years ago

I'm sure it's not nothing, but to what extent does it matter that Alphabet is headquartered in the US? Deepmind seems to still be based in Kings Cross - and London benefits.

fragmede2• 2 years ago

What turns commenters so smarmy and grumpy when the topic is historical? So many comments are uncurious swipes telling each other to read a book.

flkenosad3• 2 years ago

Some day we'll have so much digital money we can buy whatever we want! Too bad there won't be any trees left...

flkenosad3• 2 years ago

Because they could care less about anything else.

sufehmi• 2 years ago

https://archive.md/t8z0P

jcfrei• 2 years ago

I've given the strength of the US economy a lot of thought recently and it comes down to 8 main reasons. The two obvious ones are:

- Liberal labour and corporate laws

- abundance of resources (fossil fuels + fertile soil)

The other 6:

- Low housing prices due to vast land reserves and cheap construction. leaves more capital available to invest into the stock and bond markets

- An excellent system of highways. reduces transportation costs for companies and allows for high labour market flexibility (+ high willingness of Americans to commute large distances)

- Coherent labour market that spans roughly 330M people

- A nation wide well established 401k system that funnels a lot of the retirement savings into US stocks and bonds - incl. venture capital.

- higher affinity for risk taking. Americans are in large parts descendants of risk taking expats

- Large maritime borders and only two (friendly) neighboring countries

BirAdam2• 2 years ago

I would say that those are solid reasons historically, but I would say that stocks/401k/IRA have spun out of control and driven P/E ratios to stupid levels that are unsustainable. Also, housing prices are no longer affordable for the majority. For example, many people I know bought homes in 2019-2022 and they are now stuck. They could sell and make money, but then they’d be buying roughly an equivalent house to the one they’re in due to rising costs. They could rent, but rents have become extortionate.

elzbardico• 2 years ago

During the peak of Brazil’s Military Rule and the Economic Miracle in the early 1970s, one of the General-Presidents, Emílio Médici, made a strikingly honest remark:

“The economy is thriving, but the people are not.”

piker• 2 years ago

My experience as a expat in London is that new things aren’t really being built in Europe today, and that fact is greenwashed over to keep the people here from recognizing how miserable the infrastructure and housing are compared to modern North American counterparts.

hnpolicestate• 2 years ago

Let them eat cake.

dathinab2• 2 years ago

Is "Americas's economy" soaring or "Americas top .1%s economy" soaring?

Because as someone not from the US it often looks a lot (a very big lot) like that in recent year most economical growth exclusively went to a very small minority of US citizens but not the US as a whole.

Like wasn't people economically struggling while the Democrats claiming everything is fine 'cause look economy is growing one of the more believable reasons of people not voting for Democrats (!= voting for Trump)???

BirAdam2• 2 years ago

Yeah. The US economy isn’t doing well overall, and it would be worse if the US Dollar weren’t the global reserve. The thing you mention with money going to the top is exactly what one should expect in inflationary monetary policies and large amounts of government spending. It’s also what one should expect in a representative democracy. Money goes first to the banking cartel and the. To those who are politically and/or financially well connected. Period. They enrich themselves and the rest of us pay $6 for a carton of eggs.

pattt• 2 years ago

Different regions play complementary roles in the global economy. The oversimplified description is that the US drives innovation and risk-taking, Europe prioritizes social welfare and sustainability and Asia powers manufacturing. Forcing everyone to compete in the US-style growth race would be disastrous - imagine the burnouts, resource drain and market instability if every country tried to be Silicon Valley. Plus, many Europeans simply don't share the "get rich quick" mentality - they value work-life balance and social security more. Whether we're being pushed into this growth-obsessed game is another debate. Ideally, regions should focus on their strengths while maintaining independence. Europe can keep its social model while smartly adopting tech, Asia can focus on sustainable industry, and the US can lead in innovation. It's like an ecosystem - diversity makes it stronger. The goal shouldn't be for everyone to play the same exhausting game, but to maintain different approaches that complement each other.

shaftoe• 2 years ago

Your model works when every player provides something of value.

What does Europe's self indulgent attitude bring to the international table?

nemo44x• 2 years ago

A few luxury brands and a well preserved history and culture that is nice for tourism. Lots of high value human capital if only they could truly unlock it and allow it to thrive.

Today's Europe is just milking what it can as it continues its decades long crisis of identity and pessimism. Demographics are destiny and it's extremely problematic for Europe's future. There's no real leadership and it's one large admin state that can only agree to fund people's lives today at the cost of tomorrows lives using whatever assets it has left from its golden age before the wars. It's no wonder no one is having kids as they know the future is bleak. Just let the admin state manage my life and take it easy and not worry too much and fade away into the future until it's all gone...slowly and then all at once.

The jungle produces strong creatures and much of the leading world is much more full of jungle animals than the zoo animals the people of the European continent have become generation over generation.

slifin• 2 years ago

The US dollar is the world's reserve currency So countries keep huge stores of dollars in their reserves because they need it for trade Then what happens is the US starts the money printer to pay for US government services This inflates the dollar and means that everyone who holds the dollar has lost value

Including Americans who are paid for their labour with dollars and do not own assets

So wealthy Americans/companies see an influx of money, asset prices rise and every other country gets poorer relative to the USA

agp2572• 2 years ago

I would argue the opposite. If you compare US dollar to every other currency the value of their currency has decreased a lot compares to US dollar. This would be a plus to hold US dollar as their own currency has depreciated and holding more dollars has helped them reduce their losses. But it has one down side is that if you hold too much US dollar the country exposes itself to US monetary policy.

trts4• 2 years ago

not sure there is a country on earth that you could save your money in the national currency and not watch inflation rip away the value of your earnings. The purchasing power of USD has declined 95% over the past century.

Prettiest horse in the glue factory

psychlops• 2 years ago

Close, but inflation also makes Americans poorer. Global asset holders (US included) are just fine as the dollar cost simply rises against the asset. Holders of dollars will lose value. Holders of dollar denominated debt (mortgages) are winners.

The US Government does gain a lot of wealth doing this, but it doesn't necessarily trickle down to Americans or American companies.

PittleyDunkin10• 2 years ago

but it doesn't necessarily trickle down to Americans or American companies.

It absolutely does go to american companies—that's the entire point of the privatization movement america's been experiencing the last forty years. It's much more difficult to articulate how this reaches americans and builds actual wealth, though, and certain industries benefit more highly from being basically a private form of government (the defense industry, finance, airlines, critical tech companies, etc) than others.

If americans want to reap any windfalls from their "economy" (whatever americans even think that is—as best I can tell it functions in political discourse essentially the same way the Pontifex Maximus performing an augury functioned in ancient Rome) they're going to have to start demanding more concrete things than "jobs" and "stock performance" and "real estate markets".

ffitch2• 2 years ago

modern version of printing money is Quantitative Easing, but the US is in the opposite, Quantitative Tightening mode since 2022. Federal Reserve is essentially taking money out of circulation for the last two years.

Timber-6539• 2 years ago

To the contrary the M2 supply [0] indicates that the Fed's QT policy has barely taken any money out of circulation.

[0]https://fred.stlouisfed.org/series/M2SL

jjtheblunt• 2 years ago

i think of it as prices of good inflating, not the dollar itself.

DontchaKnowit• 2 years ago

Theres literally 0 difference

insane_dreamer9• 2 years ago

everyone who holds the dollar has lost value

right, but it makes it easier for the US gov to pay its dollar denominated debts to foreign holders; the huge advantage of being able to borrow in your own currency!

immibis12• 2 years ago

The incoming president wants to end the trade deficit, which is the same as ending world reserve currency status.

lenerdenator• 2 years ago

The American stock market is soaring ahead of its rivals.

Stock markets are just an indicator of how surplus value is distributed to shareholders, not a picture of actual economic health.

TulliusCicero3• 2 years ago

GDP (per capita) is not the same thing as the stock market, even if they're often roughly correlated.

talkingtab• 2 years ago

This is corporate propaganda. A corporate take on America based on stories that are atypical. The US is a country where the stock market is soaring while more and more people are not paid a living wage, are homeless and cannot obtain fundamental health care. FT is a written for and read by those fewer and fewer people who benefit benefit from this situation. As tech people we are often the beneficiaries of the ever growing disparity between the haves and have-nots, so we do not want hear or think about where this road leads us. Not a good place folks.

America has given free reign to Corporations with United vs FEC. The preamble to the constitution now reads "We the Corporations of the United States".

maxehmookau• 2 years ago

Is it because corporate profits are put ahead of the living standards of the masses? I bet it's that.

insane_dreamer9• 2 years ago

If you look at the "American economy" as "corporate growth and wealth", then yeah, it's doing great. Best in the world.

But if you look at it as "the economic wellbeing of the country's citizens", then it's average at best.

The second measure is the one that matters. Enough with the debunked trickle down economics bullshit.

ricksunny• 2 years ago

What does ‘soaring’ mean? Are economies ‘rivals’ to each other? Are we in a race? Where is the finish-line?

Thank god for this instructiveness of this headline for remediating the apparent deficency of the economics classes I took in university and in business school. /s

The business press makes me want to gag sometimes, and trims our mindset to keep us plebes in an unnecessarily competitive mindset with respect to each other. Who do you think benefits from this narrative? What are FT’s interests here? Subscriber revenue? Ad revenue? What are the interests of those stakeholders?

nyeah• 2 years ago

Good as far as it goes. But employees don't get paid in productivity, we get wages.

gorfian_robot• 2 years ago

why does this article conflate the existence of AI startups with strong economic growth for the last four years? it is almost like there is another factor at play ....

corimaith7• 2 years ago

I see the economic conspiracy theorists are on a field day here...

satao• 2 years ago

America is a de facto keynesian state while the European Union is pushin austerity since 2008

ffitch2• 2 years ago

2.8% GDP (and labour productivity) growth doesn’t look that impressive when budget deficit is at 6.4%. A large portion of US GDP is domestic consumption.

bugtodiffer• 2 years ago

is it? x'D

vondur2• 2 years ago

I guess compared to most of Europe, which is getting poorer? I think the coming decades will now be dominated by the growth of the Indian economy, who will probably be the biggest beneficiary of the worldwide de-investment in China.

dannyobrien• 2 years ago

Just to throw in another opinion, one that I think will be guaranteed to annoy the majority of commenters so far: This piece argues that the US isn't doing that well economically in absolute or historical terms, but only looks like that way because the popular point of comparison, Europe, is doing even worse:

https://thenextrecession.wordpress.com/2024/12/04/us-economy...

rustyzig2• 2 years ago

Isn't that the general understanding? As I understand it, everyone was expecting the world to fall into a recession on the heels of the COVID situation and everything that came with that. Which much of the rest of the world effectively has (or at least close to it), as expected. The surprise is that the US is still doing okay.

TulliusCicero3• 2 years ago

But Japan is also doing not great, right?

whateveracct3• 2 years ago

the funny thing to me about the "Well, I'm not doing good in this economy" anecdata rebuttals to the reportedly good US economy is that..people have always lived paycheck to paycheck in the US economy. Eliminating that shouldn't be the benchmark for "good." Literally everyone can't be a winner all the time.

steveBK1232• 2 years ago

US economy is soaring because the old guard (Europe) passed peak and all the new guard (Japan, Korea, Taiwan, China, BRICS) didn't quite live up to the hype once they reached near wealth parity.

Where would you rather invest today - US or a demographically stagnant, highly regulated Europe? US or rapidly shrinking countries with risk-averse cultures like Japan and Korea? How about China where they might expropriate you / throw you in jail? Or Taiwan which is under the cloud of Chinese invasion?

Etc.

Cleanest dirty shirt and all that.

saturn8601• 2 years ago

Said in another way: The US is the last standing haven for the robber barrons of the world. Once the US falls there will be nowhere left for them to go.

If we just fast forward the video tape we see where this is going. Maybe thats why Elon is so eager to get to Mars.

steveBK1232• 2 years ago

The US is the last place standing that doesn't look at all innovators & leaders as robber barons. Some are, sure.

But if you want economic growth, someone needs to take risk. Capital formation, investment, founding companies. This is what leads to hiring and jobs.

Look at ossified cultures in EU, UK, and even Japan where stringent hiring/firing laws, shrinking populations and dire economic growth mean it's great to already be 40/50+ years old protected worker. Unfortunately it also means youth can't find jobs, and where they can they are under more tenuous contractual agreements than their older cohort has. Plus an increasing share of the taxes the youth pay will be to fund the generous retirement of their elders who outnumber them.

And again before some US Doomers chime in, take a global perspective. Go look up some rich world unemployment stats. The US right now has some of the lowest unemployment both historically and when compared against all the current global rates.

jurli• 2 years ago

It's kind of crazy that with so many opinions on economics, no one ever mentions the most obvious things.

When elite papers say the "economy is doing well," what they usually mean is "the GDP is going up way higher than other places." What exactly is a GDP? It's literally the total sum of money SPENT by government, consumers, and businesses combined (this is the textbook definition, and how it's calculated).

When prices of stuff go up by 25% because there's a shortage of labor, or shortage of material, or shortage of infrastructural efficiency, by definition the GDP goes up 25%. There isn't any increase in life quality, nor any increase in the amount of stuff produced. This is why people feel like the economy is complete shit, while all the numbers point to the economy is doing well, and all the institutions that rely on these data (think tanks, policymakers, journalists) are baffled why people don't feel the same.

In contrast, in places that produce things very cheaply, if the export goes down, its GDP numbers will go down by definition. This in turn causes an overflow of goods internally, and prices paid by internal consumers even lower, therefore decreasing the GDP numbers even more. This is the opposite of the above scenario, where people are getting better things for cheaper, and their lives are improving without any increase in total compensation. All the while the numbers are telling a different story.

I think GDP might have been one of the biggest red herrings for policymakers. It's distorting their view of what's going well and what isn't.

Why America's economy is soaring ahead of its rivals

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