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> After 16 months in July 2019, a report was produced but it did not provide the comparisons requested by Congress. Rather, the GAO in its report said making th
by Maarten88 6y ago
> After 16 months in July 2019, a report was produced but it did not provide the comparisons requested by Congress. Rather, the GAO in its report said making the comparisons was too difficult to obtain meaningful results [...]
As an outsider from Europe, let me try.
1. It always seemed to me that the litigious nature of doing business in the US must be costly to society. The thinking of "If anything ever happens to you, someone owes you money". Lawyers are needed in anything of consequence, and it leads to lots of overhead, distraction and unnecessary work to avoid the possibility of being liable for anything.
2. Then there is corruption. The US ranks lower than most european countries on corruption (https://en.wikipedia.org/wiki/Corruption_Perceptions_Index https://en.wikipedia.org/wiki/Corruption_Perceptions_Index). The article hints at that, mentioning "politicizing" of infrastructure projects. That also costs money to society.
3. Then there is lack of competition. Because antitrust laws have not been enforced for decades in the US (not anywhere else too btw), I suspect that big infrastructure projects are getting distributed among a few large companies, who don't actually compete; they'll all make good money and pay their C-level execs well.
There may be other factors like healthcare costs, and unions adding to costs, etc, but those seem to be a result of the above, rather than a root cause.
- nickpp 6y ago0. Unions. And that implies the others: litigious, corrupted and lacking competition.
- estebank 6y agoAre you implying that there aren't unions in Europe?
- nostromo 6y agoThat's not the right question. The question is are labor unions stronger in Paris or New York; London or Chicago? It's not an obvious answer. If you just looked at pay, you'd probably come to the conclusion that unions in blue state metros in the US are much more powerful than any of their European counterparts.
- thescriptkiddie 6y agoEurope famously has no labor unions. /s
- casefields 6y ago3 of you already strawmanning that user. He didn't say they were the only reason, nor anything about Europe's unions. They are making the same point the article you 3 clicked at the top of this page: >Although the material and equipment costs are similar (within 10%) for projects in the United States and in Europe, labor costs are substantially higher in the United States as outlined above. For example, in California the average billing labor rates for qualified tunnel workers is about $70/hr and the average New York labor rate of qualified tunnel workers is at over $100/hr, whereas in Germany (one of the high labor rates countries in Europe) the comparable labor rate is about $30/hr." You add up all these inefficiencies, including Union labor, and it starts to bloat infrastructure projects. Unions can do wonderful things, but they no incentive to fix things when they're benefit. Or in the words or Upton Sinclair: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
- deleted 6y ago[deleted]
- brnt 6y agoUnions are stronger in Europe, so that does not make sense.
- refurb 6y agoYour link for corruption is actually “corruption perceptions”, not actual corruption and the US is the same as France.
- etrabroline 6y agoSo whose opinion are we supposed to consult? The local governments whose corruption we are trying to measure? Asking the local people seems like the best way to do it to me.
- refurb 6y agoYou're going to get extremely biased answers based on how any local group defines corruption. People from Western countries are highly sensitive to corruption, even soft corruption (e.g. some politician introduces his kid to a constituent who is a business person in order to get an internship). Ask people in highly corrupt countries if that's corruption and you'll get a very different answer (my sister-in-law, who is from a developing nation, would call that leveraging your network). Add on top that it's perception. In western countries how many people have direct experience with political corruption? Their views are going to be heavily influenced by media coverage. And then add on top anti-corruption measures. If your gov't prosecutes corruption aggressively, it will seem like there is more of it, versus a country that just ignores it. If it's not in your face, you'd probably say your country is not that corrupt. When in fact the country that more aggressively fights corruption is probably less corrupt than one that doesn't.
- etrabroline 6y agoWhen you suggest an alternative I will weigh it against asking the locals.
- rossdavidh 6y agoSpeaking as an American who has been to Europe, used their mass transit (and mostly liked it), but has skepticism about a lot of European political processes working here: yes, absolutely. All 3 of your points are spot on. Healthcare does have an impact, in that the comparison of labor costs btw US and Europe often doesn't account for the fact that the cost of labor in the US includes health insurance, generally, whereas the cost of labor in Europe does not. This is the flipside of comparing tax rates between US and Europe, where Europe's rates look very high, but include healthcare generally, so the same cost is booked as labor in the US but as general government spending in Europe.
- BurningFrog 6y agoHealthcare in Europe is also paid by the workers, with their taxes. The real difference is that it's 2-3 times as expensive in the US.
- Ericson2314 6y agoNever mind who pays what ultimately, the marginal costs are borne differently so you could in principle spin up some temporary construction labor for cheaper. (Other laws make employment less liquid, somewhat reducing this benefit. IMO those laws should be changed, but only with the non-work-related benefits increasing commensurately (UBI). (Definitely not trying to bolster the Macrons here.))
- Maarten88 6y ago> The real difference is that it's 2-3 times as expensive in the US. Yes. Which may be caused by the same three issues: 1. Doctors afraid of being litigated by patients, doing unnecessary treatments and paying costly insurance. 2. Corruption and bribery leading to things like Medicare being unable to negotiate drug prices and doctors prescribing addictive opioids to the tune of billions of dollars. 3. Inverted competition: Hospitals run a for-profit business while patients will prefer the best and most expensive service they/their insurance affords them. Who chooses a treatment based on price when your health is at stake? Also, somehow, drug prices are much higher than anywhere else, even completely generic stuff like insulin. Nobody looses, except everyone else
- syndacks 6y ago"If anything ever happens to you, someone owes you money" -- genuinely curious what happens in Europe. There must be malpractice laws that would make someone liable for something if they mess up big time, no? Is it simply that the payouts are smaller?
- realityking 6y agoMalpractice law exists but the sums are _a lot_ lower. Case in point here’s a news article from last week about the settlement for a young man who had a kidney removed instead of his spleen: https://www.weser-kurier.de/bremen/bremen-stadt_artikel,-geschichte-einer-fatalen-operation-_arid,1941428.html https://www.weser-kurier.de/bremen/bremen-stadt_artikel,-ges... The judge called it unbelievable and truly outrageous. He’s set to receive 90k Euro for pain and suffering + indemnification for any future issues with his surviving kidney.
- pas 6y agosee also http://rationallyspeakingpodcast.org/show/rs-236-alex-tabarrok-on-why-are-the-prices-so-dmn-high.html http://rationallyspeakingpodcast.org/show/rs-236-alex-tabarr... the curse of a very productive economy is that opportunity costs put an upward pressure on prices.