8 ms·

Size of domestic market used to be the theory in the 60s (it led to the formation of the EU), but isn't a popular explanation anymore because most large countri

Size of domestic market used to be the theory in the 60s (it led to the formation of the EU), but isn't a popular explanation anymore because most large countries never ended up getting rich. Economic system used to be theory in the 90s, but also has fallen out of favour as countries that had "good systems" never really caught up (the UK has a very similar system in many ways, but doesn't have that final piece). It isn't really that simple. The US just appears to have everything at once. The closest is probably Australia or possibly Switzerland (both are significantly smaller than Canada). Also, the US and Canada do not have the same level of wealth...the only country in the world that is close to the US in wealth is Switzerland and Australia (the latter is a bit unclear but is probably true once superannuation is included). Canada is definitely up there but is more similar to Europe than the US, again there is nowhere that really compares to the US.

weatherlite 4y ago
A key thing is the dollar's status is reserve currency. It keeps its value up despite the US being a debtor nation and amassing huge debt. Without reserve currency status its anyone's guess how things will look - probably closer to Europe.
brabel 4y ago
> the only country in the world that is close to the US in wealth is Switzerland and Australia What?! I have no idea where you got that idea from, but looking at https://www.worldometers.info/gdp/gdp-per-capita/ https://www.worldometers.info/gdp/gdp-per-capita/ you can see the USA is 13th in the world when its wealth is divided by its population. If you were trying to say that the USA is the wealthiest nation in absolute terms, I would understand, but when you place Australia and Switzerland as the only nations that "come close" you're clearly implying per capita wealth, meaning that's nonsense.
- deepnotderp 4y ago
  1-12 are either petro states or distorted due to being tax havens.
- skippyboxedhero 4y ago
  GDP isn't wealth, it is a measure of output over a period of time (and wealth is an amount at a point in time). It is also, generally, quite misleading because a nation can produce a tremendous amount of output, and all of that can be siphoned into an offshore account in Switzerland (KSA is an example, but there are also more subtle examples like Germany). And measuring wealth is very, very complex. Do you include pensions? How do you value a state pension? Do you include housing? How do you value housing? But if you look at relative net financial wealth (inc. pensions, you are likely going to Google and find something that doesn't include pensions) then the statement is true...the US and Switzerland are way out ahead on net financial assets, and in datasets that include pension wealth then you have Australia up there too (which has one of the most successful pension systems in the world, very strong economy too but they punch above that weight when looking at wealth). Again though, measuring these kind of things is complex so you have to not only be able to Google a ranking system but understand exactly how the pension system is structured in that country, how is the financial sector structured, how is the tax system structured, etc. The US is consistently at the top by any measure though.
  - brabel 4y ago
    The problem is that you're saying it's very hard to measure wealth while at the same time confidently claiming the US is at the top. That just doesn't make sense. GDP may not be a perfect measure of wealth but it's the best we've got IMO. I've lived for a short while in Canada, for many years in Australia, and visited the USA many times... I really don't see much difference in wealth in general. I'm sure there's a lot more extremely rich people in the USA, but those are a small portion of the population so I wouldn't consider that an important indication of the wealth of a country, at least not as much as the wealth of the majority of its citizens (and the USA notoriously also has a lot more very poor people than either Australia or Canada). If you do that, perhaps the Arab Emirates would be wealthier? Or even China, home to more bilionaires than the USA IIRC?! Also, if you include healthcare access and pension as you seem to be doing, again, the USA is probably the worst as you're pretty much on your own with those things, while in nearly any other developed country, people get decent healthcare and pension even without having had high paying jobs their whole life.
- jhj 4y ago
  GDP does not represent wealth, it's a measure of current economic production. Furthermore, GDP is skewed for some countries where GNP might be a better figure (e.g., Ireland, where a fair chunk of the domestic production accrues to foreigners operating in the country). Table 2-1 in [1] lists mean wealth per adult per country, with Monaco first ($324,721), Switzerland second ($231,354) and the US third ($215,146) as far as I can tell. Median wealth figures are of course worse. [1] https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-databook-2021.pdf https://www.credit-suisse.com/media/assets/corporate/docs/ab...
  - skippyboxedhero 4y ago
    You have referenced the number for 2000. You can also see Australia punches well above it's weight in that survey. The stuff CS produces on UHNWIs is also very interesting.
chongli 4y ago
The EU is not very comparable to the US. Pass all the laws you want allowing mobility and trade between EU members, you’re still not going to bridge the deep language and culture divides between the countries. The US is a true single market because English is the dominant language and because everyone from the Deep South to Alaska consumes the cultural products of Hollywood and New York and the technology of Silicon Valley.
- skippyboxedhero 4y ago
  Right, if you look at banking (which is regulated nationally) there is very little competition between banks in EU states. There are examples in other industries. But I didn't compare it with the US at all, all I said was: the EU was formed, in part, because people in the 60s believed that US growth was stronger because the domestic market was larger (and that scale advantages were critically important to business success). This was a very common view in the 60s in the UK too (and held by the govt which embarked on a huge investment/forced merger program to boost domestic production that ended in disaster). And it was totally wrong, as subsequent economic performance demonstrated (the reason why the EU's single market is incomplete is nothing to do with language and everything to do with politics). And how do you explain those products being dominant in the rest of the world? The UK went through this, tried to create globally competitive firms with scale by forcing companies to merge, almost all of them went bankrupt (have you heard of British Leyland? No?) because they were mismanaged, and produced bad products no-one wanted. It was like trying to add one to one and make twenty.
pkaye 4y ago
Doesn't Australia mostly rely on its iron and coal mining? Minerals is basically 2/3d of their exports.
- skippyboxedhero 4y ago
  No. I am not sure how little you have to understand about the world (the US is also a massive commodities exporter, a good proportion of the world's trade is commodities) to think that...but no, Australia isn't just a big mining outpost. Mining is 10% of GDP in Aus. For comparison, oil and gas is 8% of GDP in US.
  - FredPret 4y ago
    You could have listed all those numbers and made your point without being an ass
  - pkaye 4y ago
    But this shows much higher numbers for mineral exports while US is much lower. Where did you get the numbers? https://oec.world/en/profile/country/aus https://oec.world/en/profile/country/aus https://oec.world/en/profile/country/usa https://oec.world/en/profile/country/usa
d_burfoot 4y ago
The US loses only to Switzerland in mean wealth per capita, but ranks below even a country like Italy in median WPC: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... Basically, the US 1% is much richer than other countries, but the typical American is probably less wealthy than someone in other developed countries.
bee_rider 4y ago
History put us in a pretty unique position anyway, right? The list of advanced economies not blown up in WWII is pretty short, which gave us a nice lead, and probably kicked off some feedback loops.

weatherlite 4y ago

A key thing is the dollar's status is reserve currency. It keeps its value up despite the US being a debtor nation and amassing huge debt. Without reserve currency status its anyone's guess how things will look - probably closer to Europe.

brabel 4y ago

> the only country in the world that is close to the US in wealth is Switzerland and Australia What?! I have no idea where you got that idea from, but looking at https://www.worldometers.info/gdp/gdp-per-capita/ https://www.worldometers.info/gdp/gdp-per-capita/ you can see the USA is 13th in the world when its wealth is divided by its population. If you were trying to say that the USA is the wealthiest nation in absolute terms, I would understand, but when you place Australia and Switzerland as the only nations that "come close" you're clearly implying per capita wealth, meaning that's nonsense.

deepnotderp 4y ago
1-12 are either petro states or distorted due to being tax havens.
skippyboxedhero 4y ago
GDP isn't wealth, it is a measure of output over a period of time (and wealth is an amount at a point in time). It is also, generally, quite misleading because a nation can produce a tremendous amount of output, and all of that can be siphoned into an offshore account in Switzerland (KSA is an example, but there are also more subtle examples like Germany). And measuring wealth is very, very complex. Do you include pensions? How do you value a state pension? Do you include housing? How do you value housing? But if you look at relative net financial wealth (inc. pensions, you are likely going to Google and find something that doesn't include pensions) then the statement is true...the US and Switzerland are way out ahead on net financial assets, and in datasets that include pension wealth then you have Australia up there too (which has one of the most successful pension systems in the world, very strong economy too but they punch above that weight when looking at wealth). Again though, measuring these kind of things is complex so you have to not only be able to Google a ranking system but understand exactly how the pension system is structured in that country, how is the financial sector structured, how is the tax system structured, etc. The US is consistently at the top by any measure though.
- brabel 4y ago
  The problem is that you're saying it's very hard to measure wealth while at the same time confidently claiming the US is at the top. That just doesn't make sense. GDP may not be a perfect measure of wealth but it's the best we've got IMO. I've lived for a short while in Canada, for many years in Australia, and visited the USA many times... I really don't see much difference in wealth in general. I'm sure there's a lot more extremely rich people in the USA, but those are a small portion of the population so I wouldn't consider that an important indication of the wealth of a country, at least not as much as the wealth of the majority of its citizens (and the USA notoriously also has a lot more very poor people than either Australia or Canada). If you do that, perhaps the Arab Emirates would be wealthier? Or even China, home to more bilionaires than the USA IIRC?! Also, if you include healthcare access and pension as you seem to be doing, again, the USA is probably the worst as you're pretty much on your own with those things, while in nearly any other developed country, people get decent healthcare and pension even without having had high paying jobs their whole life.
jhj 4y ago
GDP does not represent wealth, it's a measure of current economic production. Furthermore, GDP is skewed for some countries where GNP might be a better figure (e.g., Ireland, where a fair chunk of the domestic production accrues to foreigners operating in the country). Table 2-1 in [1] lists mean wealth per adult per country, with Monaco first ($324,721), Switzerland second ($231,354) and the US third ($215,146) as far as I can tell. Median wealth figures are of course worse. [1] https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-databook-2021.pdf https://www.credit-suisse.com/media/assets/corporate/docs/ab...
- skippyboxedhero 4y ago
  You have referenced the number for 2000. You can also see Australia punches well above it's weight in that survey. The stuff CS produces on UHNWIs is also very interesting.

chongli 4y ago

The EU is not very comparable to the US. Pass all the laws you want allowing mobility and trade between EU members, you’re still not going to bridge the deep language and culture divides between the countries. The US is a true single market because English is the dominant language and because everyone from the Deep South to Alaska consumes the cultural products of Hollywood and New York and the technology of Silicon Valley.

skippyboxedhero 4y ago
Right, if you look at banking (which is regulated nationally) there is very little competition between banks in EU states. There are examples in other industries. But I didn't compare it with the US at all, all I said was: the EU was formed, in part, because people in the 60s believed that US growth was stronger because the domestic market was larger (and that scale advantages were critically important to business success). This was a very common view in the 60s in the UK too (and held by the govt which embarked on a huge investment/forced merger program to boost domestic production that ended in disaster). And it was totally wrong, as subsequent economic performance demonstrated (the reason why the EU's single market is incomplete is nothing to do with language and everything to do with politics). And how do you explain those products being dominant in the rest of the world? The UK went through this, tried to create globally competitive firms with scale by forcing companies to merge, almost all of them went bankrupt (have you heard of British Leyland? No?) because they were mismanaged, and produced bad products no-one wanted. It was like trying to add one to one and make twenty.

pkaye 4y ago

Doesn't Australia mostly rely on its iron and coal mining? Minerals is basically 2/3d of their exports.

skippyboxedhero 4y ago
No. I am not sure how little you have to understand about the world (the US is also a massive commodities exporter, a good proportion of the world's trade is commodities) to think that...but no, Australia isn't just a big mining outpost. Mining is 10% of GDP in Aus. For comparison, oil and gas is 8% of GDP in US.
- FredPret 4y ago
  You could have listed all those numbers and made your point without being an ass
- pkaye 4y ago
  But this shows much higher numbers for mineral exports while US is much lower. Where did you get the numbers? https://oec.world/en/profile/country/aus https://oec.world/en/profile/country/aus https://oec.world/en/profile/country/usa https://oec.world/en/profile/country/usa

d_burfoot 4y ago

The US loses only to Switzerland in mean wealth per capita, but ranks below even a country like Italy in median WPC: https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... Basically, the US 1% is much richer than other countries, but the typical American is probably less wealthy than someone in other developed countries.

bee_rider 4y ago

History put us in a pretty unique position anyway, right? The list of advanced economies not blown up in WWII is pretty short, which gave us a nice lead, and probably kicked off some feedback loops.