4 ms·

Don't know where you live but Europe's wealth divide is bigger than America's. We just need to make the distinction between income inequality and wealth inequal

Don't know where you live but Europe's wealth divide is bigger than America's. We just need to make the distinction between income inequality and wealth inequality which are completely different things. Urban property prices for Europeans are far less approachable on our wages than they are for Americans on their wages. Munich has the same square foot/meter prices as SF but at a third of the wages. I assume it's similar in Paris and London. When I was working in Germany for an engineering company, all the guys in the Dallas-FW office had bought big houses in the suburbs (yeah, car dependence though) while everyone in the Munich office was still renting (and not living centrally). Europe had less income inequality, but much higher wealth inequality thanks to decades/centuries of accumulated old-money that keeps growing, especially in real-estate assets. Europe protects you from becoming homeless but it's near impossible to accumulate wealth if you start from the bottom, while in the US you can easily become wealthy from the bottom if you're savvy and healthy but you can also easily become homeless if you're not.

rcarmo 4y ago
If you want overinflated real estate prices (relative to local wages/affordability), try Lisbon.
- ChuckNorris89 4y ago
  Yeah, that too, although correct me if I'm wrong, but to me, Lisbon's housing issues seem to be self inflicted by prioritizing Airbnbs and housing for tourists and rich crypto-bro nomads at the expense of its own citizens. Could probably be fixed if the Portuguese would vote right, no? Meaning it's more of a political issue than an economical one.
  - rcarmo 4y ago
    I wrote a fairly long comment the other day in another thread that explains how the visas and AirBnBs are just the icing on the cake. It's very much the legacy of decades of neglect from property owners and lobbying from the building industry, compounded by bad government regulation.
  - margorczynski 4y ago
    Here in Poland there's a lot of property not rented as the law is such that if someone stops paying it'll take you years to (maybe) throw him out. And during all that time you need to pay the bills for him because if he gets cut off from e.g. electricity for not paying you face criminal charges. I would assume the situation is similar in many places across Europe.
    - ChuckNorris89 4y ago
      That sounds like the worst. In Austria the tenant is responsible to sign the contracts to the utilities under his own name so if he doesn't pay his bills and gets cut off it's his own problem. Also some landlords check your payslips to make sure you have a stable income so that evictions are less likely to be needed.
      - margorczynski 4y ago
        Here it is a choice and many wised up and require the transfer to the tenant or install pre-paid meters on e.g. electricity. Also checking the background has become now much more common. But either way if someone like that starts living in your property removing him (legally) is really time and money consuming. Many don't take the risk and just leave the flat/house unoccupied. What people don't understand that one of the major differences between the US and Europe is ownership - in many European countries your property is not really your property. Here the state is solving the possible homelessness issue by forcefully seizing the "private" property.
        ChuckNorris89 4y ago
        >in many European countries your property is not really your property. Here the state is solving the possible homelessness issue by forcefully seizing the "private" property This doesn't ring true at all. What do you mean by this? Where I lived in Europe your property meant your property any way you sliced it. Yeah, evictions done through the legal system and not via muscle can take a very long time because the system is low and someone squatting in your parament isn't a high priority vs more serious crimes, but that's still your property and the government can't take it away from you.
sohtym 4y ago
Mainly because interest rates are lower. In the US the mortgage rate is ~7%, in at least some countries in northern Europe it is ~3%. And it used to be 1-2% recently. This however doesn't mean there aren't also a lot of inequality in Europe.
- throw0101c 4y ago
  > Mainly because interest rates are lower. In the US the mortgage rate is ~7%, in at least some countries in northern Europe it is ~3%. And it used to be 1-2% recently. "Danish bank launches world’s first negative interest rate mortgage": * https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage https://www.theguardian.com/money/2019/aug/13/danish-bank-la...
  - egman_ekki 4y ago
    yeah, but they added fees on top, so it was never like your principal was going down without paying installments. Now the interest rates are back to 5%, and 6% might come soon. The best period was last year when mortgages were already around 4% (because they’re driven by the free market and what was happening in the US) and on top of that you had negative interest on your bank account, because Danish National’s bank interest rate was negative, so banked passed off the costs to customers. The negative interest rate also didn’t help when the inflation was going up quite quickly.
em-bee 4y ago
all the guys in the Dallas-FW office had bought big houses in the suburbs (yeah, car dependence though) while everyone in the Munich office was still renting that's exactly showing that the divide is less. less people in europe are wealthy enough to afford their own house, but also less people are so poor to have to live on the street. more people are in the middle renting. Europe protects you from becoming homeless but it's near impossible to accumulate wealth if you start from the bottom, while in the US you can easily become wealthy from the bottom if you're savvy and healthy but you can also easily become homeless if you're not. again the result is that europe has less of a divide between rich and poor. and society is better off as a result of it.
- dogma1138 4y ago
  Europe has lower income inequality but greater wealth inequality. When only a handful of people can afford to buy and are forced to rent that does not show lower inequality. If you have 100 people when 50% of them can’t afford to buy a house you have lower inequality than if 99% can’t afford to buy one. Europe overall has far greater divide between the rich and the poor and the wealthy classes are far more dominated by old money. You have countries where the richest families haven’t changed in 400 years. And this is despite the biggest wealth redistribution event that happened in history - WW2. I’m not saying that Europe is a bad place to live, I live there well in the UK but there are major issues here. I earn for more than £90K however buying anything outside of a 2-3 bed 800-900 square foot flat in London is out of the question. As houses in middle and upper middle class areas are easily £2M these days and these aren’t mansions either, these are 1000-1500 square foot Victorian houses.
  - em-bee 4y ago
    When only a handful of people can afford to buy and are forced to rent that does not show lower inequality. it does. less rich people = less inequality.
    - dogma1138 4y ago
      Sadly that isn’t how we measure inequality because it doesn’t makes sense. By your method a feudal society is perfectly equal since only a fraction of the population has any wealth whilst the rest slave away in the fields…
manmal 4y ago
> Europe protects you from becoming homeless but it's near impossible to accumulate wealth I think you are actually making the point of a smaller wealth divide. You might have meant social mobility instead? I’d agree that this is better in the US.
sidlls 4y ago
It might be easier to start at the bottom and become wealthy in America, but it is not "easy". In fact, it's quite difficult, and for practical purposes may as well be impossible for the majority of such people. It usually requires an insane amount of luck. Sometimes it also requires working hard, but it almost always also requires a huge amount of luck.

rcarmo 4y ago

If you want overinflated real estate prices (relative to local wages/affordability), try Lisbon.

ChuckNorris89 4y ago
Yeah, that too, although correct me if I'm wrong, but to me, Lisbon's housing issues seem to be self inflicted by prioritizing Airbnbs and housing for tourists and rich crypto-bro nomads at the expense of its own citizens. Could probably be fixed if the Portuguese would vote right, no? Meaning it's more of a political issue than an economical one.
- rcarmo 4y ago
  I wrote a fairly long comment the other day in another thread that explains how the visas and AirBnBs are just the icing on the cake. It's very much the legacy of decades of neglect from property owners and lobbying from the building industry, compounded by bad government regulation.
- margorczynski 4y ago
  Here in Poland there's a lot of property not rented as the law is such that if someone stops paying it'll take you years to (maybe) throw him out. And during all that time you need to pay the bills for him because if he gets cut off from e.g. electricity for not paying you face criminal charges. I would assume the situation is similar in many places across Europe.
  - ChuckNorris89 4y ago
    That sounds like the worst. In Austria the tenant is responsible to sign the contracts to the utilities under his own name so if he doesn't pay his bills and gets cut off it's his own problem. Also some landlords check your payslips to make sure you have a stable income so that evictions are less likely to be needed.
    - margorczynski 4y ago
      Here it is a choice and many wised up and require the transfer to the tenant or install pre-paid meters on e.g. electricity. Also checking the background has become now much more common. But either way if someone like that starts living in your property removing him (legally) is really time and money consuming. Many don't take the risk and just leave the flat/house unoccupied. What people don't understand that one of the major differences between the US and Europe is ownership - in many European countries your property is not really your property. Here the state is solving the possible homelessness issue by forcefully seizing the "private" property.
      - ChuckNorris89 4y ago
        >in many European countries your property is not really your property. Here the state is solving the possible homelessness issue by forcefully seizing the "private" property This doesn't ring true at all. What do you mean by this? Where I lived in Europe your property meant your property any way you sliced it. Yeah, evictions done through the legal system and not via muscle can take a very long time because the system is low and someone squatting in your parament isn't a high priority vs more serious crimes, but that's still your property and the government can't take it away from you.

sohtym 4y ago

Mainly because interest rates are lower. In the US the mortgage rate is ~7%, in at least some countries in northern Europe it is ~3%. And it used to be 1-2% recently. This however doesn't mean there aren't also a lot of inequality in Europe.

throw0101c 4y ago
> Mainly because interest rates are lower. In the US the mortgage rate is ~7%, in at least some countries in northern Europe it is ~3%. And it used to be 1-2% recently. "Danish bank launches world’s first negative interest rate mortgage": * https://www.theguardian.com/money/2019/aug/13/danish-bank-launches-worlds-first-negative-interest-rate-mortgage https://www.theguardian.com/money/2019/aug/13/danish-bank-la...
- egman_ekki 4y ago
  yeah, but they added fees on top, so it was never like your principal was going down without paying installments. Now the interest rates are back to 5%, and 6% might come soon. The best period was last year when mortgages were already around 4% (because they’re driven by the free market and what was happening in the US) and on top of that you had negative interest on your bank account, because Danish National’s bank interest rate was negative, so banked passed off the costs to customers. The negative interest rate also didn’t help when the inflation was going up quite quickly.

em-bee 4y ago

all the guys in the Dallas-FW office had bought big houses in the suburbs (yeah, car dependence though) while everyone in the Munich office was still renting that's exactly showing that the divide is less. less people in europe are wealthy enough to afford their own house, but also less people are so poor to have to live on the street. more people are in the middle renting. Europe protects you from becoming homeless but it's near impossible to accumulate wealth if you start from the bottom, while in the US you can easily become wealthy from the bottom if you're savvy and healthy but you can also easily become homeless if you're not. again the result is that europe has less of a divide between rich and poor. and society is better off as a result of it.

dogma1138 4y ago
Europe has lower income inequality but greater wealth inequality. When only a handful of people can afford to buy and are forced to rent that does not show lower inequality. If you have 100 people when 50% of them can’t afford to buy a house you have lower inequality than if 99% can’t afford to buy one. Europe overall has far greater divide between the rich and the poor and the wealthy classes are far more dominated by old money. You have countries where the richest families haven’t changed in 400 years. And this is despite the biggest wealth redistribution event that happened in history - WW2. I’m not saying that Europe is a bad place to live, I live there well in the UK but there are major issues here. I earn for more than £90K however buying anything outside of a 2-3 bed 800-900 square foot flat in London is out of the question. As houses in middle and upper middle class areas are easily £2M these days and these aren’t mansions either, these are 1000-1500 square foot Victorian houses.
- em-bee 4y ago
  When only a handful of people can afford to buy and are forced to rent that does not show lower inequality. it does. less rich people = less inequality.
  - dogma1138 4y ago
    Sadly that isn’t how we measure inequality because it doesn’t makes sense. By your method a feudal society is perfectly equal since only a fraction of the population has any wealth whilst the rest slave away in the fields…

manmal 4y ago

> Europe protects you from becoming homeless but it's near impossible to accumulate wealth I think you are actually making the point of a smaller wealth divide. You might have meant social mobility instead? I’d agree that this is better in the US.

sidlls 4y ago

It might be easier to start at the bottom and become wealthy in America, but it is not "easy". In fact, it's quite difficult, and for practical purposes may as well be impossible for the majority of such people. It usually requires an insane amount of luck. Sometimes it also requires working hard, but it almost always also requires a huge amount of luck.