25 ms·

Here’s a better comparison. The thing that really hurt the Eurozone was the 2011 - 2013 recession that the US did not experience. Plus there’s a slower growth r

Here’s a better comparison. The thing that really hurt the Eurozone was the 2011 - 2013 recession that the US did not experience. Plus there’s a slower growth rate even in the good times. https://freedomandprosperity.org/wp-content/uploads/2022/02/Feb-5-22-Tweet.jpg https://freedomandprosperity.org/wp-content/uploads/2022/02/... That said, these numbers are very misleading and do not show well what a person’s life looks like in the US. By my own anecdotal estimation, in the EU low and medium income people live a better life than in the US and have more livable wages, relaxed work culture, and enjoy a strong safety net. The missing GDP growth seems to show up in the upper middle to high incomes where it is extremely hard to pull away from the pack and acquire wealth. Things like early retirement and FIRE are almost unheard of in EU countries. Stock investing seems much less common. People mostly seem focused on more conservative investments like real estate that has a lower yield and liquidity than equities. Luxury spending seems limited to small consumer outlays like fashion or travel, not large wealth building outlays like McMansions. It is really, really uncommon to hear of someone making more than 100k USD and taxes in most countries take a bigger bite. There are even significant wealth taxes in some countries. For example in some parts of Spain the wealth tax is high enough that it would be impossible to live off investments as the safe withdrawal rate is so low that you would need millions to fund a modest income. All of this is deep in the political psyche that wants to cut down the tall poppies.

tinus_hn 3y ago
[flagged]
- futureshock 3y ago
  I’d like to point out that the open door policy to refugees came because Europe was trying to escape the demographic trap and the collapse of the social safety net. The hope was that young refugees would become net positive GDP contributors for decades, an idea borrowed from the US. If that has failed, it’s due to a failure of integration. Europe can actually be quite a racist place and in many ways the US is better at offering big opportunities to immigrants and encouraging them to become big tax contributors. The US’s secret sauce is that the only real cultural purity it has to protect is consumer capitalism.
  - lyu07282 3y ago
    The US’s secret sauce is that is an empire that can, will and does constantly project its massive military and clandestine power around the world to further its interests at all times, while never having to deal with any of its blowback. And then americans laugh at the EU welcoming refugees you created in the first place, or pretend the EU is socialist while laughing at its massive energy crisis caused by its completely batshit insane liberalized energy market. We are ruled by atlanticist neoliberals you put there in the first place.
    - voz_ 3y ago
      This is nonsense. Blaming it on US policy is insanely narrow, and ignores years of colonial interest from almost every European nation.
    - dougmwne 3y ago
      I’d largely agree with that, though I originally meant the secret sauce that gets better results out of immigrants. The effects of empire go far beyond military. The monetary dominance serves as a hidden tax on all other currencies as the US enjoys more money creation than other central banks can manage. The US prints and the world gets the inflation consequences. Plus the cultural dominance lets the US reshape the world economy, legal systems and behavior to suit the interests of US companies. And yes, there is massive political interference and an absolute fit when foreign governments don’t bend the knee. Your big mistake here is to imply some kind of us vs them. Regular Americans are not laughing at you, they are under the same boot heel that you are. This whole system is for the benefit of maybe a few thousand or tens of thousands of incredibly rich and powerful people. They don’t care about the citizenship of of the people they are exploiting. Actually, people in the EU have done a better job fighting back for more comfortable lives for all. Working class Americans are a lost cause.
    - selectodude 3y ago
      Pretty sure Europe's massive energy crisis is an own goal caused by replacing all their energy generation with Russian natgas.
- jen20 3y ago
  This is at least as much (if not substantially more) to do with boomers who have entitlements wildly unimaginable to anyone younger.
whiddershins 3y ago
[flagged]
- bamboozled 3y ago
  People in the South of France buy one espresso or one beer and nurse it for 2 hours while staring at these ocean. Down voted for being ridiculous. The inequality in America is wild too.
- UncleOxidant 3y ago
  A lot of what you mention is related to energy useage: smaller cars/houses, keeping houses cold in winter, less consumption overall. Perhaps the Europeans are on the right track here and we in the US are on the wrong track when taking climate change into consideration?
  - nonethewiser 3y ago
    As youve identified, energy cuts across everything. It is a very broad indicator of wealth. Energy austerity is still austerity even if you think its better for the environment.
- ChatGTP 3y ago
  I'd prefer to have access to free healthcare and social safety nets than having espresso. You clearly haven't been to the US but there are a lot of poor people here.
- WantonQuantum 3y ago
  Citations needed. Many citations.
- SketchySeaBeast 3y ago
  You seem to be confusing wealth with excess. I don't think conspicuous consumption is a virtue.
- adev_ 3y ago
  > People in the South of France buy one espresso or one beer and nurse it for 2 hours while staring at the ocean. This is currently quite hilarious to read. Give them one million dollar and I can guarantee you they will still drink one expresso facing the sea for 2 hours. It is just named being French (or Latin) and has nothing to do with wealth Time is everything in life. In many cultures, being able to spend it doing nothing or something you enjoy is the greatest sign of wealth. Poor people do not have this luxury: they do have to work to survive.
steveoscaro 3y ago
Very interesting comment. I've read it a few times.
nonethewiser 3y ago
> By my own anecdotal estimation Well here is an actual study that found the poorest 20% of Americans consumed more goods and services than the average people from affluent countries. Including Europe. https://www.justfacts.com/news_poorest_americans_richer_than_europe https://www.justfacts.com/news_poorest_americans_richer_than... This matches my anecdotal observations of everything being smaller in Europe, people owning less, and energy being so expensive.
- amrocha 3y ago
  Consumption is a terrible proxy for quality of life. It's also terribly USAian of you.
  - derelicta 3y ago
    don't you know CONSUM = HAPPY ?
    - beebeepka 3y ago
      Pollution is good. Consume more. Money before anything else. Buy more junk. L Btw, we need budget for more They Live glasses to distribute freely
    - lionkor 3y ago
      It's got what plants crave.
  - didntcheck 3y ago
    Not really. Europeans aren't some superior noble ascetics. People want to consume, and their demand exceeds their ability in practically all situations. So USians are getting more of what they want while most Europeans would jump at the ability to do the same. For the record, I am European myself
    - FirmwareBurner 3y ago
      >Not really. Europeans aren't some superior noble ascetics. Indeed. In my town center, on the weekends, the streets are full of Teslas, luxury cars and SUVs of the well off people from the suburbs with nice houses, coming to the city for shopping and indulgence in various forms of consumerism and showing off (mostly inherited) wealth. Europeans are just poorer and more unequally wealthy than Americans, with fewer people owing most of the wealth, not more righteous.
dmoy 3y ago
> For example in some parts of Spain the wealth tax is high enough that it would be impossible to live off investments as the safe withdrawal rate is so low that you would need millions to fund a modest income. What are the numbers there? I heard of the wealth tax above €3 million, but is there more?
- miguelxt 3y ago
  The €3 million one is a new "temporary" tax since this year from the central goverment. "Impuesto al patrimonio" has existed for long and it depends on where in Spain you live. It's not applied in the region of Madrid, and the it kicks from a net worth of €400k in Aragón. In all regions your main residence is exempted. For a net worth of €4m, you'll pay €60k in Aragón to €22k in Vizcaya to €0 in Madrid.
  - dmoy 3y ago
    So like 1.5%? With US&International based investment returns that means like 40% more money is needed above what's normally required, or say 23 years instead of 19 years of investing. So that hurts the whole FI/RE thing, but doesn't sound like it would be the primary blocker.
    - mariojv 3y ago
      See https://news.ycombinator.com/item?id=36777125 https://news.ycombinator.com/item?id=36777125 for a breakdown of what it would look like with an example portfolio in Valencia. The tax differs by region and is highly progressive. For a 2M portfolio in Valencia it ends up cutting 0.7% off your safe withdrawal rate after exemptions if you split it between a married couple. It makes it harder to retire early, but don't forget about additional US costs like health insurance, vehicle, etc.
scythe 3y ago
>The thing that really hurt the Eurozone was the 2011 - 2013 recession that the US did not experience. This is true, but understated in a crucial manner. By global standards, the greatest enduring strength of the US economy has been its ability to recover from downturns. More than anything else, that has pulled it ahead of competitors time and time again. When the early '80s financial crisis hit Japan with a lost decade, Volcker (PBUH) pulled the US out of the doldrums and back into a growth phase within three years. When the Asian financial crisis hit at the same time as the dotcom bust, the US recovered more efficiently than the erstwhile "Asian tigers". When the 2007 financial crisis went worldwide, aggressive measures by the Fed and a willingness to risk inflation restored growth faster than in Europe. When COVID hit, economies around the world dived, but even with political divisions running at their highest since 1876, the US again restored growth more quickly than almost anywhere else — now growing at competitive rates with China. There are a variety of theories about this, but one iniquitous postulate I've heard is that the US makes it a lot easier for companies to do layoffs — not a happy proposition for those directly affected, but what could be worse for an economy than having thousands of people working on something that just isn't working? Many worker protections — for health, safety and family — have become more popular with economists recently, but when the subject of being able to fire people comes up, there is still a sort of grim understanding transmitted in whispers: paying someone who isn't making progress makes us all worse off in the long run. Of course we can also trace the roots of some profound social malaise — including the collapse of whole cities — to the cutthroat nature of employment in America; there is no free lunch.
- pasabagi 3y ago
  I'm not sure about your 'iniquitous postulate'. If such a correlation existed, you would expect all countries with weak employee protection to enjoy economic growth that is better than their peers. That doesn't seem to be true. If you look at the employment protections of the UK[0], and compare them to the US[1], they seem fairly similar. And yet, the UK has very low worker productivity, worst-in-class economic growth, etc. The problem with taking general economic lessons from the US is that the US is in a unique, and uniquely advantageous economic position.
  - 3y ago
toyg 3y ago
> All of this is deep in the political psyche that wants to cut down the tall poppies. What you call "cut down tall poppies" others call "correcting thousands of years of aristocracy-fuelled unfairness". European wealth has much older roots. In a few centuries, Americans will likely reach a similar political point.
- danjac 3y ago
  Given actual vs perceived social mobility in the US compared to Europe, it could be argued that the US reached that point some time ago: https://www.economist.com/graphic-detail/2018/02/14/americans-overestimate-social-mobility-in-their-country https://www.economist.com/graphic-detail/2018/02/14/american...
- dougmwne 3y ago
  Sure, I am aware. And if you let the aristocracy go on for too long eventually they claim divine right. It is possible that some European countries have over corrected though.
  - euroderf 3y ago
    > And if you let the aristocracy go on for too long eventually they claim divine right. Well, the US has become a bastion of neo-feudalism, so there's that.
    - dougmwne 3y ago
      Fancy term, but can you develop an argument to support it?
      - alphager 3y ago
        Do the laws apply equally to everyone regardless of wealth or do the rich achieve better results? We don't even have to pick the extreme outliers where affluenca officially plays a role. Someone that can spend a million on lawyers in the US will get a better outcome.
troad 3y ago
> Here's a better comparison. The moment I saw the article headline, I knew the comments would be full of people running defence with fuzzy claims of qualitative wellbeing. "Yes, our economy may objectively be underperforming, but look at the Life Quality Index, invented at the University of Copenhagen, which divides the number of UNESCO sites in a country by the number of different pension schemes... The hard truth is - less prosperity means less money for nurses, less money for teachers, less money for infrastructure. Worse health outcomes, worse educational outcomes, worse transport and logistics. A decreasing quality of life. Less prospects for children. Increasing emigration. Europe devotes a disproportionate amount to social spending compared to the US, so it remains competitive despite its shrinking economy, but this won't continue forever. Eventually, Europe's economy will become so relatively small, that even its outsized social spending will begin to be dwarfed by the spending of US states. It's been the case for some time that Portuguese professionals are leaving to go drive trucks in the US, and now doctors in the UK are getting poached en masse by Australian states. How long until German engineers can have a better life working as taxi drivers in China? I like Europe and I wish it would right course, but there is an aggressive myopia on this continent when it comes to how quickly the rest of the world is moving past them, and how very bad that will be for Europe in the mid-to-long term. Europe's slide into irrelevance will be a net loss for us all, but most of all for the quality of life of Europeans themselves.
mariojv 3y ago
I think it's definitely less common in Europe, but I did want to mention that there are European FIRE communities. See this one for Spain: https://www.reddit.com/r/SpainFIRE/ https://www.reddit.com/r/SpainFIRE/ or Bogleheads Spain: https://bogleheads.es https://bogleheads.es The wealth tax also makes FIRE harder, but there are exemptions that make it more manageable. Here is information about the wealth tax in Valencia: https://atv.gva.es/es/ipatrimoni https://atv.gva.es/es/ipatrimoni Let's use a married couple in Valencia with 2M euro in index funds as an example. They get 500K allowance each to subtract from their taxable base. Subtracting the 1M total exemption for the couple, their taxable base would be 1M euro for the purposes of the wealth tax. On the remaining 1M, they'd pay 10,595.71 for the first 668,499.75, and 1.12% on the remaining 331,500.25, for an additional 3,712.80. This puts their total yearly wealth tax at 14,308.51, or about 0.7% of their total 2M portfolio. Generally, 4% is seen as a safe withdrawal rate for a properly managed portfolio for a 30 year retirement. Subtracting 0.7%, that'd give them a 3.3% safe withdrawal rate on their 2M portfolio, which gives them after-wealth-tax money of 66K to play with. Let's say half of what you're pulling each year is taxable for capital gains. With a 20% capital gains tax, that ends up being about 60K. This is a pretty good income for Valencia. Estimated cost of living for a family of 4 there is about 28K: https://www.numbeo.com/cost-of-living/in/Valencia https://www.numbeo.com/cost-of-living/in/Valencia That gives them another 32K after tax for travel, luxuries, etc. Not to mention, you also get an exemption of 300K (individual) for your primary residence. There are also some other limits on the tax like it not being able to exceed 60% of your total income. In the US, with a withdrawal rate of 4% on the 2M and no wealth tax, you'd get 80K. After 15% capital gains on half of what you're pulling each year, 74K. Subtract $1400/month or ~$16K for good health insurance for a family of 4 and it's a basic tie, not accounting if you have to actually hit a deductible. In Spain you will just get free public healthcare if you're a citizen. It's definitely harder to build that level of wealth because of salaries there, but I don't think it's fair to say that it's completely impossible to FIRE there.
- mariojv 3y ago
  Replying to this because I can't edit the comment anymore. I overestimated the tax by a lot, I misread the chart and was adding the "Cuota" (sum of previous row taxes) from 1 row below what I should have. They only pay 3,108.51 on the first 668,499.75. This puts the total tax at about half of my estimate, so only a ~0.35% drag on their 2M portfolio. It's a very progressive tax, basically goes up 10X for really rich folks (>10M they take 3.5% of total wealth).

tinus_hn 3y ago

[flagged]

futureshock 3y ago
I’d like to point out that the open door policy to refugees came because Europe was trying to escape the demographic trap and the collapse of the social safety net. The hope was that young refugees would become net positive GDP contributors for decades, an idea borrowed from the US. If that has failed, it’s due to a failure of integration. Europe can actually be quite a racist place and in many ways the US is better at offering big opportunities to immigrants and encouraging them to become big tax contributors. The US’s secret sauce is that the only real cultural purity it has to protect is consumer capitalism.
- lyu07282 3y ago
  The US’s secret sauce is that is an empire that can, will and does constantly project its massive military and clandestine power around the world to further its interests at all times, while never having to deal with any of its blowback. And then americans laugh at the EU welcoming refugees you created in the first place, or pretend the EU is socialist while laughing at its massive energy crisis caused by its completely batshit insane liberalized energy market. We are ruled by atlanticist neoliberals you put there in the first place.
  - voz_ 3y ago
    This is nonsense. Blaming it on US policy is insanely narrow, and ignores years of colonial interest from almost every European nation.
  - dougmwne 3y ago
    I’d largely agree with that, though I originally meant the secret sauce that gets better results out of immigrants. The effects of empire go far beyond military. The monetary dominance serves as a hidden tax on all other currencies as the US enjoys more money creation than other central banks can manage. The US prints and the world gets the inflation consequences. Plus the cultural dominance lets the US reshape the world economy, legal systems and behavior to suit the interests of US companies. And yes, there is massive political interference and an absolute fit when foreign governments don’t bend the knee. Your big mistake here is to imply some kind of us vs them. Regular Americans are not laughing at you, they are under the same boot heel that you are. This whole system is for the benefit of maybe a few thousand or tens of thousands of incredibly rich and powerful people. They don’t care about the citizenship of of the people they are exploiting. Actually, people in the EU have done a better job fighting back for more comfortable lives for all. Working class Americans are a lost cause.
  - selectodude 3y ago
    Pretty sure Europe's massive energy crisis is an own goal caused by replacing all their energy generation with Russian natgas.
jen20 3y ago
This is at least as much (if not substantially more) to do with boomers who have entitlements wildly unimaginable to anyone younger.

whiddershins 3y ago

[flagged]

bamboozled 3y ago
People in the South of France buy one espresso or one beer and nurse it for 2 hours while staring at these ocean. Down voted for being ridiculous. The inequality in America is wild too.
UncleOxidant 3y ago
A lot of what you mention is related to energy useage: smaller cars/houses, keeping houses cold in winter, less consumption overall. Perhaps the Europeans are on the right track here and we in the US are on the wrong track when taking climate change into consideration?
- nonethewiser 3y ago
  As youve identified, energy cuts across everything. It is a very broad indicator of wealth. Energy austerity is still austerity even if you think its better for the environment.
ChatGTP 3y ago
I'd prefer to have access to free healthcare and social safety nets than having espresso. You clearly haven't been to the US but there are a lot of poor people here.
WantonQuantum 3y ago
Citations needed. Many citations.
SketchySeaBeast 3y ago
You seem to be confusing wealth with excess. I don't think conspicuous consumption is a virtue.
adev_ 3y ago
> People in the South of France buy one espresso or one beer and nurse it for 2 hours while staring at the ocean. This is currently quite hilarious to read. Give them one million dollar and I can guarantee you they will still drink one expresso facing the sea for 2 hours. It is just named being French (or Latin) and has nothing to do with wealth Time is everything in life. In many cultures, being able to spend it doing nothing or something you enjoy is the greatest sign of wealth. Poor people do not have this luxury: they do have to work to survive.

steveoscaro 3y ago

Very interesting comment. I've read it a few times.

nonethewiser 3y ago

> By my own anecdotal estimation Well here is an actual study that found the poorest 20% of Americans consumed more goods and services than the average people from affluent countries. Including Europe. https://www.justfacts.com/news_poorest_americans_richer_than_europe https://www.justfacts.com/news_poorest_americans_richer_than... This matches my anecdotal observations of everything being smaller in Europe, people owning less, and energy being so expensive.

amrocha 3y ago
Consumption is a terrible proxy for quality of life. It's also terribly USAian of you.
- derelicta 3y ago
  don't you know CONSUM = HAPPY ?
  - beebeepka 3y ago
    Pollution is good. Consume more. Money before anything else. Buy more junk. L Btw, we need budget for more They Live glasses to distribute freely
  - lionkor 3y ago
    It's got what plants crave.
- didntcheck 3y ago
  Not really. Europeans aren't some superior noble ascetics. People want to consume, and their demand exceeds their ability in practically all situations. So USians are getting more of what they want while most Europeans would jump at the ability to do the same. For the record, I am European myself
  - FirmwareBurner 3y ago
    >Not really. Europeans aren't some superior noble ascetics. Indeed. In my town center, on the weekends, the streets are full of Teslas, luxury cars and SUVs of the well off people from the suburbs with nice houses, coming to the city for shopping and indulgence in various forms of consumerism and showing off (mostly inherited) wealth. Europeans are just poorer and more unequally wealthy than Americans, with fewer people owing most of the wealth, not more righteous.

dmoy 3y ago

> For example in some parts of Spain the wealth tax is high enough that it would be impossible to live off investments as the safe withdrawal rate is so low that you would need millions to fund a modest income. What are the numbers there? I heard of the wealth tax above €3 million, but is there more?

miguelxt 3y ago
The €3 million one is a new "temporary" tax since this year from the central goverment. "Impuesto al patrimonio" has existed for long and it depends on where in Spain you live. It's not applied in the region of Madrid, and the it kicks from a net worth of €400k in Aragón. In all regions your main residence is exempted. For a net worth of €4m, you'll pay €60k in Aragón to €22k in Vizcaya to €0 in Madrid.
- dmoy 3y ago
  So like 1.5%? With US&International based investment returns that means like 40% more money is needed above what's normally required, or say 23 years instead of 19 years of investing. So that hurts the whole FI/RE thing, but doesn't sound like it would be the primary blocker.
  - mariojv 3y ago
    See https://news.ycombinator.com/item?id=36777125 https://news.ycombinator.com/item?id=36777125 for a breakdown of what it would look like with an example portfolio in Valencia. The tax differs by region and is highly progressive. For a 2M portfolio in Valencia it ends up cutting 0.7% off your safe withdrawal rate after exemptions if you split it between a married couple. It makes it harder to retire early, but don't forget about additional US costs like health insurance, vehicle, etc.

scythe 3y ago

>The thing that really hurt the Eurozone was the 2011 - 2013 recession that the US did not experience. This is true, but understated in a crucial manner. By global standards, the greatest enduring strength of the US economy has been its ability to recover from downturns. More than anything else, that has pulled it ahead of competitors time and time again. When the early '80s financial crisis hit Japan with a lost decade, Volcker (PBUH) pulled the US out of the doldrums and back into a growth phase within three years. When the Asian financial crisis hit at the same time as the dotcom bust, the US recovered more efficiently than the erstwhile "Asian tigers". When the 2007 financial crisis went worldwide, aggressive measures by the Fed and a willingness to risk inflation restored growth faster than in Europe. When COVID hit, economies around the world dived, but even with political divisions running at their highest since 1876, the US again restored growth more quickly than almost anywhere else — now growing at competitive rates with China. There are a variety of theories about this, but one iniquitous postulate I've heard is that the US makes it a lot easier for companies to do layoffs — not a happy proposition for those directly affected, but what could be worse for an economy than having thousands of people working on something that just isn't working? Many worker protections — for health, safety and family — have become more popular with economists recently, but when the subject of being able to fire people comes up, there is still a sort of grim understanding transmitted in whispers: paying someone who isn't making progress makes us all worse off in the long run. Of course we can also trace the roots of some profound social malaise — including the collapse of whole cities — to the cutthroat nature of employment in America; there is no free lunch.

pasabagi 3y ago
I'm not sure about your 'iniquitous postulate'. If such a correlation existed, you would expect all countries with weak employee protection to enjoy economic growth that is better than their peers. That doesn't seem to be true. If you look at the employment protections of the UK[0], and compare them to the US[1], they seem fairly similar. And yet, the UK has very low worker productivity, worst-in-class economic growth, etc. The problem with taking general economic lessons from the US is that the US is in a unique, and uniquely advantageous economic position.
- 3y ago

toyg 3y ago

> All of this is deep in the political psyche that wants to cut down the tall poppies. What you call "cut down tall poppies" others call "correcting thousands of years of aristocracy-fuelled unfairness". European wealth has much older roots. In a few centuries, Americans will likely reach a similar political point.

danjac 3y ago
Given actual vs perceived social mobility in the US compared to Europe, it could be argued that the US reached that point some time ago: https://www.economist.com/graphic-detail/2018/02/14/americans-overestimate-social-mobility-in-their-country https://www.economist.com/graphic-detail/2018/02/14/american...
dougmwne 3y ago
Sure, I am aware. And if you let the aristocracy go on for too long eventually they claim divine right. It is possible that some European countries have over corrected though.
- euroderf 3y ago
  > And if you let the aristocracy go on for too long eventually they claim divine right. Well, the US has become a bastion of neo-feudalism, so there's that.
  - dougmwne 3y ago
    Fancy term, but can you develop an argument to support it?
    - alphager 3y ago
      Do the laws apply equally to everyone regardless of wealth or do the rich achieve better results? We don't even have to pick the extreme outliers where affluenca officially plays a role. Someone that can spend a million on lawyers in the US will get a better outcome.

troad 3y ago

> Here's a better comparison. The moment I saw the article headline, I knew the comments would be full of people running defence with fuzzy claims of qualitative wellbeing. "Yes, our economy may objectively be underperforming, but look at the Life Quality Index, invented at the University of Copenhagen, which divides the number of UNESCO sites in a country by the number of different pension schemes... The hard truth is - less prosperity means less money for nurses, less money for teachers, less money for infrastructure. Worse health outcomes, worse educational outcomes, worse transport and logistics. A decreasing quality of life. Less prospects for children. Increasing emigration. Europe devotes a disproportionate amount to social spending compared to the US, so it remains competitive despite its shrinking economy, but this won't continue forever. Eventually, Europe's economy will become so relatively small, that even its outsized social spending will begin to be dwarfed by the spending of US states. It's been the case for some time that Portuguese professionals are leaving to go drive trucks in the US, and now doctors in the UK are getting poached en masse by Australian states. How long until German engineers can have a better life working as taxi drivers in China? I like Europe and I wish it would right course, but there is an aggressive myopia on this continent when it comes to how quickly the rest of the world is moving past them, and how very bad that will be for Europe in the mid-to-long term. Europe's slide into irrelevance will be a net loss for us all, but most of all for the quality of life of Europeans themselves.

mariojv 3y ago

I think it's definitely less common in Europe, but I did want to mention that there are European FIRE communities. See this one for Spain: https://www.reddit.com/r/SpainFIRE/ https://www.reddit.com/r/SpainFIRE/ or Bogleheads Spain: https://bogleheads.es https://bogleheads.es The wealth tax also makes FIRE harder, but there are exemptions that make it more manageable. Here is information about the wealth tax in Valencia: https://atv.gva.es/es/ipatrimoni https://atv.gva.es/es/ipatrimoni Let's use a married couple in Valencia with 2M euro in index funds as an example. They get 500K allowance each to subtract from their taxable base. Subtracting the 1M total exemption for the couple, their taxable base would be 1M euro for the purposes of the wealth tax. On the remaining 1M, they'd pay 10,595.71 for the first 668,499.75, and 1.12% on the remaining 331,500.25, for an additional 3,712.80. This puts their total yearly wealth tax at 14,308.51, or about 0.7% of their total 2M portfolio. Generally, 4% is seen as a safe withdrawal rate for a properly managed portfolio for a 30 year retirement. Subtracting 0.7%, that'd give them a 3.3% safe withdrawal rate on their 2M portfolio, which gives them after-wealth-tax money of 66K to play with. Let's say half of what you're pulling each year is taxable for capital gains. With a 20% capital gains tax, that ends up being about 60K. This is a pretty good income for Valencia. Estimated cost of living for a family of 4 there is about 28K: https://www.numbeo.com/cost-of-living/in/Valencia https://www.numbeo.com/cost-of-living/in/Valencia That gives them another 32K after tax for travel, luxuries, etc. Not to mention, you also get an exemption of 300K (individual) for your primary residence. There are also some other limits on the tax like it not being able to exceed 60% of your total income. In the US, with a withdrawal rate of 4% on the 2M and no wealth tax, you'd get 80K. After 15% capital gains on half of what you're pulling each year, 74K. Subtract $1400/month or ~$16K for good health insurance for a family of 4 and it's a basic tie, not accounting if you have to actually hit a deductible. In Spain you will just get free public healthcare if you're a citizen. It's definitely harder to build that level of wealth because of salaries there, but I don't think it's fair to say that it's completely impossible to FIRE there.

mariojv 3y ago
Replying to this because I can't edit the comment anymore. I overestimated the tax by a lot, I misread the chart and was adding the "Cuota" (sum of previous row taxes) from 1 row below what I should have. They only pay 3,108.51 on the first 668,499.75. This puts the total tax at about half of my estimate, so only a ~0.35% drag on their 2M portfolio. It's a very progressive tax, basically goes up 10X for really rich folks (>10M they take 3.5% of total wealth).