27 ms·
The European Union's remarkable growth performance relative to the United States
- Rinzler89 2y ago>Because of the large role of foreign multinationals in Irish GDP, we do not include Ireland in intra-EU groups on panel B. Same should be applied for Netherlands and Luxembourg.
- Radim 2y agoAnd Cyprus. And Malta. Luckily UK is already out of the EU, or that would be another can of money-laundering worms!
- anonylizard 2y agoThe entire article can basically summarized in one sentence "Using PPP instead of USD to measure GDP, significantly shrinks the gap between the EU and the US" Now, using USD has its problems, but PPP's primary purpose is living standard comparisons, and doesn't work as a national strength comparator. When in a war, you are buying ammunition and weaponry with USD, not PPP. When there's a energy shock, you are importing oil and gas with USD, not PPP. When you are in a AI race, you are buying GPUs with USD, not PPP. There'll be some people who argue that 'only living standards' matter. If the two simultaneous hot modern wars in Ukraine, Gaza, and soon Taiwan can't convince that hard power matters, then don't complain when the draft officer knocks on your door.
- Rinzler89 2y ago>When in a war, you are buying ammunition and weaponry with USD, not PPP. Not if you're buying it locally. >When there's a energy shock, you are importing oil and gas with USD, not PPP. When you are in a AI race, you are buying GPUs with USD, not PPP. Pretty much. PPP is useful for the stuff you can source locally like groceries, rents, local cars and groceries, etc. but a lot of stuff needs to be imported so then the EU's financially weaker position shows, especially when bidding internationally for scarce items.
- spywaregorilla 2y agoNot if you're buying it locally from an entirely domestic supply chain which is approximately nothing
- dukeyukey 2y agoYou'd be surprised, Europe has a massive industrial base. European steel can be made with European iron and coal to make European weapons in European factories from European designs.
- spywaregorilla 2y agoSourced with european energy produced by european produced infrastructure and by workers eating european food grown with european resources? It's "possible" for this to happen. And in the event of a large global war, we'll even go as far as to say it's plausible. But given that the world is heavily globalized and not at war, it's not actually what happens because it is cheaper to trade with others.
- dukeyukey 2y agoWe're talking about this in the context of PPP versus nominal GDP when buying military equipment. Most countries _have_ to buy at nominal prices cos they either don't have a domestic arms industry, or they have one, which uses resources bought at nominal, global prices. But the EU has both a domestic arms industry _and_ the inputs locally, so it's probably cheaper to go the domestic route, hence they can buy at PPP rates rather than nominal.
- bun_terminator 2y agoWith of course Germany being dead last
- highcountess 2y agoGermany is being gutted to “equalize” the EU zone in order to form a centralized authoritarian state like was accomplished in the USA following the civil war, when what as a union of sovereign states that were globally and among themselves represented in DC, were brought under an authoritarian centralize power structure through various sticks and carrots over the subsequent decades to the point that even American academia has settled on the fact that the USA is not a “democracy” at all, but rather a Plutocracy (last time I heard), but that may have also shifted more into a kleptocracy at this point. The overarching goal of the oligarchs is to eventually merge and equalize the whole of the Americas and Europe into a kind of Oceania from 1984 and revitalize a kind of aristocracy, but whose power and control is abstracted and secured through technology. Some call it digital-feudalism, I think cyber-feudalism is more accurate because it evokes the nexus between human interaction with technology more. Peoples are promised one thing and they always get something way worse from it, the EU that is effectively already an abstracted tyranny, is just one example.
- deleted 2y ago[deleted]
- mikro2nd 2y agoBizarre to me that "not having tech giants" is seen as a weakness, where I would think that "allowing giant (tech) monopolies" is the bad thing.
- voidbert 2y agoFrom an ethical perspective, tech monopolies aren't a very good idea. However, from a purely economics standpoint, tech giants make up a not insignificant part of the US's GDP.
- tokai 2y agoBut most of the US tech giants don't produce anything of value. They just suck out adverting money from companies that actually produce wealth. Its the same as the Germans 1944 GDP or Russians current. The numbers go high when you burn a tremendous amount of money.
- Rinzler89 2y ago>But most of the US tech giants don't produce anything of value. That doesn't really matter at the end of the day when you're discussing finances. All that matters for people, countries and governments in capitalism is that they have more money in their pockets than the rest, not how ethically that value gets generated or if their work produces much social value to society.
- Longhanks 2y agoThere's lots of value in being able to influence huge portions of the population. The fact that you consider it morally wrong does not make it invaluable to others.
- hackeman300 2y agoAgreed. Also just so you know, invaluable is one of those weird words that is intensified with in-, not negated. It means even more valuable, not worthless
- deleted 2y ago[deleted]
- rco8786 2y agoGDP per capita per hours worked is an interesting metric, and highlights a significant cultural difference between the US and the EU. But for me it's a little disingenuous to start taking cherry picked slices of the EU and comparing them against the whole US. If you ignore Mississippi, Alabama, Louisiana, etc, or just focus on the Northeast corridor or West Coast...no region in the EU comes close in GDP terms.
- deleted 2y ago[deleted]
- spaniard89277 2y agoNot only that, for many people things are going south. I don't really care much about GDP if I have no disposable income nor ability to save money with a normal job. And that's the case for a lot of people in Spain, and I presume other countries too.
- Rinzler89 2y agoYeah, it's everywhere. GDP just means how much wealth extraction is going on from the economy. But that extra GDP increase could be extracted from a productive SW business, or from squeezing people on housing costs, but the GPU numbers don't differentiate this.
- jq-r 2y agoHappening in Croatia too. The government is chest thumping how we're having stellar economy, high GDP and whatnot. The economists I've listened to are saying that this is mostly propped up by injection of EU funds so the economy artificially looks fine while in reality its in shambles. At the same time people are emigrating to rest of the Europe (Germany, Ireland mostly). We never had that much emmigration in the history of the country. And people are not leaving because the "economy is stellar". At the same time the government is having no trouble getting immigration historically from Bosnia and nowadays from Asia. "People just don't want to work" the local government is shouting while paying everyone minimum wages, while extracting EU money using their friend's private companies.
- 2y ago
- admissionsguy 2y agoIs it possible that the relative strength of the EU per hour worked results from the fact that the low end jobs were made non-existent by regulation and people who work them in the US live off government handouts in the EU?
- bigfudge 2y agoI don't think so. UK and US have equivalent unemployment rates but vastly different welfare systems. Germany is more generous than the UK but has lower unemployment. Southern Europe has higher unemployment, but welfare typically less generous than Northern Europe. Low end jobs exist in the EU too — they just pay better than they do in the US. Low-end jobs that can be shifted in location (e.g. clothes production) have already left both US and EU. Low end jobs that need to be done in-country or are harder to offshore (cleaning, food factory work) remain in country (but perhaps eat into corporate profits, explaining the lower GINI coefficient of EU vs US.
- feedforward 2y agoAs opposed to the US, where the heirs who don't work live in mansions, living on the handouts of expropriated surplus labor time of those who do work and create wealth.
- admissionsguy 2y agoYou just have no idea. We have banks run by the same families since before the US was formed. We have whole sectors of economy structured to protect inherited privilege and prevent upward mobility. Take a look at any list of billionaires from the US vs EU…
- Bostonian 2y ago'in terms of output per hour worked, some EU countries are as productive as the US' A weakness of this metric is that you can raise it by having a high minimum wage and other policies that discourage the employment of less skilled workers, while reducing total income by shutting some people out of the labor market.
- FrustratedMonky 2y agoThis, "if we have to pay more, then people will lose jobs", is a Republican boogie man. The absurd infinitum is that corporations would pay zero and use slaves if they could. The pay-line above which a corporation will value automating over having an employee, is always moving for every job, and yes, they will automate jobs 'No-Matter-What-The-Minimum-Wage'. Jobs today that are minimum wage are already at risk for being automated and eliminated, changing the minimum wage only hastens or pushes out the time frame. It will happen. Thus Increasing minimum wage is only forcing corporations to not use slaves. To keep the population above some starving threshold. And of course, it pumps money back into economy since people have to spend their pay.
- iron_ball 2y ago> corporations would pay zero and use slaves if they could Honest question: why is this absurd? Slavery has been a widespread practice in history, and it is still ongoing in some places. Corporations exist to make money. The brute mathematics of profit require costs to be reduced. To zero, if at all possible.
- ImJamal 2y agoIt is absurd because in order to make money the companies need people with money to buy their products. If everybody was a slave they wouldn't be able to buy anything.
- iron_ball 2y agoSure, can't argue with that. But there are plenty of stable points on the curve from 0% to 100% slavery.
- stoppropaganda 2y ago[flagged]
- ralusek 2y agoI would imagine that Europe's biggest problem is that most of its smartest people tend to work in the US or for US companies or universities.
- aantix 2y agoApparently most jobs in the Germany are salary capped? We hosted a German foreign exchange student. His dad was an anesthesiologist. He said the hospital told him “here’s what you’ll be making”. No negotiation. No competing offers. Why would harder or go out of your way to contribute to your industry if your salary is going to be artificially capped?
- littlestymaar 2y ago> Why would harder or go out of your way to contribute to your industry if your salary is going to be artificially capped Because most people do don't do their job well to get paid better? In fact, monetary incentive are one of the least efficient way to motivate workers once they are past subsistence level. (Sure you can make sure that everyone starts their work life with a six digit credit for their studies and then need to take another, even bigger, one for housing so that they can never go past subsistence level, but that's no a recipe for healthy society… And that's not how the US worked in its golden age either).
- aantix 2y agoSo you’ll make that decision on my behalf, that any sort of upward mobility wouldn’t motivate or benfit me. Gaslighting.
- barrenko 2y agoEven worse is when there is a negotiating process (as everything is copied from the US), but there's no actual negotiation on your part expected.
- I_o_IllI__o_I 2y ago[flagged]
- graemep 2y agoThe big problem with this is that the EU has a lot of very different economies, at different levels of development, significant variations in policies at the national level. If you look at the breakdown in figure two west and north EU economies have been stagnant, the south has declined hugely, while the east has performed really well.
- NL807 2y agoSo basically development appears in parts of Europe that has the most potential to grow.
- graemep 2y agoYes, mostly, but south doing badly is the result of things going wrong, and a lack of help from the EU.
- blitzar 2y agoThe US is no different. In the EU they are countries, in the US they are called states.
- dukeyukey 2y agoPlease, no. US federalism and the EU's curious confederal thing are vastly different. They are not seriously comparable.
- deleted 2y ago[deleted]
- mongonews 2y ago[flagged]
- seydor 2y ago... and other stories we tell ourselves to sleep better
- dzink 2y agoThe math adds up when you notice a couple of things: 1. The EU added Bulgaria, Romania and other new member states in 2007 that expand the population and thus markets to 440 million in the EU vs 300-something in the US. 2. Government makes money from every transaction by its residents (and companies, but for per capita metrics, we look at residents)- income, employment, purchases, etc. The US grows by immigration - but fresh immigrants usually jump into employment in lower skilled / paid jobs. However the EU with its social policies enables more women to be in the workforce due to better childcare availability and hours and allows individuals to carry less savings because of low cost healthcare and other available safety nets. Poorer people with income buy a lot more staples, food and spend a lot more of their income, boosting the local economy. Wealthier middle class is more likely to save or spend money on bigger things- from real estate to investments to education, but that doesn’t trickle into the GDP as much (education is often non-profit and real estate has capital gains rates). When more people are employed in a country - you see a bigger rise to middle class and more spending per capita and income per capita. To raise GDP per capita, just enable more childcare and support for employment of women. However, since the US government uses unemployment of only people who became recently unemployed and are still looking for jobs instead of all unemployed, to measure all unemployment they would irreversibly damage their performance in their favorite self-improving metric, and would have to do more for their citizens.
- ajross 2y agoYeah, this is entirely down to the explosive growth of low-GDP mostly-eastern-Europe[1] nations as they approach parity with the rest of the EU. The countries that made up the "EU" of 2000 have generally done poorer than the USA[2] in GDP per capita growth. Great data here if you want to explore: https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=US https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location... [1] And also Ireland, who have really done well the past two decades. [2] The UK in particular really fell off its mark.
- Rinzler89 2y ago> And also Ireland, who have really done well the past two decades. Ireland was excluded form the original article statistics since it's skews the data a lot, due to all the multinational companies being HQ there. It's kind of like the Delaware of the EU.
- paganel 2y ago> The EU has outperformed the US on per-capita output growth Too bad we're demographically dying here in Europe, as in the population has stopped growing. We're slowly becoming the 18th century Venice of the global world, i.e. pretty wealthy by the standards from back then but just waiting for a Napoleon to put it out of its geo-strategic irrelevance.
- lccerina 2y ago"weaker university rankings", lol. The ETH Zurich is 7th in the ranking, and does that with tuition fees that are 1/10 of MIT... Or do we want to talk about the > 1trillion student debt bubble that keeps US universities afloat?
- Mandelmus 2y agoI had to look this up. I'm doing my master's in computer science at ETH Zurich, where it is ranked #5 globally according to THE [1], and I pay 804 CHF (874 USD) per semester, i.e. 1608 CHF (1,748 USD) per year. I just had to check MIT's tuition. > The median annual price paid by an undergraduate who received an MIT Scholarship was $12,715 in the 2022–2023 academic year. [2] You're basically right, MIT (ranked #3) is almost eight times more expensive than ETH (ranked #5). To be clear though, ETH Zurich is in Switzerland, which is not in the EU. --- [1] https://www.timeshighereducation.com/world-university-rankings/2024/subject-ranking/computer-science https://www.timeshighereducation.com/world-university-rankin... [2] https://mitadmissions.org/afford/cost-aid-basics/access-affordability/ https://mitadmissions.org/afford/cost-aid-basics/access-affo...
- AtlasBarfed 2y agoPolitically it is not in the EU. It is geographically completely surrounded by the EU. So politically ... it is in the EU.
- polotics 2y agoHow does this follow, can you explain?
- xethos 2y agoNot OP, but presumably Switzerland is "in the EU" the same way Hawai'i is in the ocean. It's objectively above sea level, and not literally in the ocean. But when you're surrounded by ocean to that extent, it can have a large impact on the way life is lived.
- kypro 2y agoEuropean's weakness in my opinion is the size of the state. The state can only grow with private sector growth, but when 50% of all spending in your economy is done by the government and most people are employed either directly or indirectly via the government organic growth (without debt) becomes challenging. Additionally for government to be as large as it is Europe implements significantly higher tax rates than most of the world which results in consumers having less disposable income to spend on products that drive innovation like tech and private companies have less money to invest in new opportunities. Further, Europe is probably the single most unattractive place to start a business from a regulatory perspective in addition to being very unattractive from a tax perspective. Unlike in the US or Dubai where entrepreneurs will travel to start businesses, in the UK you would typically look to do the opposite if possible and start your company somewhere else. Nothing Im saying here is particularly controversial from an economics perspective, yet politically what I'm saying is highly controversial if you like in Western Europe. I find people here tend to view it as the government's job to fix economic issues through investment, interest rate manipulation and debt rather than allowing room for private sector to innovate and grow. At this point the evidence of Europe's failed economics policy is clear, and given this you would think politicians would be looking to try something different. But we're not. The answer if anything is that the government just isn't big enough, there just isn't enough regulation, there just isn't enough debt and investment, there are too many damn companies making profit while we grow poorer! My guess is that Europe's underperformance will continue for a while yet.
- dukeyukey 2y ago> Unlike in the US or Dubai where entrepreneurs will travel to start businesses, in the UK you would typically look to do the opposite What? The UK has a massive amount of immigration, and loads of startups and tech companies were started by Europeans moving to the UK TO START A BUISNESS. Like, you probably picked the worst country to make this claim about.
- kypro 2y ago> tech companies were started by Europeans moving to the UK That's true. The UK relatively speaking isn't as bad as some parts of Europe so if you're operating a business serving European customers and there's a need / reason to operate in Europe for regulatory reasons the UK (well London) is probably one of the more attractive places to have your office – especially if you're doing some kind of fintech startup (pre-Brexit anyway).
- FredPret 2y agoI’m sceptical about the claims here - seems like all of the growth is coming from Eastern Europe catching up. True exponential growth requires that everyone get richer over time, all the time, even the rich. It would be wonderful for the world if Europe could grow as rich as the States, so I hope the article is right.
- mahmoudhossam 2y agoThe US's formula for growth is incredibly politically unstable though. The rich getting richer (aka trickle down economics) is all fun and games until you have blood on the streets which is already happening in the US. The EU formula (have the rich make their money where it's cheaper but still within the union) seems to be better on the long run but it won't be without significant pain either.
- rafaelmn 2y agoThe EU model is basically "keep the peasants from rebelling while maintaining the aristocracy". Everything is stacked against class mobility in exchange for some safety nets.
- mahmoudhossam 2y agoEastern Europe did get a lot of class mobility in the last 20-30 years though, this may be the case for the west.
- FredPret 2y agoI was shocked at the crazy taxes on middle class earners when I was in Europe. Now way these people build wealth long-term. And it’s kind of on par with the US COL-wise.
- Sammi 2y agoExcept this is factually untrue. Social mobility is greater in europe than in the us: 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... There's this false narrative about the US being the bastion of social mobility, but it just doesn't hold up to facts. Europe does much better on this.
- tekla 2y agoWhat does the EU even do these days? Can't launch things to space, and gets salty that SpaceX is launching Sats for them, can't make shells for a war that literally at their doorstep and relies on countries literally half a world away to do basically everything for them (US and SK), barely has a navy that can patrol waters literally next to them and has to rely on the US for boats. Has fewer Carriers than single nations and the ones that the UK has are Diesel because they couldn't afford nuclear power. What does the EU even do?
- yokoprime 2y agoThose are extremely arbitrary metrics stated without sources. Do better.
- tekla 2y agoDamn all these super arbitrary claims. Imagine having numbers to back them up. Oh wait Can't launch things to space, and gets salty that SpaceX is launching Sats for them, > https://en.wikipedia.org/wiki/Ariane_5 https://en.wikipedia.org/wiki/Ariane_5 > Ariane 5 is a retired European heavy-lift space launch vehicle > https://en.wikipedia.org/wiki/European_Space_Agency https://en.wikipedia.org/wiki/European_Space_Agency > The ESA currently has only one operational launch vehicle, Vega EU can't launch their own Sats since they have no rockets that can launch anything that isn't a tinysat https://spaceflightnow.com/2024/04/27/live-coverage-spacex-to-launch-european-commissions-galileo-satellites-on-falcon-9-rocket-from-the-kennedy-space-center/ https://spaceflightnow.com/2024/04/27/live-coverage-spacex-t... Well that's embarrassing. can't make shells for a war that literally at their doorstep and relies on countries literally half a world away to do basically everything for them (US and SK), > https://en.yna.co.kr/view/AEN20231205000300315 https://en.yna.co.kr/view/AEN20231205000300315 > S. Korea indirectly supplied more 155-mm shells for Ukraine than all European countries combined barely has a navy that can patrol waters literally next to them and has to rely on the US for boats. Has fewer Carriers than single nations and the ones that the UK has are Diesel because they couldn't afford nuclear power. > https://en.wikipedia.org/wiki/EU_Navy https://en.wikipedia.org/wiki/EU_Navy > The combined component strength of the naval forces of member states is some 514 commissioned warships. Of those in service, 4 are fleet carriers. Damn, smaller carrier fleets than entire countries. Do better when you want incredibly easy to find numbers. So what DOES the EU do?
- beefman 2y ago> The right metric for international comparisons is purchasing power parity (PPP)-adjusted output MER is the right metric for most uses. But for comparing growth no currency conversion is needed, obviously. In every period to 2023 from 1995 (1995-2023, 1996-2023, 1997-2023 etc) US GDP growth has exceeded EU GDP growth. US output is 59% higher than in the year 2000. EU output is 36% higher. (Constant local currency data from the respective governments.)
- neonbones 2y ago>weaker university rankings Really? As far as I know, the most authoritative ranking in academia is the Shanghai ranking[0], where, apart from outliners in the US with gigabudgets, most of the top are made up of European universities. The top looks rather like that, except for a “bunch” of mega popular US universities, the rest are quite mediocre. [0]: https://www.shanghairanking.com/rankings/arwu/2023 https://www.shanghairanking.com/rankings/arwu/2023
- xela79 2y agowhy are all these discussion threads filled with whataboutism, I would wonder that having equal opportunities across the pond, in either direct, as a positive.