5 ms·

The 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

The 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 ago
The 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 ago
  Eastern 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 ago
  I 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 ago
  Except 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.
  - FredPret 2y ago
    That measurement method is skewed in favor of the European system where the wealth & income ladders start a bit higher and end much lower than in the US. If you measured improvements in net worth as well, and measured it by the number of dollars added to someone's bottom line instead of just what quintile someone is in, it would be IMO a more fair comparison. For example, (made up numbers ahead) let's compare two made-up people: A is in the bottom quintile earning say 20k EUR with a net worth stagnating at 0 EUR, and they then move up to the top quintile earning 80k EUR with a net worth of 20k EUR and growing. They pay heavy taxes on that 80k EUR so it's hard to grow their wealth. B is in the bottom quintile of the US, earning 20k USD. They make it up a couple of quintiles, but not quite to the top. They still end up earning 150k USD, and because they pay low tax, most of the 150k sticks around, giving them a net worth of say 50k USD and growing faster. A will give a better indicator of social mobility according to the Economist's method. But I'd much rather be B.
    - Sammi 2y ago
      You're quite literally making stuff up.
      - FredPret 2y ago
        Just trying to illustrate a point, but feel free to carry on.
onlyrealcuzzo 2y ago
> 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. Wealth compounds. In nominal terms, the bottom 10% have no chance against the top 10%. In percentage terms, the US is going on like ~5 straight years of the lower half doing relatively well: https://www.stlouisfed.org/open-vault/2024/feb/us-wealth-inequality-widespread-gains-gaps-remain https://www.stlouisfed.org/open-vault/2024/feb/us-wealth-ine...
Ajedi32 2y ago
The rich getting richer is not "trickle down economics", it's just the natural consequence of evenly distributed economic growth. If Bob makes $5000 a month and Steve makes $10,000 a month, then the income disparity between those two individuals is $5000 a month. Now imagine the economy doubles in size and those gains are evenly distributed. Now Bob will be making $10,000 a month and Steve will be making $20,000, and the income disparity between the two will be $10,000 a month. There's nothing trickling down in that scenario.
- Karellen 2y ago
  But under "the natural consequence of evenly distributed economic growth" Steve was and is making a constant 66% share of the wealth. Except that's not we have in the US/EU/UK. The top earners have been increasing their share since the 1970s, if not longer. See, e.g. https://www.bbc.co.uk/news/business-59565690 https://www.bbc.co.uk/news/business-59565690 > since 1995, billionaires' wealth had risen from 1% to 3%. > The world's richest 1% has taken more than a third of all additional wealth accumulated since 1995, while the bottom 50% captured just 2%. > The researchers found that the world's 52 richest individuals saw the value of their wealth grow by 9.2% per year for the past 25 years, well above less wealthy social groups. (That was just one of the page 1 results for "wealth inequality history" that I got. I know I've read better analyses that cover longer time periods before, but I'm feeling lazy at the moment. If you have any links at all to suggest we're in anything like "evenly distributed economic growth" then there's a possibility I'd be inclined to dive deeper.)
  - FredPret 2y ago
    Why is this a problem as long as those at the bottom experience the maximum amount of growth possible? For instance, if I could press a button that would double my net worth while at the same time 5x-ing the net worth of my least favorite billionaire, I'd smash that button a million times a day.
    - Karellen 2y ago
      > Why is this a problem as long as those at the bottom experience the maximum amount of growth possible? What makes you think they are?
FredPret 2y ago
How can you call it unstable when it’s been pumping out a self-reinforcing fountain of money for centuries? Just look at GDP graphs for the US, EU, and China over the past couple of decades. You’ll see smooth upward exponential growth for US + China with a small bump in 2008. For the EU, it’s been nothing but wild gyrations, mostly trending sideways. Anyone from the World Bank, the IMF, and even tradingeconomics.com has this data.
- mahmoudhossam 2y ago
  I think the word you're missing from my reply is "political". The US economy is very robust, but politics have never been this bad.
  - FredPret 2y ago
    Are you sure? https://en.wikipedia.org/wiki/American_Revolutionary_War https://en.wikipedia.org/wiki/American_Revolutionary_War https://en.wikipedia.org/wiki/Great_Depression_in_the_United_States https://en.wikipedia.org/wiki/Great_Depression_in_the_United... https://en.wikipedia.org/wiki/American_Civil_War https://en.wikipedia.org/wiki/American_Civil_War
  - mensetmanusman 2y ago
    You don’t remember the weekly political bombings from the 70s?

rafaelmn 2y ago

The 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 ago
Eastern 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 ago
I 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 ago
Except 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.
- FredPret 2y ago
  That measurement method is skewed in favor of the European system where the wealth & income ladders start a bit higher and end much lower than in the US. If you measured improvements in net worth as well, and measured it by the number of dollars added to someone's bottom line instead of just what quintile someone is in, it would be IMO a more fair comparison. For example, (made up numbers ahead) let's compare two made-up people: A is in the bottom quintile earning say 20k EUR with a net worth stagnating at 0 EUR, and they then move up to the top quintile earning 80k EUR with a net worth of 20k EUR and growing. They pay heavy taxes on that 80k EUR so it's hard to grow their wealth. B is in the bottom quintile of the US, earning 20k USD. They make it up a couple of quintiles, but not quite to the top. They still end up earning 150k USD, and because they pay low tax, most of the 150k sticks around, giving them a net worth of say 50k USD and growing faster. A will give a better indicator of social mobility according to the Economist's method. But I'd much rather be B.
  - Sammi 2y ago
    You're quite literally making stuff up.
    - FredPret 2y ago
      Just trying to illustrate a point, but feel free to carry on.

onlyrealcuzzo 2y ago

> 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. Wealth compounds. In nominal terms, the bottom 10% have no chance against the top 10%. In percentage terms, the US is going on like ~5 straight years of the lower half doing relatively well: https://www.stlouisfed.org/open-vault/2024/feb/us-wealth-inequality-widespread-gains-gaps-remain https://www.stlouisfed.org/open-vault/2024/feb/us-wealth-ine...

Ajedi32 2y ago

The rich getting richer is not "trickle down economics", it's just the natural consequence of evenly distributed economic growth. If Bob makes $5000 a month and Steve makes $10,000 a month, then the income disparity between those two individuals is $5000 a month. Now imagine the economy doubles in size and those gains are evenly distributed. Now Bob will be making $10,000 a month and Steve will be making $20,000, and the income disparity between the two will be $10,000 a month. There's nothing trickling down in that scenario.

Karellen 2y ago
But under "the natural consequence of evenly distributed economic growth" Steve was and is making a constant 66% share of the wealth. Except that's not we have in the US/EU/UK. The top earners have been increasing their share since the 1970s, if not longer. See, e.g. https://www.bbc.co.uk/news/business-59565690 https://www.bbc.co.uk/news/business-59565690 > since 1995, billionaires' wealth had risen from 1% to 3%. > The world's richest 1% has taken more than a third of all additional wealth accumulated since 1995, while the bottom 50% captured just 2%. > The researchers found that the world's 52 richest individuals saw the value of their wealth grow by 9.2% per year for the past 25 years, well above less wealthy social groups. (That was just one of the page 1 results for "wealth inequality history" that I got. I know I've read better analyses that cover longer time periods before, but I'm feeling lazy at the moment. If you have any links at all to suggest we're in anything like "evenly distributed economic growth" then there's a possibility I'd be inclined to dive deeper.)
- FredPret 2y ago
  Why is this a problem as long as those at the bottom experience the maximum amount of growth possible? For instance, if I could press a button that would double my net worth while at the same time 5x-ing the net worth of my least favorite billionaire, I'd smash that button a million times a day.
  - Karellen 2y ago
    > Why is this a problem as long as those at the bottom experience the maximum amount of growth possible? What makes you think they are?

FredPret 2y ago

How can you call it unstable when it’s been pumping out a self-reinforcing fountain of money for centuries? Just look at GDP graphs for the US, EU, and China over the past couple of decades. You’ll see smooth upward exponential growth for US + China with a small bump in 2008. For the EU, it’s been nothing but wild gyrations, mostly trending sideways. Anyone from the World Bank, the IMF, and even tradingeconomics.com has this data.

mahmoudhossam 2y ago
I think the word you're missing from my reply is "political". The US economy is very robust, but politics have never been this bad.
- FredPret 2y ago
  Are you sure? https://en.wikipedia.org/wiki/American_Revolutionary_War https://en.wikipedia.org/wiki/American_Revolutionary_War https://en.wikipedia.org/wiki/Great_Depression_in_the_United_States https://en.wikipedia.org/wiki/Great_Depression_in_the_United... https://en.wikipedia.org/wiki/American_Civil_War https://en.wikipedia.org/wiki/American_Civil_War
- mensetmanusman 2y ago
  You don’t remember the weekly political bombings from the 70s?