7 ms·

Portugal is an interesting microcosm of the general economic problems in EU vs US. I don't think tinkering with income tax brackets/credits is going to fix the

Portugal is an interesting microcosm of the general economic problems in EU vs US. I don't think tinkering with income tax brackets/credits is going to fix the actual problem - robust and steady job creation of good paying jobs. There are ~11M people in Portugal, 3M of which are in Lisbon metro and 2M are in Porto metro areas. This leads them to having the same problem as Japan - the population is decreasing, BUT the countryside and 2nd/3rd tier cities are emptying out. So housing affordability in the major cities remains poor. The youth therefore get squeezed out and emigrate, leaving an increasing tax burden problem paying for all the benefits given to the increasingly aging population. My father visited his home town in the countryside in the last decade and found much of the town essentially abandoned. No one lived in the home he grew up in. His uncle owned an inn that had no guests, etc. Meanwhile, Portugal remains a beautiful place and I will visit more in the future, and could even see wanting to retire there.

klipt 2y ago
The EU and USA both have free movement between states. But the USA has massive federal tax revenue and spending which redistributes wealth from rich states to poor states. Federal taxes are much higher than state taxes. By comparison the EU has high state taxes, but very tiny "confederal" EU level revenue. So much less ability to balance things between rich and poor member states. This puts poor states like Portugal into a bad position where they suffer from brain drain due to the free movement, but don't get enough monetary benefits from the EU to counteract that. This turns Portugal into a gateway country for the EU: they have loose immigration rules because they want to attract young workers. But as soon as those workers live in Portugal long enough to get an EU passport, many brain drain away to other (better paying) EU countries, and need to be replaced with even more immigrants.
- alephnerd 2y ago
  > This puts poor states like Portugal into a bad position The only reason Portugal (and Ireland, Spain, Greece, etc) is counted as a "Developed Country" today is because of the EU. These countries received the lion's share of EU Development Funds until EU expansion in the 1990s-2000s. If Portugal didn't join the EU, it would have been similar to Argentina - it's economic peer until EU ascension in 1986
  - melenaboija 2y ago
    Spain is x3 the nominal GDP of Ireland and x6 Greece and the 15th economy in the world and the three together are of the size of Canada. Maybe your comment about what defines a developed country might be overly simplified...
    - alephnerd 2y ago
      > developed country Developmental indicators, nominal GDP per Capita, and median household income. Before Spain, Ireland, Greece, and Portugal ascended into the EU in the 1970s-80s, their developmental indicators largely mirrored those of developing countries from that era (Malaysia, Turkey, Argentina, Iran). It was EU developmental funds that helped these countries not fall into the middle income trap. The only developing countries that were able to escape the middle income trap without EU Development Funds or oil were South Korea, Taiwan, Singapore, and Israel. Also, having a large GDP does not mean a country is developed. China and India have the 2nd and 5th largest GDP in the world, yet their median household incomes are less than that of Thailand, Mexico, or Malaysia - let alone countries defined as developed by the IMF.
      - lastdong 2y ago
        Portugal, like Spain and Argentina, faced significant historical challenges in the 20th century. Portugal's fascist regime, which lasted until 1974, limited investment in infrastructure and economic development. Spain, under Franco's dictatorship, also faced political and economic constraints. Argentina, too, experienced political instability and economic turmoil, particularly during the 1970s military dictatorship. Also were mentioned Malaysia, Turkey, and Iran, which have their own unique historical contexts that I'm not as familiar with.
        alephnerd 2y ago
        Absolutely. And that doesn't have anything to do with my point that Spain was a developing country well into the 1990s, and that most of the post-Franco era development was subsidized by EEC and EU Developmental Funds Read this, it's a good overview of the process - https://www.elibrary.imf.org/display/book/9781557753199/ch02.xml https://www.elibrary.imf.org/display/book/9781557753199/ch02...
- steveBK123 2y ago
  Yes, EU is hurt a lot by being a currency union with freedom of movement without being a true federal state. It is helpful to the core rich countries and to elite/upwards mobile across countries. But it hollows out the periphery. A lot of the GFC era EU debt crisis was German banks lending to southern European states to then buy goods/services from.. German industry. So I was not as understanding of the northern countries looking down at the "lazy south". It was far more complicated than this and they were happy to look the other way while it worked for the first decade. I'm honestly not sure where EU goes from here as the GFC & the response dampers any enthusiasm for a true federal government, unified military, etc. Not that there was much appetite to hand over that much sovereignty to start with. Nor does it help that post-GFC, even the rich parts of EU have further diverged in terms of wealth/income from the US, so they are probably feeling even less "generous". Draghi wrote a whole report on EU competitiveness recently and in standard Eurocrat form its like a 500 page paper no one will read, let alone action.
  - fakedang 2y ago
    And that is precisely the issue with the EU. I was always supportive of the spirit of the European Union and its ultimate objectives, but in its current state, it's a brutalized self-sabotaging entity that has disillusioned the general public to veer rightwards. And with furthermore technological lagging vis-a-vis China and the US, and the immigration crisis, not to mention the Russian Axis round the corner and the collective inaction of a number of EU states around that, and it's no wonder the EU is falling back into 3rd place. And for some reason, the EU still thinks net uncontrolled refugee migration is good for their economics,their population and their electability, as is letting American private equity buy up large swathes of residential properties. Guess that's what you get when you let freeloaders who haven't worked a real job in their lives hold unelected positions of power.
    - randomNumber7 2y ago
      From my impression of Germany I can tell you they would do the same suicide without the eu.
    - xk_id 2y ago
- namaria 2y ago
  Portugal's GDP PPP is about 485 billion dollars. About the same as Tennessee. Portugal received about 3 billion dollars from EU funds in 2021. About the same Tennessee received from the US federal government in that same year. I fail to see how a nominal difference in internal organization leads to much different outcomes. edit: I got some bad data on my search, my bad, will leave my mistake up.
  - alephnerd 2y ago
    Loans and Bonds are not serviced in purchasing power - they are serviced in exchange rate $s and €s. Portugal (and a significant portion of EU members) had an economic meltdown during the Eurozone crisis from 2008-14, and are still trying to service those loans and bonds to this day. Also, Portugal's GDP is half that of Tennessee's. In fact, Portugal has the same population size as Michigan and North Carolina, yet a GDP that is ~50% and ~33% in size respectively.
    - namaria 2y ago
      PPP is used solely to compare Portugal to a US federation unit. The economy of Portugal happens in Euro and Tennessee in Dollars, and that is immaterial to this argument.
      - alephnerd 2y ago
        PPP is not a useful comparison unit when nominal $-€ conversions and costs are extremely well understood.
        namaria 2y ago
        Which US state has an economy of a size comparable to that of Portugal? Does that change when the relative value of Euro to Dollar fluctuates?
        alephnerd 2y ago
        > Which US state has an economy of a size comparable to that of Portugal Oklahoma, but Oklahoma also only has 40% of the population of Portugal. Despite being in the Western half of Europe, Portugal is economically comparable to an Eastern European country like Poland or Slovakia. The only US territory (not state - even poor Mississippi has a higher median household income and GDP per capita than much of Western Europe excluding Germany and Scandinavia) that is comparable to Portugal is Puerto Rico. In fact, the problems Puerto Rico faces today in the US mirror those that Portugal faces in the EU.
brm 2y ago
I mean you've also accurately described Pennsylvania...
- steveBK123 2y ago
  American doomers generally underestimate how much better we have it than the rest of the developed world on just about every economic measure - income, wealth, employment, etc. Like sure the EU, healthcare & education is cheap/free, but your taxes at the low end will are double to pay for that. And they pay nurses similar to what we pay fry cooks. Even higher pay places like London, UK pay 1/3 to 1/2 what you can make in NYC or SF for similar jobs.
  - ejieiownnqj 2y ago
    [dead]
- alephnerd 2y ago
  Pennsylvania has an HDI of 0.928 [0] (comparable to the United Kingdom and Luxembourg). Portugal has an HDI of 0.876 [1] Median household income in Pennsylvania is approx $73,000 [2], but median household income of Portugal is below $20,000 [3] Sure the US has plenty of problems, but it is absolutely one of the most developed large countries in the world. The only other large (greater than 50 million population) countries with higher developmental indicators are the UK (barely) and Germany. [0] - https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_Human_Development_Index_score https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_terr... [1] - https://en.m.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index https://en.m.wikipedia.org/wiki/List_of_countries_by_Human_D... [2] - https://www.census.gov/quickfacts/fact/table/PA/INC110222 https://www.census.gov/quickfacts/fact/table/PA/INC110222 [3] - https://eco.sapo.pt/2023/01/13/rendimento-medio-das-familias-da-ue-foi-de-18-370-euros-anuais-em-2021-portugal-ficou-abaixo/ https://eco.sapo.pt/2023/01/13/rendimento-medio-das-familias...
chgs 2y ago
The U.K. has the same problem. Remove London from the equation and the U.K. is poorer than the poorest US state. And like the EU there’s very little investment from London out to the regions This leads to increased demand for housing in London (and to a lesser extent Manchester and a couple other big cities) and a vicious cycle. Even worse, an ambitious young person can’t go anywhere else other than London thanks to Brexit. In the U.K. the median wage outside London is about 20% above the minimum wage. There’s basically no point in doing anything other than the lowest shittest job you can find. Hell a masters degree will only net you about 30% more than minimum wage in many sectors. I’ve just spent 2 weeks in the US, including being in Florida since Sunday. A young colleague has been working in our DC office for much of the last 2 years on a non immigrant visa. He went for a h1b and has got it, he’ll be leaving for a local employer by the end of the year. For the first time ever I’m actually thinking the problems of the US are now less than those of the U.K., and even potentially Europe, and were I 20 again I’d be looking at the US as a target.
- steveBK123 2y ago
  Yes I've worked nearly 20 years with teammates in London and watched how much even London & NYC have diverged in that time. There was a brief period post GFC where it seemed like the US had lost its way and Europe had the right idea. Europe leaned hard into austerity and self immolated while the US just grew our way out of it and into the future. As an American, I've always sort of held the stereotype of Europe as being a fun place to vacation. Nice lifestyle if you've made your money already, probably elsewhere. Unintentionally or not, Eurocrats seem to have done everything they can to perpetuate this further and further. Between austerity, regulation, bureaucracy, etc it just seems like the whole continent is encased in amber, focussed on how to slice up a static/shrinking pie.
  - j7ake 2y ago
    It’s a nice lifestyle even if you haven’t made your money as long as you have a full time position. The work-life balance is so tilted towards life that it’s already semi retirement for people with full time jobs because job security is so high. Best is getting a job in the European Union (in Belgium ) , United Nations, or other multi country agency.
BobbyTables2 2y ago
Noticed odd things in Spain - there is no suburb. Cities there transition instantly from high-rise apartments to rural farms. And prices in cities seem far above what the locals could possibly earn.
forinti 2y ago
My grandparents' village has been growing, but only because it has become a sleeper town for Aveiro (and maybe Porto - there's a train station nearby). Portugal is such a great place to live, it just lacks reasonably paying jobs.
chipdart 2y ago
> So housing affordability in the major cities remains poor. The youth therefore get squeezed out and emigrate, leaving an increasing tax burden problem paying for all the benefits given to the increasingly aging population. At a risk of going off on a tangent, it should be said that this is a direct consequence of the 2007-2008 financial crisis and the resulting 2010–2014 Portuguese financial crisis. https://en.wikipedia.org/wiki/2010%E2%80%932014_Portuguese_financial_crisis https://en.wikipedia.org/wiki/2010%E2%80%932014_Portuguese_f... A series of banks went bankrupt, the construction sector was ravaged, the real estate sector plummeted due to a market where neither consumers not producers could have access to credit. With the drop in supply and a constant demand, housing costs skyrocketed even though salaries stagnated. The youth is then faced with the problem of either facing a lifetime of earning salaries that don't allow them to buy or even rent a home or emigrating to places where it's possible to earn a modest living. Taxes aren't the problem. The bulk of the income of those who can afford a home is already syphoned to service the costs of buying a home. If housing becomes affordable, people stay and will have disposable income.

klipt 2y ago

The EU and USA both have free movement between states. But the USA has massive federal tax revenue and spending which redistributes wealth from rich states to poor states. Federal taxes are much higher than state taxes. By comparison the EU has high state taxes, but very tiny "confederal" EU level revenue. So much less ability to balance things between rich and poor member states. This puts poor states like Portugal into a bad position where they suffer from brain drain due to the free movement, but don't get enough monetary benefits from the EU to counteract that. This turns Portugal into a gateway country for the EU: they have loose immigration rules because they want to attract young workers. But as soon as those workers live in Portugal long enough to get an EU passport, many brain drain away to other (better paying) EU countries, and need to be replaced with even more immigrants.

alephnerd 2y ago
> This puts poor states like Portugal into a bad position The only reason Portugal (and Ireland, Spain, Greece, etc) is counted as a "Developed Country" today is because of the EU. These countries received the lion's share of EU Development Funds until EU expansion in the 1990s-2000s. If Portugal didn't join the EU, it would have been similar to Argentina - it's economic peer until EU ascension in 1986
- melenaboija 2y ago
  Spain is x3 the nominal GDP of Ireland and x6 Greece and the 15th economy in the world and the three together are of the size of Canada. Maybe your comment about what defines a developed country might be overly simplified...
  - alephnerd 2y ago
    > developed country Developmental indicators, nominal GDP per Capita, and median household income. Before Spain, Ireland, Greece, and Portugal ascended into the EU in the 1970s-80s, their developmental indicators largely mirrored those of developing countries from that era (Malaysia, Turkey, Argentina, Iran). It was EU developmental funds that helped these countries not fall into the middle income trap. The only developing countries that were able to escape the middle income trap without EU Development Funds or oil were South Korea, Taiwan, Singapore, and Israel. Also, having a large GDP does not mean a country is developed. China and India have the 2nd and 5th largest GDP in the world, yet their median household incomes are less than that of Thailand, Mexico, or Malaysia - let alone countries defined as developed by the IMF.
    - lastdong 2y ago
      Portugal, like Spain and Argentina, faced significant historical challenges in the 20th century. Portugal's fascist regime, which lasted until 1974, limited investment in infrastructure and economic development. Spain, under Franco's dictatorship, also faced political and economic constraints. Argentina, too, experienced political instability and economic turmoil, particularly during the 1970s military dictatorship. Also were mentioned Malaysia, Turkey, and Iran, which have their own unique historical contexts that I'm not as familiar with.
      - alephnerd 2y ago
        Absolutely. And that doesn't have anything to do with my point that Spain was a developing country well into the 1990s, and that most of the post-Franco era development was subsidized by EEC and EU Developmental Funds Read this, it's a good overview of the process - https://www.elibrary.imf.org/display/book/9781557753199/ch02.xml https://www.elibrary.imf.org/display/book/9781557753199/ch02...
steveBK123 2y ago
Yes, EU is hurt a lot by being a currency union with freedom of movement without being a true federal state. It is helpful to the core rich countries and to elite/upwards mobile across countries. But it hollows out the periphery. A lot of the GFC era EU debt crisis was German banks lending to southern European states to then buy goods/services from.. German industry. So I was not as understanding of the northern countries looking down at the "lazy south". It was far more complicated than this and they were happy to look the other way while it worked for the first decade. I'm honestly not sure where EU goes from here as the GFC & the response dampers any enthusiasm for a true federal government, unified military, etc. Not that there was much appetite to hand over that much sovereignty to start with. Nor does it help that post-GFC, even the rich parts of EU have further diverged in terms of wealth/income from the US, so they are probably feeling even less "generous". Draghi wrote a whole report on EU competitiveness recently and in standard Eurocrat form its like a 500 page paper no one will read, let alone action.
- fakedang 2y ago
  And that is precisely the issue with the EU. I was always supportive of the spirit of the European Union and its ultimate objectives, but in its current state, it's a brutalized self-sabotaging entity that has disillusioned the general public to veer rightwards. And with furthermore technological lagging vis-a-vis China and the US, and the immigration crisis, not to mention the Russian Axis round the corner and the collective inaction of a number of EU states around that, and it's no wonder the EU is falling back into 3rd place. And for some reason, the EU still thinks net uncontrolled refugee migration is good for their economics,their population and their electability, as is letting American private equity buy up large swathes of residential properties. Guess that's what you get when you let freeloaders who haven't worked a real job in their lives hold unelected positions of power.
  - randomNumber7 2y ago
    From my impression of Germany I can tell you they would do the same suicide without the eu.
  - xk_id 2y ago
namaria 2y ago
Portugal's GDP PPP is about 485 billion dollars. About the same as Tennessee. Portugal received about 3 billion dollars from EU funds in 2021. About the same Tennessee received from the US federal government in that same year. I fail to see how a nominal difference in internal organization leads to much different outcomes. edit: I got some bad data on my search, my bad, will leave my mistake up.
- alephnerd 2y ago
  Loans and Bonds are not serviced in purchasing power - they are serviced in exchange rate $s and €s. Portugal (and a significant portion of EU members) had an economic meltdown during the Eurozone crisis from 2008-14, and are still trying to service those loans and bonds to this day. Also, Portugal's GDP is half that of Tennessee's. In fact, Portugal has the same population size as Michigan and North Carolina, yet a GDP that is ~50% and ~33% in size respectively.
  - namaria 2y ago
    PPP is used solely to compare Portugal to a US federation unit. The economy of Portugal happens in Euro and Tennessee in Dollars, and that is immaterial to this argument.
    - alephnerd 2y ago
      PPP is not a useful comparison unit when nominal $-€ conversions and costs are extremely well understood.
      - namaria 2y ago
        Which US state has an economy of a size comparable to that of Portugal? Does that change when the relative value of Euro to Dollar fluctuates?
        alephnerd 2y ago
        > Which US state has an economy of a size comparable to that of Portugal Oklahoma, but Oklahoma also only has 40% of the population of Portugal. Despite being in the Western half of Europe, Portugal is economically comparable to an Eastern European country like Poland or Slovakia. The only US territory (not state - even poor Mississippi has a higher median household income and GDP per capita than much of Western Europe excluding Germany and Scandinavia) that is comparable to Portugal is Puerto Rico. In fact, the problems Puerto Rico faces today in the US mirror those that Portugal faces in the EU.

brm 2y ago

I mean you've also accurately described Pennsylvania...

steveBK123 2y ago
American doomers generally underestimate how much better we have it than the rest of the developed world on just about every economic measure - income, wealth, employment, etc. Like sure the EU, healthcare & education is cheap/free, but your taxes at the low end will are double to pay for that. And they pay nurses similar to what we pay fry cooks. Even higher pay places like London, UK pay 1/3 to 1/2 what you can make in NYC or SF for similar jobs.
- ejieiownnqj 2y ago
  [dead]
alephnerd 2y ago
Pennsylvania has an HDI of 0.928 [0] (comparable to the United Kingdom and Luxembourg). Portugal has an HDI of 0.876 [1] Median household income in Pennsylvania is approx $73,000 [2], but median household income of Portugal is below $20,000 [3] Sure the US has plenty of problems, but it is absolutely one of the most developed large countries in the world. The only other large (greater than 50 million population) countries with higher developmental indicators are the UK (barely) and Germany. [0] - https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_Human_Development_Index_score https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_terr... [1] - https://en.m.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index https://en.m.wikipedia.org/wiki/List_of_countries_by_Human_D... [2] - https://www.census.gov/quickfacts/fact/table/PA/INC110222 https://www.census.gov/quickfacts/fact/table/PA/INC110222 [3] - https://eco.sapo.pt/2023/01/13/rendimento-medio-das-familias-da-ue-foi-de-18-370-euros-anuais-em-2021-portugal-ficou-abaixo/ https://eco.sapo.pt/2023/01/13/rendimento-medio-das-familias...

chgs 2y ago

The U.K. has the same problem. Remove London from the equation and the U.K. is poorer than the poorest US state. And like the EU there’s very little investment from London out to the regions This leads to increased demand for housing in London (and to a lesser extent Manchester and a couple other big cities) and a vicious cycle. Even worse, an ambitious young person can’t go anywhere else other than London thanks to Brexit. In the U.K. the median wage outside London is about 20% above the minimum wage. There’s basically no point in doing anything other than the lowest shittest job you can find. Hell a masters degree will only net you about 30% more than minimum wage in many sectors. I’ve just spent 2 weeks in the US, including being in Florida since Sunday. A young colleague has been working in our DC office for much of the last 2 years on a non immigrant visa. He went for a h1b and has got it, he’ll be leaving for a local employer by the end of the year. For the first time ever I’m actually thinking the problems of the US are now less than those of the U.K., and even potentially Europe, and were I 20 again I’d be looking at the US as a target.

steveBK123 2y ago
Yes I've worked nearly 20 years with teammates in London and watched how much even London & NYC have diverged in that time. There was a brief period post GFC where it seemed like the US had lost its way and Europe had the right idea. Europe leaned hard into austerity and self immolated while the US just grew our way out of it and into the future. As an American, I've always sort of held the stereotype of Europe as being a fun place to vacation. Nice lifestyle if you've made your money already, probably elsewhere. Unintentionally or not, Eurocrats seem to have done everything they can to perpetuate this further and further. Between austerity, regulation, bureaucracy, etc it just seems like the whole continent is encased in amber, focussed on how to slice up a static/shrinking pie.
- j7ake 2y ago
  It’s a nice lifestyle even if you haven’t made your money as long as you have a full time position. The work-life balance is so tilted towards life that it’s already semi retirement for people with full time jobs because job security is so high. Best is getting a job in the European Union (in Belgium ) , United Nations, or other multi country agency.

BobbyTables2 2y ago

Noticed odd things in Spain - there is no suburb. Cities there transition instantly from high-rise apartments to rural farms. And prices in cities seem far above what the locals could possibly earn.

forinti 2y ago

My grandparents' village has been growing, but only because it has become a sleeper town for Aveiro (and maybe Porto - there's a train station nearby). Portugal is such a great place to live, it just lacks reasonably paying jobs.

chipdart 2y ago

> So housing affordability in the major cities remains poor. The youth therefore get squeezed out and emigrate, leaving an increasing tax burden problem paying for all the benefits given to the increasingly aging population. At a risk of going off on a tangent, it should be said that this is a direct consequence of the 2007-2008 financial crisis and the resulting 2010–2014 Portuguese financial crisis. https://en.wikipedia.org/wiki/2010%E2%80%932014_Portuguese_financial_crisis https://en.wikipedia.org/wiki/2010%E2%80%932014_Portuguese_f... A series of banks went bankrupt, the construction sector was ravaged, the real estate sector plummeted due to a market where neither consumers not producers could have access to credit. With the drop in supply and a constant demand, housing costs skyrocketed even though salaries stagnated. The youth is then faced with the problem of either facing a lifetime of earning salaries that don't allow them to buy or even rent a home or emigrating to places where it's possible to earn a modest living. Taxes aren't the problem. The bulk of the income of those who can afford a home is already syphoned to service the costs of buying a home. If housing becomes affordable, people stay and will have disposable income.