It’s the median, but I shouldn’t call people “stupid”

by John Quiggin on June 3, 2005

David Brooks resurrects the claim that

The Western European standard of living is about a third lower than the American standard of living, and it’s sliding. European output per capita is less than that of 46 of the 50 American states and about on par with Arkansas.
This was done to death in the blogosphere a couple of years ago, but it’s obviously time for another go.

Update: Oops! Scott Martens points out in comments that the EIU gives US median household income as $57 936, way out of line with the Census Bureau figure, which obviously invalidates my comparison, and casts doubt on their figures for France. I guess I’d better not just rely on a quick Google next time. I’ll look into the EIU numbers some more.

And, as several commentators point out, that will also teach me to be more careful before slagging off others for sloppy work. Time for a dish of crow.

Further update I haven’t yet found out how the EIU gets its numbers, but I’ve fixed the obvious errors in the post and taken the opportunity to remove unfair comments about Brooks


The obvious problem with Brooks’ claim, as it refers to standards of living, is the use of arithmetic means rather than medians. The incomes accruing to Bill Gates and the rest of the Forbes 400 rich list make a measurable difference to the US average[1], but have no effect on US living standards (apart from the 400 and their immediate families constituting perhaps 0.001 per cent of the US population). The top quintile of households gets somewhere between 40 and 60 per cent of aggregate income and therefore dominate calculations of mean income, but most people are not members of the top quintile.

A much more relevant statistic is median household income. Rather than do proper research on the topic, I relied on a quick Google, unwisely as it turned out.

The US Census Bureau has excellent data on median household income by state and for the US as a whole. It produces the striking result that real median household income was lower in 2004 (43,318) than in 1998 (43,825) and has increased only marginally since 1991 (41,411). Admittedly, average household size has been declining slowly over time, but this is still a striking corrective to Brooks-style triumphalism.

For an international comparison , I found that the Economist Intelligence Unit publishes data and projections for median household income. I couldn’t locate data for a suitable EU aggregate so I picked the obvious example, France (I checked a couple of other EU countries and they were similar). The EIU reports that French median household income for 2004 was $US42,451[1]. Unfortunately, the EIU obviously uses a different estimator than the US Census Bureau as it reports median US household income as 57 936. This puts French median household income at 73 per cent of the US level.

On the same data set, however, average household size in the US is 2.7 persons, compared to 2.4 in France, so income per person in the median French household is about 80 per cent of the US level. Similar comparisons apply to other Western European countries (thanks to commenter ‘ab’ for pointing this out).

It’s also necessary to take account of work and leisure; Americans have more of the former and French more of the latter, and both appear to be happy with their choices. This factor accounts for most of the difference in income between the US and western EU countries.

In addition, there are lots of intangibles which are a matter of taste. Readers can make their own choices between Paris, France and Paris, Arkansas in these respects.

fn1. The income accruing to this group bounces about, but it appears to average around $50 billion a year (a 5 per cent return on wealth of 1 trillion) contributing about 0.5 per cent to US mean income.

fn2. In the original version of the post, I incorrectly compared this figure to the Census Bureau number. I suspected this might be an exchange rate adjusted number rather than the more correct PPP, but I now think it’s probably PPP.

{ 1 trackback }

Sandra Haberkorn
11.18.05 at 3:51 am

{ 62 comments }

1

fifi 06.03.05 at 4:29 am

The low standard of living in Europe hasn’t affected the demand for life any there and, at the same time, it’s worth pointing out Americans who die after accumulating a lot of stuff stay dead anyway.

2

Scott Martens 06.03.05 at 4:36 am

Note the last sentence in the section “Market opportunities” on the Economist page on France:

“The median household income, at US$42,451 in 2004, is slightly above the EU average and we expect it to remain so throughout the forecast period.”

This strongly suggests that the EU averge median household income is not so far off from France’s.

I remember when Conrad Black was flogging the notion that Canada’s GDP per capita at market exchange rates might soon fall to half of the US’s. Of course, using median household income divided by median household size at PPP rates, Canada was doing a good deal better. So, for arguments sake, I’m okay with market exchange rates. (After all, we all know that the free market is the best way to measure value, right? :^P) But, the difference in housing costs alone makes a large dent in the European figure. On the other hand – as I know all too well right now – the difference in medical costs also makes a big difference in the other direction.

3

Scott Martens 06.03.05 at 4:44 am

Where does the EIU get its information? Its figures for US median household income are quite different from the Census Bureau. The Economist is reporting the US median to be $57,936.

4

abb1 06.03.05 at 5:04 am

Yeah, Scott is right: the EIU reports US Median household income as $57,936. Something doesn’t fit here.

5

des von bladet 06.03.05 at 5:29 am

Is there a convenient source for the various quintiles? A troll late in Maria’s French referendum thread was making some, uh, interesting comparisons about life at the low end of the respective scales…

6

Barry 06.03.05 at 6:19 am

Well, the classic line is the USA is a better place to be rich, and Europe is a better place to be poor.

7

Steve Carr 06.03.05 at 6:45 am

John, come on. Your broader critique of Brooks is correct, but why would you use the EIU number for France but not the EIU number for the US? Let’s keep the apples and oranges separate.

8

John Quiggin 06.03.05 at 6:46 am

That will teach me to be more careful. I’ll post a correction ASAP

9

Platypus 06.03.05 at 6:48 am

So, the next obvious question…where does Australia fit into this picture?

10

bi 06.03.05 at 6:57 am

Is the GDP the only thing that matters? I thought we should also take into account costs of living.

11

Miracle Max 06.03.05 at 7:24 am

The major difference between the U.S. and social-democracies is the support for non-market provision. Accordingly, comparisons founded on market-focused measurements, such as household income, gloss over economic welfare.

12

jet 06.03.05 at 7:31 am

I really liked this article but think the subject is deserving of much more of Mr. Quiggins time. It would be pertinent to the subject to further explore all sorts of economic differences between the US and Europe. For example, the average rate of attempts at opening new businesses and how often they fail, and perhaps why. Economic mobility would be another extremely interesting study. Do the poor in the US remain so for long, what about in Europe?

Either way, I’d love to see someone educated on the subject expound the differences. The results of any such study would also be a powerful tool of political rhetoric.

But if the EIU ratio of European and US medians holds true, then we’ve already received our “powerful tool of political rhetoric”.

13

nofundy 06.03.05 at 7:32 am

“It is happier to live in a poor country that is moving forward – where expectations are high – than it is to live in an affluent country that is looking back” – Brooks

What a clown. I expect he will be moving to India with Friedman any day now.

14

Kermit 06.03.05 at 7:37 am

I have been living in Germany for upwards of two years now and I would say that the cost of living is quite lower here in Germany. Even with a significant VAT of 16%, prices tend to be a bit lower. Some things like brand name sneakers cost significantly more, but butter is at least half the price. Shopping in the supermarket is much cheaper than in the states. I would never dream of paying $3-$4 for a box of cookies here (unless of course they were Mallomars which, alas, are unavailable here)because I get good cookies for €1-€1.50. Meat is cheaper, milk is cheaper, and so on. Restaurants are significantly cheaper. Gas is at least twice the price but then, the average fule economy here is much higher than in the States. Car insurance is cheaper. I find that I am able to save much more money than I was in the states though my salary is complarable to what it was. I would stay that the standard of living is much higher here if one includes crime statistics and the like. I’d live here forever if it were only home to me. Oh and going to the doctor is easy as pie.

15

Russkie 06.03.05 at 7:39 am

> That will teach me to be more careful.

Everyone makes mistakes, and correcting them quickly is what’s important.

But sneering and condescending headlines that call your opponent “Stupid” are a different issue.

16

Russkie 06.03.05 at 7:43 am

> For example, the average rate of attempts at
> opening new businesses and how often they fail,
> and perhaps why.

In high-tech the rules in Europe are skewed in favor of the big fish. ETSI will never adopt a technology propounded by a small company if Siemens and Alcatel want something else.

17

jet 06.03.05 at 8:03 am

So home ownership rates are lower, taxes are higher, the EIU has the US median income almost a third higher, starting new businesses is harder, economic mobility is lower, and protectionism is the word of day. Some “workers paradise”. I’m thinking if that’s the price of government provided health care and 35 hour weeks, I’m out.

18

Chris Baldwin 06.03.05 at 8:04 am

Is David Brooks one of those efficiency over justice types? There seems to be rather a lot of them around these days. Oh well.

19

jet 06.03.05 at 8:08 am

Chris Baldwin,
We’re all justice types, just some of us are shortsighted and some of us aren’t.

20

ab 06.03.05 at 8:13 am

Staying with the EIU numbers:

Median household income, (persons per average household) / household income per person
all in dollars, 2004

US 57,936 (2.7) / 21,458
UK 46,597 (2.4) / 19,415
France 42,451 (2.4) / 17,688
Netherlands 40,010 (2.3) / 17,396
Germany 37,911 (2.1) / 18,053
Sweden 35,804 (2.1) / 17,050

There’s about a 20% difference between the US and France/Germany/Holland/Sweden.

21

Barry 06.03.05 at 8:15 am

Or rather some of us have little problem with injustice, provided our paychecks clear the bank.

22

bi 06.03.05 at 8:24 am

By gosh, jet, do you envision a utopia in which _every single person_ to own a huge independent company with millions of employees? (If you can’t see the contradiction here: buy a brain.)

Look, starting a new company simply isn’t for everyone, so don’t even pretend that it’s a useful measure of general prosperity.

23

jet 06.03.05 at 8:32 am

Very clever bi, that the number of successful new startups is in no way connected to the overall health of an economy. Very clever indeed. With insight like that, I’ll jump right on your advice about my purchase priorities.

And to think here I was believing that the smaller a company the higher its incentives to become more efficient and productive.

But thanks for the comment, you kind of refuted yourself on that one.

24

john b 06.03.05 at 8:52 am

Higher incentives, but lower competence & fewer economies of scale – hence why most small businesses fail.

And if you can produce evidence demosntrating a statistically significant correlation between absolute GDP and number-of-startups, then I’ll eat not only my hat, but a wide array of other headgear.

25

Walt Pohl 06.03.05 at 8:56 am

I would pay money for a premium version of Crooked Timber, whose only feature was that it contained no comments by “jet”.

26

wufnik 06.03.05 at 8:59 am

I’m sure this has already been thought of, and may be reflected in the numbers, but have these medians been adjusted in any meaningful way to take account of health care spending requuirements, which I assume are lower for individuals in France than in the United States? If not, wouldn’t you want to make that adjustment, given the materiality of these costs?

27

reuben 06.03.05 at 9:01 am

Economic mobility would be another extremely interesting study. Do the poor in the US remain so for long, what about in Europe?

The UK’s Sutton Trust recently published a study on economic mobility in eight developed nations. According to the report:

International comparisons indicate that intergenerational mobility in Britain is of
the same order of magnitude as in the US, but that these countries are substantially less mobile than Canada and the Nordic countries. Germany also looks to be more mobile than the UK and US, but a small sample size prevents us drawing a firm conclusion. Intergenerational mobility fell markedly over time in Britain, with there being less mobility for a cohort of people born in 1970 compared to a cohort born in 1958. No similar change is observed in the US.

If the report is accurate (I’m no expert, so won’t weigh in), it’s a pretty terrible indictment of both the UK and the US, at least as far as social mobility goes.

To pick up another of your points, Jet, I’m an economically middle class American who has lived and worked in both the US and the UK. I’m happier in the UK, but I know that

28

Slocum 06.03.05 at 9:03 am

Is David Brooks one of those efficiency over justice types? There seems to be rather a lot of them around these days. Oh well.

And do unemployment rates have anything to do with a just society? Or is a place on the dole just as good? I’m asking because the large numbers of unemployed, disaffected immigrants in ethnically segregated ghettos in European countries don’t seem to be made very happy by the welfare payments and free medical care.

Does the fact that the U.S. is seemingly far more successful with its immigrants have anything to do with the fact that here they tend to be gainfully employed? And, through this employment, tend to interact with those outside their immigrant communities? Does these issues factor at all into your sense of social justice?

29

James Wimberley 06.03.05 at 9:03 am

Did you notice the other curious Instapundit factoid that adjusted for cost of living, Nordics have lower disposable incomes per head that the Spanish and Portuguese? This is so peculiar that it should have led anyone with sense to question the methodology. (I have just moved to Spain and have a reasonable personal impression of the Spanish standard of living).

1. Nordics wil tend to have lower disposable incomes compared to Iberians partly because they pay much higher taxes, for much better public services (education, health, transport, environment,income security, etc. etc.). It’s absurd to leave out these services when comparing welfare internationally.

2. Brooks and his ilk use comparisons with western Europe – especially France and Germany – to make political points against Europe as a whole. But of course the idea that these two countries are the heart of Europe is less and less true, and the effect of the French “non” is to marginalise French influence even more. One reason for the “non” is precisely that there is now a majority of countries for liberal economic reforms, the Nordics, Britain, Ireland, the Netherlands, Iberia, and Eastern Europe; all doing better economically. The Rconomist published a calculation last year that if you remove just Germany, the EU’s growth over recent years had matched that of the US.

30

Alison 06.03.05 at 9:06 am

I often think life expectancy and infant mortality rates are good indices of affluence because it is difficult to imagine a greater economic ‘good’ than to live, and for your child not to die.

The EU as a whole is a little way ahead of the US on both measures (about 1 year of life per person, and one more living baby per thousand births), and affluent/ redistributive European countries such as France and Sweden are even further ahead.

http://www.cia.gov/cia/publications/factbook/rankorder/2091rank.html

31

reuben 06.03.05 at 9:15 am

Ack – my kingdom for a bit of preview action. Among other things, it prevents accidentally hitting the wrong key and posting prematurely.

Anyway, the Sutton Trust study is here: http://www.suttontrust.com/reports/IntergenerationalMobility.pdf

And here’s what I was trying to write when I accidentally posted:

To pick up another of your points, Jet, I’m an economically middle class American who has lived and worked in both the US and the UK. I’m happier in the UK, but I know that much of that is down to personal predilection; you sound like you’re much happier in the US. Luckily, we’re both where we want to be.

As a bit of a man in the middle, one thing I’ve noticed is that while some Europeans (I’m including Brits here) are instictively critical of the US, it’s actually extremely rare. What’s even more rare is for Europeans to go on about how Europe is a better place to live than the US, even when they really believe it is.

My countrymen back in the states, however, seem to have a very unfortunate habit of needing to bash the European quality of life at every turn, much as you’ve just done. I really don’t understand this aggressive defensiveness. What makes so many of my fellow Americans so thin skinned? You’d think that, as good as we have it, we wouldn’t be quite so defensive.

I don’t mean to pick on you in particular; indeed, what I’m talking about isn’t so much something I’ve seen in your posts just here as a kind of aggregate feeling from a year of reading posts on this issue.

32

reuben 06.03.05 at 9:26 am

But then of course maybe since I’m American, I notice my fellow countrymen’s bitching more. We do seem to be a defensive lot, though.

33

jet 06.03.05 at 9:29 am

Reuben,
Thanks for your interesting post. And just shooting from my personal take on why Americans tend to bash European economies is that there is obviously a debate in the US over how the economy should be modeled. One side of the debate holds up Europe as the example, thus the other side attacks Europe to disprove the example. I’d would presume that issues like social justice would preclude either side of the debate in Europe from ever holding up the US as an example ;)

Walt Pohl,
I’d be happy to give you a script that publishes CrookedTimber RSS feeds minus whomever you want ;)

John B,
What makes you think that absolute GDP and the number of startups are connected? I certainly never postulated such. Or perhaps you measure health in absolute GDP? So the French economy is healthier than Australia’s?

34

Thomas 06.03.05 at 9:41 am

I’ll just point out that according to the OECD, who should have the numbers, the average european is actually much more entrepeneurial than the average US citizen – the only two countries in europe to have lower rates of self-employment than the US are Luxembourg and Norway. Some places, have more than trice the number of independants the US does. This isn’t accident – the US healthcare model and taxcode distorts the market in havor of large companies in fairly blatant ways.

35

Kevin Donoghue 06.03.05 at 10:02 am

The big problem with Brooks is not that he doesn’t know his means from his medians; it is that he thinks he can draw sensible conclusions about the very complicated process of economic development just by pulling out a few summary statistics. If it was that easy, why would we need the likes of Amartya Sen? (But if we must rely on simple comparisons, I’m with Alison: life expectancy and infant mortality matter more than GDP.)

Plus, Brooks writes tripe like this: “Over the last few decades, American liberals have lauded the German model or the Swedish model or the European model. But these models are not flexible enough for the modern world. They encourage people to cling fiercely to entitlements their nation cannot afford.”

So Krugman’s essays, Why Germany Kant Kompete and Unmitigated Gauls are lauding the German and French models? And slow growth relative to China and India diminishes what Europeans can afford? This is what might be called the Red Queen fallacy: the notion that if others are going faster, we are going backwards.

36

reuben 06.03.05 at 10:08 am

I’d would presume that issues like social justice would preclude either side of the debate in Europe from ever holding up the US as an example .

You’ve not been listening to New Labour then, mate.

Getting back to the data, according to the Sutton Trust, social mobility is higher in northern European countries than in the US (and UK), and self-employment is higher almost everywhere in Europe than in the US? Very interesting…

37

moni 06.03.05 at 10:19 am

One side of the debate holds up Europe as the example, thus the other side attacks Europe to disprove the example.

Maybe, the actual debate isn’t all so ridiculously simplistic, but some really love to pretend it is, so they can engage in the usual stereotypes and bragging competitions about the size of the gdp like it was, oh nevermind.

Usually, when people want to look for specific areas that can be improved, they do go and look at other places in which those areas work better, and how and if certain policies can be imitated or taken as example and integrated in another context that is different. What’s the point of arguing that living in the US is better than in Europe or viceversa as a whole? It depends on who you are, what you do, where you live, and yes, ultimately, even totally personal preferences. It also depends on specific aspects and areas of work, life, politics, social policies, laws, etc.; trying to draw an overall winner of biggest, best, coolest country (or union of countries) as if it was a contest is pointless. Amusing, but pointless.
Besides, Europe is just as diverse as the US in fact even more because it’s 25 countries, not one. At best, a comparison even on standards of living is more useful and interesting when made between smaller restricted areas, such as regions and states or even cities, for instance.

38

Harry 06.03.05 at 10:47 am

My understanding of the social (economic) mobility literature is the OECD countries don’t vary a lot, except that Sweden has an unusually hihg level. US is worse when you exclude immigrants. A nice stat for jet: if you are born into the top decile of households you have 18 times more chance of staying there than you do of reaching it if born into the bottom decile (in the US).
I’m not at all convinced its better to be rich in the US than in Europe. You can be richer in the US, but everyone but the super-rich (a very small percentage) have anxieties about things Europeans don’t have to worry about. Family life is less secure (higher divorce rates, even among the rich); families (especially among the relatively rich) are more geographically scattered; etc. A great deal of GDP is wasted in both places (wasted here means something like “not spent in a way that contributes to personal flourishing”. But I agree with everything moni said, so apologise for ignoring it in everything I have said!

39

Ragout 06.03.05 at 10:50 am

I’m not sure which number is more comparable to the EU figures, but 43,000 sounds about right for median household income in the US. $58,000 sounds about right for what the Census Bureau misleadingly calls “median family income.” Median family income excludes “non-families,” which is to say, single people.

40

reuben 06.03.05 at 10:50 am

Interesting points from Jet and Moni. I definitely think there’s a need among many in the US to declare that America is the best and that other nations suck in comparison. Now that I’m over here (in the UK), that tendency strikes me as a bit odd. Saying “my country’s the best” doesn’t really seem to be part of the national discourses of the European nations I’m relatively familiar with. And no, I don’t think that’s because people in these nations think the US or some other nation than their own is better; it’s as if they don’t think in terms of “X nations is the best”.

Of course, the French have a reputation for being haughty about their own national superiority, but I’m not familiar with France, so can’t say.

I really do think this is one of the primary characteristics of Americans in general, this quantification of nations in terms of “best”. Perhaps it’s because of our national myth as the promised land forged by the bold men and women who escaped their decadent, failing countries.

The UK, of course, errs too far in the other direction. Since it lost its empire, it seems unsure of how to define itself, and gives itself too little credit for what it manages to do well.

41

moni 06.03.05 at 11:33 am

And no, I don’t think that’s because people in these nations think the US or some other nation than their own is better; it’s as if they don’t think in terms of “X nations is the best”.

Reuben, if you think about it, that kind of discourse is very much present in Europe too, but perhaps more in respect to cultural aspects or leisure activities or sports, football, food, nightlife, etc. Or the climate, even… as if it was an achievement!
Seriously I don’t think it’s quite common for people from different EU countries to argue about the respective GDP or unemployment rate in a serious ‘we’re better than you’ fashion.
Even when comparisons are done between certain laws or policies, the “x nation is doign better than us *at this* so we should try and do like them in that respect” is more common and accepted as a neutral statement of fact (for instance, on issues like health policies). Whereas I get the impression that argument is not as popular on the other side of the pond. I don’t know if it’s for the reason you say, or perhaps even simply to do with the size of the country. And its military power, I guess. I think that inevitably influences perceptions even when the topic is nothing to do with military policies.

Anyway, for fans of national rankings, here’s the Mercer survey of quality of life and the UN development index.

42

abb1 06.03.05 at 11:48 am

It has something to do with intensity and quality of propaganda carried out by the establishment.

Mostly with the intensity; I am sure a fair number of North Koreans are absolutely positive that their country is the best.

43

luci phyrr 06.03.05 at 12:55 pm

Agree with ragout, every thing I’ve seen puts household income in the US in the mid 40’s.

58K is quite an outlier.

44

Barry 06.03.05 at 1:02 pm

Most of the Europe-bashing in the US is of right-wing origina, and it’s purpose (IMHO) is to prevent Americans from looking at Europe, and drawing lessons which might threaten interests in the USA.

It’s been recently pointed out on some blogs that the US government spending on health care (per capita, PPP adjusted) is at or above the levels of some European countries. This suggests that the patchwork US government system should be replaced by a single-payer system (with a fair chunk of the private system remaining as a premium layer, for those who can afford it. However, so many Americans have been propagandized into believing that Europe medically resembles the Soviet Union when Stalin was in a particularly bad mood, that this won’t happen soon.

I guess the best summary of the argument is TINA – ‘There is no (acceptable) alternative’. If most Americans believe that the current system is the best in the world, that system has excellent protection, and the vested interests can enjoy the fruits of that system.

45

Barry 06.03.05 at 1:10 pm

“Agree with ragout, every thing I’ve seen puts household income in the US in the mid 40’s.

58K is quite an outlier.”

Posted by luci phyrr

ISTR $43K US being used somewhere a few years ago (late 1990’s).

46

jet 06.03.05 at 1:35 pm

luci phyrr and barry,
I think the point was that whichever method was being used by the EIU to get the $58K for the US was also being used by the EIU to get the $43K for Europe. So if the $58K is too high, then so is the $43K. Either the EIU is throwing darts or the average household income in the EU 15 is 70% of the US’s.

47

ogmb 06.03.05 at 1:35 pm

Does the fact that the U.S. is seemingly far more successful with its immigrants have anything to do with the fact that here they tend to be gainfully employed? And, through this employment, tend to interact with those outside their immigrant communities? Does these issues factor at all into your sense of social justice?

Is this based on anything tangible, slocum?

48

Barry 06.03.05 at 1:43 pm

“luci phyrr and barry,
I think the point was that whichever method was being used by the EIU to get the $58K for the US was also being used by the EIU to get the $43K for Europe. So if the $58K is too high, then so is the $43K. Either the EIU is throwing darts or the average household income in the EU 15 is 70% of the US’s.”

Posted by jet · June 3rd, 2005 at 1:35 pm

1) No, that doesn’t hold.

2) The better thing to use is purchasing power adjusted incomes.

49

roger 06.03.05 at 2:48 pm

Personally, I think there is something extremely silly about comparing, say, the Netherlands or Sweden to the U.S. — or France or Germany – without a sense of the historic paths travelled by each country. The story of the latter half of the twentieth century seems to me to be composed of two things: the amazing growth of the U.S. from the late nineteenth century up to 1929 slowed down relative to the growth of European economies up to the eighties. That makes some sense — until Europe came out of the the (self inflicted) wounds of total combat, the U.S. growth was going to be increasingly in a vacuum. The other part was the unexpected slowing of European growth after the eighties. Now, I can’t imagine that France or the U.K. or any European country would catch up with the U.S., save by some catastrophe. And comparing the EU to the U.S. is to exaggerate the political unity of the EU.

But given those paths, the thing that stands out is that Europe and Japan have to solve the problem of keeping the fruits of opulence (obviously, the Europeans CAN afford their system more, now, than they could when it started, because they are much richer than when it started) while starting growth again. I don’t think it is a coincidence that the slowdown is during the same period during which the various liberalizing treaties that created the EU came into effect — in combination with the inflation scared policies of the central banks. Those were killers. The lesson the EU should learn from the U.S. is to use the state to create a much stronger consumer credit market. Inflation isn’t an automatic bogeyman — it can be an indicator of growth. The U.S. has sublimated its inflation into debt per household and the cost of social services, and made up for stagnation of single worker household incomes by turning women into the workforce. This has worked — although I’d bet that we are coming to the limit of its total usefulness. The lesson the Europeans shouldn’t learn is to create American style inequality. It won’t help the average European, any more than it helps the average worker in any of the LDCs that have tried the most radical free enterprise medicines.

50

jet 06.03.05 at 2:56 pm

Okay, well just using my favorite “quick look up but beware the source” site, the CIA World Factbook, I get the US’s GDP per capita purchase power parity at $40,100, France’s at $28,700, Germany’s at $28,700 , and the UK at $29,600 (all at 2004 est).

I’m not sure what the EIU was measuring, but with European Gini indexes being in the low 30’s and the US’s at 45, the average middle class worker’s salary is more comparable between Europe and the US than those GDP numbers would imply. But even with the US’s higher Gini score, the US keeps its middle class just as well off or better than Europe while allowing more of its hard workers or lucky into the covetted realm of the upper class. And while I’d support removing the lucky from the upper class, I think have huge incentives for being smarter and harder working than the average bear are just plain common sense.

51

abb1 06.03.05 at 3:18 pm

…the US keeps its middle class just as well off or better than Europe while allowing more of its hard workers or lucky into the covetted realm of the upper class.

No, it doesn’t. The US is allowing fewer hard workers into the upper class, but those few supermen who do make it there (they actually belong to a different, better species) find themselves in a totally different realm.

52

Barry 06.03.05 at 4:25 pm

Nice, Jet. However, it’s an average. And how does this justify the belief that “the US keeps its middle class just as well off or better than Europe while allowing more of its hard workers or lucky into the covetted realm of the upper class.”?

There are two hypotheses, one before the ‘while’, and one after. I haven’t seen much to prove either.

53

a different chris 06.03.05 at 6:10 pm

>and both appear to be happy with their choices.

Ah, “revealed preference” again. Those guys in line for Powerball tickets must just be there for the camaraderie, as they would never give up their 49 weeks of work…

Uh, an antelope is happy with its choice to run away from the lion, but I’m not sure it wouldn’t rather the lion not be lurking at all.

The real middle class, not the 20-something childless libertarians over-represented on the ‘net and here by “jet” would like not to have to worry about affording health care and good primary and secondary education for their kids. We don’t mind working so much, but we do mind the gun at our head.

Thomas @ 34 — THANK YOU!! I always freaking wondered why every place I went in Yurp I seemed to meet the owners. I wrote it off as “touristy places” and was well aware that there were corps like Siemens that were so mind-bogglingly big that they probably have entries in The Hitchhiker’s Guide To The Galaxy.

Rueben, the term “defensive” is an oddity of the English language. People are really “offensive” in this sense. See, they know there is some hole in their “US uber alles” logic, but they don’t know where it is. So when you have a weakness in your line of defense, but don’t know where it is – you go on offense.

Then the second line of attack is always the conservatives who have to bash Europe to deflect the masses from their own discontent. You don’t have to look at *any* economic figures to see how the US economy is going – just watch the right wing. When a number of RW pundits suddenly seem concerned, for no discernable reason, with how Europe has structured itself, then you know they’re worried about the US masses.

It’s a distracting circus for the working class, and the Europeans are painted as the clowns.

You know bad things are coming – the lousy jobs report, the postponed Army recruitment report – when people who haven’t said boo about Europe for years are suddenly wanging away on their word processors.

54

jet 06.03.05 at 10:19 pm

Chris, 2004 was the second biggest year for largest number of millionaires created since 1999. And 1999 was itself a record year.

55

bi 06.03.05 at 11:47 pm

I expect the next “objective” measure of economic wealth will be “number of citizens who are as rich as Bill Gates, never mind all the poor people around”. Or “number of people who are too fat to fly.” Or “amount of wealth owned by the President.” Etc. etc. etc.

56

Andrew Brown 06.04.05 at 9:15 am

why don’t footnotes[1] work properly on CT[2]

fn1. They do when I use Textile

fn2. But they don’t here, do they?

57

Andrew Brown 06.04.05 at 9:16 am

does _anything_ of the textiel formatting work?

# I mean, is this
# a list?

58

Andrew Brown 06.04.05 at 9:21 am

Sorry if that looks like spam. I couldn’t figure out another way to test this _extremely irritating_ business with “footnotes”:http://www.bradchoate.com/mt/docs/mtmanual_textile2.html when the rest of it seems to work perfectly well.

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Barry 06.04.05 at 9:33 am

“Chris, 2004 was the second biggest year for largest number of millionaires created since 1999. And 1999 was itself a record year.”

Posted by jet

Jet, PLEASE take a stat course.

60

Antoni Jaume 06.05.05 at 7:44 am

I think that most of the difference is explained by the yearly number of work hours (under 1500 in most of the EU against some 1800 in the USA). Add a slightly greater working participation of the population and the difference may very well go away.

DSW

61

engels 06.05.05 at 10:56 pm

I think have huge incentives for being smarter and harder working than the average bear are just plain common sense

Why?

62

bi 06.06.05 at 4:19 am

Because whatever jet says is common sense, is common sense. That’s why it’s called common sense. If you don’t agree, you’re an anti-semitic traitorous Saddam-loving relativist fascist Islamic Stalinist pinko.

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