I very much appreciate the focus on data and facts about Europe’s economic stagnation, rather than rhetoric about how things that are often not even relevant for the economic comparison are supposedly worse in the US, as a form of 'Eurocope'. If Europe wants to improve, we first need an honest understanding of the underlying facts and problems
We also need to understand the drawbacks of a certain socio-political model. Otherwise it is just the typical one sided promotion of a right-wing agenda. All of this has been a trope ever since the 1990s, if not longer (in the 1970s: JJ Servan-Schreiber, Le Defi Americain), often with as goals to push through aims that they tend to call deregulation, flexibilisation and liberalisation.
* One big source of EU regulation is the business lobby itself, and especially the push for harmonization and standardisation (this cuts out the protectionist ploys by national governments and power bases).
The opening sentence of last paragraph falls under the rule "show, don't tell."
I find Krugman's view refreshingly balanced, he's willing to acknowledge that Europe does objectively better on some metrics while lagging on others.
The US outperforms Europe in software, but can't seem to build a railway or a ship without it turning into a budget disaster. What's better or worse depends on whether you prefer a B2B SaaS platform or a train platform.
Of course the UK can accomplish neither, which makes me suspect these jeremiads about "Europe" are actually mostly about the UK.
You can also wonder how much of the superior economic growth (if there is any) is down to the increase in both the public and private debts ever since the Reagan-era (or the expansionist policies in the aftermath of GFC 2008). Current EU is mindful of the public debt positions in an ageing continent, current Trump and GOP is not.
Those debts and trade deficits in turn lean on the privileges the dollar brings and the petrodollar recycling.
Thanks, the bs from Krugman & co. in the last few months became ridiculous.
Even worse, the absolute cope of a slice of europeans that think of themselves as being the European elite that just can't accept we're being subclassed by other countries we feel superior of, for some reason. I say "countries" because, for example in tech, the list goes beyond the US: China, South Korea, Taiwan, etc.
p.s. about "Europe has nice city cores but these are inaccessible to young Europeans". European capitals' centres are inaccessible to anyone who's not in the top-10/20% of incomes, and those are the ones tourists typically visit. The normal person in Madrid or Paris absolutely does NOT live in the centre, that is like 5-10% of the population.
For neoliberals, the so called Progress Movement, and rightists this is hardly a problem. The city centres being a privilege for the wealthy (stop all rent controls, tear down all public housing, no manipulation of land value) and high levels of segregation is exactly how they like to see this happen and has to be promoted, even.
Rent controls are absolutely a way to worsen home affordability, everywhere, and social housing is just not doable in large swaths of European capitals centres (and even around it).
European capitals are extremely expensive housing-wise, with the centres being comically expensive, but the real problem is that 90% of the city that is not the centre is really expensive, but could be much less expensive by allowing more buildings of any type. And also, the European incomes are just flat or rising painfully slowly, and that is the main problem the article represents.
Cities in Europe have already grown hugely in the past couple decades, and with declining square metres per appartment. As long as there is an excess of money (supply) and a growing wealth gap the housing will become more and more expensive. Billionaires sponsored thinktanks and magazines will not change this.
And yet the housing supply is not enough. Basically the (almost) only reason for housing being too expensive in every city in the world is because the supply can't keep up with demand.
The only BS here is suddenly acknowledging whole cities are (too) expensive, not just the city centres of capitals (which you previously claimed).
Obviously building houses takes time, and there is not infinite land. 'Demand' is a function of the excess of money and wealth in the economy. This is directly absorbed into the prices.
In fact I corrected. The city centres are comically expensive and you can't really do anything about that because they're old and you can't build almost anything there. You can't just demolish the old buildings in the centre or Rome to build 20 story condos.
But outside the city centre you can build much more than today, and there's a metric ton of evidence in the economics literature that the reason housing is becoming less affordable is that demand outruns supply in many cities. I can attest this having seen it with my eyes, where a huge influx of students and young workers hit the city where I studied and you just could see rents increasing by the day. It was like +20/30% in a few years. In the meanwhile a corruption scandal in the city basically halted the construction of almost every residential building.
Of course the price of the 9 square meters room in which students will live is not influenced at all by what homes millionaires choose to live in.
I ask you not to follow lefties on this because it's just a huge bs. The reason for the cost of housing is that regulations don't allow to build enough. Full stop.
A frustration I have when people discuss US vs Europe GDP, is that it is almost always based on GDP/capita but fails to account for the difference in age structure between the two. While many EU countries are seeing shrinking working age populations, the US worker pool is growing. This would lead to divergence in GDP/capita even at constant productivity. None of this is to say that Krugman is right or that Europe doesn't have serious problems, but feels like an unfair comparison. (to the article's credit, it does somewhat address the other disparity - hours worked).
Wondering how Covid-related fiscal policy plays into these conclusions. The impact of redistribution in your chart and the median incomes reported from the OECD are bolstered substantially by fiscal rescue packages, which were quite large in the US.
I like krugman but this is a good counter to what is often a bit of a bias he has towards Europe. I do sometimes suspect that if the USA had not elected Trump people in general could feel better about the progress of the US. I have visited many times and spent 6 great weeks working in Philadelphia in 85 when I was 25. But now just feel let down and disappointed. Bit like a close family friend we don’t like to talk about much or visit anymore and while they have a better car and bigger house we need find a reason to doubt their wealth is wither well earned or deserved.
"Imagine America produces twice as much software, while the price of each unit of software halves. At current prices, the value of American software output looks unchanged even though the volume of software produced has doubled."
True, but in a foreign country, you can now buy twice as much software with the same amount of your goods, so you can avail yourself of this productivity increase. It increases your standard of living. But, yes, in reality tech companies today often have a great deal of monopoly power, so it will not work out anywhere near so favorably for the foreign country.
(1) Paul Krugman reminds us of those scholars who claimed the Soviet Union was doing great and about to catch up with the US. It wasn’t, and it didn’t. It collapsed. (I am sorry if this reads like Schopenhauerian eristic, which is not my intention.)
(2) Now the numbers: Europe vs the US on forward P/E: (source: the US-made ChatGPT)
I very much appreciate the focus on data and facts about Europe’s economic stagnation, rather than rhetoric about how things that are often not even relevant for the economic comparison are supposedly worse in the US, as a form of 'Eurocope'. If Europe wants to improve, we first need an honest understanding of the underlying facts and problems
We also need to understand the drawbacks of a certain socio-political model. Otherwise it is just the typical one sided promotion of a right-wing agenda. All of this has been a trope ever since the 1990s, if not longer (in the 1970s: JJ Servan-Schreiber, Le Defi Americain), often with as goals to push through aims that they tend to call deregulation, flexibilisation and liberalisation.
* One big source of EU regulation is the business lobby itself, and especially the push for harmonization and standardisation (this cuts out the protectionist ploys by national governments and power bases).
https://samf.substack.com/p/how-much-are-liberals-to-blame-for
https://i.imgur.com/hGgQoGg.png
The opening sentence of last paragraph falls under the rule "show, don't tell."
I find Krugman's view refreshingly balanced, he's willing to acknowledge that Europe does objectively better on some metrics while lagging on others.
The US outperforms Europe in software, but can't seem to build a railway or a ship without it turning into a budget disaster. What's better or worse depends on whether you prefer a B2B SaaS platform or a train platform.
Of course the UK can accomplish neither, which makes me suspect these jeremiads about "Europe" are actually mostly about the UK.
You can also wonder how much of the superior economic growth (if there is any) is down to the increase in both the public and private debts ever since the Reagan-era (or the expansionist policies in the aftermath of GFC 2008). Current EU is mindful of the public debt positions in an ageing continent, current Trump and GOP is not.
Those debts and trade deficits in turn lean on the privileges the dollar brings and the petrodollar recycling.
Thanks, the bs from Krugman & co. in the last few months became ridiculous.
Even worse, the absolute cope of a slice of europeans that think of themselves as being the European elite that just can't accept we're being subclassed by other countries we feel superior of, for some reason. I say "countries" because, for example in tech, the list goes beyond the US: China, South Korea, Taiwan, etc.
p.s. about "Europe has nice city cores but these are inaccessible to young Europeans". European capitals' centres are inaccessible to anyone who's not in the top-10/20% of incomes, and those are the ones tourists typically visit. The normal person in Madrid or Paris absolutely does NOT live in the centre, that is like 5-10% of the population.
For neoliberals, the so called Progress Movement, and rightists this is hardly a problem. The city centres being a privilege for the wealthy (stop all rent controls, tear down all public housing, no manipulation of land value) and high levels of segregation is exactly how they like to see this happen and has to be promoted, even.
I forgot to write "European capitals' centres".
Rent controls are absolutely a way to worsen home affordability, everywhere, and social housing is just not doable in large swaths of European capitals centres (and even around it).
European capitals are extremely expensive housing-wise, with the centres being comically expensive, but the real problem is that 90% of the city that is not the centre is really expensive, but could be much less expensive by allowing more buildings of any type. And also, the European incomes are just flat or rising painfully slowly, and that is the main problem the article represents.
Cities in Europe have already grown hugely in the past couple decades, and with declining square metres per appartment. As long as there is an excess of money (supply) and a growing wealth gap the housing will become more and more expensive. Billionaires sponsored thinktanks and magazines will not change this.
And yet the housing supply is not enough. Basically the (almost) only reason for housing being too expensive in every city in the world is because the supply can't keep up with demand.
The rest is leftist bs.
The only BS here is suddenly acknowledging whole cities are (too) expensive, not just the city centres of capitals (which you previously claimed).
Obviously building houses takes time, and there is not infinite land. 'Demand' is a function of the excess of money and wealth in the economy. This is directly absorbed into the prices.
In fact I corrected. The city centres are comically expensive and you can't really do anything about that because they're old and you can't build almost anything there. You can't just demolish the old buildings in the centre or Rome to build 20 story condos.
But outside the city centre you can build much more than today, and there's a metric ton of evidence in the economics literature that the reason housing is becoming less affordable is that demand outruns supply in many cities. I can attest this having seen it with my eyes, where a huge influx of students and young workers hit the city where I studied and you just could see rents increasing by the day. It was like +20/30% in a few years. In the meanwhile a corruption scandal in the city basically halted the construction of almost every residential building.
Of course the price of the 9 square meters room in which students will live is not influenced at all by what homes millionaires choose to live in.
I ask you not to follow lefties on this because it's just a huge bs. The reason for the cost of housing is that regulations don't allow to build enough. Full stop.
Disparities in health care and outcomes, and in mortality, are notably absent from this discussion.
A frustration I have when people discuss US vs Europe GDP, is that it is almost always based on GDP/capita but fails to account for the difference in age structure between the two. While many EU countries are seeing shrinking working age populations, the US worker pool is growing. This would lead to divergence in GDP/capita even at constant productivity. None of this is to say that Krugman is right or that Europe doesn't have serious problems, but feels like an unfair comparison. (to the article's credit, it does somewhat address the other disparity - hours worked).
Wondering how Covid-related fiscal policy plays into these conclusions. The impact of redistribution in your chart and the median incomes reported from the OECD are bolstered substantially by fiscal rescue packages, which were quite large in the US.
I like krugman but this is a good counter to what is often a bit of a bias he has towards Europe. I do sometimes suspect that if the USA had not elected Trump people in general could feel better about the progress of the US. I have visited many times and spent 6 great weeks working in Philadelphia in 85 when I was 25. But now just feel let down and disappointed. Bit like a close family friend we don’t like to talk about much or visit anymore and while they have a better car and bigger house we need find a reason to doubt their wealth is wither well earned or deserved.
"Imagine America produces twice as much software, while the price of each unit of software halves. At current prices, the value of American software output looks unchanged even though the volume of software produced has doubled."
True, but in a foreign country, you can now buy twice as much software with the same amount of your goods, so you can avail yourself of this productivity increase. It increases your standard of living. But, yes, in reality tech companies today often have a great deal of monopoly power, so it will not work out anywhere near so favorably for the foreign country.
(1) Paul Krugman reminds us of those scholars who claimed the Soviet Union was doing great and about to catch up with the US. It wasn’t, and it didn’t. It collapsed. (I am sorry if this reads like Schopenhauerian eristic, which is not my intention.)
(2) Now the numbers: Europe vs the US on forward P/E: (source: the US-made ChatGPT)
May 2006: Europe ~14–15x, US ~15–16x
May 2016: STOXX 600 ~15.6x, S&P 500 ~16–17x
May 2026: Europe/STOXX 600 ~15x; S&P 500 ~21x