Unless the Goal Is Lower Living Standards, Bernie Sanders Has Learned the Wrong Lesson from Europe
. . . at how poor it feels.
Oregon, Maddogshome, is number 18 in state to state GDP (PPP) comparisons. Mark Perry has a nice comparison between US GDP per capita by state vs. European countries and Japan, Korea, Mexico and China. I was surprised that Oregon ($54,858.00) beat all of the listed countries, and even beat the US GDP (PPP) average ($54,629). Yes, oil rich countries like Norway at $64,856.00, Luxembourg at $97,661.90, and Switzerland at $57,235.30 are outside the EU, but within Europe and do very well, but small Norway's economy is substantially oil dependent, and both Luxembourg, and Switzerland are small countries with large banking, and financial sectors. These are factors unreproducible for the US.
Like Dan Mitchell, I like and respect much of what the Nordic nations have done, but I suspect they will need to follow, and even improve upon Sweden's welfare reforms.
Frankly, I suspect that the US, the Nordic countries, Switzerland, and a few other nations are beginning to slowly but surely find the sweet spot here at the End of History. Exactly what the sweet spot is, has yet to be defined, and I suspect that we will find many interpretations. The ultimate question is how much security the people feel comfortable with versus how much liberty they desire.
The charts and links above seem to point out that the US has done amazingly well as a large nation in creating the economic liberty/wealth aspect of the equation, while the smaller more homogenous Nordic countries have done particularly well in creating a safety net.
Sweden's welfare reforms have been particularly productive. If the US would begin adopting more of the Swedish welfare reforms is seems likely we could move more quickly to define the sweet spot.
When it comes to ranking countries by per capita GDP (PPP), The US position is amazing. It comes in at 10th after 5 tiny oil kingdoms, and 4 tiny trade, and/or banking and finance countries.
Unless the progressives have their way and the US economic engine is hobbled, it is clear the US will continue to accelerate economically forcing the Nordic nations to continue with welfare reforms. The alternative is to be left behind as The US pulls away economically. I have no doubt the Nordic nations will not allow this to happen.
The Southern European nations are another story completely.
The graph found in Dan Mitchell's piece show how clearly the southern European nations are falling behind in the economic race for per capita prosperity. This graph clearly shows that there is something about the germanic states, and areas which allow them to become far more prosperous than other parts of Europe. These nations include Norway, Sweden, Denmark, Germany (although former East Germany seems to have been damaged by its time as a Soviet Satellite), Switzerland, Austria, and the germanic parts of Italy, and France. Also interestingly the north of Spain is particularly prosperous, as is southern Ireland (an historic change).
Notice also how the large cities in many of the lower GDP countries are GDP sinks, for example, London, Paris, Lisbon, Madrid, Athens, and Budapest all show up as anomalously prosperous areas against a backdrop of much lower prosperity.
While we should not totally discount the tiny super prosperous nations like Switzerland, Luxembourg, Singapore, Hong Kong, and Norway, these offer far fewer opportunities to learn than will the slightly larger to medium sized nations like the Nordic countries. The super tiny tend to be wealthy because they excel at something like banking, or trade, or are sitting upon a large pool of oil. Large nations cannot replicate these specific benefits.
At this point the very best thing America can do is continue to drive forward economically, creating prosperity for all of our citizens. This will pressure the other nations of the world to follow suit. The ultimate goal is to create sufficient wealth to fully eradicate world poverty.
China keeps buying up American companies, and lawmakers are starting to sound the alarm
. . . blithering idiots.
"China is buying American companies at a record rate this year, and lawmakers are getting increasingly worried about it.
In February, 45 members of Congress signed a letter to the US Treasury Department's Committee on Foreign Investment (CFIUS), stating their concerns about a Chinese-led investor group's bid to buy the Chicago Stock Exchange."
I'm old enough to remember when the Japanese buying spree during the 1980s was considered the horror to end all horrors. If you remember, the Japs came in and bought all kinds of assets like Rockefeller Center. Mon Dieu! Then then the nation essentially went bankrupt, and they sold many of these assets and left. The beauty of this was they bought high. and sold at firesale lows!
So, exactly why are the American politicians bloomers in a knot over the Chinese coming in and buying American companies for more than any American is willing to pay? Are they afraid of money? Do they think the Chinese will steal our workers? Mon Dieu!!! Only a politician could explain this nonsense.
What is happening is the Chinese are beginning to realize that China is a Ponzi, and their money is at risk in China. So, they want to take it out, but can't. But China will let them buy foreign assets, and so the wealthy Chinese come to buy assets. Why here? Because we are the only truly safe and stable country on the planet. Europe has socialismed itself into uncompetitiveness with their over-regulation, and bloated welfare state. Japan is dying, with debt to GDP of nearly 250%!!! The international oil patch is in zombie mode. Where would one go to buy valuable assets which will be available in the years and decades to come? America!
They can buy stock, they can buy assets, like corporation, entities, mines, wells, and land. LET THEM! Our businesses will use the money for new productive ventures. That is good for the economy. Why don't our idiot politicians know this?
The inequity at the heart of France’s labour market - FT.com
. . . not competition, and labor.
"It is a bruising setback for Mr Hollande, who has repeatedly said he will run for re-election in 2017 only if he has made significant progress in cutting France’s double-digit unemployment. This is still hampered by the high cost of labour, the confrontational nature of labour relations and the inequity of a two-tier system in which employees with permanent contracts enjoy too much protection. Meanwhile young people spend years hopping between precarious temporary positions. The lesson Mr Hollande should draw from the debacle, however, is to be bolder rather than more cautious in framing his ambitions for a second term."
Worldwide, the Boomers are the worst generation in history. They want security, and sinecure here in France, and do not care if it destroys the country, and bankrupts their children, and grandchildren. They want the good life, and will have it regardless of the sacrifice their children will need to make.
"The main problem is that the president, elected on a manifesto that played to traditional socialist values, has failed to make the case for reform to a sceptical public. Instead, he spent his first year in office delivering crowd-pleasing promises made on the campaign trail. Now, voters on the left feel betrayed; those on the right doubt his motives; and he is heavily constrained by the need to unite the leftwing of his party in order to combat the populist appeal of the National Front. More-over, a backdrop of sluggish growth is not conducive to structural reforms that rarely pay off in the short term.
In Italy, Mr Renzi has been able to take more decisive action because he came to power with a clear commitment to reform — and because the Italian economy was far closer to crisis. In France, economic growth has been disappointing, but stable; public debt manageable; and productivity comparable with that of most major economies. Many people do not see the urgency of more disruptive changes.
Nonetheless, the current system is failing young people, whose future Mr Hollande pledged to improve at the outset of his presidency. If he wants to win their support for a second term, he should address the inequity at the heart of France’s labour market, changing the terms of employment for all and not perpetuating the divide between insiders and new entrants. He must make the case now, if he is to win a mandate to be bolder next time round."
The system in both countries, and Spain, Portugal, and Greece is failing the young people. In all of these countries, it is uncommon for the young to be able to find paying jobs, and if they do, the jobs are for short periods of time, perhaps up to a year, and are seldom career oriented. So it is common to find trained lawyers spending their years 25- 35 working retail shoe sales, and occasionally for a few months "working" for free as a legal clerk, with a limited room/board stipend. It is impossible to understand how these people will be able to work from age 35 until retirement at age 65, and fund a reasonable retirement.
Young, qualified and jobless: plight of Europe's best-educated generation
"'All your life," says Argyro Paraskeva, "you've been told you're a golden prince. The future awaits: it's bright, it's yours. You have a degree! You'll have a good job, a fine life. And then suddenly you find it's not true."
Or not so suddenly. Paraskeva left Thessaloniki University five years ago with an MSc in molecular biology. Beyond some private tutoring, paid essay writing ("I'm not proud. But a 50-page essay is €150") and a short unhappy spell in a medical laboratory, she hasn't worked since.
Over cold tea in a sunlit cafe in Greece's second city, Paraskeva says she has written "literally hundreds of letters". Every few months, a new round: schools, labs, hospitals, clinics, companies. She delivers them by hand, around the region. She's had three interviews. "I will go anywhere, really anywhere," she says. "I no longer have the luxury of believing I have a choice. If someone wants a teacher, I will go. If they want a secretary, I will go. If they want a lab assistant, I will go.'"
Why in the world are we not willing to take any and all of these highly qualified professionals, whether in molecular biology, or any other STEM degree? We have positions which need to be filled, and they have workers which need work. Mr. Obama what is the problem?
" According to data out on Monday more than 5.5 million under-25s are without work, and the number rises inexorably every month. It's been called the "lost generation", a legion of young, often highly qualified people, entering a so-called job market that offers very few any hope of a job – let alone the kind they have been educated for.
European leaders are rarely without a new initiative. Last week, they pledged to spend €6bn (£5bn) over two years to fund job creation, training and apprenticeships for young people in an attempt to counter a scourge that has attained historic proportions. This week, Angela Merkel is convening a jobs summit to address the issue. Yet still the numbers mount up. In Greece, 59.2% of under-25s are out of work. In Spain, youth unemployment stands at 56.5%; in Italy, it hovers around 40%."
We need the competition for jobs, which will allow the best to reinvigorate our businesses, and these young people need jobs. We know these people will integrate into US society. Offer green cards to any of these highly trained professionals who will come, apply for citizenship, and work.
"But others point out Europe's "economically inactive" now include millions of young people (14 million, according to the French president, François Hollande) not in work, education or training but who, while technically not unemployed, are nonetheless jobless – and have all but given up looking, at least in their own country. Millions more are on low-paying, temporary contracts. By most measures, the situation is dire.
In the words of Enrico Giovannini, Italy's employment minister, this is a disaster all the more shocking because it is hitting Europe's best-educated generation: in Spain, nearly 40% of people in their 20s and early 30s have degrees; in Greece it's 30%; in Italy, more than 20%.
The crisis is even more acute because of its knock-on impact: these are often young people with no pensions, no social security contributions, diminishing networks, limited opportunities for independence. High youth unemployment doesn't just mean social problems and productivity wasted; it means falling birthrates and intergenerational tension between parents and their thirtysomethings still living at home. "A wholesale destruction," a Bologna University professor says, "of human capital"."
This has been going on for nearly a decade now, and many of these young people will never be able to utilize their skills, they will have been out of the market so long, their skills will have rotted. This is the ultimate wages of socialism, and the economic stagnation which accompanies it.
We have the power to do what we did in the 19th century, and provide Europe with a way out, emigration to the US. Only this will be emigration of the educated, the professional, the skilled, which will mean we will need even more immigrants to cross our Southern border to provide services for these new workers. We will also need to slash regulations on businesses, and do a Reaganesque turn to tax sanity. The best course of action would be to impose a national consumption/sales tax to completely replace the individual, corporate income tax systems, and the Estate/Death, and gift tax system. This change would make the tax system simple, and need no IRS. Since all but a few states have sales taxes, the federal government could pay the state sales tax collectors to collect the federal tax, and remit to the federal government. The result would be a federal system which needed only a small legal collections arm, and this could be performed by existing private collection services, and the Department of Justice for legal issues. The cost savings alone would be a multibillion dollar boost to the economy.
In this environment, American business would be able to grow the economy, which would allow us to utilize more of the European skilled workers and more of the unskilled labor we obtain from Mexico and Central America. This would allow revitalization of much of middle America which is currently fearful of immigration taking their jobs, the Trump voters. This would be a win/win/win/win approach.
But Obama has had 7 years to figure this out, and he has not done so. Perhaps the next President will, but not if it is Hillary, she is the status quo, war/hawk President. Sanders is a fool, too stupid to know which side the bread the butter is on, and Cruz is an enigma in this regard. Trump could likely be persuaded, but that would require someone from the Republican party addressing this issue, that seems a bridge too far in the current climate.
Economic growth is the only solution, and will provide the funds necessary to solve our gargantuan debt problem, along with our stagnating economy, and its consequences.
Not holding my breath, we are blessed with the worst political class in human history.
I've traveled in Europe, I like Europe, I wouldn't mind living in Europe, for a while, mostly because with the Maddog family income we would live like Kings, er, and Queens. And no, I am not bragging here, I am making an observation about how low the median incomes are thought most of Europe. Don't worry, analysis to follow.
One thing I noticed, even early in the 1990s, when traveling through Italy/Europe, was the vastly lower standard of living between Europe and the US. On a trip in 1994, we took the ferry from our Bellagio home base to Menaggio where we rented bikes and made a loop riding the SS340 down to the Funivia station just North of Argegno, riding the Funivia up to Pigra, and then following the SP13, turning right onto the SP14, following it back to the SS340 which we followed back to Menaggio, and the ferry ride home.
Great ride, not too long, and mostly downhill so it was easy to take in the scenery, and watch the people. This is a less touristed part of Italy/Switzerland. I was surprised by how lower middle class everything felt. This feeling never left me during that trip. It has reappeared every subsequent trip. The further from the big city tourist areas, the more everything feels like lower middle class US.
When I first stumbled upon this post by Mark Perry, I was not surprised, but I suspect many will be.
If Sweden Left The EU and Joined the US, It Would Be the Poorest U.S. State, Below Even Mississippi
I remember reading an article stating that if we normed US income so median US income was 100, Swedish median income would equal 67, about the same as the median black income in the US. Sadly, I was not able to find that article on second look.
The Mises Institute elaborates in this article:
If Sweden and Germany Became US States, They Would be Among the Poorest States
That Germany has such a low standard of living always surprises me. After all Germany is the economic powerhouse of Europe, with low unemployment, and a driving economy. But the standard of living for the average German is pretty meager. And when one accounts for Purchase Power Parity, just how meager become indelibly apparent.
So, How does Britain do in this comparison?
Why Britain is poorer than any US state, other than Mississippi | Coffee House
Ouch! Time made the counter argument, er, sorta, and in inimitable Time fashion won the argument against the position Time staked out, dead bang! No, really, these people are wankers of the first order.
Britain Is Not Poorer Than Alabama
Tim Worstall runs the numbers, proving Time and it contributor are wankers. Time must not have had the time to run the numbers, or perhaps did not have the maths acumen. Worstall finds that yes indeed, Britain is poorer than every US State, even Mississippi.
Britain Is Poorer Than Any US State: Yes, Even Mississippi
In 2004, Timbre did an economic analysis of GDP between the US and Europe, and found Europe was lagging far behind the US.
Timbro: EU versus USA
Here are some GDP comparisons from Demographia:
Sweden: GDP Per Capital Compared to US From 1960
Germany: GDP Per Capital Compared to US From 1960
Does that put this issue to rest? The real issue for Europe is that America is pulling away from Europe, and will continue to do so. How long before the US standard of living is 4 times Europe, or more? The Obama Presidency has slowed the American economic train, but it seem unlikely that will last indefinitely, and the European train is slowing even more rapidly, so even if America continues to slow it will continue to pull away from Europe.