Saturday, April 2, 2011

Would You Be Better Off In Europe?

An interesting article here. Here's a few excerpts.

Take Zurich and Chicago. One looks good and the other, broken down. If America has such a famously high GDP per capita and Chicago is one of America's crown jewels, maybe there is something wrong with using GDP per capita as an index of social well-being...

If I get a raise, I might be worse off. I might widen the gap in income with others around me. Who cares? Well, by doing this, I might be spreading poverty, which, like everything, is relative. I might make my public space more of a hellhole than before...

People at the libertarian Cato Institute love to scoff: "Oh, our poor in America are so well off in GDP per capita." Go ahead. Argue. I'll let you win. But I dare the Cato types, when the argument is over, to go outside and walk around some Chicago neighborhoods...

Even in 2008, precisely because of "globalization," Germany had a serious shortage of people able to fill high-skill, high-paying jobs, especially engineers. In the United States, engineers complain they can't find work; many of them just end up in sales. In the union-free, lower-cost United States, we don't create the kind of jobs engineers can do. Germany's problem? It has too many such jobs. It's our whole globalization thesis turned upside down...

In 2005, the real hourly wage for production workers in America was approximately 8 percent lower than it was in 1973, while our national output (productivity) per hour is 55 percent higher. So it's dubious whether most Americans have gained even a penny in purchasing power since 1989.


Also, here's a fun tool for contrasting what life would be like for you in comparison to another country.

5 comments:

MKR said...

I'm stuck at trying to understand the first sentence of that article: "Americans may believe the United States is set up for the middle class, and Europe is set up for the bourgeois." What does this guy think that the terms "middle class" and "bourgeois" mean? Is the distinction supposed to be that the one term is English and therefore applies to Americans while the other is French and therefore applies to continental Europeans?

Darf Ferrara said...

I don't understand why "globalization" is blamed in the Germany example. If the market was global then unused resources in the US would be allowed to be used in Germany. The fact that it doesn't happen more often indicates that there isn't enough globalization. In fact I know a US engineer who went over to Germany in the 2008 time frame. He enjoyed the trip, his company got some quality engineering done. Everybody wins!

By the way, does this mean that you are retracting the complaints you had about income inequality, since GDP is such a lousy measure of well-being?

Jon said...

Which argument about GDP and inequality are you referring to. I don't think I argued what you think I argued.

Darf Ferrara said...

You're right, I was thinking of the argument about GDP growth post Bretton-Woods. I think that the one thing that the article gets right is that GDP is a lousy measure of what is "good". Going further, interpersonal utility makes it difficult to compare how well individuals are doing simply based on a monetary values such as salary or wealth. The idea that more vacation time is better than more salary depends on whether an individual wants more of one than the other.

HispanicPundit said...

Didn't we discuss this already? Here is my take on the issue, from our previous discussion.