Is EU richer than the US ?

oldtobor

Is EU richer than the US ?

For those of you who know both country - continents, is the EU richer than the USA from the point of view of the general wealth and well being of the majority of the population ?

I know the statistics say the US is very rich, but the real day to day life of Americans seem much poorer from a real life experience point of view. Am I wrong ?

I list why :

1) Free health care in the EU, don't have to worry too much if you get sick.
In the US if you are laid off you may lose health insurance that doesn't even cover all things, so constant fear and worry. And many companies want to get rid of all health expenses, so you pay all in the end which could be more than 200 dollars a month etc.

2) Job security is higher in the EU, the unions have more power, the system seems to have more protection, the hire , fire system is much softer in the EU. In the US anyone can get fired at any moment for any reason at all, even no reason. So the system is very "free" as hire and fire, but takes a high toll on stress, etc.

3) College education is almost free, costs very little. In the US you pay much more compared to the EU, at least 2,000 dollars a year. Then there is never any guarantee that your "skills" aren't worthless and "out of date", hence back to school, etc.

4) Taxes in the US are actually quite high and just about as high as EU. Property taxes, and others do add up to the Eu of almost 30%.

5) The US pensions are lower, even much lower and there is no security in what you will get. The US may give 1,000 dollars a month for 30 years labor (social security), the EU is higher, maybe 1,300 dollars.

6) Home prices in the US are coming close to being as expensive as the EU. In the EU an average house is about 250,000 dollars and the US is about there. With much worser build quality of European homes. US McMansions seem to almost fall apart because of bad build quality, the EU is all stone - concrete (but much smaller homes).

7) No vacations for American workers, the EU has almost 2 months. The American workers fear being a slacker and getting fired - laid off if they take any time off hence worry - stress.


Just some ideas, but all and all the EU seems to have a higher standard of living working less hours and enjoying. I know it is a complex debate but do any of you know both places and have any ideas ?

jim mcnamara

I'm less than sure about the numbers you gave.

I do know that in the US the distribution of wealth in the population has changed, with an increase in inequality over time:
http://www.faculty.fairfield.edu/fac...ome&wealth.htm

shorter tem view:
http://www.levy.org/pubs/wp_502.pdf

What I think you are talking about is the fact that the lower ownership group - 40% of the US only has about [tex]1/2[/tex] of the pie. I don't think that is the case in EU.

oldtobor

I know that in the US the rich get richer and poor poorer. That the idea of trickling down wealth is at the end of the road. Just the single problem of health insurance is enough to eventually make the US into a third world country, (some third world countries have free health care but maybe not very good).

It is a general sensation that the US workers are losing out. You can more easily find jobs in the US and you may land one that pays you 5,000 dollars a month, but you can be sure that 2 years down the road you won't be in that job anymore because of layoffs and downsizing etc. In the EU the pay is much lower but much more static and stable. There is the fact that there are no starter homes in the EU, they all start at about 250,000 dollars whereas in the US you can find a home for 100,000 dollars but maybe with a long commute to work. All in all I have a feeling the US is becoming poorer for the majority and is losing out as average wealth to the EU.

oldtobor

I find it incredible that such a rich country like the US with such a rich infrastructure, homes etc. gets bogged down on something like health care which is a fundamental thing just like water and bread. It is as if the system (and not only the US but in general) finds ways of creating an artificial scarcity to keep people moving or working, to break the economic equilibrium. It is as if something always has to give, either the house prices start going up or health care becomes insanely expensive and before you know it even food can get insanely expensive (as it may become given the use of food as gasoline for cars, biofuel etc..). Even though the US is rich enough to give it almost all for free to everyone, the system automatically creates scarcity, it automatically creates rich and poor, it constantly breaks the equilibrium, and it increasingly targets the FUNDAMENTAL BASIC GOODS LIKE HOMES AND HEALTH.

Another thing is that the more money flows around in the world, the more the rich don't know what to do with it, thus the more speculation in homes and other goods and the poorer the weaker classes become. Paradoxically the richer the rich get, the poorer the poor risk getting, like if all the rich pump in money into real estate to make the prices go crazy like in London where a 30 square meter home can cost easily 500,000 dollars. The richer the rich, the more money in the world (chinese central banks, stock market etc.) , the poorer the poor.

Economist

Actually, this is a commonly held myth. In the US, both the rich and the poor are getting richer. This has nothing to do with the "trickle down" effect you referred to either. Rather, this is what happens when a country makes economic progress, which creates more wealth for everybody. As JFK said, "A rising tide lifts all boats."

Economist

Probably not.

You're forgetting that these issues give EU employers and incentive to be very selective about who they hire, which is exactly why it is more difficult to get a job in the EU. Furthermore, the people who are most hurt by these policies are low-skill and less educated workers (in other words, these policies disproportionally hurt poor people).

Economist

I hate to tell you this but scarcity is a fact of the world. People have unlimited wants and needs, yet there are only a limited amount of resources to fulfill these unlimited wants and needs. No body "creates scarcity." In all actuality, people try to figure out ways to use these resources more efficiently, which creates wealth and leads to progress.

If you guys actually care about getting some facts on the comparison of the EU and US, then I suggest you check out this book by German reporter Olaf Gersemann:
http://www.amazon.com/Cowboy-Capital...4206519&sr=8-1

russ_watters

That's a very popular lie perpetrated by democratic politicians in the US, but it simply isn't true.

The correct statement would be that the poor get richer but the rich get richer faster.
To some this may be regrettable, but it is also a basic economic reality that exists in virtually every country in the world.

Anyway, for the US, here are the stats (you've probably seen them before since I post them every time someone makes this claim...): http://www.census.gov/hhes/www/incom...inc/h01ar.html

Boiled down to the main point, the bottom 20% of the population has seen a 30% increase in income (inflation adjusted) over the past 40 years. Over the same period, the top fifth has seen a 78% increase in income. And that's household income, by the way - it does not reflect the fact that the average household size has gotten smaller over the past 40 years, so the improvment in living condition is actually greater than the 30% improvement in income. That doesn't make any sense. The unemployment rate in the US is low now and has been for quite some time (compared to most other western nations. Are you making the prediciton that in the next two years it is going to get drasticly higher? Or are you commenting on the high turnover rate in the US? That is largely due to the workers knowing they have other options and the lack of the rediculous controls that other countries (France) have.

For comparing the US and Europe, Europe has seen some major improvements in a lot of areas due to the creation of the EU and the combined economic power competing with the US in certain areas (the dropping value of the dollar is largely the result of this). But the US economy is growing faster than Europe's and has been for quite some time. And that isn't likely to change any time soon.

Is your purpose for posting this thread just general USA bashing via popular myths? There's really no value in that. It isn't a discussion, just a rant with people correcting you afterwards.

wildman

The poor have actually gotten a little poorer in the US for the last 6 years in an absolute sense (when adjusted for inflation) and the rich have become very much richer.

In general it is true though.

wildman

I mean in general the Economist is correct.

Economist

You're right that some studies have shown this, but most of those studies have shown to be flawed. One main reason, is that they don't account for things like fringe benefits and self-employment which have become an increasing role in our economy.

Here's a pretty good article on this exact topic:
http://www.minneapolisfed.org/pubs/r...7-09/wages.cfm

russ_watters

Not true. If you look at the data I provided, you will see that in the past 6 years, the earnings of the top 5% bracket has increased by only 2.5%, and all of that in the past year.

oldtobor

What was meant by this is that if you take 10 people who have been downsized, outsourced, laidoff or whatever, and they were making 5,000 dollars a month, maybe, after finding another job, only one of them is still making that amount, maybe one is even making 10,000 dollars a month but you can be sure that most of the others are making much less, between 2,000 and 3,000 for example. So I don't have precise numbers, but the general impression I have is that if you do lose a good job - company it is not at all easy in the US to get to where you were. Some do but most don't. I know many people who have been through such a change. Am I wrong ? maybe. Do you know of alot of people who have been getting better and better situations ? Thanks for letting me know then. But you know it isn't true, that most get hosed.

Economy is a numbers game, no one knows for sure how it is for everyone, no one knows every single situation, but the impression I get is that given all the original points in the first post, it isn't so easy to keep on saying yes the US is still much richer than the EU. In many cases it seems the exact opposite.

Economist

No, what you're saying is not true. People generally make more money as they get older (because job experience allows people to get higher paying jobs). Most people don't get laid off and then get stuck with an incredibly low paying job (unless it's just for a really short time while they look for another job). For example, if someone is an accountant and they are paid $100,000 a year, they are paid this amount of money for a reason, precisely because they are very productive and they are worth $100,000 to the company. If they get laid off, it is unlikely that they'll only find a job paying $50,000. You have to realize that it was no accident they made $100,000 to begin with.

Also, considering that it is tougher to land a job in the EU, I think your analysis above may apply to the EU better than the US. If someone is laid off in the EU, then it will be tougher to get hired.

jim mcnamara

Just as a matter of clarification -
Russ, is net wealth the same thing in your view as net income?
For net wealth the reverse of what you found for net income appears to be true.
(See the post above).

russ_watters

Yes. As the numbers clearly show, you are wrong. There must be people making more, otherwise the average incomes would be decreasing due to the job turnover and they aren't.

Instead of making up statistics to fit your perceptions, how about acutally looking at the statistics and then dealing with the reality that your perceptions are just perceptions? They aren't real. Virtually everyone I know who has changed jobs on purpose or by layoff fits into that category. Several have seen truly enormous raises. But then, I'm 31 and most of my friends are also young and moving up quickly.

One friend of mine was probably making $35k as a mindless office drone. He got laid off 4 years ago, langushed on unemployment for a year, not really trying to get a new job (why bother if the government will pay you not to work?). When that ran out, he got trained to be a paralegal (takes about 3 months), found a job immediately, and now he makes in excess of $50k.

russ_watters

No, certainly net wealth is not the same as net income. But "wealth" is really a pretty useless measure since an awful lot of people actually have negative net wealth. And often it's the richer who are the most negative.
I don't see a post discussing that.