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Is EU richer than the US ?

  1. Oct 30, 2007 #1
    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 Then there is never any guarantee that your "skills" aren't worthless and "out of date", hence back to school, etc.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 ?
  2. jcsd
  3. Oct 30, 2007 #2

    jim mcnamara

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    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/faculty/hodgson/Courses/so11/stratification/income&wealth.htm [Broken]

    shorter tem view:

    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.
    Last edited by a moderator: May 3, 2017
  4. Oct 30, 2007 #3
    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.
    Last edited: Oct 30, 2007
  5. Oct 30, 2007 #4
    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.
    Last edited: Oct 30, 2007
  6. Nov 4, 2007 #5
    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."
  7. Nov 4, 2007 #6
    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).
  8. Nov 4, 2007 #7
    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:
  9. Nov 4, 2007 #8


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    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/income/histinc/h01ar.html [Broken]

    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.
    Last edited by a moderator: May 3, 2017
  10. Nov 4, 2007 #9
    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.
    Last edited: Nov 4, 2007
  11. Nov 4, 2007 #10
    I mean in general the Economist is correct.
  12. Nov 4, 2007 #11
    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/region/07-09/wages.cfm [Broken]
    Last edited by a moderator: May 3, 2017
  13. Nov 4, 2007 #12


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    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.
  14. Nov 5, 2007 #13
    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.
    Last edited: Nov 5, 2007
  15. Nov 5, 2007 #14
    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.
    Last edited by a moderator: Nov 5, 2007
  16. Nov 5, 2007 #15

    jim mcnamara

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    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).
  17. Nov 5, 2007 #16


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    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.
  18. Nov 5, 2007 #17


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    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.
  19. Nov 6, 2007 #18

    jim mcnamara

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    How about #2? Follow the links, I guess, if I hashed the text my apologies.

    I flat out do not buy your negative wealth argument, except in terms of the US tax laws.
    The point I was trying to make was that measuring income and measuring how well off you are are not synonymous. Again equating your argument about 'negative net wealth'
    with high net income is also essentially non-productive.

    EXample of how true net worth affects your life postively IMO:
    My brother owns a well-run store, his net income is below $US50000. The store grosses about $US1800/day. This means his cash flow is good. He taps into the store cash as needed, and then replaces it. People on a $50000 salary cannot do that. Example: find $2500 to fix a roof leak. Salaried folks borrow instead, increasing debt load.

    His true net wealth on paper is currently large. As far as the tax roles go, his net worth is negative. He owes more on the store than it is assessed. And his ability to purchase things matches that figure of his true net worth. His net income does not.
  20. Nov 6, 2007 #19
    Interesting real life example of how things work. The other poster said he was 31 and getting better like all his friends. So the older you are the harder it is to find the good job ? Then if all you need is 3 months para-legal course to land 50,000 dollars why go to college ? I think it is a fluke case. The point is they are all fluke cases, maybe the concept of generalizing in economics is fundamentally flawed. There are a million examples showing hard lives and poverty even after "working hard" and a million examples of the opposite. There probably is no general rule.

    But the benefits thing is BS. If you get sick your hospital bill can become 200,000 dollars, there goes all your money! even if you are insured by your IBM company for example they will maybe pay 20,000 dollars because other things aren't covered.

    Then the guy who is worth 100,000 dollars to his company, does that imply 80 hour work weeks? then he is actually making 50,000 dollars for a standard 40 hour week. And how much is the stress and surely crappy boss that just wants him to stay until midnight cost ? I am just guessing but there are many variables. Your statistics don't mean a thing. If you got a thousand people making 1000 dollars a year and one making a billion, then the average is a million dollars a year but no one is making it. So beware of numbers and false impressions and generalizations and economic theories in general. They are all deeply flawed.
  21. Nov 6, 2007 #20
    Actually I think you are alittle misguided here. Your example of the average person making a million dollars is misleading becaue economics can tell us a bigger picture. You happened to give a statistic that is infact misleading strictly to back you own point. Surely there are others that would paint a better picture of your given scenario such if you found the median wealth and i'm sure there are plenty more. Sure statistics can never predict on an idividual's circumstances but then again you asked the question about the average American wealth. You seem to have more of a problem about our health care, as if that defines our wealth. I personally dont know anyone that has encountered the problems you suggeseted. I know they are out there but you make it seem like they are rampent.
  22. Nov 6, 2007 #21

    So of those initial points I made all together in my first post, health care expenses, job security, college costs, tax costs, little vacation, home costs etc. and that compared to the EU, you suggest that all those points are not very important in the US in the larger scheme of things ? I accept being completely wrong, really. I just thought that all those points in my first point do add up and comparing them to the EU, it gives me a sensation of the US being actually poorer.

    Granted there are more choices in the US for jobs, you can move more easily from state to state, each state - market is different and you can find a nice corner to make good, I agree. But all those points I made do add up and the US is starting to resemble the EU more and more in many subtle ways like home prices near big cities having high paying jobs. This was not the case for the US 10, 20 years ago, you could find affordable homes in LA or NYC, but things started to resemble London or Tokyo, high home prices and rents etc. I may be all wrong, but if you all have examples where things are much better than as I see them I accept and appreciate these other views.
  23. Nov 6, 2007 #22
    Because college grads have the ability to move up and make more money 5 - 10 years after graduation, and get paid more than $50,000. Besides, people don't only make decisions about careers based on money. Many people would rather have a job paying $30,000 in a field they love, as opposed to a $50,000 job in something they don't like. Most PhDs can make more money in the private sector, but they choose to work in academia where the pay is not so high. It's no mystery why they choose academia, they go into academia because they find the career choice personally more rewarding.

    Do you understand the difference between median and mean? The reason you mentioned above is the exact reason they use the median income. In your example above, the mean income would be $1 million, while the median income would be $1000.

    Maybe. Or maybe you're generalizations, impressions, logic, and reasoning is deeply flawed. I wonder which is more likely?
  24. Nov 6, 2007 #23
    You should really read this book, as it discusses most of the issues you discussed above:

    In my opinion, it is not clear that health care is worse in the US. This topic is currently being heavily debated, and I'd rather not get into it, because there is a post elsewhere on this forum which discusses this exact topic. You should check it out if you want to hear some of the arguments.

    Job security is probably not as sound as you think in the EU. It may be more difficult to get fired, but it's also more difficult to get hired. I'd take our labor market any day.

    As far as tax costs, we probably have lower tax rates then most (all?) of the EU.

    I'm not sure about home prices. You'd have to compare places both in and out of cities. My guess is that people get more home for their money in the US.

    I also doubt that the US is poorer. However, everyone has different tastes/preferences, so if you prefer life in the EU, then great. I however, think I'd enjoy living in the US more. When you are talking about standards of living for the median person though, it seems to me the US does better.

    Well, these major US cities probably have high rents and home prices for multiple reasons. Some are just that fact that many people want to live there because they like it and enjoy the job opportunities and the big city feel. Some economists claim that the reason property is very expensive in some of these major US cities, is because of regulation/government/policy. Zoning laws and building restrictions have made home prices go up, because in effect it's made homes more scarce, and more people have wanted to move there, but these regulations have made it more difficult to house these people.
  25. Nov 6, 2007 #24
    Oh so you were going on a sensation. Well I have been to quite a few countries in the EU and I would say in general I felt right at home (besides cultural differences). Everything was alittle smaller like rooms, streets, food portion sizes hahaha (this I actually hated, I go hungry in Europe). I have never lived over there but there doesnt by my preception seem to be a huge difference. Though I cant say what I would have noticed going over to the EU 50 years ago. Maybe I would have noticed huge difference.

    Well of course the EU and the rest of the world is catching up to the US. It's called the Law of diminshing returns. The richer a country gets the harder it gets to continue in a positive direction. I dont think the US economy is going down, but rather EU is coming up. Certainly creating the euro helped. US wasnt going to be head for ever.
  26. Nov 6, 2007 #25


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    You know what - yeah, I was wrong about that. I was thinking about it incorrectly - people don't often have negative wealth due to their loans, just very near zero (as shown in your link). Many young people (like me) buy houses on virtually no downpayment, which puts them in a lot of debt, but the equity in their house is still there, for a slightly positive net worth.
    Your income determines how nice of a car and house you can buy, how many toys you can buy, etc. It seems pretty obvious to me.
    You aren't comparing apples to apples. Income stats are gross, and your brother therefore has a very large income, but also very high expenses.
    Worth and wealth are the same thing. If he owes more than the value of the store, it is negative. Also, if he's borrowing against his store, that's still debt. He still has to pay it back (otherwise, he's just taking more income, which then also blows your theory out of the water).

    Anyway, the semantics of that aside, are you making the argument that the income distribution shows that the poor are getting poorer? Because you haven't shown that. Just like with income, the fact that the wealth distribution is getting wider does not imply that the poor are getting poorer. That's that myth again.
    Last edited: Nov 6, 2007
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