How Much Better is the United States?


Ethan Gach

I write about comics, video games and American politics. I fear death above all things. Just below that is waking up in the morning to go to work. You can follow me on Twitter at @ethangach or at my blog, And though my opinions aren’t for hire, my virtue is.

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16 Responses

  1. Avatar Michael Drew says:

    This is great stuff.  To some extent, measuring economic activity is like nailing Jello to the wall.Report

    • Quite. I took a pass on the last conversation as I was on the road when it happened, but numbers are calculated differently. This is true whether we’re looking at GDP, “median income”, unemployment, or what-have-you.

      And even when they’re measured the same way, of course, they sometimes tell only part of the story. And if they’re not telling the part of the story that someone likes, of course, they’re likely as not to call you a damn liar and authoritatively cite Lies, Damn Lies, and Statistics.Report

    • Avatar Michael Drew in reply to Michael Drew says:

      …I should hasten to add that I’m not saying economic data is worthless or something.  Consistent measurements, constantly defined, taken in one country and compared thereto at various times, obviously provide great amounts of highly illuminating insight about what is happening economically in that country; and that it’s not as if the adjustments can’t be made to allow productive international and inter-regional comparisons: they definitely can.   It’s just thats it’s a bit like nailing Jello the experience of actually doing so.Report

      • Avatar Renee in reply to Michael Drew says:

        Measurements like GDP are all artificial.  There is no such thing, other than the fact that we defined it.  We defined it in such a way to be useful, for certain things.  When we treat these measurement outside of their specific definitions, trouble ensues.  I’m not a full fledged Austrian, but I think they are on to something when they differentiate between economic measurements and real wealth (whatever the heck that is).Report

        • Avatar Tom Van Dyke in reply to Renee says:

          Why is GDP “artificial?”  It may be a crude tool and an imprecise one, but we can certainly use it to ascertain real differences if they’re big enough, the US vs. Europe @ 50%, Europe vs. South America or South America vs. Africa.

          Germany vs. Greece.  Who would question that?  This is real, not artificial.Report

  2. Avatar James Hanley says:

    Can’t comment on all of this right now, but it almost sounds like you’re condemning hedonic indexing, which would be the wrong response.

    If all you’re doing is pointing out that hedonic and non-hedonic measures can’t be directly compared, then, yes, and ignore my first sentence.Report

    • Avatar DensityDuck in reply to James Hanley says:

      Seems to me that’s exactly what he’s doing–suggesting that American “GDP growth” is due to A: paper money in the stock market, and B: lying.  Meanwhile Europe has trains and free doctors and government-mandated vacation.Report

  3. Avatar DensityDuck says:

    Criticizing “hedonic indexing” is just a tarted-up restatement of “yeah the poor might be better off but they’re still poooooooor”.  If you honestly don’t think that widespread distribution of telecommunications devices improves the overall quality-of-life (and, therefore, economic productivity) of a nation, then there’s not much to say.Report

  4. Avatar Ethan Gach says:

    I didn’t intend to be taken as criticizing hedonic indexing, only that if the same methodoloy is applied to calculating European per capita GDP, the results we get will be different from the ones used in Davidson’s article.Report

    • By ignoring the European debt crisis, Davidson’s critics don’t engage his thesis.

      The thesis isn’t really about Germany, which is the obvious lion of the European economy, if not the sole tent pole.  Yet they niggle over 0.5% in GDP, as if that’s a key support of Davidson’s argument.

      [My own argument is that Germany’s birthrate is 1.4, well under the replacement rate of 2.1 or so.  This is the truest measure of the health of a society, and all the rosy OECD stats on material well-being pale.]

      The core of Davidson’s thesis isn’t the 20% difference between the German and US GDPs, but that Europe as a whole averages 50% lower!

      Further, the argument that at least the Eurostates provide more social services is an artful one but not a rigorous one: it ignores that the US actually does have a safety net, food stamps, aid to women & children, Medicaid for the poor and Medicare for the old.  We are not comparing apples to apples.

       A reporter in Greece once complained after I compared her country to Mississippi, America’s poorest state. She’s right: the comparison isn’t fair. The average Mississippian is richer than the average Greek.

      That’s Davidson’s starting point, not splitting hairs over 0.5% of Germany’s GDP.

      Further, that the question isn’t whether the generous Eurostate doesn’t give one a warm & fuzzy, but that its sustainability is at question [and this touches as well on Germany’s birthrate, one of the lowest in the entire world]:

      European leaders like to mock the U.S. for its inequality and lack of social safety net. Though, for now, it looks as if Europe is headed for a two-tier society without any plan for improving the lot of the lower tier. How can Brussels excite a generation of ambitious young people — the ones who will determine Europe’s future success — when too many of them are offered low-wage, short-term work in stagnant industries to pay for the far more generous benefits their elders receive? How can Europe compete if its youth experience the flexibility while the old get the security?

      It’s time to update the discussion from a decade ago, and from the OECD–an advocacy front for Eurostatism–defining the debate.


    • Ethan,

      Thanks for the clarification.  Ignore my first sentence.

      I want to object to the quoted bit on military spending, though.

      The United States spends more than 4.0 percent of GDP on the military as opposed to less than 1.0 percent across Western Europe. One can argue whether this spending is necessary, but this is another 3.0 percent of GDP that is not improving living standards.

      It’s wrong in a couple of ways.  First, most of that military spending ultimately ends up as someone’s salaries, so it is improving living standards, for someone.  It’s just not possible to make such a blanket statement about military spending without logically implicating any government spending.

      More importantly, it’s half right in a sense that makes the implication all wrong.  That is, military spending probably has a lower multiplier effect than many other forms of government spending.  But what that means is that it’s a drag on the economy, and if we account for that drag, the U.S. actually looks even better.  We’ve achieved our high GDP despite some extra drag from military spending.

      And as for healthcare spending, any such analysis ought to point out that U.S. pharmaceutical consumers are subsidizing European pharmaceutical consumers.  That accounts for some, although by no means all, the difference in health care costs.

      Some of the other things are true, though, and the comparison is not easy, in part because we and they have chosen apples and oranges as policies.

      Oh, as to Krugman’s “And all I can say is, whoa!””  If that’s truly all he could say about it, then he’s truly traded in his economist hat for his partisan pundit’s hat.Report

      • Nob Akimoto Nob Akimoto in reply to James Hanley says:

        I dunno, when you look at a lot of the half-assed writing that passes for economics blogging by noted and important economists, I don’t think Krugman should be judged on any harsher standard than the Arnold Klings or Greg Makiws of the world.

        That said, if half of US services sector growth is actually coming from the financial services industry, there’s something fundamentally structurally deficient with the US economy. We can make arguments about the desirability of a strong financial services sector, but accounting for half of total service sector growth shows an overweighting of priorities that’s mindboggling.

        I haven’t looked at the van Ark paper yet, but I wonder how the UK compares to other countries in that regard. Given how important the City is to the UK’s economy, I’d imagine there’s a lot of overlap in services growth.Report

  5. Avatar Shannon's Mouse says:

    Other interesting bits of data to compare are GDP per hour worked and GDP per ton of CO2 emitted.  Until the Great Recession, the US was pretty even with most of Europe in the former category — sometimes better, sometimes worse depending on the country.  Regarding the latter, the US compares terribly to pretty much all of Europe.