As someone who lives in Europe, my impression is that the continent's first priority is how to keep paying the fat pensions it pays to its retired class, the second priority is how to keep paying the pensions followed by a distant third about how to keep paying the pensions.
For me it's remarkable how the continent lives looking at the past and not at the future. The older people I talk to show no concern about Europe's economic future, they're always dismissive about the problems Europe faces. They're stuck in the 70's, 80's or 90's it seems.
IMHO, we do want retirement (it is essential that past a certain age, you are not forced to work anymore - at least because you are too tired to work, at best so you can enjoy life full time as you see fit - retired people also babysit and run a lot of important stuff thanks to their free time, so they still work but outside wage labor in a way - so much so that many things would break if they didn't).
This being established, retired people obviously need money to live. You have basically two existing systems for this:
1. You make the working class pay for currently retired people
2. You make each people put money aside for later
The first choice is a collective solution to a collective problem, and also provides guarantees.
The second choice is liable to economical crises, mistakes and is an individualistic solution to a collective problem. The risk is having people who don't have any money and who are forced to work at the end of their life (if they can still find a position and are still healthy enough for this).
Of course, 1 is not perfect: there are laws defining the minimum amount of work you need to do in your like to have a good pension. If you don't work "enough" in your life, no good retirement for you. But that's a problem both options have.
It's unclear what benefit that second solution brings to the table, in both cases there's some amount of money that needs to be set aside for stuff to work. Only, in the first solution, that's safely managed for you, you pretty much don't have to worry about it.
Pensions don't seem that fat as well.
As someone currently working, I'll take the "Europe pays the pensions" aka "We, the working class, pay the pensions", aka the first option, any day. I'm happy to pay for the retirement of my retired fellows.
I would worry more about the ultra-riches stealing money from everyone and digging the inequality gap.
I don't know why everyone is being so dismissive. Pensions in Europe nowadays are just transfers from young and poor to older and wealthier. The average French pensioner (not working) has a higher income than the average French worker (working).
You might want to look up the value of those "fat pensions" - a lot of them are substantially less than US Social Security.
e.g. in Ireland, the state contributory pension (aka what you paid egregious social security taxes for) maxes out at about $18,000 per year. The equivalent pension from US Social Security is about $45,000.
This depends on the country. Austria is doing quite well here.
Why are there so many homeless people in the USA? If your assumption were to work, it would not be the case. You are simply making an incomplete analysis here.
> Why are there so many homeless people in the USA? If your assumption were to work, it would not be the case.
Are you somehow assuming homeless people are all old retired people eligible for pensions? I literally cannot follow your logic here in any way no matter how much I try.
Now wondering: is the US "richer" because its pensioners are "poorer"? Because that doesn't quite seem to be the case. I'm not familiar with US pensions discourse. I suspect if you count Medicare (14% of Federal spending, 3% of GDP) as a type of "pension" the situation looks different.
I'm not sure what this obsession is at the moment with 'fat pensions'. Pensions are far from 'fat', and (european) governments have been very dishonest about what will happen state pensions for decades. Governments simply don't have the nerve or honesty to tell the population what's going to happen and get the message across to everyone. And at the same time, youth unemployment is really high. So what do you want, old people to retire 'early' to make way for young people to work, thus requiring a 'fat pension', or do you want them to never retire, and thus not need a 'fat pension'?
Europe's problems can be summed up by Hanlon's razor: Never attribute to malice that which is adequately explained by stupidity.
Which is the next part:
> The older people I talk to show no concern about Europe's economic future, they're always dismissive about the problems Europe faces. They're stuck in the 70's, 80's or 90's it seems.
As an 'older' person in the UK, I've always been 'concerned' about the economic future of the continent, but we've elected increasingly incompetent politicians. When you get older you'll have the same opinions. Politics has gone from being a job trying to manage the country, to being an all expenses paid job with little risk other than re-election, and little responsibility because everything is 'the EU', or a quango (quasi-governmental organization - basically still the Government but not really sackable either).
Consider the UK - ARM was 'ours'. Could you imagine the US allowing it to be sold off to a foreign country? Well, you can guess what ukgov did.
Sabre Engines wanted a tiny amount of Government funding, who said no, so they closed and sold off some incredibly useful tech.
Maggie Thatcher sold off, and perhaps had to sell off, public utilities such as water, with little extra thought as to 'what happens next'. Well, that's 'gets bought out by foreign companies and channels profit abroad instead of reinvesting'.
Then there's the very European union-centric industries that often shoot themselves in the foot and ruin entire industries (UK car manufacturing spent more time on strike in the 1970s than building cars and can you guess what happened).
> I'm not sure what this obsession is at the moment with 'fat pensions'.
Pretty sure it's a concerted effort to force the EU countries to adopt private/financialized pension schemes and abandon the still dominant socialized model. The huge new inflow into the financial markets would make some people very very rich, and conveniently would also transform low pensions from a societal problem into a problem of bad personal foresight instead.
(Not accusing GP in particular, they probably just picked it up in the media)
I can talk about France specifically, the working age population feels squeezed currently because a big portion of their wages goes to pay pensions, let's be specific:
for a 100k paid by your employer, 46k goes to you after all taxes, 45k goes to social contribution, of those 20k specifically to paying current pensioners[1].
It doesn't look so bad, unless you take into account the inversion of the demographic pyramid, the workers will get progressively more squeezed as older folks enter retirement, and are unlikely to get themselves good retirement given that there isn't enough kids to support them when they will be old.
And so, the rational move is to save more to fund your retirement while already getting pressured by relatively low wages and low saving potential due to the taxes, and France doesn't really have a growth lever to pull to get us out of this situation as we're already at a very high debt-to-GDP ratio.
So that's why some workers are unhappy with what they call "fat pensions", what also doesn't help in France is that the country is very centralized around Paris and rent is now another channel where money flows from workers to (often) pensioners.
As 2027 elections approaches, it seems we have the options of being even more fiscally irresponsible (the extremes), and the center seems to lean for austerity measures (Edouard Philippe) and none of these are making me optimistic about the future.
Which country exactly has "fat" retirement payments in Europe?
I do have a private pension, and the country where I live a retirement payment can barely pay for a room in a shared apartment in the capital city. Not exactly what I call fat.
"When we compare the European, or at least northern European, economy with that of the United States some points should be indisputable."
So is he comparing Europe to the USA or just Northern Europe? And is he including Switzerland, Norway, Iceland, etc or just the EU? It's rather confusing and I wouldn't even know where to begin in trying to do these comparisons.
I live in Switzerland and have worked on projects all over Europe and work cultures and efficiency are so different everywhere. I definitely have a better quality of life here though than when I lived in the USA.
Europe has either been expanding to include, if you look at EU, or it has always included, if you take the geographical boundary, a lot of very poor southern and eastern European countries.
I think EU expansion is a good thing but it makes even well intentioned comparisons difficult if e.g. Germany re-absorbs East Germany, or other nations join the EU
Poland was about 20% of the USA by PPP in the 90s, 40% when it joined the EU and 60% now.
Is that a success or a failure? It can definitely make some stats look worse.
Americans, who mostly have no experience living or traveling abroad, can be counted on to not be able to find any of the countries you mentioned on a map. They either view all of Europe as either a sort of socialist utopia with fancy prisons and decent healthcare, or else as a bureaucratic disaster of taxes and restrictions. Although some will also say it's merely a museum. (I personally think it's a bit of all those things).
To be clear, though, Paul Krugman doesn't need to be specific at all, because he's simply pandering to one specific audience in America who hold one specific one of those stereotypes.
> What should worry Europe, instead, are the geopolitical implications of US/Chinese leadership in advanced technology. We used to have a global economic system overseen by a mostly benign and in any case law-abiding hegemon. That system was, however, gradually eroding with the rise of China, and has now taken a drastic hit with America’s abandonment of the rules it largely created.
> a mostly benign and in any case law-abiding hegemon.
Lol wat?
> has now taken a drastic hit with America’s abandonment of the rules it largely created.
"When gentlemen can't win the competition, they change the rules". Because of course. It's not "international law order", it's "rules-based order". And it didn't start with Trump; e.g. the US started gutting the WTO's Appellate Body during Obama's term.
Krugman so badly wants this to be true. But handwaving away massive difference in IT innovation and in practical data like housing size and vastly greater American consumption does not make it true. Just 20% of European homes even have air conditioning. European industrial energy costs are more than 2x the U.S. Don't ignore the data. Europe is behind and falling behind at an ever-faster clip. And the strategic issues of continued vast unskilled migration into Europe and the need to re-arm in a post-NATO world are further economic burdens that will tip most of Europe into middle-income status.
I don't buy into this critique at all... I live in two cities in Europe. I like our size of houses. I like not needing to own a car. I like that in both of the cities I live in there are 8 supermarkets within ten minutes walk. I like that I never have to think about healthcare costs. I've never felt the need for air conditioning. And when I see Americans' lives, they seem full of crappy stuff that I have no need for, food that's positively unhealthy. Not to mention guns, etc, etc.
I think it's valid to question whether and how GDP translates into happiness, but America (as a whole) does just have .. more and bigger.
We will eventually start cottoning on to air conditioning as people realize it's a bidirectional solution that can warm you in the winter. The need is genuinely less than the US as Europe is both further north (New York is the same latitude as Lisbon) and currently benefiting from the Atlantic evening out the temperature.
I don't have AC so by the above measurement I'm poor. But I have a heat pump which circulates chilled water through the floors. So which way should we compare now?
Air conditioning is not needed in most of Europe, no idea why that would be a measurement of economic advancement.
Krugman presented arguments with data, it'd be nice to see your data that counters Krugman's argument, not a whole different set of measurements that you are defining as the basis of comparison. It's just a strawman with makeup.
There is really no similary between the most populous areas of Europe and, say, Columbus or Chicago or .... The summers in eastern America are savage and inhuman; the winters, by contrast, are ... savage and inhuman.
People complain about the weather in England, but in fact there are palm and eucalyptus growing in Oxford, though it's bad taste and you might lose one in a bad winter. It never gets hot and never gets cold.
I realized after living in UK and Germany that the religious fanatics who founded USA must really have been oppressed to put up with it.
I am using the adjusted numbers. Official are 2k and scientist adjusted are around 12k. WHO's estimate for Europe is 175k. I do find all the European justification here to show a lot about what Europeans actually think of their own citizens. The numbers make us look bad and so the numbers must be wrong because we can never look bad in this way is such a modern American leadership way of looking at it.
Poland, Germany, Switzerland, Benelux, the Nordics, Baltics, most of Central Europe don't have a need for AC. It might make life more comfortable during some days of heatwaves but it's definitely not a need to survive.
Southern Europe has experienced more scorching heat the past 1-2 decades and AC is going to become a necessity given the trend of climate warming but it's not Arizona.
Also I think people aren't aware that the USA doesn't use the same methodology to count heat-related deaths, a heart attack from someone working out in the fields on 35C+ weather is not counted as heat-related, Scientific American published an article about it back in 2024[0].
> It might make life more comfortable during some days of heatwaves but it's definitely not a need to survive.
Well I don't know , I lived 4 years in the Netherlands in one of those apartments that have huge windows on every room. During the summer some days got closed to 37-38c and the sun sets at what , 11PM ? I was pretty scared our newborn might die - I put a fan right on her of course but I'm not sure this setup is OK at all.
No. Even now, in the longest days of the year, the sun sets at 10pm, and we're not even into the hottest days of the year for another month or two as the days continue to get shorter again.
The numbers you cite are from last year, which was unusual historically as records, not the norm. The sunset in the hottest month will be 9pm, and those highs of >30C are experienced for less than one week. I think you're missing the point of the parent posters where it's over 25C in the large parts of the US for 3-4 months of the year.
A need is a necessity, is AC a necessity or a comfort? It's only a need if without it your life would be so insufferable that you cannot live normally, otherwise it's not a need but a comfort.
Many things aren't needed, survival doesn't mean biological survival so you don't need to bring up "a smartphone isn't a need" since without one a life in modern society becomes quite insufferable (banking access, government access, etc.).
It's the reality: it doesn't get hot in the summer and it doesn't get cold in the winter. The climate is 'maritime' and moderated by the immense influence of the Atlantic/Mediterranean/Baltic. On the east coast of USA you might expect the same, but the wind is from the west and thus to some extent reproduces the savage 'continental' weather of the interior. The main body of Americans live in extremely hostile weather environments.
So you are saying AC is a need in the Netherlands for the odd week of heatwaves in a year?
Installing thousands to millions of AC compressors, piping, having the grid ready for the spike in consumption when all these ACs turn on, etc. is a necessity that needs to happen because The Hague is reaching 30C for 3 days in the next week?
Interesting how little lives are worth to Europeans given how many die due to heat each year. To beat America in indifference to one's own people is an actual achievement.
I am unaware of the US situation, but there are vast differences in housing quality across Europe. Compare the Netherlands, even bad parts of the countryside, to the Greek or Romanian countryside. WTF! And where you'd need air conditioning (Southern Italy, Sicily, Southern Greece) you won't find air conditioning, outside of some very rich enclaves (like parts of Malta, a small part of Sicily, some Greek and Adriatic Islands). And there's 1 reason for that: they can't afford it.
And if we're being entirely honest ... most large European cities I've seen certainly could benefit from having half thrown down and rebuilt. As well as essentially all of the smaller ones.
And as for one of Paul Krugman's comment "Americans, however, have more stuff, that is, material goods: Our houses and cars, in particular, are much bigger. Europeans, on the other hand, have more time ..."
That's not because Europeans don't want big houses, don't want infinite stuff. In very large parts of Europe they can't afford it. And they certainly want more and longer jobs. They just can't find jobs that pay enough to justify giving up free time. But would they work, say, 44 hours per week for a 15-20% raise? (because it's 15-20% more compared to a 38 hour week) I know people that wouldn't, but I also know people that would love such an opportunity.
> That's not because Europeans don't want big houses, don't want infinite stuff. In very large parts of Europe they can't afford it.
But this is true of the USA as well, large parts of it people cannot afford a big house, a bigger car, and they have fewer options of smaller dwellings, smaller cars to choose from when they cannot afford the biggest, most expensive options.
Wanting infinite stuff is definitely much less prevalent in Europe than in the USA, the materialistic culture is very different (and it differs even more between countries in Europe).
> I am unaware of the US situation, but there are vast differences in housing quality across Europe. Compare the Netherlands, even bad parts of the countryside, to the Greek or Romanian countryside. WTF!
Compare the housing quality in rich coastal cities of the USA vs the Appalachia, WTF!
Such a weird way of thinking, we achieved so many technological breakthroughs that can benefit everyone, why should anyone fall behind? Worldwide we see the opposite i.e. the world is converging more and more. And even so I don’t care, you may consume twice or thrice as much as me if you like! I don’t think most people even want to compete with the US on purchase power equality anymore, life’s pretty good here and it keeps getting better, consumption in itself isn’t an end goal. Almost all countries here are happier and healthier than the US and people spend much less time working and more time enjoying themselves.
I love spectating this criticism of Europe on X. I'm European, but live in NZ and just landed in Netherlands a week ago. While I'm generally very supportive of EU, it is indeed noticeable:
1. iOS asked me to select a default browser, but it wasn't working thus none of the links open for a while.
2. Cookie banners are holy-sheeet. I do see them while in NZ, but holy heck this is next level. They are huge and everywhere.
3. Gemini AI (and its cousin AI summaries in YouTube) is not available. Grok on my mates Tesla - not available (I think it's been out over a year on US).
4. It wasn't even a hot day, but no cooling in Amsterdam trams is insanity.
5. Some shops don't accept foreign cards. Also cards not accepted in red light district at all lol.
Bottle caps haven't bothered me, tiny housing is understandable and biking to places was nice. Workers everywhere seem unhappy and don't seem to be eager to work, but thats likely just local nuance.
This comment probably won't go down well but your point irked me.
> And the strategic issues of continued vast unskilled migration into Europe
If only there wasn't a global power invading countries for oil reserves over the years and causing mass migration and destabilising those places?
Also have you considered 100% of the EU doesn't NEED air conditioning?
Come back when you have a minimum wage and universal healthcare. Your IT comment forgets the fact that the US allows tech companies to do whatever they like all in the pursuit of "progress" when infact you're in a situation now that your personal privacy is a memory of a dream.
I will just note that there was quite a lot of European participation in the bombing of Libya, as well as the Iraq war. European policy towards North Africa has basically been "hopefully they'll drown before they cross the Mediterranean" rather than pro-stability.
The EU and NATO didn't not initialize those wars. We supported the US after they made false claims for WMDs. And now when Ukraine needs some more support, they're AWOL all of a sudden. Because their "democracy" runs on the whims of a TV show personality who didn't even win more than 50% of the vote.
> If only there wasn't a global power invading countries for oil reserves over the years and causing mass migration and destabilising those places?
Do you think that's the only reason for 'mass migration'?
Consider that in the last 20 years internet access is *globally ubiquitous* because of cheap mobile phones.
That in turn means that people in the poorest parts of Africa that 20 years ago had no idea whatsoever about how 'rich' Europe is in comparison, in 2026 not only can see what they don't have, but can communicate with those than can help them make that journey by land and sea.
War and envy (for want of a better word) are the two reasons.
> War and envy (for want of a better word) are the two reasons.
Envy will bring more skilled workers and you'd be surprised how many people don't want to leave their homeland. Regardless of the grass being greener. Infact it's those specific reasons why there is an integration problem, because they moved without choice so fairly don't feel obligated to integrate.
Because oftentimes towns and cities were not build from the ground up in a completely new continent, and most of all, are made of bricks or cement, not wood.
> Just 20% of European homes even have air conditioning.
And half of the percentage of obese population so draw your conclusions.
I work in the energy sector for a manufacturer you’ve definitely heard of.
The USA is ahead in certain industries, mostly information technology, but decades behind in others.
Literally, you have technology most of Europe moved away from in the 80s(air insulated HV switchgear), where most of Europe now mostly builds gas insulated switchgear.
Europa has a GDP on par with the USA.
Honestly what do people think the product is, wine and cheese?
Dutch living in Colorado. You can spin stats any way you like. But if you look at the last few waves of companies. Machines for making chips, manufacturing chips, designing chips, search, social, mobile, AI.
If this was a soccer match the score would be 10-1 (yee ASML). Not only that the winners in these industries tend to compound and grow.
There are many great things about the EU, that are outside of this competitive ecosystem. But I don't think sticking our heads in the sand is really a great idea.
> Machines for making chips, manufacturing chips, designing chips, search, social, mobile, AI.
Read the article before trying to refute it. What it says is precisely that the US advantages are restricted to the IT sector that you mention. It is in the remainder of the economy that the EU pulls ahead.
I'm European. I think Europe’s main problem is that its leaders and citizens are more concerned with how to distribute wealth than with creating it. In many countries, much more importance is placed on pensions than on the education of the younger generations.
Krugman’s analysis may well be accurate, but the problem is that China is now beginning to assert itself in sectors where Europe used to be strong (manufacturing, automotive, etc.). If our software is American and our hardware is Chinese, who will pay for the pensions?
Why did he reduce Europe to north Europe in the beginning of the article? The EU is not just North Europe. It sounds to me a bit like cherry picking to make his case.
It's difficult to consider Krugman's takes seriously after his very flawed 1998 predictions. Perhaps he's uniquely poorly suited to understanding the role of technology in economic development, and is best described as an economist with a very limited outlook outside his narrow discipline?
I've never heard of this guy before, but this is extremely petty. Are you suggesting you've never been wrong in your life? Do you think it would be interesting if, rather than engaging with anything you said, people dragged out a quote from 28 years ago to dismiss everything you say? This is an embarrassingly low form of ad hominem.
He's basically repeating his mistake - underestimating the relevance of technological progress - from 28 years ago, except now it's explicitly in service of his political bias.
For your information: Paul Krugman is a Nobel memorial prize winning economist. He used the publicity of his award to become, essentially, a political commentator, including an opinion column in the most important American newspaper of record, the New York Times. He's not a random commenter on a website, without any ambitions of relevance. He uses the aura of being an eminent scientist to give his personal opinions a veneer of respectability that they perhaps do not merit.
The US is the IT-supplier of the world. I don't know how large a % of that comes for outside the US. But with all the 'shenanigans' of the Trump regime and the trust the US has lost due to that, that should lead to losing IT business from the rest of the world.
In other words, If Europe would disavow using US IT, as would be the wise choice I think, then Europe might close the gap.
I just hope this is not just wishful thinking though.
It will be a spectacular crash if/when it crashes. But there is this old adage of 'the market can remain irrational much longer than you can stay solvent'.
> Yet productivity growth as conventionally measured has in fact been much faster in the US than in Europe. How can this be consistent with the fact that there has been virtually no change in the relative value of goods produced per hour? That’s the apparent US-Europe paradox. What explains it is the fact that the US and European economies produce different mixes of goods – a qualifier that is not picked up in the conventional measures of productivity. And that difference in mixes of goods affects the prices at which productivity measures should be calculated in order to make a meaningful comparison across countries
One of the most important things to recognize is that the vernacular meaning of "productivity", which would be something to do with how hard people work and how many widgets they turn out, is not the same as the technical economic term "productivity", which is roughly GDP divided by hours worked. This causes a lot of discourse with people talking past each other.
The examples relate to tech companies. If you think about, say, Youtube, that (a) contributes a lot to US GDP and (b) doesn't cost European consumers all that much. Indeed, a lot of stuff produced by Silicon Valley is ""free"" (ad-supported or free tier) at the point of use.
This is before we get into complicated cases like international attribution of revenue, such as Apple Ireland.
I understand your point but YouTube isn't a good example as it has its global development team headquartered here in Zürich.
Multinationals really confuse comparisons - when I bought a macbook here in Europe it got shipped to me directly from china. My money went to apple Switzerland. At no time in the process was the USA involved.
Well, yes, but in both cases of Youtube revenue and Apple, that money is eventually going to show up in the accounts of the US parent company and its share price, even if it's in a Swiss bank account.
It's very hard to say where internet economic productivity ""is""! That might cause it to be over- or under- counted.
Multinationals are disincentivized to send revenue back to the USA because they are taxed twice on it - they're taxed in the country it was earned in and they're taxed again in the USA as income because they are essentially completely different companies.
Trump had a tax holiday in his first term where companies were allowed to send revenue back to the USA without being taxed. If I remember correctly apple sentt back billions and used it for stock buybacks.
So money earned outside the USA rarely makes it back.
Money usually stays in the community where it is paid. Even within the US, local businesses keep something like 80% of the money local in the community (spent at other local businesses or banks, city taxes, etc.), meanwhile buying from a chain store has most of the money shipped to some tax haven in Texas or Arkansas.
Its interesting that voices going on about European decline gets louder and louder the more the US slips into fragmentation, autocracy, debt, lower life expectancies, trust, and so on.
Just the best moment then to do something ourselves about that real or perceived decline, because the US isn't there to support anymore. And China or Russia have zero interest to support anything else - not that they should, I was just dropping names.
So, what he says is that productivity gains in the U.S. are:
1. Only apparent when measured at 2017 prices but not when measured at PPP (purchase power).
2. In the US most of productivity gains are concentrated at the tech industry and California. The rest of the economy (and most of non-California states) are less productive than Europe.
Personally, I am not entirely convinced but these are interesting arguments. It is loudly obvious to any non-American that the US healthcare is very far away from being "productive".
The apologetism of American socioeconomic system is a thing endemic to HN. Even Reddit with its USA-skewed demographic is far less delusional, for all its other faults. Same for other social media like YT. I suppose it's a distinction of well-to-do SWEs (and VCs alike) vs actual working class majority.
> Last week I wrote about the question of whether Europe is really falling behind the United States economically.
The USA has a few key areas where it benefits a lot - for instance, the oil mafia that is controlled by the USA, e. g. the old petrodollar deal, though with the defeat of the USA against Iran (look at the "Memorandum of Understanding" signed by Trump recently) this may change a little. But an even more important area of US dominance is the software situation. The US corporations control WAY too much already. That is not good. Then add the fact that the arms industry as well as the nuclear arsenal, is also heavily controlled by the USA; arms industry is more varied, but the nuke issue is a problem, even more so when you see that Putin has Trump by the ... precious. Europe needs to disentangle as much as possible from the USA in every area. And this is not happening. Quite the opposite, Merz is constantly surrendering and submitting to Trump. He is like the ultimate US politician. Recently the EU parliament also submitted to defeat by agreeing to Trump's selfish trade deal. And european nukes? Where are these?
So unfortunately, Europe is not doing well. It is not doing completely wrong either, but it is acting like an old man who wants to submit to others. And I don't see the current generation of politicians in the EU to want to change this. They get too much financial kickback to hold down other european citizens right now. Nobody will fix the EU either, so - a deadlock situation.
Krugman. He couldn’t write a single sentence in an article about Europe without mentioning Trump.
This is the same guy that said the internet was not going to be a big thing, made wildly incorrect predictions about everything from post-Covid inflation to Obama-era growth predictions, and was oblivious to the downsides of zero interest rate policy.
At this point, Krugmans work should be considered entertainment at best, or maybe political comedy.
As someone who lives in Europe, my impression is that the continent's first priority is how to keep paying the fat pensions it pays to its retired class, the second priority is how to keep paying the pensions followed by a distant third about how to keep paying the pensions.
For me it's remarkable how the continent lives looking at the past and not at the future. The older people I talk to show no concern about Europe's economic future, they're always dismissive about the problems Europe faces. They're stuck in the 70's, 80's or 90's it seems.
IMHO, we do want retirement (it is essential that past a certain age, you are not forced to work anymore - at least because you are too tired to work, at best so you can enjoy life full time as you see fit - retired people also babysit and run a lot of important stuff thanks to their free time, so they still work but outside wage labor in a way - so much so that many things would break if they didn't).
This being established, retired people obviously need money to live. You have basically two existing systems for this:
1. You make the working class pay for currently retired people
2. You make each people put money aside for later
The first choice is a collective solution to a collective problem, and also provides guarantees.
The second choice is liable to economical crises, mistakes and is an individualistic solution to a collective problem. The risk is having people who don't have any money and who are forced to work at the end of their life (if they can still find a position and are still healthy enough for this).
Of course, 1 is not perfect: there are laws defining the minimum amount of work you need to do in your like to have a good pension. If you don't work "enough" in your life, no good retirement for you. But that's a problem both options have.
It's unclear what benefit that second solution brings to the table, in both cases there's some amount of money that needs to be set aside for stuff to work. Only, in the first solution, that's safely managed for you, you pretty much don't have to worry about it.
Pensions don't seem that fat as well.
As someone currently working, I'll take the "Europe pays the pensions" aka "We, the working class, pay the pensions", aka the first option, any day. I'm happy to pay for the retirement of my retired fellows.
I would worry more about the ultra-riches stealing money from everyone and digging the inequality gap.
I don't know why everyone is being so dismissive. Pensions in Europe nowadays are just transfers from young and poor to older and wealthier. The average French pensioner (not working) has a higher income than the average French worker (working).
You might want to look up the value of those "fat pensions" - a lot of them are substantially less than US Social Security.
e.g. in Ireland, the state contributory pension (aka what you paid egregious social security taxes for) maxes out at about $18,000 per year. The equivalent pension from US Social Security is about $45,000.
This depends on the country. Austria is doing quite well here.
Why are there so many homeless people in the USA? If your assumption were to work, it would not be the case. You are simply making an incomplete analysis here.
See: https://www.forbes.com/sites/andrewbiggs/2019/03/15/u-s-reti...
It is from 2019, but things are still somewhat similar today.
5 European countries have higher homelessness rates than the US, total EU numbers also dwarf the US (1.3m vs 750k)
https://ourworldindata.org/data-insights/how-common-is-homel...
https://www.notus.org/us-news/homeless-report-hud-president-...
https://www.dw.com/en/eu-sees-rise-in-homelessness-amid-hous...
900 k for the EU: https://de.euronews.com/my-europe/2023/09/05/bericht-fast-90...
You third link uses different metrics than the other two.
> Why are there so many homeless people in the USA? If your assumption were to work, it would not be the case.
Are you somehow assuming homeless people are all old retired people eligible for pensions? I literally cannot follow your logic here in any way no matter how much I try.
Now wondering: is the US "richer" because its pensioners are "poorer"? Because that doesn't quite seem to be the case. I'm not familiar with US pensions discourse. I suspect if you count Medicare (14% of Federal spending, 3% of GDP) as a type of "pension" the situation looks different.
I'm not sure what this obsession is at the moment with 'fat pensions'. Pensions are far from 'fat', and (european) governments have been very dishonest about what will happen state pensions for decades. Governments simply don't have the nerve or honesty to tell the population what's going to happen and get the message across to everyone. And at the same time, youth unemployment is really high. So what do you want, old people to retire 'early' to make way for young people to work, thus requiring a 'fat pension', or do you want them to never retire, and thus not need a 'fat pension'?
Europe's problems can be summed up by Hanlon's razor: Never attribute to malice that which is adequately explained by stupidity.
Which is the next part:
> The older people I talk to show no concern about Europe's economic future, they're always dismissive about the problems Europe faces. They're stuck in the 70's, 80's or 90's it seems.
As an 'older' person in the UK, I've always been 'concerned' about the economic future of the continent, but we've elected increasingly incompetent politicians. When you get older you'll have the same opinions. Politics has gone from being a job trying to manage the country, to being an all expenses paid job with little risk other than re-election, and little responsibility because everything is 'the EU', or a quango (quasi-governmental organization - basically still the Government but not really sackable either).
Consider the UK - ARM was 'ours'. Could you imagine the US allowing it to be sold off to a foreign country? Well, you can guess what ukgov did.
Sabre Engines wanted a tiny amount of Government funding, who said no, so they closed and sold off some incredibly useful tech.
Maggie Thatcher sold off, and perhaps had to sell off, public utilities such as water, with little extra thought as to 'what happens next'. Well, that's 'gets bought out by foreign companies and channels profit abroad instead of reinvesting'.
Then there's the very European union-centric industries that often shoot themselves in the foot and ruin entire industries (UK car manufacturing spent more time on strike in the 1970s than building cars and can you guess what happened).
> I'm not sure what this obsession is at the moment with 'fat pensions'.
Pretty sure it's a concerted effort to force the EU countries to adopt private/financialized pension schemes and abandon the still dominant socialized model. The huge new inflow into the financial markets would make some people very very rich, and conveniently would also transform low pensions from a societal problem into a problem of bad personal foresight instead.
(Not accusing GP in particular, they probably just picked it up in the media)
I can talk about France specifically, the working age population feels squeezed currently because a big portion of their wages goes to pay pensions, let's be specific:
for a 100k paid by your employer, 46k goes to you after all taxes, 45k goes to social contribution, of those 20k specifically to paying current pensioners[1].
It doesn't look so bad, unless you take into account the inversion of the demographic pyramid, the workers will get progressively more squeezed as older folks enter retirement, and are unlikely to get themselves good retirement given that there isn't enough kids to support them when they will be old.
And so, the rational move is to save more to fund your retirement while already getting pressured by relatively low wages and low saving potential due to the taxes, and France doesn't really have a growth lever to pull to get us out of this situation as we're already at a very high debt-to-GDP ratio.
So that's why some workers are unhappy with what they call "fat pensions", what also doesn't help in France is that the country is very centralized around Paris and rent is now another channel where money flows from workers to (often) pensioners.
As 2027 elections approaches, it seems we have the options of being even more fiscally irresponsible (the extremes), and the center seems to lean for austerity measures (Edouard Philippe) and none of these are making me optimistic about the future.
[1]: https://code.travail.gouv.fr/outils/simulateur-embauche
Which country exactly has "fat" retirement payments in Europe?
I do have a private pension, and the country where I live a retirement payment can barely pay for a room in a shared apartment in the capital city. Not exactly what I call fat.
"When we compare the European, or at least northern European, economy with that of the United States some points should be indisputable."
So is he comparing Europe to the USA or just Northern Europe? And is he including Switzerland, Norway, Iceland, etc or just the EU? It's rather confusing and I wouldn't even know where to begin in trying to do these comparisons.
I live in Switzerland and have worked on projects all over Europe and work cultures and efficiency are so different everywhere. I definitely have a better quality of life here though than when I lived in the USA.
"(actually the euro area)", it says so multiple times in the article.
Europe has either been expanding to include, if you look at EU, or it has always included, if you take the geographical boundary, a lot of very poor southern and eastern European countries.
I think EU expansion is a good thing but it makes even well intentioned comparisons difficult if e.g. Germany re-absorbs East Germany, or other nations join the EU
Poland was about 20% of the USA by PPP in the 90s, 40% when it joined the EU and 60% now.
Is that a success or a failure? It can definitely make some stats look worse.
Well Italy for example is a founding member and joined in 1958. So not including it makes as much sense as not including Germany.
Americans, who mostly have no experience living or traveling abroad, can be counted on to not be able to find any of the countries you mentioned on a map. They either view all of Europe as either a sort of socialist utopia with fancy prisons and decent healthcare, or else as a bureaucratic disaster of taxes and restrictions. Although some will also say it's merely a museum. (I personally think it's a bit of all those things).
To be clear, though, Paul Krugman doesn't need to be specific at all, because he's simply pandering to one specific audience in America who hold one specific one of those stereotypes.
> What should worry Europe, instead, are the geopolitical implications of US/Chinese leadership in advanced technology. We used to have a global economic system overseen by a mostly benign and in any case law-abiding hegemon. That system was, however, gradually eroding with the rise of China, and has now taken a drastic hit with America’s abandonment of the rules it largely created.
This is the underlying theme of Europe 2031, a scenario ostensibly in the spirit of AI 2027. (https://europe2031.ai/; discussed in https://news.ycombinator.com/item?id=48489996)
> a mostly benign and in any case law-abiding hegemon.
Lol wat?
> has now taken a drastic hit with America’s abandonment of the rules it largely created.
"When gentlemen can't win the competition, they change the rules". Because of course. It's not "international law order", it's "rules-based order". And it didn't start with Trump; e.g. the US started gutting the WTO's Appellate Body during Obama's term.
> We used to have a global economic system overseen by a mostly benign and in any case law-abiding hegemon
Shall we starting to list chronologically US's interference with foreign states now, or... ?
> We used to have a global economic system overseen by a mostly benign and in any case law-abiding hegemon
This is probably due to the op being the denizen of a country which has not been affected by the aforesaid hegemon
Krugman so badly wants this to be true. But handwaving away massive difference in IT innovation and in practical data like housing size and vastly greater American consumption does not make it true. Just 20% of European homes even have air conditioning. European industrial energy costs are more than 2x the U.S. Don't ignore the data. Europe is behind and falling behind at an ever-faster clip. And the strategic issues of continued vast unskilled migration into Europe and the need to re-arm in a post-NATO world are further economic burdens that will tip most of Europe into middle-income status.
I don't buy into this critique at all... I live in two cities in Europe. I like our size of houses. I like not needing to own a car. I like that in both of the cities I live in there are 8 supermarkets within ten minutes walk. I like that I never have to think about healthcare costs. I've never felt the need for air conditioning. And when I see Americans' lives, they seem full of crappy stuff that I have no need for, food that's positively unhealthy. Not to mention guns, etc, etc.
I think it's valid to question whether and how GDP translates into happiness, but America (as a whole) does just have .. more and bigger.
We will eventually start cottoning on to air conditioning as people realize it's a bidirectional solution that can warm you in the winter. The need is genuinely less than the US as Europe is both further north (New York is the same latitude as Lisbon) and currently benefiting from the Atlantic evening out the temperature.
I don't have AC so by the above measurement I'm poor. But I have a heat pump which circulates chilled water through the floors. So which way should we compare now?
Air conditioning is not needed in most of Europe, no idea why that would be a measurement of economic advancement.
Krugman presented arguments with data, it'd be nice to see your data that counters Krugman's argument, not a whole different set of measurements that you are defining as the basis of comparison. It's just a strawman with makeup.
That does not seem to ring true. 175k people die annually of heat in Europe.
https://www.who.int/europe/news/item/01-08-2024-statement--h...
There is really no similary between the most populous areas of Europe and, say, Columbus or Chicago or .... The summers in eastern America are savage and inhuman; the winters, by contrast, are ... savage and inhuman.
People complain about the weather in England, but in fact there are palm and eucalyptus growing in Oxford, though it's bad taste and you might lose one in a bad winter. It never gets hot and never gets cold.
I realized after living in UK and Germany that the religious fanatics who founded USA must really have been oppressed to put up with it.
So despite a nicer climate more people die of heat in Europe than the US which just makes Europe look a lot worse.
either that or the U.S doesn't consider the same data when making its stats
https://www.scientificamerican.com/article/u-s-deaths-from-h...
Where two sets of stats are concerned always make sure they actually are using the same criteria for reporting.
I am using the adjusted numbers. Official are 2k and scientist adjusted are around 12k. WHO's estimate for Europe is 175k. I do find all the European justification here to show a lot about what Europeans actually think of their own citizens. The numbers make us look bad and so the numbers must be wrong because we can never look bad in this way is such a modern American leadership way of looking at it.
Yeah that used to be true 40 years ago maybe
Most of Europe doesn't need air conditioning? By what measures/what large countries don't have any need there?
Poland, Germany, Switzerland, Benelux, the Nordics, Baltics, most of Central Europe don't have a need for AC. It might make life more comfortable during some days of heatwaves but it's definitely not a need to survive.
Southern Europe has experienced more scorching heat the past 1-2 decades and AC is going to become a necessity given the trend of climate warming but it's not Arizona.
Also I think people aren't aware that the USA doesn't use the same methodology to count heat-related deaths, a heart attack from someone working out in the fields on 35C+ weather is not counted as heat-related, Scientific American published an article about it back in 2024[0].
[0] https://www.scientificamerican.com/article/u-s-deaths-from-h...
Baltics definitely have need for AC for few weeks in summer. Just because some people get by, doesn't mean there isn't a need.
> It might make life more comfortable during some days of heatwaves but it's definitely not a need to survive.
Well I don't know , I lived 4 years in the Netherlands in one of those apartments that have huge windows on every room. During the summer some days got closed to 37-38c and the sun sets at what , 11PM ? I was pretty scared our newborn might die - I put a fan right on her of course but I'm not sure this setup is OK at all.
Yeah 10PM is still really bad, the house becomes a freaking oven
The numbers you cite are from last year, which was unusual historically as records, not the norm. The sunset in the hottest month will be 9pm, and those highs of >30C are experienced for less than one week. I think you're missing the point of the parent posters where it's over 25C in the large parts of the US for 3-4 months of the year.
If "need" is defined as directly required to survive, but that isn't how I would define it. (So many things aren't "needed" then.)
A need is a necessity, is AC a necessity or a comfort? It's only a need if without it your life would be so insufferable that you cannot live normally, otherwise it's not a need but a comfort.
Many things aren't needed, survival doesn't mean biological survival so you don't need to bring up "a smartphone isn't a need" since without one a life in modern society becomes quite insufferable (banking access, government access, etc.).
Is AC a need or a comfort to you given this?
Some people live their lives quite ok without a smartphone in Germany, for example - so not a need there either.
I don't like the heat, so need for me - comfort is a need.
It's the reality: it doesn't get hot in the summer and it doesn't get cold in the winter. The climate is 'maritime' and moderated by the immense influence of the Atlantic/Mediterranean/Baltic. On the east coast of USA you might expect the same, but the wind is from the west and thus to some extent reproduces the savage 'continental' weather of the interior. The main body of Americans live in extremely hostile weather environments.
Around 40C isn't hot? Around -20C isn't cold, for example?
>Air conditioning is not needed in most of Europe
Uhh... https://imgur.com/a/MTTMKDr
So you are saying AC is a need in the Netherlands for the odd week of heatwaves in a year?
Installing thousands to millions of AC compressors, piping, having the grid ready for the spike in consumption when all these ACs turn on, etc. is a necessity that needs to happen because The Hague is reaching 30C for 3 days in the next week?
Interesting how little lives are worth to Europeans given how many die due to heat each year. To beat America in indifference to one's own people is an actual achievement.
Buddy, this is far from three days a year in some specific Dutch city. We have this happening all over the continent. You're just out of touch.
I am unaware of the US situation, but there are vast differences in housing quality across Europe. Compare the Netherlands, even bad parts of the countryside, to the Greek or Romanian countryside. WTF! And where you'd need air conditioning (Southern Italy, Sicily, Southern Greece) you won't find air conditioning, outside of some very rich enclaves (like parts of Malta, a small part of Sicily, some Greek and Adriatic Islands). And there's 1 reason for that: they can't afford it.
And if we're being entirely honest ... most large European cities I've seen certainly could benefit from having half thrown down and rebuilt. As well as essentially all of the smaller ones.
And as for one of Paul Krugman's comment "Americans, however, have more stuff, that is, material goods: Our houses and cars, in particular, are much bigger. Europeans, on the other hand, have more time ..."
That's not because Europeans don't want big houses, don't want infinite stuff. In very large parts of Europe they can't afford it. And they certainly want more and longer jobs. They just can't find jobs that pay enough to justify giving up free time. But would they work, say, 44 hours per week for a 15-20% raise? (because it's 15-20% more compared to a 38 hour week) I know people that wouldn't, but I also know people that would love such an opportunity.
> That's not because Europeans don't want big houses, don't want infinite stuff. In very large parts of Europe they can't afford it.
But this is true of the USA as well, large parts of it people cannot afford a big house, a bigger car, and they have fewer options of smaller dwellings, smaller cars to choose from when they cannot afford the biggest, most expensive options.
Wanting infinite stuff is definitely much less prevalent in Europe than in the USA, the materialistic culture is very different (and it differs even more between countries in Europe).
> I am unaware of the US situation, but there are vast differences in housing quality across Europe. Compare the Netherlands, even bad parts of the countryside, to the Greek or Romanian countryside. WTF!
Compare the housing quality in rich coastal cities of the USA vs the Appalachia, WTF!
Such a weird way of thinking, we achieved so many technological breakthroughs that can benefit everyone, why should anyone fall behind? Worldwide we see the opposite i.e. the world is converging more and more. And even so I don’t care, you may consume twice or thrice as much as me if you like! I don’t think most people even want to compete with the US on purchase power equality anymore, life’s pretty good here and it keeps getting better, consumption in itself isn’t an end goal. Almost all countries here are happier and healthier than the US and people spend much less time working and more time enjoying themselves.
I love spectating this criticism of Europe on X. I'm European, but live in NZ and just landed in Netherlands a week ago. While I'm generally very supportive of EU, it is indeed noticeable:
1. iOS asked me to select a default browser, but it wasn't working thus none of the links open for a while.
2. Cookie banners are holy-sheeet. I do see them while in NZ, but holy heck this is next level. They are huge and everywhere.
3. Gemini AI (and its cousin AI summaries in YouTube) is not available. Grok on my mates Tesla - not available (I think it's been out over a year on US).
4. It wasn't even a hot day, but no cooling in Amsterdam trams is insanity.
5. Some shops don't accept foreign cards. Also cards not accepted in red light district at all lol.
Bottle caps haven't bothered me, tiny housing is understandable and biking to places was nice. Workers everywhere seem unhappy and don't seem to be eager to work, but thats likely just local nuance.
This comment probably won't go down well but your point irked me.
> And the strategic issues of continued vast unskilled migration into Europe
If only there wasn't a global power invading countries for oil reserves over the years and causing mass migration and destabilising those places?
Also have you considered 100% of the EU doesn't NEED air conditioning?
Come back when you have a minimum wage and universal healthcare. Your IT comment forgets the fact that the US allows tech companies to do whatever they like all in the pursuit of "progress" when infact you're in a situation now that your personal privacy is a memory of a dream.
I will just note that there was quite a lot of European participation in the bombing of Libya, as well as the Iraq war. European policy towards North Africa has basically been "hopefully they'll drown before they cross the Mediterranean" rather than pro-stability.
The EU and NATO didn't not initialize those wars. We supported the US after they made false claims for WMDs. And now when Ukraine needs some more support, they're AWOL all of a sudden. Because their "democracy" runs on the whims of a TV show personality who didn't even win more than 50% of the vote.
> If only there wasn't a global power invading countries for oil reserves over the years and causing mass migration and destabilising those places?
Do you think that's the only reason for 'mass migration'?
Consider that in the last 20 years internet access is *globally ubiquitous* because of cheap mobile phones.
That in turn means that people in the poorest parts of Africa that 20 years ago had no idea whatsoever about how 'rich' Europe is in comparison, in 2026 not only can see what they don't have, but can communicate with those than can help them make that journey by land and sea.
War and envy (for want of a better word) are the two reasons.
> War and envy (for want of a better word) are the two reasons.
Envy will bring more skilled workers and you'd be surprised how many people don't want to leave their homeland. Regardless of the grass being greener. Infact it's those specific reasons why there is an integration problem, because they moved without choice so fairly don't feel obligated to integrate.
> Don't ignore the data.
Ah, the classic "don't ignore the data that confirms my worldview, ignore just the data that contradicts it".
Also known as "lies, damn lies and statistics".
said by an American!
> in practical data like housing size
Because oftentimes towns and cities were not build from the ground up in a completely new continent, and most of all, are made of bricks or cement, not wood.
> Just 20% of European homes even have air conditioning.
And half of the percentage of obese population so draw your conclusions.
I work in the energy sector for a manufacturer you’ve definitely heard of.
The USA is ahead in certain industries, mostly information technology, but decades behind in others.
Literally, you have technology most of Europe moved away from in the 80s(air insulated HV switchgear), where most of Europe now mostly builds gas insulated switchgear.
Europa has a GDP on par with the USA. Honestly what do people think the product is, wine and cheese?
[dead]
Dutch living in Colorado. You can spin stats any way you like. But if you look at the last few waves of companies. Machines for making chips, manufacturing chips, designing chips, search, social, mobile, AI.
If this was a soccer match the score would be 10-1 (yee ASML). Not only that the winners in these industries tend to compound and grow.
There are many great things about the EU, that are outside of this competitive ecosystem. But I don't think sticking our heads in the sand is really a great idea.
> Machines for making chips, manufacturing chips, designing chips, search, social, mobile, AI.
Read the article before trying to refute it. What it says is precisely that the US advantages are restricted to the IT sector that you mention. It is in the remainder of the economy that the EU pulls ahead.
I'm European. I think Europe’s main problem is that its leaders and citizens are more concerned with how to distribute wealth than with creating it. In many countries, much more importance is placed on pensions than on the education of the younger generations.
Krugman’s analysis may well be accurate, but the problem is that China is now beginning to assert itself in sectors where Europe used to be strong (manufacturing, automotive, etc.). If our software is American and our hardware is Chinese, who will pay for the pensions?
Standards are relative. Given most parts of the world have developed and as you mentioned China, Europe is now behind.
> The risk of being cut off from strategically important technologies, once minimal, is now very real.
Good timing given the Fable 5 story.
Why did he reduce Europe to north Europe in the beginning of the article? The EU is not just North Europe. It sounds to me a bit like cherry picking to make his case.
It's difficult to consider Krugman's takes seriously after his very flawed 1998 predictions. Perhaps he's uniquely poorly suited to understanding the role of technology in economic development, and is best described as an economist with a very limited outlook outside his narrow discipline?
https://www.snopes.com/fact-check/paul-krugman-internets-eff...
I've never heard of this guy before, but this is extremely petty. Are you suggesting you've never been wrong in your life? Do you think it would be interesting if, rather than engaging with anything you said, people dragged out a quote from 28 years ago to dismiss everything you say? This is an embarrassingly low form of ad hominem.
He's basically repeating his mistake - underestimating the relevance of technological progress - from 28 years ago, except now it's explicitly in service of his political bias.
For your information: Paul Krugman is a Nobel memorial prize winning economist. He used the publicity of his award to become, essentially, a political commentator, including an opinion column in the most important American newspaper of record, the New York Times. He's not a random commenter on a website, without any ambitions of relevance. He uses the aura of being an eminent scientist to give his personal opinions a veneer of respectability that they perhaps do not merit.
> 10% of the US economy is IT
The US is the IT-supplier of the world. I don't know how large a % of that comes for outside the US. But with all the 'shenanigans' of the Trump regime and the trust the US has lost due to that, that should lead to losing IT business from the rest of the world.
In other words, If Europe would disavow using US IT, as would be the wise choice I think, then Europe might close the gap.
I just hope this is not just wishful thinking though.
More pertinently, at the moment 100% of US economic growth is IT (or more precisely, AI). Let's see for how long...
It will be a spectacular crash if/when it crashes. But there is this old adage of 'the market can remain irrational much longer than you can stay solvent'.
I'm not holding my breath for this bubble.
> Yet productivity growth as conventionally measured has in fact been much faster in the US than in Europe. How can this be consistent with the fact that there has been virtually no change in the relative value of goods produced per hour? That’s the apparent US-Europe paradox. What explains it is the fact that the US and European economies produce different mixes of goods – a qualifier that is not picked up in the conventional measures of productivity. And that difference in mixes of goods affects the prices at which productivity measures should be calculated in order to make a meaningful comparison across countries
One of the most important things to recognize is that the vernacular meaning of "productivity", which would be something to do with how hard people work and how many widgets they turn out, is not the same as the technical economic term "productivity", which is roughly GDP divided by hours worked. This causes a lot of discourse with people talking past each other.
The examples relate to tech companies. If you think about, say, Youtube, that (a) contributes a lot to US GDP and (b) doesn't cost European consumers all that much. Indeed, a lot of stuff produced by Silicon Valley is ""free"" (ad-supported or free tier) at the point of use.
This is before we get into complicated cases like international attribution of revenue, such as Apple Ireland.
I understand your point but YouTube isn't a good example as it has its global development team headquartered here in Zürich.
Multinationals really confuse comparisons - when I bought a macbook here in Europe it got shipped to me directly from china. My money went to apple Switzerland. At no time in the process was the USA involved.
> Multinationals really confuse comparisons
Well, yes, but in both cases of Youtube revenue and Apple, that money is eventually going to show up in the accounts of the US parent company and its share price, even if it's in a Swiss bank account.
It's very hard to say where internet economic productivity ""is""! That might cause it to be over- or under- counted.
Multinationals are disincentivized to send revenue back to the USA because they are taxed twice on it - they're taxed in the country it was earned in and they're taxed again in the USA as income because they are essentially completely different companies.
Trump had a tax holiday in his first term where companies were allowed to send revenue back to the USA without being taxed. If I remember correctly apple sentt back billions and used it for stock buybacks.
So money earned outside the USA rarely makes it back.
Money usually stays in the community where it is paid. Even within the US, local businesses keep something like 80% of the money local in the community (spent at other local businesses or banks, city taxes, etc.), meanwhile buying from a chain store has most of the money shipped to some tax haven in Texas or Arkansas.
Its interesting that voices going on about European decline gets louder and louder the more the US slips into fragmentation, autocracy, debt, lower life expectancies, trust, and so on.
Just the best moment then to do something ourselves about that real or perceived decline, because the US isn't there to support anymore. And China or Russia have zero interest to support anything else - not that they should, I was just dropping names.
So, what he says is that productivity gains in the U.S. are:
1. Only apparent when measured at 2017 prices but not when measured at PPP (purchase power).
2. In the US most of productivity gains are concentrated at the tech industry and California. The rest of the economy (and most of non-California states) are less productive than Europe.
Personally, I am not entirely convinced but these are interesting arguments. It is loudly obvious to any non-American that the US healthcare is very far away from being "productive".
US healthcare is extremely productive. It is also quite expensive.
Care to explain? If it is expensive how can it be productive?
Also, if it is productive why do the US has a smaller lifespan that so many OECD countries?
The apologetism of American socioeconomic system is a thing endemic to HN. Even Reddit with its USA-skewed demographic is far less delusional, for all its other faults. Same for other social media like YT. I suppose it's a distinction of well-to-do SWEs (and VCs alike) vs actual working class majority.
They are also weirdly pro-Israel and pro-surveillance (see any stories about Palantir or Palestine get flagged within minutes).
"It is difficult to get a man to understand something, when his salary depends on his not understanding it." - Upton Sinclair
> Last week I wrote about the question of whether Europe is really falling behind the United States economically.
The USA has a few key areas where it benefits a lot - for instance, the oil mafia that is controlled by the USA, e. g. the old petrodollar deal, though with the defeat of the USA against Iran (look at the "Memorandum of Understanding" signed by Trump recently) this may change a little. But an even more important area of US dominance is the software situation. The US corporations control WAY too much already. That is not good. Then add the fact that the arms industry as well as the nuclear arsenal, is also heavily controlled by the USA; arms industry is more varied, but the nuke issue is a problem, even more so when you see that Putin has Trump by the ... precious. Europe needs to disentangle as much as possible from the USA in every area. And this is not happening. Quite the opposite, Merz is constantly surrendering and submitting to Trump. He is like the ultimate US politician. Recently the EU parliament also submitted to defeat by agreeing to Trump's selfish trade deal. And european nukes? Where are these?
So unfortunately, Europe is not doing well. It is not doing completely wrong either, but it is acting like an old man who wants to submit to others. And I don't see the current generation of politicians in the EU to want to change this. They get too much financial kickback to hold down other european citizens right now. Nobody will fix the EU either, so - a deadlock situation.
Krugman. He couldn’t write a single sentence in an article about Europe without mentioning Trump.
This is the same guy that said the internet was not going to be a big thing, made wildly incorrect predictions about everything from post-Covid inflation to Obama-era growth predictions, and was oblivious to the downsides of zero interest rate policy.
At this point, Krugmans work should be considered entertainment at best, or maybe political comedy.
Krugman sure is a good, probably even great, writer. His prose is almost effortless to consume. On the content, very interesting.