Study Highlights Plight of Europeans

[Timminz]

Greece specifically has spent too much over the years and their economy is not very diverse. They don't produce much and rely a lot of tourism. It''s a beautiful place but thats about it.

Yeah, and the Vatican has some pretty architecture, but that's about it.

[BigBallinStalin]

Much of Europe has too much Socialism. When more money is taken out of an economy it makes the people poorer. This is why we need to fight high taxes here. When individual citizen have less of their own money they then spend less and then businesses have less revenue, and pay people less or even go out of business. Then we have less jobs and more poverty so the government tries to create more programs to support those people. Then the country can't sustain it because too many people are not contributing anything in taxes.

Replace "socialism" with "central planning" and mention the inefficiencies and additional costs from unintended consequences of such a method, and then we can have a party.

Socialism works great until you run out of other peoples money. Greece specifically has spent too much over the years and their economy is not very diverse. They don't produce much and rely a lot of tourism. It''s a beautiful place but thats about it. You need to be able to produce things in order to have a robust economy. Mining, agriculture, manufacturing etc. This is much of what made America great.

Robust economy:
Of course, as you say, a healthy economy should produce things, but those things don't necessarily need to be produced primarily from the manufacturing or agricultural sector. Heavy reliance on such sectors can be avoided by freer international trade through seeking a nation's comparative advantage, by producing easier-to-produce goods in exchange for goods which are more costly to domestically produce. Also, the services sector is "real fucking neato" when a country's individuals can trade for other goods.


America:
What made America great was that it was a HUGE country with plenty of resources, a "homogenous-enough" population, and that it was practically invulnerable to attack, and geographically, it was well-established for trade. Imagine a country the size of the EU with a relatively similar nationalistic/patriotic population...

Sure, the US' having a more market-orientated economy significantly took advantage of its resources more efficiently... Still, you bring up a fun discussion of central planning v. spontaneous order (through freer markets).

Europe is poor because of Socialism as well as contraception & abortion of their children which contributes to declines in populations in many areas. When you can't even sustain a population their is no growth. Those areas that have Muslims moving in are more than sustaining the population which is good but they are loosing their culture which is a shame.

Contraception and abortion:
The decline in population growth of developed countries (DCs) compared to the higher population growth rates in lesser developed countries (LDCs) is predominantly due to the higher costs of raising children in DCs. DCs also haver lesser mortality rates and thus a lesser need to produce more kids. And there's also higher opportunity costs for having a kid in an LDC. Having more kids endows the family with more farm-hands and also a higher future safety net for the parents. In short, there's plenty more significant reasons, other than contraception and abortion, which explain why population growth rates are lower in DCs.


Europe is poor:
Europe is poor? Compared to which nations? The EU's economy is about $16 trillion in GDP...

And why lump the more market-oriented economies of Western Europe with the typically less market-orientated economies of Eastern Europe? ... : /


Immigration and "loss" of culture:
As for culture, it's not being lost; it is being changed. And for many, change is viewed as unfavorable, which is a conservative view. Most Western Europeans are described as socially liberal (i.e. tolerant of others), yet when it comes to immigration and slightly changing cultures, they tend to be very conservative on that issue.

[PopeBenXVI]

Contraception being only one part of this whole discussion but I believe a very relevant one. America falling much into the same boat but we still have a higher replacement rate as well as high immigration levels.

I wasn't talking about the reasons why people have chosen to have less children. Those are very complicated and numerous and is not just about "farm hands". Materialism is at the top here too. I have 5 kids and they are not that expensive. They just don't get everything they want and neither does our family but we still live just fine. Contraception of all those children is the main reason for population decline. If a population is shrinking it is very hard to have a growing economy without the right amount of immigration. Going from having 7 kids per family down to between 1 & 2 (depending on the area) is a huge shift. (Thats also partly why Social Security is in trouble)

A shrinking population means less demand for everything from all sorts of retail products to housing as well. We have all seen what a lack of home buyers has done to our countries economy the last couple of years. Our reason for that is different but the results of no one buying homes for sale would be basically the same. I have a house I am trying to sell right now. If I could sell it then I would have lots more money to put into the economy. I would buy a car to start. Multiply that by thousands of homes and thousands of cars and other goods being bought. If no one is there to buy the vacant homes because the population is shrinking.....good luck with that.

Good thread topic......gotta go camping for a week now but keep up the discussion. Interesting topic:)

[Haggis_McMutton]

Wait so the solution is perpetual population growth to fuel perpetual economical growth?

There might be a flaw or two in that plan.

Also not really following how socialism/central planning "takes money out of the economy". What happens to that money? Do they burn it? Doesn't it go back into the economy?

[Symmetry]

Contraception being only one part of this whole discussion but I believe a very relevant one. America falling much into the same boat but we still have a higher replacement rate as well as high immigration levels.

I wasn't talking about the reasons why people have chosen to have less children. Those are very complicated and numerous and is not just about "farm hands". Materialism is at the top here too. I have 5 kids and they are not that expensive. They just don't get everything they want and neither does our family but we still live just fine. Contraception of all those children is the main reason for population decline. If a population is shrinking it is very hard to have a growing economy without the right amount of immigration. Going from having 7 kids per family down to between 1 & 2 (depending on the area) is a huge shift. (Thats also partly why Social Security is in trouble)

A shrinking population means less demand for everything from all sorts of retail products to housing as well. We have all seen what a lack of home buyers has done to our countries economy the last couple of years. Our reason for that is different but the results of no one buying homes for sale would be basically the same. I have a house I am trying to sell right now. If I could sell it then I would have lots more money to put into the economy. I would buy a car to start. Multiply that by thousands of homes and thousands of cars and other goods being bought. If no one is there to buy the vacant homes because the population is shrinking.....good luck with that.

Good thread topic......gotta go camping for a week now but keep up the discussion. Interesting topic:)

Wow- I heard you were using twitter now, Pope Ben, but this is a surprise appearance.

[BigBallinStalin]

Well, PopeBen's solution is to have more kids. Loosening immigration restrictions would give what PopeBen wants (unless of course he doesn't like their culture).

As for real growth of the economy, population growth is one of many primary factors, but if population growth was as important as PopeBen thinks, then any country with a high population rate should be correlated with high economic growth (hint: it isn't. Countries with low growth rates tend to have very healthy economies--typically with modest growth, but still, they're wealthy and healthy).

Then you have the population growth on real economic growth debate:

If you follow Malthus, then you'll agree that population growth mostly restricts economic growth. Basically, there's too many people, wages would drop, and almost everyone lives a life of poverty--that, and there's not enough resources to be used, so problems would ensue. (note: China's one-child policy from the 1970s to 1980s, and then they say, "Ah, China is so eff'ing awesome because they restricted population growth. They're real GDP growth rate has averaged about 10% over the past decade or two. (which is massive))


If you follow Adam Smith, then you'll agree that population growth greatly contributes to economic growth and would avoid the Malthus problems, because population growth would check itself. It would self-enforce its own rate to a reasonable level. Then people use India as an example. They note that India didn't directly curb its population, and India's real GDP has been growing at roughly 6% for the past two decades, which is massive too compared to developed countries.

There's also Ricardo, and if you care enough, this website explains a good bit:
http://homepage.newschool.edu/~het/essays/growth/classicalgrowth.htm

[BigBallinStalin]

Also not really following how socialism/central planning "takes money out of the economy". What happens to that money? Do they burn it? Doesn't it go back into the economy?

To me, he's talking about Dead Weight Costs which is experienced from the less efficient production of goods through government-operated and arguably government-owned (yet privately managed) businesses.

Dead weight costs is just waste. It's potential value foregone, which means that had the good been provided by the market, then there would be less dead weight costs, in turn "more money into the economy."

Also, there's the issue of taxation and government spending. Essentially, in order for the government to create something in the economy, it has to take something from the economy (primarily through taxation and also through crowding out). Crowding out refers to the situation when government spending/investment pushes the private sector from those investments. Basically, there's only so much to go around, and the government buys most of it (thus crowding out the private sector).

Crowding out wouldn't matter if the government was 100% efficient as the market in the production of any good over the long-run, but it isn't, so...

I think that's about it.

[PopeBenXVI]

Wait so the solution is perpetual population growth to fuel perpetual economical growth?

There might be a flaw or two in that plan.

Also not really following how socialism/central planning "takes money out of the economy". What happens to that money? Do they burn it? Doesn't it go back into the economy?

As I mentioned - Population is one part of it not the "solution" in and of itself. I would say their are many reasons why Europe is poorer but with shrinking populations I suppose you think businesses have more customers then?

As for your Socialism question, if everyone in my neighborhood is taxed more do you think we are going to spend more or less money at the restaurant by my house? I will give you a hint.....it's not more and restaurants have small margins and need lots of people to eat their. Thats why when the recession really hit in 2009 one of the businesses hurt the most was restaurants. Many went out of business because no one had the money to eat out. You are right though, the money is basically burned and very little finds it's way back into the economy when the Gov is done with it.

[natty dread]

As I mentioned - Population is one part of it not the "solution" in and of itself.

No it's not. It's very simple: there's limited resources on this planet. The more people, less resources available per person. Therefore, increasing population increases poverty.

I would say their are many reasons why Europe is poorer but with shrinking populations I suppose you think businesses have more customers then?

You cannot make things out of nothing. One man's gain is another's loss.

[Augustus Maximus]

Money given to the Government very seldom finds it's way back into the economy. Most of it just travels in a circle where it does not make anyone any profit. Money paid to Government employees goes right back to it in the form of taxes. As does the money given to corporations. A vast majority of the money the government plays with stays within it. It gets shuffled around between the different Departments, it does not find it's way outside of the bureaucracy. Most of the money given out in the form of social programs, is used to by things from companies that produce very cheap goods overseas, so that money disappears into foreign banks. As we have seen any money that flows from the government to profitable enterprises is not really re-invested into the economy. They are hanging onto as much of it as they can. If they were spending it, you would see more hiring, and more large equipment purchases. That is where the government can affect the economy, by making policies that encourage corporations to spend that money.

[Phatscotty]

Money given to the Government very seldom finds it's way back into the economy. Most of it just travels in a circle where it does not make anyone any profit. Money paid to Government employees goes right back to it in the form of taxes. As does the money given to corporations. A vast majority of the money the government plays with stays within it. It gets shuffled around between the different Departments, it does not find it's way outside of the bureaucracy. Most of the money given out in the form of social programs, is used to by things from companies that produce very cheap goods overseas, so that money disappears into foreign banks. As we have seen any money that flows from the government to profitable enterprises is not really re-invested into the economy. They are hanging onto as much of it as they can. If they were spending it, you would see more hiring, and more large equipment purchases. That is where the government can affect the economy, by making policies that encourage corporations to spend that money.

All excellent reasons to stop asking the government take in so much money. Let it go to work in the national and local economies

[saxitoxin]

Dirt and grime, long waiting queues, drug shortages, dental patients forced to extract their own teeth, physicians and nurses from questionably licensed medical schools in backwater countries, now sick Britons have to deal with serial killers rampaging through their hospitals -

SHAKEN hospital patient Sam Edge yesterday told of his terror at being targeted by a ward's suspected serial killer - and how only his own wits saved him. His terrifying ordeal came on the second day of his stay on Ward A1 at Stepping Hill Hospital in Stockport, Gtr Manchester - where murder detectives yesterday stepped up their hunt for the suspected killer.

http://www.thesun.co.uk/sol/homepage/ne ... iller.html

Is there nothing the developed world can do to help these poor people? It really is Clockwork Orange come to life.

[thegreekdog]

Dirt and grime, long waiting queues, drug shortages, dental patients forced to extract their own teeth, physicians and nurses from questionably licensed medical schools in backwater countries, now sick Britons have to deal with serial killers rampaging through their hospitals -

SHAKEN hospital patient Sam Edge yesterday told of his terror at being targeted by a ward's suspected serial killer - and how only his own wits saved him. His terrifying ordeal came on the second day of his stay on Ward A1 at Stepping Hill Hospital in Stockport, Gtr Manchester - where murder detectives yesterday stepped up their hunt for the suspected killer.

http://www.thesun.co.uk/sol/homepage/ne ... iller.html

Is there nothing the developed world can do to help these poor people? It really is Clockwork Orange come to life.

I bet that serial killer would have been turned away in the United States because he didn't have insurance. GO USA!

[General_Tao]

The entire premise of this thread, that of Europe being poorer than the US, is based on raw GDP per capita figures. That's a very flawed and misleading metric, because income distribution in the US is a lot more polarized than in Europe. The income levels at the top are much, much higher than average. This skews the average up. The income difference in Europe is much less pronounced. This is a somewhat new phenomenon, the US' Gini Index has shot up to reach the levels of developing countries like Mexico or Brazil.

Click image to enlarge.

If you look at poverty rates, the US' is at 12%, which is about twice as much as France's or Ireland's. So the idea that Europeans are much poorer really doesn`t hold much water.

Furthermore, if you look at the level of public service in Europe, you find that necessities like health services, transport (rail), high-quality secondary and higher education are much cheaper than in the States. In the US a family household with 3 kids who might be making $200k/yr could spend the majority of their after-tax income on private schools for their kids. You also have a lot more social services, like free/subsidized daycare that don't enter the GDP picture but ultimately all these public services raise the relative wealth/income level of the average European relative to the average American.

Anyone who has lived and traveled significantly in W. Europe would know that the premise and conclusion of the study in this thread is, at best, a big reach.

[saxitoxin]

Using the Gini index is sophistic and irrelevant. The fact that everyone in Portugal are equally poor doesn't establish anything other than everyone people in Portugal are equally poor. Income disparity is meaningless in the frame of this discussion, however, I acknowledge it is a frequent non-sequitur shotgunned out by those seeking to excuse the horrifying, chronic poverty of Europe and Sub-Saharan Africa, rather than advocate for meaningful solutions based in social justice and humanism.

Country A has 400 units of wealth
Person 1 has 125 units
Person 2 has 100 units
Person 3 has 100 units
Person 4 has 75 units

Country B has 1000 units of wealth
Person 1 has 500 units
Person 2 has 300 units
Person 3 has 100 units
Person 4 has 100 units

Country A has a high-level of income equality. Country B has a low-level of income equality.

Nonetheless, the majority of people in Country B are still better off than the majority of people in Country A.

[saxitoxin]

To further example the meaningless of the Gini coefficient to this discussion:

- the UK sits in the same Gini bracket as Mongolia
- Portugal sits in the same Gini bracket as Pakistan

I would not suggest one could analogize the economic situation in UK to Mongolia or in Portugal to Pakistan, but according to the logic of introducing the Gini coefficient into this discussion, I suppose I should.

The Gini coefficient is as relevant to this discussion as the Lionel Bart musical Oliver! Both Gini and Oliver! present a romanticized version of European poverty, where everyone charmingly lives their modest little lives in a neatly ordered and happy state of simple and carefree subsistence, but are ultimately irrelevant to the crux of this conversation.

[General_Tao]

Ginis are extremely relevant when you compare the indices of two countries with fairly similar GDP per capita, like comparing the US to Sweden and Norway. We`re not talking about Mongolia or Pakistan here... If you look at the income levels of the bottom quartile or bottom half in those European countries, you`d find that they are much higher than the US'. Most of the difference in overall GDP/cap between the US and that of most W. European countries comes from the fact that the top incomes are much higher. This obscures the fact that in Europe, people who are at the bottom of the spectrum are by and large much better off than in the US. Not just in terms of raw income figures, but also because of things like their access to higher education and healthcare being far greater.

There is only so much you cannot extrapolate from a GDP per capita figure, because this data in the US hides the fact that the distribution of that income is extremely skewed (as reflected by the much higher Gini coefficient). To illustrate how dramatic this is, I`ll use your example above; if the US were "Country B", its income distribution would actually look like this:

Country B has 1000 units of wealth
Person 1 has 850 units
Person 2, 3, 4 and 5 together have 150 units

...because in the US the top 20% own 85% of the total national income.

http://sociology.ucsc.edu/whorulesameri ... ealth.html

[General_Tao]

To further illustrate my point, while the US' GDP per capita is $46k, the median income is actually only $25k...huge difference. So you can see how much that picture is skewed by the fact that the top incomes are much higher...

You`ll find that the difference between the average and the median in Europe will be much smaller (as reflected by the size of the GIni coeff) and that the median income figures are fairly similar while the bottom income (the focus of this conversation, since we're comparing poverty rates) will be higher in countries like Sweden or Germany than in the US.

Figures from WSJ:
INCOME GROUPS IN THE U.S. Median — $25,076
Top 10% — $87,334
Top 5% — $120,212
Top 1% — $277,983
Top 0.5% — $397,949
Top 0.1% — $1,134,849
Top 0.01% — $5,349,795

http://blogs.wsj.com/wealth/2007/02/01/ ... h-o-meter/

PS: it's also ridiculous to lump Europe with sub-saharan Africa as you did above ("horrifying, chronic poverty of Europe and Sub-Saharan Africa")

[Timminz]

To further illustrate my point, while the US' GDP per capita is $46k, the median income is actually only $25k.

Seriously? That's a pretty hefty negative-skew.

[thegreekdog]

To further illustrate my point, while the US' GDP per capita is $46k, the median income is actually only $25k.

Seriously? That's a pretty hefty negative-skew.

Is that per person or per family or what?

[General_Tao]

$25K is the median income per capita in the US, as quoted by the WSJ. It is indeed a lot smaller than the average income per capita which is the GDP per capita figure, around $46k. That discrepancy is entirely due to the high and superhigh incomes skewing the picture (what's known in math/stats as the moment of the curve).

[thegreekdog]

$25K is the median income per capita in the US, as quoted by the WSJ. It is indeed a lot smaller than the average income per capita which is the GDP per capita figure, around $46k. That discrepancy is entirely due to the high and superhigh incomes skewing the picture (what's known in math/stats as the moment of the curve).

Not sure if you saw my question - how is the median income determined? Is it by person? Is it be family or household? Is it by "working-age person"? Does it include retirement income or social security?

[General_Tao]

Median income is the level at which half the adult population is making more (or less). So yes, by working-age person but I believe it also includes retirees and seniors.

There is a slight difference between family and household.

I think that the latest figures for the US median income puts it near the european average, but if you look at the lower 75% or less then the US would drop below most W European countries. Basically, people in the bottom in Europe tend to be better off than their american counterparts.

[General_Tao]

Also, a lot of Europe's recent economic problems stem from the absorption of poorer southern European countries. But even then, countries like Portugal, Spain or Greece are far wealthier than they were a decade or two ago, even today. Those were almost third world countries not too long ago.

[thegreekdog]

Median income is the level at which half the adult population is making more (or less). So yes, by working-age person but I believe it also includes retirees and seniors.

There is a slight difference between family and household.

I think that the latest figures for the US median income puts it near the european average, but if you look at the lower 75% or less then the US would drop below most W European countries. Basically, people in the bottom in Europe tend to be better off than their american counterparts.

Hmm... maybe I didn't phrase my question correctly.

Which of the following are included in determining the range (that will determine the median):
- The guy who is a stay at home dad making $0.
- The high school kid who makes $7 an hour.
- The baby who makes $0.
- The old lady who gets her monthly social security check and nothing else.

Are they all included? If they are, would that not skew the numbers down?