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Comment by ChrisLomont | Hacker News Reader

>Considering Germany is an economic powerhouse this law probably isn't harming the economy

US median household annual disposable PPP income is around $34,000.

German median household annual disposable PPP income is around $25,000.

Note PPP means adjusted for cost of living, so that is not hiding the difference.

There is likely some differences in household makeup, etc., but it seems unlikely that any demographic difference is going to make up for Germans having ~25% less disposable income.

So somehow the US system is generating significantly more disposable income for its people.

[1] https://en.wikipedia.org/wiki/Median_income

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Disposable income is income after tax. Europe has higher tax rates that the US, so this is to be expected. It also has better services. So what you don't see in this comparison is that in return for their higher taxes, they for example get free or cheap higher education and healthcare.

If the German government cuts funding for those two sectors, passes on the savings to people by reducing tax rates, and requires them to pay for those services out of pocket like the US, the disposable income may reach parity, but the people would probably be worse off in real terms.

>So what you don't see in this comparison is that in return for their higher taxes, they for example get free or cheap higher education and healthcare.

Household disposable income is net including those social benefits, so the complaint is incorrect. Here's the definition used in these datasets:

https://data.oecd.org/hha/household-disposable-income.htm

Right. It’s a moot comparison.

They all have healthcare when they need it and have no health-related bankruptcies or anxiety over such. Having a part-time job isn’t crippling to their health and safety. Their transportation systems are cutting edge as well.

If you combine only the tangible cost benefits of healthcare and transportation availability, that should account for approximately the difference in disposable income.

But in the US, kids below 15 are not counted, this means that the population is artificially set at 80% of its real number.

These PPP income are pretty hard to compare. You have so much local variability within a country that you can only really compare the same kind of family situation in the same kind of city. You also need to compare against what you get from the system. For example, in the US, a part of your revenue is in your PPP if you are not ill, but if you get a cancer, you are good for a good stack of expenses depending on your health insurance, in the EU, the health insurance will cover all the costs. If you are in Denmark, you get access to free education (you even get paid to study), in Germany education is free.

As a French who has been working/living is several countries in the EU and have friends nearly all over the world, I can say, the real factor, if you are an engineer, is where you live, that is, the cost of housing. Because the salary as an engineer will be nearly the same in the country you live but the cost of living can vary a lot.

IIRC according to OECD data, American workers average ~1800 hours/year, Germans ~1400/year, which maps closely to that income difference.

So basically Germans are equally productive, hour for hour, but have collectively chosen more free time over more purchasing power.

(Also that chart has 2016 data for the US and 2013 data for Germany, making the comparison somewhat awkward)

> somehow the US system is generating significantly more disposable income for its people.

Then why are so many people complaining about the cost of living, housing, healthcare, education etc? Could someone remind us what is and what isn't included in "disposable"?

Primarily because people love to complain, it's the number one sport of all of humanity.

The US median cost of living is lower than in: Germany, France, UK, Australia, Sweden, Finland, Canada.

Healthcare is a very legitimate complaint. It's plainly outrageous. Even in the case where the bill is often mostly footed by an employer, that comes out of wages to one degree or another.

Housing is not a legitimate complaint (everyone doesn't live in NYC, LA, Seattle and SF). The median US costs on rent and housing are lower than any comparable disposable income nation, and you get far larger accomodations (space) in the US than the other nations.

Education is not a legitimate complaint. The US is overflowing with modestly priced, high quality in-state university choices, including quite affordable state schools. If you spend $160,000 on a shit paying degree from a tier two school for no good reason, that's on you. You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.

> You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.

$40,000 euros for a degree is still a ridiculous amount. It costs $11,000 to go to Oxford per year right now, and before the ridiculous fee increases it would be about $11,000 for a 4 year degree.

It's about $5,000 per year on average across the EU, with some countries offering free tuition. Because, hey, it turns out educating people ends up a net benefit to society!

denmark pays their students the equivalent of 700usd per month while they're in school

> educating people ends up a net benefit to society!

Education benefits but degree mills whether Asia, America or Europe don't benefit much. And this is increasingly common.

You can't ignore the fact that taxes are higher in Europe. So everyone is paying for college, constantly, in addition to that numbers you quoted.

> Housing is not a legitimate complaint (everyone doesn't live in NYC, LA, Seattle and SF). The median US costs on rent and housing are lower than any comparable disposable income nation, and you get far larger accomodations (space) in the US than the other nations.

I don't think this is accurate. Maybe it used to be, but not anymore. For example, Numbeo says:

> Rent in Germany is 30.85% lower than in United States (average data for all cities).

https://www.numbeo.com/cost-of-living/country_result.jsp?cou...

It would be better to find more official data, but I wasn't able to find anything for Germany.

> Education is not a legitimate complaint. The US is overflowing with modestly priced, high quality in-state university choices, including quite affordable state schools. If you spend $160,000 on a shit paying degree from a tier two school for no good reason, that's on you. You don't get to bitch about doing something that dumb when you could have gotten the exact same degree for $40,000 and paid for half of it with a part-time job over four years.

$40,000 for four years of education + living expenses? Do you think students are living out of garbage cans? $10,000/year will probably cover in-state tuition + books/fees/etc., sure, and what do you think is a reasonable cost for housing, food, transportation, etc. for a student?

> The US median cost of living is lower than in: Germany, France, UK, Australia, Sweden, Finland, Canada.

Could you please refer me to a source for cost of living comparison? I am not disputing this assertion, I have just been unable to find a good source comparing cost of living between countries.

Disposable income is income after taxes. What you are looking for is discretionary income, which is income after taxes and necessities.

Right, so systems with taxpayer-funded healthcare are at a big disadvantage in this comparison?

Not only that, but renters in the US pay a substantially higher proportion of their income on housing than in Germany. (See http://www.jchs.harvard.edu/sites/default/files/brief_intern...) I'd bet the story is similar for transportation.

Exactly! That's the point I made elsewhere in this thread [0].

[0] https://news.ycombinator.com/item?id=17766788

Another thing to keep in mind is that Germany doesn't fund its own defense. (The tiny amount Germany spends is insignificant; the German airforce doesn't even bother keeping its aircraft airworthy.)

We in the US fund our defense and Germany's defense (and cover the rest of the free world too) and still end up with more post-tax income than Germany does. That's a massive productivity gap.

> We in the US fund our defense and Germany's defense (and cover the rest of the free world too)

I agree that the USA has used its military to keep a kind of pax americana. But that is not the complete story. The super expensive wars on Afghanistan and Irak didn't had anything to do with "the free world" and a lot with oil.

BTW That may have changed nowadays, but it was a very good idea that Germany had a low military budged.

Right. We're able to fight two stupid wars at the same time and provide blanket defense coverage for our allies. It's a huge financial burden. Bringing up the US's stupid expensive wars of choice just reinforces my point. We're so productive that we can afford these follies.

But not single payer health care, free education, modern transport infrastructure, parental leave, and renewable energy

It's all about priorities.

Looking at how those wars have ballooned our national debt, I disagree that we can afford those follies

Your point is a valid one, but Germany has a lot of restrictions on what military force it can have. It's not necessarily a choice.

What's the point of 'bothering' to keep a token airforce airworthy when your total military personnel is capped to far below a useful amount (350,000) for any reasonable attempt at defence, and for historical reasons you are incredibly adverse to using them overseas?

Yeah, bad things tend to happen when Germany gets focused on their military. Let's not encourage them!

Post-tax income is an irrelevant metric because higher taxes are compensated by the services they pay for. Our level of defense spending is not insignificant, yours is offensive. We don't need to outspend the rest of the world, we just need to convince Russia that invading the EU is not worth it.

You keep talking about defense.

Is that like preemptive forward defense in other peoples countries?

All that while producing a significantly higher happiness index than the US. Amazing.

You know what else produces "happiness"? Morphine. Happiness never built a bridge, cured a disease, or discovered a new particle. Productivity matters more, since it leads to satisfaction with a life well-lived, and ultimately more fulfilment than "happiness". Your happiness dies with you. What you accomplish lives forever.

I don't think Germans are happier than Americans because we take more opiates. Your claim that productivity (or, for that matter anything else) is more important than happiness is plain absurd. I prefer a good life over one that ends with me jumping off a bridge I built.

> I prefer a good life over one that ends with me jumping off a bridge I built.

That's a fantastic way to put it. If we aren't being productive to improve happiness (directly or indirectly), then why are we doing it?

You know very well that I didn't mean that Germans literally medicated themselves into happiness. (AIUI, that's more an American thing.)

My point is that a life of comfort is not the ideal to which we should aspire, and that humanity's accomplishments have not come from people who didn't want to bother exerting themselves.

As I've said previously, European social policy is basically rest-and-vest at civilization scale.

> My point is that a life of comfort is not the ideal to which we should aspire

You are equating a life of comfort with happiness. A lot of people have a more nuanced ways of evaluating their lives, where they value facing challenging and meaningful problems while also seeking stability and comfort.

It's why we have better adjectives to describe a good life than "happiness", i.e "fulfillment".

> humanity's accomplishments have not come from people who didn't want to bother exerting themselves.

Many of humanity's greatest breakthroughs came from people who were specifically insulated from the uncertainties of daily survival. From aristocrats experimenting with physics, to lifetime tenured monks (and later academics) who were given the day to day security to pursue lines of thought that otherwise wouldn't be considered.

Despite the oft-repeated cliche, necessity is more often the enemy of invention. Necessity serves as a pruning mechanism to select the best hypothesis of the many that were created when resources were plentiful.

A life of comfort is very much an ideal we should aspire to. There will always be people who have the intrinsic motivation to accomplish grander things. People don't accomplish great things because they are forced to.

That's not a great argument because happiness leads to productivity. Productivity and happiness are not mutually exclusive at all. And at the end of the day what's the point if you're not happy.

Some grand, hand wavy idea of great fulfilment somewhere down the line doesn't cut it, because you know what never built a great bridge, cured a disease, or discovered a new particle? Living with crushing debt, stagnant wages whilst working paycheck to paycheck.

> Happiness never built a bridge...

Back in my day, every Philosophy 101 curriculum included John Stuart Mill, who had this to say.

"Human beings have faculties more elevated than the animal appetites, and when once made conscious of them, do not regard anything as happiness which does not include their gratification."

You're using a very narrow definition of happiness. A uselessly narrow definition IMO, and apparently for no reason but to spread bigotry. Most people wouldn't be happy knowing they hadn't achieved anything (see: Maslow's hierarchy of needs). Even the otherwise rather short-sighted "Objectivists" tacitly accept this view, with "enlightened self interest" being their phrase of choice to avoid acknowledging the origin of that thought.

Modern Germans do not lack in accomplishment. They just choose to balance goal-directed work with enjoyment of its fruits, instead of staying on the treadmill past the point of diminishing returns. Here in the US, there's a bit of a fetish about claiming to work super-long hours to satisfy a Calvinist "work is virtue" image, while actually goofing off for (at least) half of that whenever nobody's looking. That's really stupid. The European approach of actually enjoying that time with family and friends guilt-free seems smart, compared to spending it in the office neither being productive nor having fun.

Well, it probably comes out to a wash after you subtract copays, deductibles, and other out of pocket healthcare expenses from the US after-tax income.

If you factor in all benefits, the US compensation level is drastically higher than in Germany. US healthcare is far more expensive than in Germany, nearly double in fact.

Per capita it's equal to over 20% of the median full-time wage ($50k).

I think the point was more - if you take the average American paying $1-2k for healthcare per month vs Germany's $0 for healthcare per month, then that alone wipes out the difference in compensation (ignoring the fact that they have cheaper schools, more holiday, a tighter social safety net, better transportation systems, and so on)

Being median income I have a feeling that the US median is "pulled up" significantly by the top .01% of earners in the US - I have a feeling they account for a far larger amount than the top .01% of German earners.

Also - this does not take into account additional costs such as healthcare that will pull down the US amount.

I think you are mistaking median for mean. Mean gets pulled up, median doesn't. It's literally what the guy at 50% mark has.

Since this is the median and not the mean, it seems that the top .01% should have no impact or bias here.

The statistic here tells us that the person right in the middle of the American income distribution makes more than the person in the middle of the German income distribution, even when disregarding the actual incomes at other points in that distribution.

That's not how the median works though. You're thinking of mean.

It's not an average, it's a median. That is, there are as many people who have incomes higher than that as having incomes lower than that. How much higher is already inconsequential, a few may have astronomical incomes without affecting the median.

The definition of median is precisely that the top 0,1% affect it only 0,1%.

But household income is very tricky to measure and for example its unclear if they include health expenditure in exactly the same way

I’d have to dig into the numbers, but the wealthiest Americans get their income via capital gains and dividends, which I’m not sure would be included in those figures.

and yet that disposable income doesn't provide a longer life expectancy or more happiness; germany beats the US in both categories (and others):

https://en.wikipedia.org/wiki/World_Happiness_Report#2018_Wo...

> So somehow the US system is generating significantly more disposable income for its people.

Disposable income doesn't factor in the higher cost of healthcare (huge) or other "taxes" that aren't taken into account.

Purchasing power is a metric that needs to be adjusted by actual cost of living and quality of such living.

1980s quality healthcare has been dropping in cost. The problem with healthcare prices today is that it covers many new advances that are still expensive.

The only fair way to compare healthcare over time is if the exact same quality of care drops in price over time.

It is accounted for. PPP stands for Purchasing Power Parity.

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