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Comment by pigsty | Hacker News Reader

> If the European companies don't wake up to this, they will gradually see a brain drain

I think the EU has taken a pretty consistent stance in wanting to avoid America’s massive wealth divide.

It’s nice to know that you can be on the benefitting side of such a divide, but it comes with social downsides. America’s rent, homeless, and crime problems are far, far beyond most places in Europe and a big factor in this is people with insane wealth happily paying insane amounts for formerly cheap properties.

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I beg to differ. I am western European, I was born the poorest of my classmates, friends, colleagues, whatever. I'm also the one, among my circle, earning way more than everybody else. Despite that, my net worth is and will always be on the lower end of said circle. Most if not all of my peers have parents that own their house, some of them own activities which they've already basically partially passed on their children etc. I know it sounds bitter but I feel like I was born to work while most of my peers were born into rent-seeking mode. Due to the high taxation, I've an hard cap on what I can make with my life unless I get insanely lucky, the combination of high taxation and high rent is an enormous pressure, my life would be totally different if I had started with my own home. Maybe there are statistics out there about this, but it feels like that having your own home early (e.g. through the help of parents) is more important than whatever career or academic achievement (PHD, etc.) you go through. I don't think it's the same in the USA.

It’s not. I know people that that had nothing, moved to the US and now own multiple homes now after doing well in tech.

Life in the US is not easy, but it seems like upward mobility is still easier than most of Europe. Sure it’s great in Europe if your family has owned land since William I roamed the earth though.

> I think the EU has taken a pretty consistent stance in wanting to avoid America’s massive wealth divide.

Then raise the tax rates at higher incomes.

People can be 'psychologically satisfied' with having a large number given to them during salary negotiations for their gross salary, but then once income is greater than (say) 200'000, a larger and larger portion is taken at higher tax brackets.

And a refresher on how marginal tax brackets work:

* https://www.vox.com/2019/1/18/18187056/tax-bracket-marginal-...

>Then raise the tax rates at higher incomes.

Pay and tax are not just some metrics to change to accomondate status psychology reasons...

Don't know where you live but Europe's wealth divide is bigger than America's. We just need to make the distinction between income inequality and wealth inequality which are completely different things.

Urban property prices for Europeans are far less approachable on our wages than they are for Americans on their wages. Munich has the same square foot/meter prices as SF but at a third of the wages. I assume it's similar in Paris and London.

When I was working in Germany for an engineering company, all the guys in the Dallas-FW office had bought big houses in the suburbs (yeah, car dependence though) while everyone in the Munich office was still renting (and not living centrally).

Europe had less income inequality, but much higher wealth inequality thanks to decades/centuries of accumulated old-money that keeps growing, especially in real-estate assets.

Europe protects you from becoming homeless but it's near impossible to accumulate wealth if you start from the bottom, while in the US you can easily become wealthy from the bottom if you're savvy and healthy but you can also easily become homeless if you're not.

If you want overinflated real estate prices (relative to local wages/affordability), try Lisbon.

Yeah, that too, although correct me if I'm wrong, but to me, Lisbon's housing issues seem to be self inflicted by prioritizing Airbnbs and housing for tourists and rich crypto-bro nomads at the expense of its own citizens.

Could probably be fixed if the Portuguese would vote right, no? Meaning it's more of a political issue than an economical one.

I wrote a fairly long comment the other day in another thread that explains how the visas and AirBnBs are just the icing on the cake.

It's very much the legacy of decades of neglect from property owners and lobbying from the building industry, compounded by bad government regulation.

Here in Poland there's a lot of property not rented as the law is such that if someone stops paying it'll take you years to (maybe) throw him out. And during all that time you need to pay the bills for him because if he gets cut off from e.g. electricity for not paying you face criminal charges.

I would assume the situation is similar in many places across Europe.

That sounds like the worst. In Austria the tenant is responsible to sign the contracts to the utilities under his own name so if he doesn't pay his bills and gets cut off it's his own problem.

Also some landlords check your payslips to make sure you have a stable income so that evictions are less likely to be needed.

Here it is a choice and many wised up and require the transfer to the tenant or install pre-paid meters on e.g. electricity. Also checking the background has become now much more common.

But either way if someone like that starts living in your property removing him (legally) is really time and money consuming. Many don't take the risk and just leave the flat/house unoccupied.

What people don't understand that one of the major differences between the US and Europe is ownership - in many European countries your property is not really your property. Here the state is solving the possible homelessness issue by forcefully seizing the "private" property.

>in many European countries your property is not really your property. Here the state is solving the possible homelessness issue by forcefully seizing the "private" property

This doesn't ring true at all. What do you mean by this? Where I lived in Europe your property meant your property any way you sliced it.

Yeah, evictions done through the legal system and not via muscle can take a very long time because the system is low and someone squatting in your parament isn't a high priority vs more serious crimes, but that's still your property and the government can't take it away from you.

Mainly because interest rates are lower. In the US the mortgage rate is ~7%, in at least some countries in northern Europe it is ~3%. And it used to be 1-2% recently. This however doesn't mean there aren't also a lot of inequality in Europe.

> Mainly because interest rates are lower. In the US the mortgage rate is ~7%, in at least some countries in northern Europe it is ~3%. And it used to be 1-2% recently.

"Danish bank launches world’s first negative interest rate mortgage":

* https://www.theguardian.com/money/2019/aug/13/danish-bank-la...

yeah, but they added fees on top, so it was never like your principal was going down without paying installments. Now the interest rates are back to 5%, and 6% might come soon.

The best period was last year when mortgages were already around 4% (because they’re driven by the free market and what was happening in the US) and on top of that you had negative interest on your bank account, because Danish National’s bank interest rate was negative, so banked passed off the costs to customers. The negative interest rate also didn’t help when the inflation was going up quite quickly.

all the guys in the Dallas-FW office had bought big houses in the suburbs (yeah, car dependence though) while everyone in the Munich office was still renting

that's exactly showing that the divide is less. less people in europe are wealthy enough to afford their own house, but also less people are so poor to have to live on the street. more people are in the middle renting.

again the result is that europe has less of a divide between rich and poor. and society is better off as a result of it.

Europe has lower income inequality but greater wealth inequality.

When only a handful of people can afford to buy and are forced to rent that does not show lower inequality.

If you have 100 people when 50% of them can’t afford to buy a house you have lower inequality than if 99% can’t afford to buy one.

Europe overall has far greater divide between the rich and the poor and the wealthy classes are far more dominated by old money.

You have countries where the richest families haven’t changed in 400 years.

And this is despite the biggest wealth redistribution event that happened in history - WW2.

I’m not saying that Europe is a bad place to live, I live there well in the UK but there are major issues here.

I earn for more than £90K however buying anything outside of a 2-3 bed 800-900 square foot flat in London is out of the question. As houses in middle and upper middle class areas are easily £2M these days and these aren’t mansions either, these are 1000-1500 square foot Victorian houses.

When only a handful of people can afford to buy and are forced to rent that does not show lower inequality.

it does. less rich people = less inequality.

Sadly that isn’t how we measure inequality because it doesn’t makes sense. By your method a feudal society is perfectly equal since only a fraction of the population has any wealth whilst the rest slave away in the fields…

>Sadly that isn’t how we measure inequality

Who is "we"? The gini coeffient does measure income inequality similar to that. And yes, a feudal society would be more equal...

For example, a feudal society of, say, 50,000 peasant and a single lord, where each peasant makes 80 units of money, and the lord's tax cut is 10% (a common tax at the time, called a "tithe"), will have a gini coefficient of 0,09 (where 0 = full equality, and 1 = total inequality).

We’re not talking about income inequality.

The Gini coefficient always had its shortcomings which is why it’s rarely used in its pure form.

there is a gini coefficient for wealth too.

and if you look at the numbers, both the income and the wealth coefficient in the US is worse than in europe

>We’re not talking about income inequality.

Aren't we? Isn't the very title of this HN post "why aren't you making" X amount?

In any case, wealth distribution is more or less the same regarding US and EU: EU fares better (less inequality).

It also fares better in more humane lifestyle for more...

It sounds like more effective predation against society to me. People more successfully exploited.

> Europe protects you from becoming homeless but it's near impossible to accumulate wealth

I think you are actually making the point of a smaller wealth divide. You might have meant social mobility instead? I’d agree that this is better in the US.

It might be easier to start at the bottom and become wealthy in America, but it is not "easy". In fact, it's quite difficult, and for practical purposes may as well be impossible for the majority of such people. It usually requires an insane amount of luck. Sometimes it also requires working hard, but it almost always also requires a huge amount of luck.

> are far, far beyond most places in Europe

Have you been to Europe?

> rent

I see frequent stories on HN about people not able to afford homes in Lisbon, London or Paris. Trivial to dig up rent stats and compare against median income.

> homeless

I was in Frankfurt in summer. Entire 3x3 block area next to the main train station reminded me of Tenderloin in SF. Homeless people, urine and poop, needles, stench.. you got it all. And this is apparently one of the richest city in the strongest economy in Europe. Let's not talk about poor parts of Moldova, Romania or Belarus.

And you should add tolerating a bad transport infrastructure where infinite car traffic is normal.

Come to Ireland, non existing public transport and road infrastructure.

And (mostly) low salaries with high taxes.

I am looking to Spain. Know Ireland, not my place to live. Yes, we should specify the city or country involved. Beyond the traffic I have a good experience traveling by train in Ireland and UK.

Still better public transport than 99% of the US

That's nice but corporate greed and exec compensation is the cause of the US wealth divide not tech workers getting paid market value.

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