Comment by runnerup | Hacker News Reader

Comment by runnerup | Hacker News Reader

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16% of Germans[0] and 16% of Californians[1] are in a union. 7% of Mississippians[2] are in a union.

Mississippi vs. California is also interesting. Mississippi has far less participation in unions (7% vs 16%) and much less regulation for employers to follow. Overall Mississippi looks like one of the best places in the USA for employers in terms of an accommodating regulatory environment. However, personal outcomes in Mississippi are languishing compared to even Germany! Let alone compared to California.

You chose an interesting two geographies to compare/contrast. It looks like 16-17% of Californians are in a union. It also looks like 16-17% of Germans are in a union. Perhaps it’s not the degree of union participation which drives differences in economic opportunity between these regions!

0: https://stats.oecd.org/Index.aspx?DataSetCode=TUD

1: https://www.bls.gov/regions/west/news-release/unionmembershi....

2: https://stacker.com/mississippi/see-how-much-mississippis-wo...

But unions are not all the same. And I was not trying to make a point about union membership at all. I was rather lamenting economic policy. Some economists and some industrialists believe in keeping wages low to remain competitive. This thinking is present in Germany but (it seems to me) that it is less present in California. In my opinion, the long term economic effect of low wages is economic stagnation, even if you might remain economically competitive on the world stage. Eventually the rest of the world would move on and whatever role you were filling would disappear anyway.

This seems like a reasonable take on the situation. I've personally always wondered about the relative cost of "under-employment" (allowing wages to go much lower) vs. "partial re-employment" (time and effort needed for retraining to other high-paying jobs, moving to those jobs, and some % of people who are physically/mentally unable to make that transition).

It's also an easy way to get caught by brain drain. Germany is already somewhat suffering from this for highly skilled workers.

Didn't you just provide the Grand Parents point?

The unions are not the solution? That in fact unions make no difference at all in many situations and it is rather under underlying economic conditions that matter more.

Unions may be able to curb some systemic abuse for a limited time, in limited circumstances, but market forces will always win the war.

As such it best to look for foundational economics not magical unions to solve economic inequality.

Mississippi, being the poorest state in the union, is as rich as Germany (GDP/capita).

Median income in Germany was $32,133 the most recent year for which OECD has data (2019)[0]. Median income in Mississippi was $24,509 in 2019[1]. Mississippi uses an unusual amount of slave labor (legally, of course) to generate that GDP with fully 1% of their population in prisons.

Personally, having spent time in both Mississippi and Germany, I think quality of life is higher is Mississippi for some people, and it is higher in Germany for other people. If you are wealthy enough to own land, get medical care out of state, and enjoy semi-rural living (it has some decent city life but if you like that there are better places to live), Mississippi offers a lot. If you like great schools and walkable cities, Germany can be pretty great, though it helps greatly to learn the language.

0: https://en.wikipedia.org/wiki/Median_income#cite_note-3

1: https://datacommons.org/place/geoId/28/?utm_medium=explore&m...

GDP/capita typically measures economic wealth and is typically used to compared economies. "Median income" does not account for cost of living which can explain how Mississippi can have a higher quality of life despite a lower median income.

> GDP/capita typically measures economic wealth and is typically used to compared economies.

I believed that the top level comment of 'mustafa_pasi was more focused on the effects of unions on employee outcomes, rather than on national-level outcomes. So I chose to continue that. Perhaps I was wrong. If we're asking the question: "Should I, as a selfish individual, support increasing unionization?" we can come to a different conclusion than "Should I, as a massively powerful national leader entrusted with the perpetuation of my nation and its ability to deal with existential threats, support increasing unionization?"

> "Median income" does not account for cost of living.

In this case it does, as the numbers I gave been adjusted for purchasing power parity.

It wasn't meant to be snarky and I apologize if it came off that way. Median income doesn't account for federal and state benefits and other non-income compensation like food stamps, housing assistance, medicare, medicaid and child tax credits. GDP/capita (PPP) is what economists use to compare wealth.

> GDP/capita (PPP) is what economists use to compare wealth.

I agree this makes sense if you're comparing "What could a nation do with its wealth?", which is a question that economists are often tasked with. But it makes less sense to use GDP if you're comparing "What is the economic outcome of a typical individual in that society?"

GDP (total, possibly adjusted for PPP) makes sense if you'd like to know roughly how much a nation could contribute in war materiel to an existential crisis.

GDP (per capita, usually adjusted for PPP) makes sense if you'd like to know roughly how much infrastructure (schools/healthcare/etc) a nation could choose to build out for its citizens.

For me though if I'm asking the question "how comfortable are hypothetical young adults going to be in a nation?" (how comfortable would my children be?) I still feel like median income, adjusted for purchasing power parity, makes a lot of sense towards answering that question. Otherwise, to "economists", is median income just a useless metric which offers no insight at all? Why do they spend so much effort tracking it for so many different geographies? This could be interpreted as an "appeal to authority" fallacy but I'd like to know -- if I'm using the metric wrong, how should I be using it?

Median income only makes sense if cost of living is the same but it's not. The median house price in Germany is $410,000 and the median one in Mississippi is $254,900. It would be easier to afford a home in Mississippi with a $24.5k income than one in Germany with a $32.1k income. This is not accounting for other subsidies too like I mentioned.

Meanwhile the average rent in Germany is roughly $900/month while it's over $1,000/month in Mississippi. Personally I thought that Purchasing Power Parity attempted to adjust for regional differences in costs - obviously it heavily depends on your "personal" basket which is why I'm focused on "the typical citizen growing up in this area".

What am I supposed to be using median income for? If "GDP/capita (PPP) is what economists use to compare wealth", as you say, then what do those same economists that you're talking about use median income metrics for? I accept that I might be using median income wrong, but I'm curious what using it "right" looks like.

Good catch. You're right that rent is cheaper in Germany than Mississippi, which I did not know.

> GDP/capita typically measures economic wealth and is typically used to compared economies.

It measures total output, not quality of life for most people. Median income (when adjusted for PPP) is a better indicator of the latter.

> "Median income" does not account for cost of living

Using real median income accounts for that across time (for inflation), and using purchasing power parity (PPP) accounts for it across space (addressing different regional cost levels.)

Median income is not an objective measure to compare wealth. Again as I said below, it does not take into account non-income based compensation like food stamps, housing assistance or child tax credits. For example, Medicaid compensation for example is 3x of than the equivalent in Germany.

> Median income is not an objective measure to compare wealth.

It is an objective measure, it is not (and neither is GDP/capita) a measure of wealth. Both are income measures, not wealth measures.

> it does not take into account non-income based compensation like food stamps, housing assistance or child tax credits

It can, when it is net of taxes and transfers, which is a fairly common stat (OECD uses it for comparisons, specifically becuase tax and benefit distribution varies considerably among OECD members.) But whether it is or isn’t is orthogonal to whether it is an objective measure, though it is releavnt to how good of a measure it is for various purposes (but for comparing common lifestyle, its better than GDP/capita, which doesn’t capture any aspect of distribution, in any case.)

> For example, Medicaid compensation for example is 3x of than the equivalent in Germany.

The US having ludicrously higher medical costs than Germany without better outcomes doesn't make government medical coverage for the indigent in the US better than for those covered than similar coverage in Germany. Might make it somewhat better for the healthcare providers receiving the compensation, I guess.

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