The American Middle Class Is No Longer the World’s Richest
nytimes.com
nytimes.com
[1] http://www.bls.gov/news.release/cesan.nr0.htm
[2] https://www.salliemae.com/assets/Core/how-America-pays/howam...
Also, it's much cheaper to live well in a certain style in the US away from the coasts than in Europe. Bubba has a large house, two trucks, a few acres of land, ATVs, a hunting cabin, and hunting licenses. Francois has a small house, pretty much no land, and a single small sedan. Francois might make more money in absolute terms but Bubba would never agree to swap.
Trust me, as an American who lives in France, Francois wouldn't swap either.
You could very well argue that freedom means absolutely no laws, absolutely no government, no public sector, period. You could also very well argue that freedom means being able to be confident that you have access to medical care, education, and child-support regardless of who you are, or your income level.
Freedom doesn't actually _mean_ anything anymore, it's just a political catch-phrase.
Can I rephrase your post and say "less government support would scare Francois..."?
Yet I felt I had much more freedom of choice in Norway: Becoming truly destitute in Norway is pretty much only possible if you refuse to apply for government support.
This, to me, meant I was free to make a lot of decisions without considering consequences that would put me at substantial risk in the UK, and much more so in the US. It is hard to describe the feeling. I've mentioned before, how I started my first company (an ISP) pretty much on a whim because we were dissatisfied with the available ISPs; we threw together a business plan, found an angel investor, found offices and moved into them (literally; three of us lived there for a while) in the span of a few months. During this time, not once did the potential consequences of failing enter my mind, for the simple reason that there'd pretty much not be any consequences: I'd be able to get government support if I needed it, and I'd "just" go back to my studies or find another job.
Not really needing to worry about healthcare, or housing, or whether or not you might starve, are important forms of freedom to me. I'd take that over a few percent lower taxes any day, and I'd argue that I get more freedom of choice from those benefits than what few percent more disposable income could buy me in other ways.
> About a third of his wages (and 20% of everything he buys) is used for the different types of government support.
If Francois makes enough to pay 1/3 of his wages in income taxes, he's earning enough that he'd pay roughly 1/3 of his wages in taxes in many pats of the US too. Sure, if Francois went to live in Utah, he'd be better off, tax wise. If he were to go to California, on the other hand, the difference would be minimal.
VAT makes up very little of the typical tax burden. I'm in the UK, and 20% VAT translates to about 4% of my gross wage, because most of my income does not go to products that are taxed at the 20% bracket (for starters, I pay tax with some of them; then I pay my mortgage, and so on; and food is zero-rated).
Tax differences are not as great as people tend to think. My tax burden in Norway was about 1-2 percentage points higher than in the UK. A salary giving me the same purchasing power in Silicon Valley, would cut my tax bill by about the same as my added costs for healthcare insurance, and certainly wouldn't cover my increased transport costs... I did the maths for this to excruciating detail because we were considering moving to the US at one point. There may be specific income levels where the differences are more pronounced due to differences in tax policies, and certainly some countries / states are more or less expensive (as I learned the other day: stay clear of Belgium... )
That strong welfare systems can provide more freedom of choice by removing a lot of concerns that you have to consider when those systems are not available.
I don't think you know what you're talking about.
In addition, 445 Billion dollars from the oil fund is in reserve for pensions.
Simply put, the Norway model is not repeatable unless you're have a natural resource reserve. One could argue that the US shale reserves should be used in similar fashion.
That is a pretty big industry. Crude petroleum and crude gas consists of over 50% of exports. A lot of economical activity leads to a lot of tax revenue. Imagine if this industry did not exist, that the petroleum simply did not exist to begin with - the people that work in this industry now would be working in other sectors and industries. (The real problem is to replace this industry with something else once the well dries up. But that is a problem brought by such a big oil industry, not a problem that exists in spite of it).
> In addition, 445 Billion dollars from the oil fund is in reserve for pensions.
I think the whole point of the fund(s) is for them to be pension funds. But it may vary how strictly they are ear marked.
Now you're undermining your original point of the oil sector subsidizing the budget. The whole point of the Pension Fund is so that the incumbent government can't go on a spending spree and leave the future generations in the mud.
I've made my point clearly - your insistence isn't backed up with any new information to the contrary.
It's easy to have a rich developed country with a high quality of life when you have a small population and lots of natural resources.
As I said in a response to someone else: Replace Norway with Denmark, or Sweden, or Germany, or France or any number of other European countries in my comment above, and the argument still stands.
Immigrating to the US has become harder over the years and "regulators" are against potentially disruptive technologies like Bitcoin while countries like Denmark are trying to embrace those kinds of technologies.
It remains to be seen if the USA can maintain its position going forward. In any case it's tough times ahead for many highly privileged economies. I'm from Austria and the disconnect between what used to be and the current realities is often huge. I guess the most important thing is to not get blinded by your own success, then you survive and possibly even thrive.
http://www.reddit.com/r/Bitcoin/comments/23og0b/danish_polit...
I was recently surprised to find that if I earned $80,000 in Australia, married to a partner who does not earn, and with two children, my effective tax rate would be ~ 15% (!), even if self-employed, once you factor in the Family Tax Assistance payment ($500/mo) and the government rebate for private health insurance purchase. That doesn't include other benefits I could receive such as child care rebate (50% of child-care costs up to $7,500 per child).
Compare to NYC, where as a self-employed person I pay 30-40% on $80k, with high property taxes on top! And I get no government assistance and certainly not healthcare.
This is astounding. And yet Americans think these countries are "socialist" and "high tax." Not true, US scores lower on economic freedom and higher on government size and tax as %GDP.
There are so many cool things about living in the US, but raising a family here just sounds absurdly stressful and expensive.
I have lived in every income spectrum up through my current one--from severe poverty to relative affluence. One of the most important observations I've made is how little "freedom of choice" there is the further down the socioeconomic ladder one goes in this country. It's just an empty phrase most often spouted by people who have never known anything other than a life of upper-middle-class or better living.
> ...by people who have never known anything other than a life of upper-middle-class or better living.
Is it? I would not know what you're talking about as I grew up during the '80 recession and my family was on welfare.
I am glad I was able to go to a university in part thanks to gouvernement student-aid in a not so expensive city.
Those services might well be worthwhile enough to warrant such coercion, but it's downright Orwellian to insist on the coercion being called 'freedom'.
I take a fair amount of offense at this statement. I am stating that, given that the word "freedom" is commonly being used not as a word, but as a political catch-phrase with multiple, often contradicting meanings, I prefer to clarify the usage, either by substituting it with another word, or defining carefully what one means by "freedom". Far from attempting to redefine "freedom", I am attempting to _totally ban its usage goddamn it_, since, as you have pointed out, its definition has been co-opted to mean something entirely alien to its original meaning.
Edit: To clarify, when I said ban, I was exaggerating. I am not supporting literally banning the word "freedom", nor sending anyone to the gulags. I simply would prefer if people were to choose other, more exact, less politically-charged words in the place of "freedom".
I find it downright comical that you call this Orwellian, given that George Orwell was a lifetime socialist.
The same argument actually applies to pretty much anything you care to call "freedom".
If you say freedom means no slavery, you have to coerce people not to keep slaves.
This is why the word "freedom" is so useless. There is no such thing as a system with no coercion. What people mean when they say freedom is "coercion is only used to enforce the balances I think are important".
As a privileged individual (middle class, white, male, above average IQ) I've always found the liberal point of view naturally alluring but ultimately it seems to be dishonest and unethical no matter how many ideological writings on anarcho-capitalist theory I keep reading. So again, while I like the ideas of extreme freedom (voluntaryism, etc) in the end it seems like it's just extreme ideology disconnected from reality and actually resulting in less freedom.
Can you elaborate on the first part? I'm not sure I understand what you mean.
The point I was trying to make was essentially that it seems logical to me that a higher crime rate can be connected to substantial inequalities in terms of opportunities / wealth.
Yes, I think so too.
The phrase you quote is most associated with Louis Brandeis' conception of a right to privacy (it was his in-a-nutshell definition).
Privacy and freedom are not the same, obviously. And, there is nothing explicitly in the Constitution (or the Amendments) about privacy per se, which is why Brandeis had to write the article grappling with the issue.
[citation needed]
Oh, you mean "more dependence upon private and corporate interests".
Or, "less democratic control over the services provided, instead left to whoever has money to influence the market to decide".
[added] I'm kidding (only slightly), because I took offense of Francois liking "less freedom". How about he has a different concept of freedom? That could be either equally valid, or less valid, or even more valid.
Basically, what you wrote, I understood as:
"I don't believe in democratic governance and voting, for me the government is some kind of enemy I want to see less of, and more wallet-voting".
Which if fine by me, but it should be stated more explicitly. Other people find wallet-voting mighty inneficient, and to me doesn't sound very different than "the rich get what they want".
Oh, yeah, freedom bonus: As a US citizen I'm forced to pay taxes on my worldwide income even if I no longer live in the US. And if I want to get rid of this beacon of freedom, my US citizenship, I have to pay an "exit tax" on my assets. Freedom my ass.
Highly recommended: https://www.youtube.com/watch?v=q49NOyJ8fNA
And that's not just a statistical sort of truth... it's actually profoundly true, something that touches deeply on the question of "affluence" and what wealth really is.
Why? Because the man in the city can purchase that anytime he wants. Just like you can go take your money to China right now and teach English as a side thing. So that subjective value can still be wrapped around an objectively lookable thing; it's just that the city man is not indulging in that lifestyle yet -- or perhaps he wishes to take that wealth elsewhere.
Even now, the junior college-to-university route is still pretty affordable.
Things are somewhat bad now —and getting worse— but it's a relatively new condition.
I am in the 80th percentile graph, far away (but not too far) from Chicago, for inflation / COL reasons I'm locally about 90th percentile, and my family is in a really nice suburb perhaps the 3rd wealthiest in the local area, but its a relatively cheap 1950s era 1600 sq ft house, a middle aged Prius and a brand new Yaris instead of two $75K trucks, only one acre of suburban land (which is actually pretty good, the mcmansion people only have 10 ft by 5 ft front lawns and no back lawn or side lawn at all). No hunting cabin, those cost almost as much as my house. Hunting licenses are dirt cheap, right up there with fishing licenses as we are a major deer hunting destination and every tourist business would scream bloody murder if the .gov discouraged their income stream. I could afford ATVs pretty easily but I'd have to give up some expensive technology hobbies, or perhaps give up a couple years of travel/vacation to afford that. The most expensive part of owning ATVs would be purchasing something capable of carrying them and then burning 10 MPG to go hundreds of miles away to use them. Its much like owning a boat in that way. Boats are pretty cheap, its the boating lifestyle that comes with owning a boat that gets extremely expensive, dock fees, tow vehicle, etc. So that's what 80th percentile income for a couple decades actually buys you.
I would expect Bubba at a 30% lower income percentile would be my situation minus the new imported cars, maybe a couple years old, or if trucks they would have to be 90s models to be affordable to Bubba, and a much dumpier suburb with virtually no land, higher crime etc. Needless to say bubba's not going to be able to afford an ATV much less multiple ATVs unless it becomes a hobby/rebuild project and bubba is handy. Your description of Francois sounds a lot more like Bubba, although Francois has better cheaper schools and better cheaper health care, so Bubba would move up to Quebec and swap in a heartbeat, plus or minus local relatives, language issues, etc.
"Bubba" is usually a local skilled blue-collar guy like a mechanic. The mainstream rural family with lots of toys like ATVs is living in a doublewide with a ten year old F-150, wife with an old Buick.
"To compare incomes across countries, the researchers applied a common adjustment known as purchasing power parity".
Source: http://www.nytimes.com/2014/04/23/upshot/about-the-data.html
Also, "Bubba" might have more cars but that's because his two teenage daughters need a car each to get to school since there is no subway, no busses and no sidewalks. Bubba's land might be 50,000 sq feet 40 miles from DC , but many people might prefer Francois' 5,000 sq feet plot in the outskirts of Paris. American cities are more sprawling, European usually compact - so it's really difficult to compare even simple things like land.
Bubba's McMansion is large, indeed, but it's built with a light frame construction with outer walls of plywood or composite and asphalt shingles as a roof. These American carton box houses just don't convince European home buyers. Francois lives in a brick house with clay tiles on the roof.
Bubba has little or no insulation against winter cold or summer heat. So his eight ACs are running on electricity all year around to heat up or cool down the home. Francois generally only turns up his radiators 5 months of the year and the district heating is very efficient. He only has AC in the three rooms facing South and there is rarely a need to turn them on. What is better?
And don't get me started on graduate and professional degrees. In Europe you study medicine, law, dentistry etc as an undergraduate in a 5-6 year program. In the US you need to do an undergraduate degree for four-years plus four more years of graduate school to become a physician. The cost of the graduate degree itself is anywhere from $150,000-$300,000.
(You also pay a couple of cents if you want to print documents, but these are the only fees I have paid in six years of University).
It's even cheaper in the bit in the middle where no-one lives.
Tax allowances in France mean you don't pay much (if anything) if you don't earn much.
No doubt the tax burden is higher in France than the US, but there's no political will to slash public services to US levels, nor would there be public support. Sarkozy tried to move in that direction, and despite being elected to do so, it was incredibly unpopular and he basically made no progress.
So essentially, your Bubba inherited the above or is not exactly the norm e.g, he has business that does exceptionally well. Exceptionally well doing business is not the norm.
http://www.nhs.uk/NHSEngland/thenhs/about/Pages/nhscoreprinc...
Pretty much everyone knows that the NHS is paid by taxpayers (NB I have met people working the UK public sector who had never given a moments thought to where the money they spent actually comes from, but they are pretty rare).
It is difficult to make good comparisons without taking the public spending into account or deducting for the part of the private income that Americans must allocate to expenses that are paid over the taxes Western European countries.
For most Europeans the value of free or almost free public benefits such as public healthcare, public education (from kindergarten to university), public transportation, low crime rate etc. is substantial.
Having lived in three European countries (Scandinavian, Iberian and now in the Balkans) and in the US (New York) I have maintained for years that American median wealth seems smaller than Western European wealth and that there is a huge public investment backlog in the US: Roads, airports, subways, railroads, hospitals, schools etc. is very outdated in many places (probably because much of it was built decades before similar infrastructure in Europe).
In America I felt like we would have to struggle just to make it into what felt like "middle class life". In Western Europe middle class life is a base from where people build their lives.
An American professional will easily afford a car (and two cars for a 2-adult household), will be able to go out to lunch regularly and go out to dinner when they please. If they want to see a specialist for a medical issue they'll have an appointment in a day.
A Danish professional may not have a car at all for a few years out of college and will likely struggle to have a second car for their partner even as a senior-level employee. They will bring their lunch every day and rarely if ever go out for dinner. Their medical issues will take weeks or months to be seen if deemed non-emergency and they'll have less choice in which doctor they see.
It's probably easier to be at the bottom of society in western Europe than in the US, but for anyone in the American middle class their quality of life would go down substantially if the moved to Scandinavia.
As you mention is common, I biked to work or took the metro. It's really not necessary or even much of a convenience in Copenhagen to have a car. Don't Americans have more cars because American cities are sprawling, have little public transportation and few sidewalks? In New York, a compact American city with great sidewalks and great public transportation, almost no one I knew owned a car.
But I agree as for the waiting time to see specialists for non life threatening issues. That part of the Danish healthcare system is really not working well.
Europe in general has a much less developed culture of going out for food. People will do it occasionally, but often prefer to prepare there own, even in a social setting. This is driven by culture, not but by money.
Lots of people -- particularly people who have other people depending on their resources for healthcare and other essentials -- which is why in addition to the cost of healthcare bankrupting people, it also discourages them from choosing timely (and more cost effective, though still expensive) interventions in many cases (because they gamble that maybe it will resolve on its own and not require the expensive intervention). Which results in later, more expensive, less effective interventions -- which takes care of both health and finances poorly, resulting in not only some people being bankrupt by high costs, but other people (sometimes the same people) being dead (and even more, alive but worse off than they would have been with earlier, cheaper intervention) because of the discouraging effects of the high costs.
> I never could understand why socialists are so crazy about healthcare being cheap and not about it being effective.
People interested in socialized medicine are generally concerned with it being accessible, "cheap" is seen as desirable as a means to that end.
Win-win.
Not true if measured by outcomes with various forms of cancer (which I would argue are pretty good metrics).
As I said in my original post, I'm talking about the middle class not the poor. A maximum out-of-pocket of 5k or 6k should not bankrupt a middle class person.
Also, I live in Serbia, and honestly even we don't wait "weeks or months" for non-emergency issues. As someone who has lived in the US as well, I've actually waited longer in the US hospital than in the Serbian one. I'm really not sure where that stereotype of "you have to wait months for surgery in Europe" comes from.
Part of me wants (without any evidence) to say this is not to do with the socially provided/not socially provided difference, but with how that benefit is provided.
I've lived in the Netherlands where the state healthcare took the form of (mandatory, price-fixed) insurance which you used by buying medical care and paying for with your insurance. That allowed me to use any hospital in NL or indeed the world (with the proviso that it was same, cheaper than NL).
There are ongoing battles in the UK to let that kind of "market portability" happen, but the way that the NHS bureaucracy works makes it hard; and maybe its the lack of that end consumer choice which lets things sometimes get so slow. (I think that's a similar complaint to HMO users in the US)
Also so much of US taxes goes to military, which countries like Canada benefit from, in a sense our military spending subsidizes Canadian healthcare.
As America becomes "enlightened" (heavy scare quotes) and withdraws its military umbrella, a strange world is left behind... how does Europe feel about having effectively no military with which to counter Russia's growing imperial ambitions? It's officially all smiles (or forced grins) while they're stuck depending on Russia now, but I'm sure wheels are spinning behind closed doors even now. If the US elects another President with ambitions to back off the foreign involvement even more, or if the situation deteriorates enough more on this one's watch, what are the odds that Europe has to start building up? And how many other places will have to follow?
And how will a social-benefit-addicted continent react to having to fund a military again? They certainly won't be able to maintain the current level of social commitments everywhere.
Maybe the US shouldn't be enforcing Pax Americana depending on your own personal values, but don't think for one second it hasn't had its benefits even outside of the US, and don't think that the end of Pax Americana is somehow going to occur with a burst of rainbows and puppies, where we go from one dominantly-powerful military to zero. The number can only go up.
Citation needed.
That's a slight overstatement - the countries of the EU spend 38% of what the US spend on it's military - which given the arguable massive overspend of the US doesn't look completely unreasonable to me.
http://en.wikipedia.org/wiki/Military_of_the_European_Union
Now of course what Europe doesn't have is strong unified leadership in these areas - which, given our history, is probably no bad thing although not the greatest thing to have at the moment.
Russia spends less that the UK and France combined on defense:
http://en.wikipedia.org/wiki/List_of_countries_by_military_e...
[1]: Diplomacy is not chess, but it has chess-like elements (along with the poker-like elements). Trying to play diplomacy without the ability to threaten anything, even with no real intent or prospect of following through on the threat, leaves you with a proportionally much weaker portion.
Pray tell, is your threat model a revanchist, bankrupt Russia from the 90s making a daring lunge across Alaska? Canada's only credible threat is, well, America.
>In fact I've seen credible arguments that it has actually contributed to world peace significantly to have the US building up the way it has,
Within the context of the Cold War, and say, NATO buildup in post war central Europe this may or may not be true. It was certainly a boost to West German/French economies that didn't have to invest quite so heavily in fending off the Warsaw pact.
Outside of the European theatre, that's a significantly weaker argument given the proxy wars the US/USSR engaged in throughout the third world.
I'm not sure how necessary it is to be that high, but I do know that there is a lot of waste in the military-industrial complex.
In the nonsense sense, yes. Your military spending subsidizes American defence contractors, who subsidize American politicians.
"Free" healthcare beats no healthcare. In 2007, 33 million Canadians had "free" healthcare. In 2007, 45.7 million Americans had no healthcare. It's nice to see Obamacare getting people coverage.
Rather than try to spin the story to make America look good, it would be more constructive to consider why America is declining and what it can do to reverse that trend.
In the software world, we're better at fixing bugs when we stop calling them undocumented features. That philosophy can work in the real world too.
It's worth pointing out too, that the US government actually pays more per capita for healthcare than most governments that provide universal healthcare, so US taxpayers pay more and need private insurance..
The WHO ratings were more about politics than healthcare.
http://online.wsj.com/news/articles/SB125608054324397621?mg=...
When you drill down into specifics, like survival rates for cancer, the US healthcare system is the best in the world, BAR NONE:
http://www.cancer.org/acs/groups/content/@epidemiologysurvei...
http://www.sciencebasedmedicine.org/cancer-care-in-the-u-s-v...
I'll bookmark it and read through it later, but from what I glanced at in the first half, it didn't get much better after that straw man. I especially like where it tried to say that government decisions are better because they're made on "evidence". Okay.
This quote and the study it talks about is relevant, because it directly aims at the access and quality of treatment for the poor and middle class.
>In 2000, the World Health Organization ranked the French health system as the best over all in the world. Do you agree?
>I question the W.H.O. methodology, which has serious problems with data reliability and the standards of comparison. A study I would take more seriously is one published last year by Ellen Nolte and Martin McKee in the journal Health Affairs. They examined avoidable mortality — that is, deaths whose risk of occurrence would be far lower if the population had access to appropriate health care interventions. In that study, based on data for the year 2000, France was also ranked No. 1, with the lowest rate of avoidable deaths. The United States was last, in 19th place, with the highest rate of avoidable deaths. That’s a severe indictment of our health care system in my judgment and calls attention, quite justifiably, to the high performance of the French health care system. http://prescriptions.blogs.nytimes.com/2009/09/11/health-car....
Given that the U.S. healthcare system ranks behind many countries with public healthcare and that the U.S. spends way more as a percent of GDP on healthcare than any other country it's quite reasonable to believe that taxpayer healthcare is as good as paid healthcare after taxes and is cheaper.
The fact that it can't be reliably (more specifically, objectively) quantified is why we see so many nearly-worthless income comparisons instead: The content mill has to run, and less responsible journalists are often happy to print arbitrary crap masquerading as information rather than tackling hard topics with hard work (or just accepting that some things can't be accurately compared and moving on to things they can actually address in a meaningful way).
The US is still flatter.
Also even if the perfect median Canadian vs the perfect median USA is open for debate, for absolutely everyone below median, the graphs indicate its a virtual certainty they'd be better off emigrating out of the USA.
I live in New York. I have a $200k house with over $6k in taxes, most of which for schools and public safety. Educational programs are flat or being cut, but employee expenses have ballooned over the last 10-15 years. The fully loaded cost of a $80-100k teacher includes about $25k in pension contribution, $15-20k in healthcare, etc. For the police/fire department, it's even crazier (they have 20 year retirement)
My personal experience is better than most. We have a good household income, and I've been promoted a few times in the last 10 years. On average our household compensation increases by 7%.
But... my net spending power is flat or down a little. Why? Property taxes up 30% since 2006. Health insurance up 150%. Food up ~30%. Utility bills up 50% (NY fail).
And in terms of medical costs, for most people, private insurance covers a vast majority of medical expenses.
My point simply is that the US not some horrible crap hole where everyone goes bankrupt when they get sick and kids can't go to college because it's too expensive.
True. OTOH, as long as they are using the same measure as before, then the report has meaning on a relative scale.
>Would be interesting to see a quality of life comparison
This would be interesting. I would like to see one world-wide (for instance, Americans may have been wealthier than Europeans for decades, but we also work harder).
It is hard to quantify, but even the comparison of a subjective measure of overall contentment could be revealing.
The Economist attempted to quantify quality-of-life and rank nations using the metrics they developed [1]. Their quality-of-life index is a bit out of date - almost 10 years old now - but interesting nonetheless.
Puts all those articles about the weak US middle class in perspective.
The real travesty is at the bottom. The worst 10% are actually doing worse now than 30 years ago. The few groups above that didn't benefit at all from the enormous economic growth of the past decades. The extreme growth of the wealthiest 10% is simply outrageous by comparison. But the middle class isn't doing quite as badly as I expected.
As Robert Kennedy once put it:
"Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans."
Is the bottom decile worse off because the top decile is better off? I don't think so, I think everyone is better off with Gates, Jobs, Page, Brin making tons of money. Wealth is not a zero sum game. Don't get me wrong, I want to see a world where everyone can support themselves and provide for their families. I just don't think having super rich people prevents that from happening, I think it is just the opposite. The Gates Foundation is a million times more effective than any gang of UN Bureaucrats.
Unfortunately, it seems most of the super wealthy are part of the latter group.
I would say that the median quality of life is slightly better in western Europe. The charts compare income after taxes – but the taxes pay for services like free healthcare and free education (in some countries, you even get paid for studying).
Another important note is that Americans work more hours per year.
But that is largely due to the fact that the bottom 10% are more likely to be new immigrants now than they were 30 years ago. If you correct for that, by only doing the comparison with the same pool of population (people who lived here 30 years ago or their descendants), the inequality is quite a bit smaller.
However, the poor doing worse than 30 is really bad. Even if you believe that a high gini coefficient is needed to encourage upward mobility, a falling living standard for the poor indicate that it is not working.
[] I'd really like to see the comparison in income after tax+education+health care. Health care and education is more or less mandatory for the middle class, and the details of how it is financed (tax, savings, insurance) shouldn't affect the comparison of living standard.
Yeah, social mobility in the US is pretty low nowadays. I don't have any numbers at hand, but wasn't there a recent story on HN about how most European countries had more social mobility than the US now?
Trickle down doesn't work. Money flows up. The poor spend it immediately (because they need it to pay for stuff they need but can't buy, which is what makes them poor), whereas the rich can afford to hoard it.
And Americans, especially if they live in the northeast or California, pay very high income taxes, and get almost nothing in return compared to other developed nations. We have to pay high university tuition in cash, and don't get healthcare, either. So keep in mind while an American will use that after-tax income to pay back student loans and purchase expensive health insurance (self-employed, anyone?), the Australians and Europeans et al aren't.
[1] How Australia's Low Tax Egalitarianism Confounds the World : http://www.cis.org.au/images/stories/policy-magazine/2010-su...
I agree that Australia seems to have a very good balance of capitalism and social welfare programs.
Also, these income comparisons don't take into account that Europeans usually work much less than Americans: In Germany and France most employees only work 30-40 hours per week, and have usually at least 30 days of paid vacation per year.
I wonder if there are studies that try to take these things into account.
"The Canadian Middle Class is Now the World's Richest"
i would wager the the stats aren't the full truth. it lists german middle class below, which is hilarious - income alone doesn't mean shit in countries with top notch public infrastructure and well organised health care. that US middle class family needs to pay health insurance on top, if their kids want to go to college an ever increasing tuition, pretty likely need multiple cars to get anywhere and have less vacation time.
if more US citizens would travel their view on how much they're getting ripped off would change drastically. US immigrants from india, china, africa still get an improvement, but for northern Europeans, incl the Swiss, Austrians, moving here is a step down in a lot of factors.
"world's richest" - haha.
For many Americans, especially the richer ones that can afford a trip to northern Europe, it would be a case of cognitive dissonance: "gosh everything is so nice here / here is not America / America is the best / I can drive my SUV in America / these Europeans are crammed into tiny cars / thank god I'm an American!" or whatever the chain of reasoning is that gets you back to "thank god I'm an American!" from the world-crushing "gosh everything is so nice here".
Other than the Hockey and Poutine thing, I can't imagine the general public having anything to complain about in that scenario.
The rich take so much for granted. By the way a lot of you tech guys are considered middle class now; but with the low barrier to entry of this world--I see a vast shift to the poverty level in just a few years.
And low barrier to entry? Maybe, but I keep hearing all the time about companies not being able to find the talent and experience in people that they need/want.
Violence in the USA is not on the civil war level of Mexico, but still three times the level of neighboring Canada... See e.g. http://en.wikipedia.org/wiki/List_of_countries_by_intentiona...
Thankfully the US still attracts the very best immigrant entrepreneurs, such as Elon Musk.
What did happen in the mid-2000s was a rise in commodity prices. By 2010 we were seeing record high prices for some commodities. Commodities are what Canada does and it stands to reason that incomes for everyone will tend to rise as demand for extracting those commodities increases.
http://www.ey.com/CA/en/Services/Strategic-Growth-Markets/G2...
I agree..also we do not have the same level of capital available to fund new ideas.
However I think that the longer the internet is around which allows (for the most part) the same ideas, information and tools to everybody the less cultural differences are going to matter as everything is becoming border-less and super competitive...the only differences will be languages and local regulations.
The US government is simply extremely inefficient and wasteful. But the money is spent.
Here's a chart. Note that in the US, public health spending accounts for 45% of total health spending:
http://en.wikipedia.org/wiki/File:Total_health_expenditure_p...
Wouldn't it be kind of odd if the rest of the developed world did not catch up to US lifestyle standards with the spread of technology and capital?
I'm not an expert on this stuff, is the falling exchange rate in any way a symptom of the underlying issue, a cause, both, neither? Everytime I try to reason through exchange rates and the world economy I get a headache.
Edit: I went and looked on Redfin and most trailer homes in the valley go for quite a bit over 100k there are maybe 4 listings for trailers for 100k or less.
http://www.redfin.com/CA/Sunnyvale/1050-Borregas-Ave-94089/u...
As such, median per capita income is always going to be considerably lower than, say, median HHI.
(Apologies if you already knew all this--I had to make a guess as to which figure from the article specifically you were referring to.)
My experience is that most college-educated people don't really understand this, because they look at themselves and everyone they know and extrapolate their definition of "the middle class" from what that population makes, which skews their perspective considerably. So you get discussions about how people making $100,000/year or $250,000/year are "middle class," when statistically speaking they are very much not.
The important thing I try to always remember is that it's the 'middle' class, not the center class. Civilization can't survive with mostly middle management and mechanics - somebody has to actually do something at some point, rather than designing something, directing something, or fixing something. The middle class is a buffer between the bulk of people who work with their bodies, and the tiny number of people who try to maximize the ratio of those people's output vs. their compensation.
The middle class has never characterized America, it's just the class that writes all of the characterizations.
The middle class are the ones who fluctuate between the two categories: They have to keep working, but as long as they do, they have some surplus income. If they spend too much and go into debt, their surplus income goes away, and they have to work more.
This is useful because it explains how some can consider themselves to be "working class" or "middle class" and yet have income that is both above average and above median. They still have working class (or middle class) anxieties, mostly because of their local economy or their bad spending habits.
So if the distribution for the US looks like this:
$10K, $20K, $30K, $50K, $100K
And another country looks like this:
$10K, $20K, $40K, $50K, $60K
We're going to say the US is "poorer"?
This is incredible. Since 2000, there is no increase in median per capita income after adjusting for inflation ? Statistics like this bring in the 1% question at times and the comparison between the really rich and the rest of the population.
The "smells" of extreme ideology..
In any case I still believe it's fair to try to spread the wealth more evenly as you and I couldn't even build stuff without the solid framework of society.
I answered your question somewhat in another comment in this article's thread:
http://www.gallup.com/poll/159029/americans-likely-say-belon...
If 100% of Americans consider themselves "middle-class", it doesn't bother me. At the end of the day it's all semantics and disagreeing about what "middle-class" means is not interesting.
You clearly have some opinions about shortcomings of the American labor market. Perhaps there's a better way to phrase your concerns that would further the discussion in a more substantive direction.
Not that are relevant to this discussion -- I just have a belief that there is a difference between being middle class (the class between the working class and the capitalist class, at least, in the usual definition applicable in post-feudal economies) and identifying as middle class.
Historically, the working class being larger than the other two combined is the norm and America's brief period with a very large middle class was something of an aberration resulting from the rapid application of agriculture by a small population to a large land area before that agriculture was effectively consolidated by large commercial entities.
Over the past 30 years--even the past 15--automation of tasks which were once done by people in the lower-to-mid tiers of the middle class. Word processors have replaced secretarial pools. Robots have replace assembly line workers. Self-service web-sites have replaced data entry clerks. "On-line" (web, e-mail,etc) have replaced tellers, postal workers, etc.
I know I'm personally responsible (due to proposing and implementing automation projects) for replacing over 1500 people since 1995. Is this a good thing or a bad? I don't know. The Industrial Revolution killed off craftsmen, but created millions of other jobs. The question is, what will the Technology Revolution leave in its wake?
So before we start pontificating on taxes, social welfare programs, and ever increasing calls for "wealth distribution"--remember to look in the mirror and ask how many people's jobs have you eliminated today?
Except technology also saves lives, keeps people connected across large distances, makes work safer, democratizes creativity, and innumerable other benefits.
The Industrial Revolution also killed off farm jobs and many domestic jobs but baling hay by hand and scrubbing laundry with a washboard are certainly steps backward.
If the problem is that some workers cannot earn a living, then let's look a policies that solve that problem directly (like a more aggressive earned income tax credit).
Are there alternative economic output measure that count that stuff as deadweight?