If you go to the doctor with a problem and get a blood test and they say that everything looks fine, but you don’t feel fine, then you don’t say: “well the numbers are right, I should feel fine”. Rather you try to find what the numbers aren’t capturing, because you know something is wrong. Same with the economy. The perception of the economy being bad is really pervasive as demonstrated by the last election, and perception matters, because selective numbers don’t tell the whole story.
People get used to things and give for granted things that used to be luxuries a few generations back (see "hedonic treadmill")
Combine that with active participants who control the media landscape and have a vested interest in painting a bleak picture so they can be the ones fixing it.
And then of course there is the fact that things are of course objectively hard for many people because not everybody can be the average person.
So in a sense it's correct to say that these numbers don't capture reality while being technically correct. And that's because reality is much more complex than the things those numbers measure.
The question is: are those indicators useful? Provided you understand what they actually measure, can that be used as a control signal to help make choices that will go in the right direction and improve quality of life for everybody?
Perhaps the improvement will be marginal and not everybody's problems will be fixed, but is it unreasonable to think that problems cannot be fixed by a quick single intervention and that instead they will compound over time?
Look at the progress humanity has made in so many fronts. Ask anybody to pick a time in history where they would like to travel back and have a better life. The most frequent answer is either now or a few years ago when they were young and everything was better (likely because of nostalgia for youth or childhood).
Very few people would really want to be the average person in an era with poor sanitation, corporeal punishment, no education, illiteracy, expensive and faint artificial lighting, widespread diseases, non-existent dental care, low life expectancy
So the people who are fed up with how things are currently going are according to your argument here either
- manipulated / brainwashed
- entitled / spoiled
- outliers (the few who have it bad are too loud).
- the problems can’t be fixed anyway
- don’t realise how much worse it was in the past
?
I disagree that the sentiment of the general population is not a useful indicator of how good things are going for the general population.
I think it is the best indicator, but people in power (and I would count most on this forum among then) don’t want to see anything that threatens their status quo.
> The perception of the economy being bad is really pervasive as demonstrated by the last election, and perception matters, because selective numbers don’t tell the whole story.
Well saying "the economy is good" or "the economy is bad" out of context is simply moronic. Good for whom? Bad for whom? It's no secret our entire society is stacked to favor investors and owners rather than workers. The market certainly treats people extremely differently based on where they are in society. Much of the population never economically recovered from the 2008 crash at all—something that won't be reflected by GDP, stock performance, "jobs created", or how many people are collecting unemployment (which is, confusingly, a wildly different figure from counting people who want jobs but can't find one—as best I can tell, a metric not reported by the federal government at all, but appears to be about twice as large as the "unemployment" metric pimped: https://www.richmondfed.org/research/national_economy/non_em.... And this isn't even touching underemployment). The CPI is a little better, but only by a small amount.
And you'd have to be blind to not notice a minimum wage job is no longer sufficient to afford rent in most major metro areas.
- Headline unemployment _is_ "people who want jobs [enough to be looking for them] but can't find one". The metric you linked to is including people outside the labor force and then weighting in a fairly opaque way. Between labor force participation being at the same point as it was 2014-2016 and unemployment being lower, I don't think it's fair to say unemployment stats are misleading. The point about underemployment is still definitely valid though.
- I'm with you that minimum wage should likely be higher, but federal minimum wage has never been intended to be "comfortable wage in a major metro". Major cities have their own minimum wages -- e.g., NYCs is $16/hr. Making $32k a year in NYC would of course not be comfortable, but is doable (eg you can rent a room in an apartment for $1k/mo, live off of oats and rice, etc). It's not intended to be a "head of household" wage, but "the least amount you can ever pay anyone"
Other than these nits I'm with you that stats don't cover the lived experience of all Americans and there's more too it than simply vibes. However I also do think that some of the vibecession is due to increasingly effective media manipulation to squeeze money from consumers. I (coincidentally just now) wrote a blog post explanding on this hypothesis here -
https://medium.com/@digital-cygnet/manipulated-into-malaise-...
> And you'd have to be blind to not notice a minimum wage job is no longer sufficient to afford rent in most major metro areas.
Either blind, or detached enough that you think that it's a good thing, as long as the value of your home also goes up and you have access to relatively cheap service labor.
I also wonder how much the USD's role as the reserve currency plays into this. If I build a home for 1 MM USD today which used to cost 150k USD in 2008 - this looks like economic growth, despite the home largely being the same between the two periods.
Certain categories of the CPI have experienced extreme inflation over the last 16 years, this gets reflected in the wages of the economically mobile and in turn raises the GDP - however we don't really price housing into the CPI in a sensible manner, and due to USD dominated trade - imports and products which compete with imports don't inflate.
The discrepancy between PPP and nominal (USD) GDP seem to be telling a story.
I'm not saying the economy is good. But according to polling, many folks who said the economy was "poor" before the November election now believe it's doing great. All in a very partisan fashion, of course: https://jabberwocking.com/wp-content/uploads/2024/11/blog_mi...
Not to put words in your mouth, but this comment seems to imply that politicians successfully painted a negative picture of the economy that didn't reflect reality and used that to win the last election. While I wouldn't put that past them, why was it successful this time and not every time? Nobody even tried to pretend the economy was bad when Clinton, Bush or Obama were up for re-election, because it obviously wasn't.
I don't know a single person in my sphere who feels this way. I think the common sentiment is things will probably improve and the stock market is up. Would be curious to see how UoM did their polling. Does answering truthfully about the state of the stock market indicate that you think that the economy is doing better?
Just to clarify, thats a poll about future "expectations" about the economy. Many of the people that voted for Trump based on his economic policies now have good expectations for the economy because they expect him to implement those policies.
* Perception of the economy depends tremendously on whether the president is of your preferred party. Whenever the presidency changes hands, you see a massive and rapid flip in which party supporters are satisfied with the state of the economy.
* If you ask Americans about how they are doing personally, as opposed to how they believe the economy is doing, their response is much rosier.
AFAIK the former effect has been found to be much stronger among Republicans, though it exists in both parties. It was something like a 50% swing in approval rating versus 10%.
I never saw the term vibecession before. Wiki has a separate page for it!
I wonder if this trend also appears in other highly advanced economies. Example: When UK switched from conservative to labour, was there a similar sentiment swing? My guess: Yes.
Netherlands also moved much more right in the last election after PM Mark Rutte stepped down after 8 years. However, broadly, the NL economy is doing much better than UK economy. Maybe the vibecession effect is stronger when the economy is weak? Could be.
And sometimes the reason you don’t feel fine end up being anxiety, and reframing your experience can make the problem go away. I visited the emergency room with chest pains several times before it actually sunk in that it was my neuroticism getting the better of me
In the US, look at how sentiments about the economy shift depending on party affiliation and who happens to be in power at the time. I do not think it’s as straightforward as saying ”if people think things are worse than they used to be, they definitely are”. There are way too many variables affecting people’s subjective experience
Its entirely because you're looking at different numbers. When the average person complains about grocery prices doubling in the past few years, they're not looking at the GDP. People take "How much money do I get in my pocket at the end of each month?" and compare it with "How much does it cost to buy what I need?". The first answer is generally tracked by the Employment Cost Index. The second is by the Consumer Price Index. If the second increases at a faster rate than the first, then people get angry.
As someone doing OK economically, when I go to the grocery I see the same thing they do: Prices are going up on key items much faster than income is rising. I didn't vote based on that, but that doesn't mean they are wrong that it's a problem. It's easy to imagine that if you were barely making it, things are worse now.
Rising income isn't a phenomenon that hits everyone equally.
More so when the blood test is measuring something that was deemed important 100 years ago and doctor is ignoring all the advances in the field since then.
We currently lack comprehensive metrics to effectively capture critical factors that normal people consider when asked “is economy doing well”. Here’s what we need:
Home Rent Affordability: Analyzing affordability by profession and location to reflect real-world dynamics.
Home Price Affordability: Assessing how accessible homeownership is across regions.
Education Costs: Understanding the burden of education expenses on families.
School Quality: Measuring the actual quality of education available.
Healthcare Cost Affordability: Evaluating access to essential healthcare without financial strain.
Drug crisis.
Crime.
Vacations and similar things.
Developing such metrics would provide a more accurate picture of economic well-being and social equity.
Luckily smart people have resources and a mandate to study each of those questions at scale. You might be interested in the work that the US Bureau of Labor Statistics (https://www.bls.gov/) does on the economic side of labor conditions, and that the Census department’s American Community Survey (https://www.census.gov/programs-surveys/acs) does on the demographic and social side. Both of these groups study questions like those you asked in ways designed to be broadly comparable over time.
The Housing and Urban Development department calculates fair market rents at the county level to support their rent assistance programs (e.g. [0]), although that starts to get at part of the complexity: for your metric do you care about the economic cost or the amount families actually have to pay after assistance?
On the NGO side, groups like the NBER (https://www.nber.org/) disseminate more exotic socioeconomic studies, and there are others.
And of course you can find a mountain of data at data.gov, the federal portal for such things.
I think the harder part (and the part the policy community specializes in) is grappling with the nuances of those kinds of numbers. What do such high-level observations actually mean in something as complex as a continent-wide collection of 10^9 people, and how much human messiness polluted their measurement?
This is exactly what I tell software engineers. They’re always like “but the software is complex and it’s not straightforward to do what you’re saying” and they gave some nonsense metrics for what complex is. It’s as easy as adding a button to a webpage to create an XML that integrates with this other tool we use but they can never explain why it’s hard. They come up with some “cyclomatic complexity” but it’s obviously easy: a single button. If it’s so easy, as my perception shows, then any numbers they’re coming up with are obviously wrong and they should just make numbers that match what I feel. And once those numbers show that it’s easy, they can just do it instead of making numbers that show it’s hard.
When you see a headline GDP growth figure, remember that this number does apply equally to all people. The US and its economy is vast, like all 50 countries of Europe put together. Recently, we are seeing that middle class and below really suffered in the last few years from high inflation, but the economic groups above fared much better. Also, new immigrants (usually unskilled) are doing better than natives. To be clear, I don't any of this post with spite for those doing well.
An idea I've seen floated is that during the pandemic a lot of people got a lot of support from the government and under Biden a lot of that was phased out.
So even if "the economy is doing fine" there would have a been a large number of people who would have had something taken away.
People got a glimpse of a more interventionist social democratic government during the pandemic and then it disappeared. So yea for people who benefited from that absolutely everything got worse after.
Typically, loans and credit being more difficult and costly to obtain, higher prices for everything, and a growing number of large layoffs aren't signals of a booming economy. Inflation has a tendency to well, inflate productivity metrics. If we're spending twice as much for the exact same stuff as we did 5 years ago, we haven't doubled productivity.
> perception of the economy being bad is really pervasive as demonstrated by the last election
How does the election tell you anything about the economy? Are you injecting a bunch of your reasons why you think people voted for X or Y or is there a factual argument behind that sentence?
> How does the election tell you anything about the economy?
He didnt say it said anything about the economy, just the perception of it.
Now to answer that question, there is the simple old adage of "its the economy, stupid" that won Clinton his campaign. But the reality is that economy perception is always asked in polls, all year round. So trends can be established wtih decades of data. Secondly, voting attitudes can be understood through economic perception, when people perceive the economy is thriving incumbents do better seeing Biden's poll numbers anyone could tell that the economy perception was not good.
There is an argument that elections can be understood as a referendum on the previous 4 years. E.g. voting for the incumbent candidate/party means more of the same.
There was a poll asking "what was your motivation to vote the way you did", and "the state of the economy" ranked pretty high among Trump voters (don't remember where I saw it though, sorry).
Or they go to the doctor thinking they have a heart attack and it's really a panic attack and despite all the tests for physical ailments, it is an emotional one.
Are you suggesting that it's impossible to have mistaken feelings about the economy or about one's own health? I'm pretty sure it's possible for people to deliberately deceive other people about the state of the economy or even the state of their own health.
> The perception of the economy being bad is really pervasive
Because the economy is bad, and this is a "drank the Silicon kool-aid" article.
In the most recent tax filing season data available, there were tax returns of:
Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% All Taxpayers
Number of Returns 1,535,899 7,679,495 15,358,991 38,397,477 76,794,954 76,794,954 153,589,908
Average Income Taxes Paid $653,730 $187,468 $108,251 $50,963 $27,891 $667 $14,279
Adjusted Gross Income (Millions) $3,872,395 $6,182,180 $7,745,525 $10,613,602 $13,191,209 $1,531,038 $14,722,247
If we then break those into the actual groups, and numbers per group, then we find their Average Per Capita Income
1 5 10 25 50 100
Number of Returns 1,535,899 6,143,596 7,679,496 23,038,486 38,397,477 76,794,954
Income Taxes Paid (Millions) $1,004,063 $435,594 $222,966 $294,234 $185,068 $51,225
Adjusted Gross Income (Millions) $3,872,395 $2,309,785 $1,563,345 $2,868,077 $2,577,607 $1,531,038
Average Tax Rate 25.9% 18.9% 14.3% 10.3% 7.2% 3.3%
Average Per Capita Income $2,521,256.28 $375,966.29 $203,573.91 $124,490.69 $67,129.59 $19,936.70
This entire "booming" part, is the 1-5%. Out the rest of America, there are 38,397,477 making $67,129 on average and 76,794,954 making $19,936 on average. The filing thresholds are "single, under 65 = $12,950" and "head of household, under 65 = $19,400". Most of the bottom 50% of America "barely" would even qualify to file based on the Average Per Capita Income stated on their tax forms. 76,794,954 tax filers "barely" qualify to even file taxes they make so little money. Half.
How about, lets look at it a different way. Anybody notice what happened to McDonalds over the last decade and a half? Corporate McDonalds used to have 465,000 employees, now, McDonalds has 150,000. 300,000 employee reduction. 1/3 remain. [1] Btw, they're also -5,000,000,000 under water in equity [2] while they keep making happy meal financial reports. 2/3 reduction in workforce, barely even covered by the news.
The situation looks very similar with almost every peer company. Notably, some of the main jobs where people in the bottom 50% work. Jack in the Box (-$851,798,000, 45,700 -> 1,090 employees), Papa Johns (-$430,933,000, 23,100 -> 13,200), Yum Brands (-7,674,000,000, 90,000 -> 25,000), Dominos (-3,976,640,000, 14,500 -> 11,200). They all went submarine on equity and started shedding employees, yet all anybody will write about is the "booming" tech sector.
I’m pretty sure it’s combination of most of the money flowing uphill to millionaires and billionaires, and people in general are also being fed a ton of propaganda that the USA is falling apart which is BS. We have issues but so does every country. It’s hard to feel great if you have no free time to enjoy life, and as a society for some reason we have become very very consumerist, not taking (or even worse not having any) time to smell the roses, and the world is falling apart every night on the internet and/or television even thought it isn’t really.
The unemployment rate is very low in the US while tightening of money supply is happening, it is a weird thing to witness as a new comer to the US.
But one has to admit Jerome Powell did accomplish something significant given what his detractors like Summers were painting was going to happen given the covid bonus US citizens got.
While unemployment rate is relatively low this measure masks deeper problems felt by those working to try and make a living.
Specifically, labor participation is near an all-time low so discouraged workers, who aren’t counted in unemployment numbers, are excluded.
Also, there has been a marked and ongoing shift from full-time jobs with benefits to part-time, casual, and gig work.
Finally, the widely cited consumer price index is a very politicized and skewed measure of the true inflation facing consumers. It ignores the real cost of home ownership via owner equivalent rent measures. It uses a process called substitution to replace suddenly expensive goods with cheaper goods. It includes arbitrary adjustments for improved quality of goods that aren’t always perceived by purchasers who only see the higher prices and these adjustments only work in one direction to skew CPI lower. That’s why consumers often perceive inflation to be higher than the CPI measure.
This is an interesting take, because it contrasts with GDP PPP [0] which is suggesting that America is in fact being overtaken by its rivals although it has managed to outpace the EU. China is claiming to already be ahead and India is well on track to gain absolute economic ascendancy relative to the US. And I expect that Asia is going to start developing some serious military muscle on the back of that because they have access to the history books and have a pretty good view into how Western leadership thinks.
If the US is benchmarked against Europe then all is well. The problem is that Europe is now a distant 3rd in terms of economic power - it can't face up to China. Arguably, if we put China in its own category and India into "Asia" then the EU might be pushing towards 4th. Everyone is still ahead of Africa I suppose.
A lot of macro economic statistics should be taken with a grain of salt, or more literally: approximations with a measurement error.
PPP GDP is useful to compare, particularly politically because if the cost of goods in a country is lower people are more likely to be healthy / comfortable with less income. I think it is a little dubious when you use PPP to compare th3e size of two economies because 1) you are taking two approximate measurements and multiplying them 2) countries with lower GDP / person typically have higher relative purchasing power.
In "rich country" (high GDP /person) you can charge a lot for a cup of coffee. In "poorer country" you are likely to charge less. Therefore you can say that person in the poorer country is not as badly off as the absolute numbers suggest. However, if "poorer country" got to the same GDP / person purchasing parity might end up being almost the same. Or, countries with lots of poor regions will have a better PPP, but the cost of living in the places where people have high income may have similar costs.
And in general the most valuable purchasing power differences don't happen for the most valuable and traded goods. An equivalent airplane is going to cost as much in India as the USA, on average. At some point the absolute number is also important.
gdp is really bad, countries don't even use the same counting methods.
I think in the Netherlands they started using criminal activity to pad up gdp growth. Also money printing and inflation is a good way to up gdp.
I like energy production and consumption a lot more, modern economies pretty much come down to using energy to either transfer or modify goods, services or data.
The EU is number one in quality of life and that’s all that matters to me. If we work just hard enough to maintain and maybe even improve it, other countries can do their pissing contest.
The US, UK, EU and realistically most developed countries I would say have fairly similar quality of life within margin of error. I've travelled a fair amount and everywhere is basically the same.
For an individual it's really going to come down to lifestyle and what you prefer. Some people like urban living and walkability, if that's you then you probably want Japan or old world metropolitan European cities. Some people want a house on a few acres and national parks the size of countries, if that's you then you probably want the US.
Working cultures are different but then there is no average on that either. People on HN tend to assume everyone is an office worker or something which is actually a fairly narrow slice of the middle of the spectrum.
Equally though, online (you can see it in this thread) there's sometimes a weird focus on the absolute worst outcomes which I've always found baffling. If you're planning to become a poor fentanyl addict then yeah, don't go to the US, find a country with a safety net, it'll be more fun.
I’m an American living in France for the past two years and cannot wait to move back to the USA. The taxes are so extreme and salaries so low that no one can even invest in the stock market. If I stay here, I will be able to leave virtually nothing to my kids when I die. The EU can take its 5 weeks of vacation and go fuck itself.
The symbol has become "a unifying thread and call to arms" as yellow vests are common and inexpensive, easy to wear over any clothing, are associated with working-class industries, highly noticeable, and widely understood as a distress signal.
Rise of far right parties across Italy, Germany, Hungary, Poland, France and many other countries is another clear signal that EU's quality of life may not be great for everyone there.
Life in the EU is amazing for me, and probably for you too, as well as many others enjoying it here. However, we can't overlook the struggles of those who are turning to radical populist parties.
That's what the chinese thought in the 18th century :).
A fun quote for the europeans here:
"Our land is so wealthy and prosperous that we possess all things. Therefore, there is no need to exchange the produce of foreign barbarians for our own." - The emperor at the height of Qing China
The higher quality-of-life was likely true at one time but I think it is quite arguable now in much of Europe. There is a palpable sense of decline that weighs too heavily on everything. How "quality" is a life without meaningful optimism for the future? It is the quality-of-life of a pensioner waiting for the graveyard.
An underrated benefit of the markedly higher standard of living in the US is that people can choose to trade standard of living for quality of life if they wish. American culture seems to preference maxing standard of living but that is optional, and there are plenty of people that make other choices.
Though it has very much decreased in recent years due to rampant inflation. My real wage has decreased since increases have been lower than inflation. For unemployed and low earners it is even worse.
You forgot to mention that this quality of life is bought with debt and deficits that have been running for the last 30 years.
Look at what's happening in France for proof that this is just not sustainable. The US has a massive advantage tough,their currency is the global currency accepted and needed everywhere that is backed by the US army. Much less so the Euro.
The cost of all these social programs has to come from somewhere and currently the majority of these costs are shouldered by the middle class that is being squeezed to the max and speaking as someone from the middle class, I can assure you that having a couple of extra weeks of holiday and more job safety (if you are into that sort of thing) is not worth 55% to 65% of my gross income.
Even universal healthcare is crumbling now.
At some point the EU will need to get it's productivity up and become competitive once again or all this quality of life will have to go as it won't be financially possible to continue on this path.
The EU could be a powerful neutral third block, focused on providing the best for its citizens, but for that they would have to keep up economically. The EU is currently a massive laggard, worse than China in a lot of metrics, yet having dalliances with some levels of Chinese authoritarianism. Not to mention the current unsustainable state of its welfare state.
Which country? This matters a lot. I doubt you are in Greece, or Italy, or Portugal.
Did you know on GBP PPP Warsaw and Budapest are now better places to live than Madrid, Lisbon and many other Mediterranean cities?
It’s crazy. Perhaps Berlin and Copenhagen are still ok, but even France is on a completely unsustainable path that will explode in the next 10-20 years.
Declining/Aging Population becomes the issue. Solutions will probably come from Biology/Nature.
Human Quality of life seems to flip the natural "evolutionary script" wrt to population growth. Shrinking population = shrinking landlords/bankers/labor/traders/military/scientists etc
In nature, where there is environmental instability/resource scarcity you see a Quantity over Quality reproductive survival strategy (which is similar to what we see poorer regions of the world) that fuels population growth.
On the flip side, where there is resource abundance and stability there is growth in population. But we don't see that happening in the richer/higher developed regions with humans.
Its like advanced human society/culture has worked out how to override biology.
We currently work around falling population(and the shrinking factors of production) with tech/automation, financial/military arm twisting and immigration which gives rise its own social and cultural instability.
Nature has found other population models though. Ants(Eusocial insects) have solved their population/survival issues by have a single Baby factory. There are theories that the Haplodiploidy it produces makes ant societies function smoother. While Meerkats have collective breeding model which is similar to what certain Feminists talk about when they say Make Kin not Babies.
It will take a couple generations of futzing about in unnecessary directions before we solve these issues. So patience with the people who don't know what they are doing is key.
This quality of life can disappear in a matter of seconds. EU is still not actively working on protecting itself from the Russian threat. The moment Russia attacks which is going to happen since this is what the fascist Russian dictatorship wants, we could kiss our quality of life goodbye.
The reason for that is that we have offloaded defense to americans and have century of accumulated capital (legacy of colonialism) to spend. How long do you think it's going to last? Even Brussels is getting concerned and that's telling.
Even within EU there is a clear correlation between economy and quality of life between countries. While yes more social policy improves quality of life, it can't compensate if the economy difference is too high.
I feel like this is only the case for a very narrow demographic - the young, bicycle-riding, sex-having mid-20s college grad still trying to figure out their calling in life while living frugally without a care.
It really sucks being 40 and still earning like 57k EUR or whatever.
Given European demographics and the changing political landscape, it's hard to imagine that the quality of life in Europe can remain as it was through the 1990-2010's. Additionally, many European cities are essentially museums, riding on what was built centuries ago, with little innovation. If you don't believe this, just go to a German city that was completely destroyed during the war.
I'd imagine that Europe is at or near the peak in terms of its quality of life.
At least some of the European lifestyle has been due to peace on the Continent. Up until now peace in Europe has been funded by US taxpayers. The situation in Georgia and in Ukraine is what you get when European affairs are left to Europeans. Without the US providing military aid to Ukraine, Ukraine would have fallen and you'd have Putin banging on your back door.
Additionally, the EU's inability to supply Ukraine with basic military equipment such as artillery shells is indicative of how Europe is devoid of industrial capacity and couldn't rally in its own defense if it had to.
PPP is an increasingly irrelevant notion in a globalized, digital, and immigration-friendly world. An iPhone or a Toyota Corolla costs the same in the US as it does in China. There is no remarkable arbitrage with real estate either - you're paying for the location and everything that comes with it. There is no secret city where the rent is low, there are plenty of well-paying jobs, you enjoy freedom of speech and can be reasonably sure the milk isn't tainted with melamine (tangent: due to strict US immigration policies and corporate RTO, the Bay Area comes close).
PPP suffers from the same problem that "basket of goods" CPI suffers from in that it doesn't account for differences in quality:
- of course a car costs more today than it did in 1980, it's a far better car
- of course a loaf of bread costs more in California than it does in India - I have certain guarantees about the pesticide levels in the wheat, the accuracy of the labeling, and my ability to seek damages from the legal system in case I chip my tooth on a stone, that I don't have in India
At best, PPP tells you something about the differences in cost of labor. But labor isn't everything you buy.
> An iPhone or a Toyota Corolla costs the same in the US as it does in China.
A maxed out iPhone costs RMB 13999 in China, which is about USD 1925. The same iPhone costs USD 1599 in the US. In Brazil it costs the equivalent of USD 2565. PPP is still very much relevant.
How often are you buying iPhones and Toyota Corollas? PPP conversion rates are based on what people actually spend their money on. Easily tradeable goods, like iPhones and cars, make up only one component of GDP.
PPP matters on an individual level, but not at all on a national level. GDP at market exchange rates is what actually matters in terms of what a country can accomplish on the world stage.
And even on an individual level, PPP struggles with accuracy, because things are only ever roughly equivalent. There's a reason why so many individual people are trying to move from China and India to the US and EU, despite all the personal financial disadvantages of doing so.
> because things are only ever roughly equivalent.
This is what people seem to misunderstand about PPP. PPP applies for daily/internal market goods. The cost of milk, eggs, clothing, etc. Which is definitely important. On a more macro scale it also compares a VW Vento in Mexico with a VW Jetta in the US...two particularly different cars with ~6000usd gap in price.
In other words, it compares basic goods for living; fudges some basic "luxury" goods, and pretends that that's representative of lifestyles. It ignores (in Mexico, for example) the fact that consumer electronics are ~20-40% more expensive (if available at all), access to truly equivalent basic luxuries (a VW Jetta for a VW Jetta) is still slightly more expensive, access to equivalent security/infrastructure/business guarantees nigh impossible to receive, and just the vast gulf of wealth inequality that exists, etc.
Wrong. People move from China to India despite the higher prices in America precisely because the increase in wages is more than enough to offset the higher prices.
> PPP matters on an individual level, but not at all on a national level. GDP at market exchange rates is what actually matters in terms of what a country can accomplish on the world stage.
That's demonstrably false cause the global super-powers (i.e. the US, Russia and China, maybe India, too) mostly depend on their internal markets only when it comes to their war industry and to paying their soldiers. When it comes to that PPP is a lot closer to the truth on the ground.
I've spent a lot of time in a lot of different countries/cities with wildly different economics and I have a very different view of things.
PPP in the real world is a bit of a fraud, at least in the way people commonly use it. A lot of things you compare between two countries are in fact very different in reality. You might actually end up paying a lot more in nominal dollars for a lot of things in countries which are supposedly "cheap" to get not even the same quality. I find that the cost to maintain the same quality of life between different countries ends up being much more similar between countries than the statistics would have you believe.
I'm in a relatively poor country at the moment. On paper meat costs a fraction of what it does in the US, but what you get at the local market tastes absolutely terrible, uneatable to my spoiled western standards. I think they literally feed the animals trash. To get quality meat you need to go to specialty stores in the rich neighborhoods that caters to the country's elite. There it's actually about 10% more than what I pay at a US supermarket and it still is not as good. The same thing goes for housing, household goods, clothes, etc. In many countries you pay a huge premium for goods imported from the west, and the selection is often quite limited.
This has been my experience everywhere in the world. Excluding a few cities where you pay a premium just on the basis of the local job market, you more or less get what you pay for no matter where you go. The differences that don't fit into spreadsheets are quite significant and almost fully account for the pricing differences from location to location.
This is the common expat mistake. Your cost of living can grow very high, if you try to replicate your old lifestyle in a country that doesn't support it. With the same approach, you can also find that living in the US is 2x to 3x more expensive than in Western Europe. (I personally settled for 2x by making some compromises.)
There has certainly been huge GDP growth in China but their specific claims about GDP can't be attempted to be believed. Their numbers have never been independently verified and most of the raw data is treated as a state secret. There is reason to suspect that some of what they're reporting is just made up. Party officials are evaluated based on meeting certain economic targets so there's a lot of incentive at the lower levels to falsify data. The same thing happened in the USSR before it collapsed (I'm not suggesting that China will collapse any time soon, just pointing out that this is a common pattern in single-party authoritarian governments). External estimates based on resource utilization indicate that real GDP might be significantly lower.
PPP is only useful for measuring regional purchasing power within a country. As a metric for comparing the relative strength of global economies it is irrelevant.
Just the opposite. PPP is less useful when comparing intra-country than inter-country. It's only relevant because there are barriers to trade, especially in services.
>And I expect that Asia is going to start developing some serious military muscle on the back of that because they have access to the history books and have a pretty good view into how Western leadership thinks.
The history books say Western countries abandoned conquest many decades ago. The leaders who initiated colonialism are long dead. Nowadays all we have are handwavey analogies to colonialism when someone wants to be provocative.
I think generic metric metrics like GDP PPP have to be put into context. When I was in China I was shocked by how much stuff there was. Not even nice things, but stuff to the point most westerners would consider cluttered.
Rent was also super cheap.
On the other hand iPhones were pretty expensive. Enchiladas were super expensive too.
These aggregated stats have to guess what you’ll buy and base their estimate off of that. Your actual financial situation will be very dependent on what you need to buy.
PPP is closer in some ways, but it's not the best... It tends to be biased against strong currencies. The USD has been extremely strong since the pandemic.
Europe is willingly self sabotaging their industry and energy production, in the name of some completely irrational environmentalist ideology that states that saving the planet is achieved by making Europe poorer while allowing China, India and a few others to pollute without any restrictions.
So yeah, we are getting poorer by the day and on the brink of a major economic crisis. Just look at what is happening in Germany.
European auto makers are failing because they can't make EVs that the market wants. And the market doesn't want their ICE vehicles either. They over-focused on very expensive high end EV vehicles. That's why they are hurting, it's not because it's EVs.
European ICE vehicles are losing out in China because people there don't want to buy any more gas vehicles, at least most people are getting there. VWAG is losing marketshare in every segment that I see. It's not green power that is killing them, it's not many good cheap vehicles that are killing them - gas or EV.
I still think the real goal is achieving energy indepedence, so that Europe does not have to import fosil fules from some very questionable and problematic countries.
Currently this also simulatenously gives those contries more money, so they can be even bigger pain in the ass in the future.
On a per capita and historic basis the emissions of developing countries are dwarfed orders of magnitude by Europe and Western countries. Not to talk about all the land conquered by the same countries.
When I hear "America’s economy is soaring," I can’t help but think it probably just means the rich are getting richer.
Don’t get me wrong—I’m not a communist. But it’s clear to me, especially when you look at how the middle class is struggling worldwide, that capitalism in its current form isn’t sustainable.
What we need is some kind of “Capitalism 2.0” or “Capitalism++”.
It makes no sense that someone with 300 billion dollars pays less (or even nothing) than a person that makes 100k per year. And this happens on ALL countries.
Covid and the subsequent recovery was and is definitely K shaped. Someone with a house and assets has crushed it. Those without have only fallen further behind.
What's this conspiracy of the US and Europe to destroy developing large economies world wide? If your plan is take over your neighbors, say you'll wipe out democracies and kill people and it's your destiny to win, then eventually the US & Europe will do something.
Russia literally talks about taking over the countries around them, bites off pieces and then subverts the countries that are left. That was all before the first piece of Ukraine was taken, Crimea.
NK - goal to destroy SK, has a big army and nukes. Worth trying to stop them.
China - Chains says the mere existence of Taiwan is worth destroying them. Also taking over the south china sea on the stupid dashed line that says they own the ocean down there. Dictatorships can't stand a functional democracy right next door.
India - if they don't plan to destroy the countries around them and take them over, then good on them. The US has been basically ignoring the fact that India is on a slow road to make their Muslim and other non-hindi citizens fail in every way in their society.
India said FU to the world and has been happy buying a lot of Russian oil that's under embargo. No one attacked them. The world isn't so simple as "western countries destroy all large growing competitors".
Two if not three of these examples are very much related to civil wars or civil-war-like dynamics. If anything, yes, I agree that the world usually isn't so simple to unconditionally take any single side.
GDP PPP is based on assumptions that - 1) People indifferent countries have the same basket of goods - probably not true for someone living in US vs Chine vs India 2) Accurate pricing data is available (which is not true for big categories like real estate in India and China - a large part of the price is under the table and unaccounted)
The US dollar is the world's reserve currency
So countries keep huge stores of dollars in their reserves because they need it for trade
Then what happens is the US starts the money printer to pay for US government services
This inflates the dollar and means that everyone who holds the dollar has lost value
Including Americans who are paid for their labour with dollars and do not own assets
So wealthy Americans/companies see an influx of money, asset prices rise and every other country gets poorer relative to the USA
I would argue the opposite. If you compare US dollar to every other currency the value of their currency has decreased a lot compares to US dollar. This would be a plus to hold US dollar as their own currency has depreciated and holding more dollars has helped them reduce their losses. But it has one down side is that if you hold too much US dollar the country exposes itself to US monetary policy.
not sure there is a country on earth that you could save your money in the national currency and not watch inflation rip away the value of your earnings. The purchasing power of USD has declined 95% over the past century.
modern version of printing money is Quantitative Easing, but the US is in the opposite, Quantitative Tightening mode since 2022. Federal Reserve is essentially taking money out of circulation for the last two years.
Close, but inflation also makes Americans poorer. Global asset holders (US included) are just fine as the dollar cost simply rises against the asset. Holders of dollars will lose value. Holders of dollar denominated debt (mortgages) are winners.
The US Government does gain a lot of wealth doing this, but it doesn't necessarily trickle down to Americans or American companies.
> but it doesn't necessarily trickle down to Americans or American companies.
It absolutely does go to american companies—that's the entire point of the privatization movement america's been experiencing the last forty years. It's much more difficult to articulate how this reaches americans and builds actual wealth, though, and certain industries benefit more highly from being basically a private form of government (the defense industry, finance, airlines, critical tech companies, etc) than others.
If americans want to reap any windfalls from their "economy" (whatever americans even think that is—as best I can tell it functions in political discourse essentially the same way the Pontifex Maximus performing an augury functioned in ancient Rome) they're going to have to start demanding more concrete things than "jobs" and "stock performance" and "real estate markets".
right, but it makes it easier for the US gov to pay its dollar denominated debts to foreign holders; the huge advantage of being able to borrow in your own currency!
If I go visit my grandma over the weekend, my activities do not register on GDP. If I hire a care assistant for $800 per day to do so, that's $800 to national GDP. The encroachment of the market into society correlates with record levels of mental and physical health crisis. US life expectancy has declined over the past three years, even as 'the economy' has surged ahead. The measures are wrong - and we all know it - apart from the financial press it seems
I was thinking the same thing the other day. Like how much of the US GDP is tied to their suburb-living car-dependent lifestyle. What percentage of the GDP is all that infrastructure (sewage, heating, power plants, power transmission, car production, road maintenance)?
Sure that create jobs, especially lower-skilled jobs which are important for society. But at the same time they didn't really need to exist. It feels like much like defense spending, it create jobs, but it doesn't create value.
> much of the US GDP is tied to their suburb-living car-dependent lifestyle. [...] , but it doesn't create value.
The "value" is for the citizens that prefer suburbs style living.
People who prefer dense city living with mass-transportation and walkable errands like European cities or downtown NYC/Chicago are missing the fact that there's another group of people (possibly the majority) that actually prefer the suburbs. Yes, I know it seems illogical.
But don't suburbs have the dependency on cars, and those ugly "stroads", and the "parking lot deserts", and "soulless cookie-cutter housing", etc, etc?!? Yes, all of that is true and detractors can keep piling on more derogatory labels but it still doesn't change the fact that many people really like the suburbs. A lot of USA college kids living in dorms in the middle of a "walkable city" have aspirations of buying a nice house out in the suburbs and hope they can land a high-paying job so they can afford that dream. Why do so many of these young people who have actual experience of living in the city want to get away from that and live in the suburbs?
Defense spending is necessary, if you want to keep your globalised markets and reasonable level of international security. Europe is now experiencing what happens if drop the "useless" defense spending too low.
Sewage, heating, and power plants are included in GDP figures. Government spending is a GDP subheading. And such things certainly create value. I derive significant value every day from my warm, insulated, suburban bathroom.
Furthermore, your assertion that the defense industry doesn’t provide value is questionable. Until you can convince the various state governments of the world to unite in a global superstate, defense spending is a necessary deterrent to invasion and exploitation by other states, so it is, in fact, valuable.
And while I agree that suburbs aren’t the ideal form of urban organization, they aren’t actually the cause of all the social ills that you imagine them to be. Depression and addiction are driven by loneliness, and loneliness is almost as high in urban societies as suburban ones. Obesity may be slightly aggravated by car dependence, but it is still historically high and a major problem in the walking/public transport countries of Europe.
So no, the demon of suburban car dependence does not provide the explanation for all ills.
> It feels like much like defense spending, it create jobs, but it doesn't create value.
This is the safest period in human history by a huge margin. It may not feel that way given the ultra connected, headline consuming nature of most people these days. But it is true.
Global trade has lifted more people out of poverty than anything else, and that was first enabled by maritime trade which was implicitly secured by the US Navy post WW2. The Internet is the second coming of that, the invention of which was a result of US military spending.
You may think that US defense spending is too high, or take other faults with the US military industrial complex. But to say that it provides no value is uninformed.
hmm what could have happened in the last 3-4 years that would impact US life expectancy? also a huge part of that decline is preventable death due to drug overdose.
That doesn't really matter if all you're doing is measuring the relative change in GDP though, and the amount of activity that doesn't register on GDP isn't increasing.
In other words, if you assume non-GDP activity is constant, then GDP does genuinely and accurately reflect economic growth.
Indeed, this is one reason why economists recommend GDP as a useful measure of growth in a country year-over-year, but not for comparing different countries' GDP directly -- the ratio of activity not counted as GDP may be quite different between countries.
Now, if you think that a massive social transformation is underway of non-GDP-registering activities to GDP-registering activities -- e.g. people used to care for their grandmas, now all those people have gotten jobs to pay for care assistants to do it instead -- then yes GDP will show "false growth" in productivity.
But that really doesn't seem to be a major factor. We really are seeing massive amounts of innovation in the economy that improve people's lives. Economists don't just look at GDP -- they look at lots of measures that all tell the same story. Productivity really is going up. GDP growth may not be 100.00% accurate, but it is mostly.
> Now, if you think that a massive social transformation is underway of non-GDP-registering activities to GDP-registering activities -- e.g. people used to care for their grandmas, now all those people have gotten jobs to pay for care assistants to do it instead -- then yes GDP will show "false growth" in productivity. But that really doesn't seem to be a major factor.
But isn't that the issue?
Before: one working-age person in the household worked part time, or did not work at all. She (it was usually a she) could get the kids off to school, pick them up after school, check in on grandma, do the shopping, cook a simple meal.
Now: the working-age person goes to work, perhaps because the family fell apart, perhaps because other rising costs (e.g. health care) forced it. Before and after school care is paid for. Someone is paid to check in on grandma. Walmart+ or Amazon occasionally delivers heat-and-eat meals.
GDP went way up! Amazon contractor has a job delivering boxes. Someone is paid to check in on Grandma, and someone else to watch the kids. Someone works in the factory making heat-and-eat meals.
But are we really better off? Is it better to staff out the kid- and Grandma-watching and to heat up a dinner in the microwave? I'm not sure anyone knows the answer to that question, but I'm certainly not sure that "we really are seeing massive amounts of innovation in the economy that improve people's lives."
The GP's point matters quite a lot, because the ratio of GDP to non-GDP value is going up. Terms like "financialization" or "commodification" describe a process that makes things visible and measurable. I think this is also what the book Seeing Like A State meant by "legibility".
And the whole reason it's a bad thing is that the human values that can't be converted to a measurable, tradeable commodity are often thrown away, because they're invisible to the commodification process.
You can assume what you want if it makes you feel better, but assuming that I am both seeing Grandma at 2PM and working for wages at 2PM is going to disappoint someone.
One of the ways we seem to be absolutely destroying the social fabric for younger people is by eliminating ("privatizing") every last public space and time in which they're allowed to exist without driving there and paying a fee for a structured transactional recreation. We have privatized the commons in an analogous way to the Enclosure Movement in industrializing Great Britain.
Feels more and more like it's the best of times and the worst of times...
Things feel off,but you have (mostly well-off) people talking about how great things are going to be and are. I suspect a lot of this correlates to the stock market.
For the median millenial atleast, whatever you were taught growing up is just the wrong guide to understanding the world today.
I think social media by its very nature, has to be understood inverted. A high number of posts about how great things are suggests otherwise. Comparisons with Europe have gone exponential that tells you more about how the posters feel than anything else...
As I complete my travels through Argentina and a layover in Lima
I realize that differences between poor and rich are much less stark in my opinion in the US and these LatAm countries where the percentage of population living below the local poverty line is 3 to 5 times higher than that of the USA
Enormous amounts of valuable activity is not captured in GDP and never has been. This makes it dangerous to take two GDP numbers from different polities (or even GDP PPP) and compare them to compare their wealth.
However, change in GDP can tell you something broader about a society. It is a compounding value, which means only a trivial amount of GDP change can be explained by moving some of a society's value into or out of the GDP measure. Over a century, the compounding effect eclipses the non-measured component.
So if two societies, over the long term, have different GDP growth numbers, one of those societies will end up rich and the other end up poor.
Slow down GDP growth even a little and you will impoverish your grandchildren. They will have to choose between becoming doctors in their poor society, or emigrating and waiting tables in the rich society.
The problem is that countries who don't want to compete on the marketisation of everything will lose out eventually.
In your example of elderly care, an extended family in Italy may care for their own grandmother (and they'd probably live longer). But the market in Italy isn't so bouyont so the younger generation can't get high paying jobs and move out even if they wanted to.
The high spending and marketisation in the US skews the game for everyone whether they like it or not.
You highlight and try and predict the eventual problems of non-marketisation but you don't seem and try and do the same to the eventual problems of marketisation.
These things are difficult to predict, but already for example we notice some problems with ultra-marketisation in the UK where house prices are now 10-12x average annual salary (it used to average 6-8x for the last two decades), and all the social strife this is causing in society. For example it can eventually lead to mass violent protests against migrants or electing extreme political parties.
Another example is that it has seriously degraded public services, since nurses can barely survive on their salary there is huge shortage of medical employees leading to huge waiting list for medical, even critical, operations.
> The problem is that countries who don't want to compete on the marketisation of everything will lose out eventually.
It goes both ways though, when shit hits the fan if your economy is based on airbnb and food delivery you're fucked.
Look at Russia, half the GDP of Germany but twice the steel production, 4 times the wheat production, 1st producer of fertilizer, huge amount of gas, &c. They had roughly the same military budget as Germany in 2020, yet the german army virtually doesn't exist.
It depends if you think our current mass productivism/consumerism practices are a bubble or the end game of humanity, history seems to prove that it goes in cycle of good and bad times. Poor countries would probably even fare better than most in case of major events, the bigger they are the harder they fall.
The problem of marketisation is that it's a shredder for human values. The economic machine doesn't care what the constituent parts are, as long as they move correctly.
My ideal world we would pay a reasonable wage to people to take care of their own children and the eldarly relatives. These are real valuable and nessasry jobs that end up being an economic drag on those that can least afford it. So instead of paying a stranger to help grandma do household chores make meals and drive her to her medical appointment why not pay her granddaughter to take care of her instead taking a second job to pay for the assured living facility? Why have both parent work two job and pay for all day daycare when dad can stay at home clean house and watch the kids? We fear population colapse as younger generation put off or decides not to have kids and yet child care cost so much that they cant aford to have kids instead pay people to be parents and nurture and raise children.
Is there evidence for this? In wealthy, developed European countries, I would bet in the southern ones, they are less likely to live in elderly homes, and vice versa with northern ones. I guess that this trend is more about culture than ability to pay.
Very good point because in my country elder care is free. Daily visits by an assistant is on the municipality. We're not a leader in GDP, but we take care of our citizens, whether they be sick or old.
That is not the point GP was making. The assistant you mention is still paid by the municipality, so they show up in GDP numbers just as much as if you paid them yourself.
What doesn't show up in GDP numbers are cultures where people take their elderly relatives into their own homes and care for them themselves. Same as hiring someone to look after your kids, or taking them to day care, shows up in GDP; while having their grandparents or other family care for the kids while you're off to work does not.
And if you borrow that money is even better because they just created the money for you to add to the GDP, and now it will have lots of sweet service fees and interest in top of that.
And on a side note because US dollars are the reserve currency and only created in one country they can go shopping around hovering up every asset and resource.
Consider this scenario. Dollar holds value for the next 1 year. FED prints dollar. It gives them to BlackRocks of the world. And these vehicles go shopping around the world in emerging markets buying up ownership. Similar to Cantillon effect, others and emerging market are left holding the bag.
Here’s How America Really Runs Britain | Aaron Bastani meets Angus Hanton
The US produces a lot of things others want to buy, including stability and security, and that is why non Americans want USD and hence others give Americans purchasing power.
GDP is C + G + ... and the C is personal consumption, so I guess if you pay 100 USD that's what gets added, and the premiums (and whatever your employer pays for you)
> If I go visit my grandma over the weekend, my activities do not register on GDP.
Yes they do. How do you visit her? What do you do while you're together? Eat some food? There's almost no way your visit doesn't register on GDP.
In reality, economic growth makes peoples lives better in simple, concrete ways. Ironically, we've started to question this only because we've become so rich due to so much growth that we're no longer dealing with "simple" problems (hunger, cold, etc).
> What do you do while you're together? Eat some food? There's almost no way your visit doesn't register on GDP.
People typically eat food even when they don't visit someone as well, the total amount remains the same. It is really common to just cook food and eat together, your life doesn't get better if you go out to eat eating your parents home cooking doesn't register on the GDP.
> If I go visit my grandma over the weekend, my activities do not register on GDP.
How do you mean? There are travel expenses and you were also doing that instead of consuming. Saving shows up in the numbers so I'm really not following what you mean here.
If you pay someone to clean their room or watch their kids, that becomes part of GDP, whereas if they simply do it out of love or social obligation, that isnt part of GDP.
There are no travel expenses, if grandma lives in a walking distance (or a couple of bus stops away, not that uncommon in Europe). She is also fine watching her grandkids from time to time, to everyone’s delight.
if you hired care assistant then you have time for some other activities like work which is more profitable than cost of care assistant thus economy has more goods. Life expectancy lowers when young people die, most often in work accidents which is related to low unemployment.
You're completely missing the problem. The care assistant, being a fungible and commoditized service provider, can never provide the kinds of illiquid unmeasurable goods that are generated by long-term and durable relationships.
My wife had a good job. She made the median household income in the area on her salary alone (my salary was still better, but that's beside the point).
When we had our second kid, the hustle wasn't worth it. Two kids in daycare took 90% of her take home pay. It was costing us more for her to work than to stay home with the kids.
Also, kids need their parents. An infant being away from their mom for that long is unhealthy for the infant
Your argument hinges on my work being more profitable than a care assistants. While that's maybe true, the difference showing in GDP is not the difference of profitability or "value" in our work. What if I'm a care assistant myself? Imagine two care assistants and two scenarios:
1. They are working from Monday to Saturday. They can't take Saturday off, so they hire a care assistant to take care of their grandma on Saturdays, they happen to hire each other.
2. They are working from Monday to Friday. They take care of their own grandma over the weekends.
Any metric that most directly relates to military spending ability seems the most pertinent these days. But of course GDP doesn’t relate to quality of life—I don’t think anyone suggested it did but of course many think it should.
Are you implying that GDP has only been measured for the last 3 years? Because I think it has been much longer, over a period where physical health has improved greatly.
This is a good point, but at the same time GDP correlates with many metrics of national wellbeing. The USA isn’t the destination of choice for migrants for no razón
There was a big dip in 2021, but it has started rising again, and it's possible it might rendezvous again with the old trend. This means parent-poster might be technically correct in the sense of "between T to T+3 it decreased", but I would not jump straight to blaming the the longer-term background horribleness of US health insurance for it.
It's far more likely to be that teensy-weensy COVID-19 pandemic, both in terms of direct damage and also reduced care for everything else.
Seriously, just looking at the examples of "stagnated and failing economies" like Japan should be a give away that this measure is total BS.
In Germany a life saving brain surgery creates 5K USD of economic activity and the same surgery creates 500K USD of economic activity in the USA.
True story, a YouTuber I'm following recently had her mother operated in Germany and then again in the USA and she made a video about the experience and the numbers:
https://www.youtube.com/watch?v=G-p1nP6hH6U
This obsession with GDP isn't healthy, among other obsessions like the "Number of gigantic companies" which is supposed to show that you are falling back in technology if you don't have extremely large companies by market capitalization metric.
It worries me because it's BS and BS can last just till a point. What happens if at one point in the future people start demanding benefiting from all that riches and success? I'm worried because I don't believe in(goodness of?) revolutions and the situation makes me anxious that the west with the US in particular is headed to some kind of revolution. They had one with the last election I guess but the revolutionaries appear to be pushing for the extreme version of the same thing which eventually might collapse with another revolution with the opposite thing like what UK ended up getting as a Labour landslide after Libertarian landslide.
> I'm worried because I don't believe in(goodness of?) revolutions
That's strange, revolutions have been the some of the most acute moments that improved things for the world population and brought rights to the common people. I'd definitely not want to live through one because it sucks for those during it, but it's great for those that come after.
100% agreed, especially when you print money the GDP is evaluated in, there's no ceiling! What can be bought for money and in what quality, that's a different story... Purchasing Power of Money is what really matters. It's still good in some European countries, but with the current policies, EU has set itself up for times of poverty.
In Germany a life saving brain surgery creates 5K USD of economic activity and the same surgery creates 500K USD of economic activity in the USA.
It doesn’t because the insurer doesn’t pay $500k.
Not to mention that if something costs $10k in the US that costs $5k in Europe, that $5k that doesn’t get spent on something else (which would also increase GDP)
Revolutions are neither good nor bad, they just are.
It's what you do after that matters. If you keep on repeating the same mistake and never change the systems that led to the political instability in the first place, then you are bound to have the same results.
How's that related to the magnificent 7 and then SpaceX/StarLink and the AI revolution (which is nearly virtually only happening in the US: even if there are a few models in France, China, etc. it's a US game)?
I don't think you realize what's going on in the EU (failing into a third world continent at an alarming rate) or in China (where "little" cities of 30 million inhabitants are all about tech and feeling like you live in the future: not that everything is rosy in China).
EU carmakers are all in big trouble while Chinese EVs and Tesla are soaring. The EU has nothing to answer the mag 7, let alone SpaceX (the ESA was already way behind NASA).
That the US is growing at a faster rate than most other nation and continents is a fact and it's got nothing to do whether you or a care assistant goes to visit your grandma.
You’ve got an overly rosy view of what’s happening in the US and underestimating Europe. AI is big in the tech world, but it’s hardly moving the needle on the overall economy. Every 1% GDP growth roughly requires the equivalent of adding a new Google sized company every year, or as actually happens a more widespread increase.
SpaceX is facing the limits of how much people want to send into orbit. Plenty of growth in the next few years, but Starlink is only generating ~6 billion a year in revenue and not much else really wants to put that much stuff into orbit. Worse, Starlink is facing ever increasing competition from cheaper ground based providers especially cellular internet, so that business may start to shrink.
One thing this article doesn't touch on is the soaring government debt, which is now really quite big: 120%, and IIRC if you add municipal debt, it's more like 140%. That is high. It also seems like much of the recent growth has been fueled by this debt.
It's unclear how this is going to unwind. America can afford, apparently, to run their deficit hot, but not forever and without limit. So at some point they have to start cutting expenditure and paying that debt off. What happens then? Or will they somehow default on it? Or, will they manage to deflate it via growth. But it is a bit of a sword of Damocles hanging over the economy, like ZIRP over VC successes of the 2010s.
The crazy thing is just how much the debt increases in living memory. Under Clinton, it was as low as 60%, which is considered a really low level.
My theory is that other countries' trade is so closely tied to the US Dollar that when the Federal Reserve prints money it's not just diluting the US Dollar but all currencies. The US is effectively taxing the world, to pay for its own spending.
> My theory is that other countries' trade is so closely tied to the US Dollar that when the Federal Reserve prints money it's not just diluting the US Dollar but all currencies. The US is effectively taxing the world, to pay for its own spending.
Yes.
The BRICs economic group has been trying to launch their own currency for a while now. This is one of the reasons for it. Trump has threatened to impose 100% tax on them and on anyone else who ever tries.
It's a little more complicated than that. US inflation is actually good for emerging economies which borrow in dollars, because it eases their debt burden.
> So at some point they have to start cutting expenditure and paying that debt off.
They don't have to cut expenditures at all. Since the Fed controls rates, they can manage the debt by adjusting interest rates. There's nothing preventing them from driving interest rates below 0% and being paid to accept money. And the Fed can buy T-Bonds at below market rates and slowly destroy excess money in the economy in a controlled fashion.
Something to keep in mind is that US government debt is integral to the economy. It's a stable way for entities hold US dollars as cash, and it's the only mechanism for them to hold large sums of US dollars in cash.
It's fine (and expected) for US government debt to continue to increase forever, it's just a number in a spreadsheet. The only real risk is the potential for a default. But even then, if you have $4 trillion dollars, what are you going to do with it instead of buying t-bonds? Exchange it for Euros and risk the impacts of currency fluctuation? And what will the buyers do with those dollars? At some point, someone is going to want to bank those dollars in savings, and that means buying t-bonds (directly, or indirectly), and the risk of default merely becomes a factor in an equation for the holder.
You can do all this at an accounting level. But ultimately US government is buying things with debt, ie paying for goods and services from third parties with an IOU, and can only do it if people think they are getting a good deal.
The way you get shafted with debt is inflation. Barely a few years ago bond yields were around 0. If you lent money to the government then, you're already very behind because of inflation - you're not getting any interest, and by the time you are repaid, the money is worth far less than before.
Furthermore, the Fed can't really let interest rates diverge too much from inflation, since the mismatch drives inflation further. That's why the rates are around 4% now, even as the economy is slowing. They have to be up to contain inflation.
So then, as the election was playing out, you could see bond yields fluctuating in line with inflation expectation. Whenever Trump said something that sounded inflationary, like tarrifs, bond yields jumped up. That's not the Fed doing it, that's lenders demanding more interest from the US govt.
Now I agree the US can get away with this more than other places. They aren't far off Italian levels now, and that would be considered teetering around crisis levels. But it's fantasy to conclude the US can keep magicking money every year with no consequence.
The US administration of the next four years has no intention of making a principal payment on the debt. They borrowed $7 trillion before, they can do it again. If a country dumps their US treasury bonds, the administration will impose tariffs on them.
I think it's interesting to compare other countries. 120 years ago the UK was the most powerful empire in history. Now 36% of UK children live in poverty, and 43% of single parent families and families with three or more children live in poverty. Over 40% of UK families from Asia/Caribbean live in deep, persistent poverty.
Many in the US are really close to that, and describe it as a "poor economy". They may have an iPhone, but they can't afford it.
As long has the US has military supremacy it won’t unwind because the military backs the dollar. As soon as that is gone then it’s all one big free fall.
You lend someone money based on whether you think they can pay you back. People still buy US debt because the US is good with its promises.
It’s the same reason the US dollar is the reserve currency… the US govt knows how to keep it reasonably stable and has decades of success at it.
Does the US use this to their advantage? Sure. But it doesn’t matter… you just need to be better than the next guy. Just observe the 100 year history of many countries: their institutions 100 years ago are much different from today. No one likes uncertainty.
the last time debt was this high was WW2, after it millions of working age men came back contributing to the economy. today the opposite is true, millions of people are exiting the workforce to retire, draining resources like Social Security. It's not sustainable, but US can tap into immigration policy to kick the ball down the road for decades
I find this part funny to because in Canada we want to have it both ways. We endlessly compare ourselves to the USA and wring our hands about whether our taxes are too high or our productivity isn't good enough, because we can't match what the USA has, but at the same time we also wring our hands about deficit and debt and are incredibly hawkish compared to everyone else.
You can't have it both ways!
Somehow it is never raised that the USA is doing absolutely incredible amounts of deficit spending that Canada dares not match, not even under this relatively more inclined to deficit spend current government.
Never raised that maybe some of their good metrics stems from the incredible amounts of deficit spending that is verboten.
US will unwind like all declining empires in history have. The rich will move their wealth out of the currency while the currency is debased via inflation (the debt will be "monetized" in contemptory econspeak). It's already happening.
the largest expediture of the US government now is fake interest payments on fake debt then? or we pay that with fake money fake Americans pay with fake taxes? :)
Stop measuring GDP and instead measure the total income of the bottom 50% of the population and optimize policy for that. Additions and exits from this group can also be tracked. We get what we measure. Will this raise income inequality?
That's just Rawls's Original Position but restated poorly.
That would make a great sci-fi story: somebody wakes up with amnesia within a John Rawls thought experiment. I'm not smart enough to write it, but I'm giving the idea away for free.
It's not just income. Corporate America has turned "prey upon the poor" into a science. Nobody really cares about protecting the poor from that sort of thing. So they'll have to deal with BS like, say, getting paid via a debit card, whose bank charges fees for nearly anything. Then there are the astronomical credit card rates/fees. There are no limits on credit card APRs.
Even government has been highly optimized for the ultra-weathly and tries to fuck over the poor. The poor get audited at a rate orders of magnitude higher than people who make $1M+/year, despite audits on the poor rarely recovering much in the way of unpaid taxes, but audits on the wealthy tend to make the IRS giant piles of cash, because rich people love to cheat on their taxes.
Then there's court fees. Get arrested, you're suddenly on the hook for a bunch of expenses. If you don't pay them - jail.
Further: look at the ease with which you can get hundreds of thousands of dollars in tax writeoffs for owning a bizjet.
Compare and contrast to the hoops a single mother has to go through every 6-12 months to keep "re-certifying" their children as qualifying for about ~$25 in monthly benefits for food for said kid. The appointments are only 9-5, M-F. Which means you have to take a day off from work; that means you lose at least $100 in income, which is a huge amount of money for a single mother working a minimum wage job.
The appointments are typically at state offices nowhere near major metropolitan cities or public transit, which means you need a car, or to take a taxi, or get a friend to drive you.
Apparently we need to be really concerned about single mothers just giving away their kids and still taking advantage of WIC at the tune of...$25/month?
Then there's all the administrative busywork generated by legislators who demand it so "taxpayers aren't ripped off."
Meanwhile, that bizjet sure does make a lot of weekend trips to Vail and the Bahamas in the winter...
The "prey upon the poor" is just as bad, if not worse, in Brazil. Growing up there you don't really realize, but after living abroad for a while it is painfully obvious.
Just a small example, stores that sell anything >30 USD don't put the real price of goods when they advertise them. They always put "<h5>x12</h5> <h1>{REAL_PRICE/12}</h1>" (show the price of the installment, while putting how many installments really small)
I had a data scientist friend who worked at a bank optimizing how much credit he could give out to people (while staying legal with the regulations). Like his goal was to get people to get more credit (usually credit card). My Bank app constantly bombard me with notifications about taking loans and getting credit cards.
This friend was not the most moral person I ever met and even him was disgusted after a few years working there, he was making a ton of money but he left anyway.
Reminds me of the Sacha Baron Cohen bit where he suggested to Bernie Sanders that we move the 99% into the 1%.
I think a generous reading is Khosla was referring to capital rather than people, which is something similar to Gini coefficient. Very generous.
On the other hand, maybe people like that, who for no reason aside from their massive personal fortune have a huge megaphone, deserve less generosity and should give everything they write a sniff test first. Idk.
Email was invented gratis by government and university employees who were largely paid by the public. Email worked fantastically for decades before the private sector monetized it with spam and CTAs to drive more interactions.
No, we might be having this discussion on mars instead of iPhones.
None of our elites care about:
a) 99% of us living a meaningful life
b) technologically moving humanity forward (supports bullet a)
Install elites that care about those and then you can use any measure you want, any system you want, etc. Instead we’ve replaced god with money. Only an upgrade for the 1%.
Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market.
Take tech out of the equation and the US is pretty much on par with EU, and China and India are just burning the coal for everyone else.
Tech is not a 'problem'. It has replaced Finance in the pecking order of power relationships. Since US controls it , it can exert control everywhere where its tech goes. China shielded itself from it early on.
> Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market.
I don't really understand what you mean. While their reach is global, it's largely American companies that are creating the tech value, no?
They're creating "value" the same way the British Empire did for China around 1800. It's almost 1:1 the same dynamic. Bad decision-making of individuals is exploited to make them act against the best interests of their country and ultimately themselves, causing money to flow outwards in exchange for virtually nothing, which is then used to import things of actual value from the hapless victims. A modern twist on this is also using that money to buy up anything of value in the victim country and renting it back to its citizens, taking the exploitation to a whole other level.
China was wise to this trick already, which is why they've shielded themselves from the very beginning. Most countries haven't learned the lesson yet, but slowly the EU is waking up as well and pushing back.
This is non-mainstream marxist-influenced economics we are talking about here, only certain activities are regarded as having "value" alongside with a zero-sum view of the economy.
>China and India are just burning the coal for everyone else.
The actual effect of this is far less than you think. While it's true there's some amount of "exporting" of emissions from rich countries to china/india, the effect is small. Consumption based emissions (ie. accounting for imports) for US is only 11% higher than territorial emissions. Meanwhile the difference for China is also 11% (in the opposite direction, of course).
For all the workers are living paycheck to paycheck, they are sitting on a gigantic monetizable pile of money.
Consider this: the most popular languages in YouTube videos are English and Spanish. And did you ever notice how most videos, when they talk about units, talk about Dollars, Miles, Inches, Pounds and Degrees Fahrenheit? That is why...
To be a wealthy YouTuber seems to mean catering to people in North America (the US specifically).
Disposable income is the money people have after taxes.
You can have 10000 dollars of monthly disposable income and be well above the global average. You can have 9999 dollar rent with only a single dollar left. A single basic peanut butter and jelly sandwich could cost 100 dollars. Your disposable income is still massively above the average. Your discretionary income would be very low, though.
Part of the causality is the other way around: The largest language communities attract the most monetization. Europe being compartmented into 24+ languages is one reason that it’s harder to monetize.
I think it was in the book "Cypherpunks" (the one with Julian Assange, Jacob Appelbaum, Andy Müller-Maguhn and Jérémie Zimmermann) where one of them said something about the last few decades with the move to total dependence on digital technologies in so many ways, and it being the largest transfer of power in the history of the species.
If someone has the exact quote, I'd welcome it...
Anyway, the idea stuck with me. Anyone who wants to reject the point will have an easy time as it's such a broad claim, but I think it's worthy of reflecting on, and perilous to ignore.
There's a lot of ink splattered about technology these days, of course, but it's still rare enough that the larger picture of what's going on historically in terms of power structures is seriously reflected on.
From a stock market perspective, if you look at a graph of Vanguard FTSE All World ex US ETF (ticker VEU), it looks like normal growth, but looks vastly different from say Vanguard Total Stock market (ticket VTI) which shows phenomenal growth. This is because VTI includes US tech stocks and VEU doesn't. Take out the tech stocks and maybe VTI would look like VEU.
>The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market.
This argument could be made for many industries. E.g. Boeing and Airbus together control almost 100% of the global passenger jet market. "Passenger jet value creation is being experienced everywhere, but being monetized in the US and EU stock market."
If you remove non-industrial and financial activity from US GDP, the economic picture is bleak. US and G7 have been steadily deindustrializing while BRICS have been doing the opposite.
US GDP is misleading in the sense that it increasingly includes a large portion of economic activity that isn't actually producing tangible wealth.
>Take tech out of the equation and the US is pretty much on par with EU
Disagree. It's not just the nature of the technology itself but the whole ecosystem -- including VC and education -- in Sillicon Valley that develops cutting edge computer tech, plus generally looser business regulation in the US and a culture of greater optimism nationally, especially relative to EU.
Certainly having a unified market (not just in regulation, government, and currency but also linguistically) has helped too especially given the network/winner-take-all effects of tech you mention. Yes the nature of technology is part of it. But it's not everything. It's a whole gestalt.
I mean, consider where we are right now, who set it up, who hangs out there, etc.
The article discusses this and disagrees. Even in the same sectors and with the top 7 companies removed, sectors in the US have higher P/E ratios due to higher projected growth rates.
The article quotes Draghi as saying “If we exclude the tech sector, EU productivity growth over the past 20 years would be broadly at par with the US,” so I think it agrees.
How is that a "problem"? What is preventing other countries from building tech winners? The USA isn't launching missiles to destroy the next foreign Nvidia or Meta competitor.
I don't think it's a problem. What's preventing other countries from building something similar to the US tech companies is a combination of regulation and culture.
Readit News
People get used to things and give for granted things that used to be luxuries a few generations back (see "hedonic treadmill")
Combine that with active participants who control the media landscape and have a vested interest in painting a bleak picture so they can be the ones fixing it.
And then of course there is the fact that things are of course objectively hard for many people because not everybody can be the average person.
So in a sense it's correct to say that these numbers don't capture reality while being technically correct. And that's because reality is much more complex than the things those numbers measure.
The question is: are those indicators useful? Provided you understand what they actually measure, can that be used as a control signal to help make choices that will go in the right direction and improve quality of life for everybody?
Perhaps the improvement will be marginal and not everybody's problems will be fixed, but is it unreasonable to think that problems cannot be fixed by a quick single intervention and that instead they will compound over time?
Look at the progress humanity has made in so many fronts. Ask anybody to pick a time in history where they would like to travel back and have a better life. The most frequent answer is either now or a few years ago when they were young and everything was better (likely because of nostalgia for youth or childhood).
Very few people would really want to be the average person in an era with poor sanitation, corporeal punishment, no education, illiteracy, expensive and faint artificial lighting, widespread diseases, non-existent dental care, low life expectancy
An example being "cast offs". In my early 20s, I moved from a poorer rural area, to a well to do city suburb.
Walking to various places, I noticed things cast aside that would never, ever be thrown away in the area I grew up in.
Examples being:
* an expensive propane bbq, with damage to one of the hoses. A $10 repair and I had a bbq worth hundreds.
(Even looked brand new)
* A set of cutlery, and plates. One of 8 plates had a crack. The cutlery was missing one fork out of a set of 8.
(For a young man eating off of one plate, this was a big bonus)
* a coat rack, mild discolouration
(10 cents in paint out of a spray can to fix)
Anyhow, you get the point. Very usable items cast off, and I would never have found this treasure trove in a poor neighbourhood.
Just being surrounded by a society of greater wealth, means better access generally.
- manipulated / brainwashed - entitled / spoiled - outliers (the few who have it bad are too loud). - the problems can’t be fixed anyway - don’t realise how much worse it was in the past ?
I disagree that the sentiment of the general population is not a useful indicator of how good things are going for the general population. I think it is the best indicator, but people in power (and I would count most on this forum among then) don’t want to see anything that threatens their status quo.
Averages are often misleading.
If one person is a billionaire, and 999 have nothing, the average person is a millionaire. That average is of little comfort to the 999 however.
Numbers are even easier to manipulate.
Well saying "the economy is good" or "the economy is bad" out of context is simply moronic. Good for whom? Bad for whom? It's no secret our entire society is stacked to favor investors and owners rather than workers. The market certainly treats people extremely differently based on where they are in society. Much of the population never economically recovered from the 2008 crash at all—something that won't be reflected by GDP, stock performance, "jobs created", or how many people are collecting unemployment (which is, confusingly, a wildly different figure from counting people who want jobs but can't find one—as best I can tell, a metric not reported by the federal government at all, but appears to be about twice as large as the "unemployment" metric pimped: https://www.richmondfed.org/research/national_economy/non_em.... And this isn't even touching underemployment). The CPI is a little better, but only by a small amount.
And you'd have to be blind to not notice a minimum wage job is no longer sufficient to afford rent in most major metro areas.
- Headline unemployment _is_ "people who want jobs [enough to be looking for them] but can't find one". The metric you linked to is including people outside the labor force and then weighting in a fairly opaque way. Between labor force participation being at the same point as it was 2014-2016 and unemployment being lower, I don't think it's fair to say unemployment stats are misleading. The point about underemployment is still definitely valid though.
- I'm with you that minimum wage should likely be higher, but federal minimum wage has never been intended to be "comfortable wage in a major metro". Major cities have their own minimum wages -- e.g., NYCs is $16/hr. Making $32k a year in NYC would of course not be comfortable, but is doable (eg you can rent a room in an apartment for $1k/mo, live off of oats and rice, etc). It's not intended to be a "head of household" wage, but "the least amount you can ever pay anyone"
Other than these nits I'm with you that stats don't cover the lived experience of all Americans and there's more too it than simply vibes. However I also do think that some of the vibecession is due to increasingly effective media manipulation to squeeze money from consumers. I (coincidentally just now) wrote a blog post explanding on this hypothesis here - https://medium.com/@digital-cygnet/manipulated-into-malaise-...
Either blind, or detached enough that you think that it's a good thing, as long as the value of your home also goes up and you have access to relatively cheap service labor.
Certain categories of the CPI have experienced extreme inflation over the last 16 years, this gets reflected in the wages of the economically mobile and in turn raises the GDP - however we don't really price housing into the CPI in a sensible manner, and due to USD dominated trade - imports and products which compete with imports don't inflate.
The discrepancy between PPP and nominal (USD) GDP seem to be telling a story.
In the crisis era of non-reproducible science and bad data collection is it any surprise the polls are wrong too?
I do not think it means what you think it means.
* Perception of the economy depends tremendously on whether the president is of your preferred party. Whenever the presidency changes hands, you see a massive and rapid flip in which party supporters are satisfied with the state of the economy.
* If you ask Americans about how they are doing personally, as opposed to how they believe the economy is doing, their response is much rosier.
See also: "vibecession"
I wonder if this trend also appears in other highly advanced economies. Example: When UK switched from conservative to labour, was there a similar sentiment swing? My guess: Yes.
Netherlands also moved much more right in the last election after PM Mark Rutte stepped down after 8 years. However, broadly, the NL economy is doing much better than UK economy. Maybe the vibecession effect is stronger when the economy is weak? Could be.
In the US, look at how sentiments about the economy shift depending on party affiliation and who happens to be in power at the time. I do not think it’s as straightforward as saying ”if people think things are worse than they used to be, they definitely are”. There are way too many variables affecting people’s subjective experience
Dead Comment
Hearing the exact same in UK too. The stats say things are ok but people standing at grocery checkout disagree
Strong divergence of 1% and rest
Rising income isn't a phenomenon that hits everyone equally.
Home Rent Affordability: Analyzing affordability by profession and location to reflect real-world dynamics.
Home Price Affordability: Assessing how accessible homeownership is across regions.
Education Costs: Understanding the burden of education expenses on families.
School Quality: Measuring the actual quality of education available.
Healthcare Cost Affordability: Evaluating access to essential healthcare without financial strain.
Drug crisis.
Crime.
Vacations and similar things.
Developing such metrics would provide a more accurate picture of economic well-being and social equity.
The Housing and Urban Development department calculates fair market rents at the county level to support their rent assistance programs (e.g. [0]), although that starts to get at part of the complexity: for your metric do you care about the economic cost or the amount families actually have to pay after assistance?
On the NGO side, groups like the NBER (https://www.nber.org/) disseminate more exotic socioeconomic studies, and there are others.
And of course you can find a mountain of data at data.gov, the federal portal for such things.
I think the harder part (and the part the policy community specializes in) is grappling with the nuances of those kinds of numbers. What do such high-level observations actually mean in something as complex as a continent-wide collection of 10^9 people, and how much human messiness polluted their measurement?
[0] https://www.huduser.gov/portal/datasets/fmr.html
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Is this true in the US?
So even if "the economy is doing fine" there would have a been a large number of people who would have had something taken away.
People got a glimpse of a more interventionist social democratic government during the pandemic and then it disappeared. So yea for people who benefited from that absolutely everything got worse after.
How does the election tell you anything about the economy? Are you injecting a bunch of your reasons why you think people voted for X or Y or is there a factual argument behind that sentence?
He didnt say it said anything about the economy, just the perception of it.
Now to answer that question, there is the simple old adage of "its the economy, stupid" that won Clinton his campaign. But the reality is that economy perception is always asked in polls, all year round. So trends can be established wtih decades of data. Secondly, voting attitudes can be understood through economic perception, when people perceive the economy is thriving incumbents do better seeing Biden's poll numbers anyone could tell that the economy perception was not good.
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let's not act like people's feelings inherently reflect the truth
Because the economy is bad, and this is a "drank the Silicon kool-aid" article.
In the most recent tax filing season data available, there were tax returns of:
If we then break those into the actual groups, and numbers per group, then we find their Average Per Capita Income This entire "booming" part, is the 1-5%. Out the rest of America, there are 38,397,477 making $67,129 on average and 76,794,954 making $19,936 on average. The filing thresholds are "single, under 65 = $12,950" and "head of household, under 65 = $19,400". Most of the bottom 50% of America "barely" would even qualify to file based on the Average Per Capita Income stated on their tax forms. 76,794,954 tax filers "barely" qualify to even file taxes they make so little money. Half.How about, lets look at it a different way. Anybody notice what happened to McDonalds over the last decade and a half? Corporate McDonalds used to have 465,000 employees, now, McDonalds has 150,000. 300,000 employee reduction. 1/3 remain. [1] Btw, they're also -5,000,000,000 under water in equity [2] while they keep making happy meal financial reports. 2/3 reduction in workforce, barely even covered by the news.
The situation looks very similar with almost every peer company. Notably, some of the main jobs where people in the bottom 50% work. Jack in the Box (-$851,798,000, 45,700 -> 1,090 employees), Papa Johns (-$430,933,000, 23,100 -> 13,200), Yum Brands (-7,674,000,000, 90,000 -> 25,000), Dominos (-3,976,640,000, 14,500 -> 11,200). They all went submarine on equity and started shedding employees, yet all anybody will write about is the "booming" tech sector.
[1] https://tradingeconomics.com/mcd:us:employees
[2] https://tradingeconomics.com/mcd:us:equity-capital-and-reser...
Specifically, labor participation is near an all-time low so discouraged workers, who aren’t counted in unemployment numbers, are excluded.
Also, there has been a marked and ongoing shift from full-time jobs with benefits to part-time, casual, and gig work.
Finally, the widely cited consumer price index is a very politicized and skewed measure of the true inflation facing consumers. It ignores the real cost of home ownership via owner equivalent rent measures. It uses a process called substitution to replace suddenly expensive goods with cheaper goods. It includes arbitrary adjustments for improved quality of goods that aren’t always perceived by purchasers who only see the higher prices and these adjustments only work in one direction to skew CPI lower. That’s why consumers often perceive inflation to be higher than the CPI measure.
If the US is benchmarked against Europe then all is well. The problem is that Europe is now a distant 3rd in terms of economic power - it can't face up to China. Arguably, if we put China in its own category and India into "Asia" then the EU might be pushing towards 4th. Everyone is still ahead of Africa I suppose.
[0] https://ourworldindata.org/grapher/national-gdp-wb?tab=chart...
PPP GDP is useful to compare, particularly politically because if the cost of goods in a country is lower people are more likely to be healthy / comfortable with less income. I think it is a little dubious when you use PPP to compare th3e size of two economies because 1) you are taking two approximate measurements and multiplying them 2) countries with lower GDP / person typically have higher relative purchasing power.
In "rich country" (high GDP /person) you can charge a lot for a cup of coffee. In "poorer country" you are likely to charge less. Therefore you can say that person in the poorer country is not as badly off as the absolute numbers suggest. However, if "poorer country" got to the same GDP / person purchasing parity might end up being almost the same. Or, countries with lots of poor regions will have a better PPP, but the cost of living in the places where people have high income may have similar costs.
And in general the most valuable purchasing power differences don't happen for the most valuable and traded goods. An equivalent airplane is going to cost as much in India as the USA, on average. At some point the absolute number is also important.
I like energy production and consumption a lot more, modern economies pretty much come down to using energy to either transfer or modify goods, services or data.
The US, UK, EU and realistically most developed countries I would say have fairly similar quality of life within margin of error. I've travelled a fair amount and everywhere is basically the same.
For an individual it's really going to come down to lifestyle and what you prefer. Some people like urban living and walkability, if that's you then you probably want Japan or old world metropolitan European cities. Some people want a house on a few acres and national parks the size of countries, if that's you then you probably want the US.
Working cultures are different but then there is no average on that either. People on HN tend to assume everyone is an office worker or something which is actually a fairly narrow slice of the middle of the spectrum.
Equally though, online (you can see it in this thread) there's sometimes a weird focus on the absolute worst outcomes which I've always found baffling. If you're planning to become a poor fentanyl addict then yeah, don't go to the US, find a country with a safety net, it'll be more fun.
Probably it is time for you to learn the plight of fellow Europeans then. The society is stewing for quite some time now, for example https://en.wikipedia.org/wiki/Yellow_vests_protests
The symbol has become "a unifying thread and call to arms" as yellow vests are common and inexpensive, easy to wear over any clothing, are associated with working-class industries, highly noticeable, and widely understood as a distress signal.
Rise of far right parties across Italy, Germany, Hungary, Poland, France and many other countries is another clear signal that EU's quality of life may not be great for everyone there.
A fun quote for the europeans here:
"Our land is so wealthy and prosperous that we possess all things. Therefore, there is no need to exchange the produce of foreign barbarians for our own." - The emperor at the height of Qing China
An underrated benefit of the markedly higher standard of living in the US is that people can choose to trade standard of living for quality of life if they wish. American culture seems to preference maxing standard of living but that is optional, and there are plenty of people that make other choices.
Look at what's happening in France for proof that this is just not sustainable. The US has a massive advantage tough,their currency is the global currency accepted and needed everywhere that is backed by the US army. Much less so the Euro.
The cost of all these social programs has to come from somewhere and currently the majority of these costs are shouldered by the middle class that is being squeezed to the max and speaking as someone from the middle class, I can assure you that having a couple of extra weeks of holiday and more job safety (if you are into that sort of thing) is not worth 55% to 65% of my gross income.
Even universal healthcare is crumbling now.
At some point the EU will need to get it's productivity up and become competitive once again or all this quality of life will have to go as it won't be financially possible to continue on this path.
If the economy falls behind then quality of life will follow at some point. In fact quality of life is already not so great and decreasing.
Did you know on GBP PPP Warsaw and Budapest are now better places to live than Madrid, Lisbon and many other Mediterranean cities?
It’s crazy. Perhaps Berlin and Copenhagen are still ok, but even France is on a completely unsustainable path that will explode in the next 10-20 years.
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Human Quality of life seems to flip the natural "evolutionary script" wrt to population growth. Shrinking population = shrinking landlords/bankers/labor/traders/military/scientists etc
In nature, where there is environmental instability/resource scarcity you see a Quantity over Quality reproductive survival strategy (which is similar to what we see poorer regions of the world) that fuels population growth.
On the flip side, where there is resource abundance and stability there is growth in population. But we don't see that happening in the richer/higher developed regions with humans.
Its like advanced human society/culture has worked out how to override biology.
We currently work around falling population(and the shrinking factors of production) with tech/automation, financial/military arm twisting and immigration which gives rise its own social and cultural instability.
Nature has found other population models though. Ants(Eusocial insects) have solved their population/survival issues by have a single Baby factory. There are theories that the Haplodiploidy it produces makes ant societies function smoother. While Meerkats have collective breeding model which is similar to what certain Feminists talk about when they say Make Kin not Babies.
It will take a couple generations of futzing about in unnecessary directions before we solve these issues. So patience with the people who don't know what they are doing is key.
I feel like this is only the case for a very narrow demographic - the young, bicycle-riding, sex-having mid-20s college grad still trying to figure out their calling in life while living frugally without a care.
It really sucks being 40 and still earning like 57k EUR or whatever.
I'd imagine that Europe is at or near the peak in terms of its quality of life.
At least some of the European lifestyle has been due to peace on the Continent. Up until now peace in Europe has been funded by US taxpayers. The situation in Georgia and in Ukraine is what you get when European affairs are left to Europeans. Without the US providing military aid to Ukraine, Ukraine would have fallen and you'd have Putin banging on your back door.
Additionally, the EU's inability to supply Ukraine with basic military equipment such as artillery shells is indicative of how Europe is devoid of industrial capacity and couldn't rally in its own defense if it had to.
Dead Comment
PPP suffers from the same problem that "basket of goods" CPI suffers from in that it doesn't account for differences in quality:
- of course a car costs more today than it did in 1980, it's a far better car
- of course a loaf of bread costs more in California than it does in India - I have certain guarantees about the pesticide levels in the wheat, the accuracy of the labeling, and my ability to seek damages from the legal system in case I chip my tooth on a stone, that I don't have in India
At best, PPP tells you something about the differences in cost of labor. But labor isn't everything you buy.
A maxed out iPhone costs RMB 13999 in China, which is about USD 1925. The same iPhone costs USD 1599 in the US. In Brazil it costs the equivalent of USD 2565. PPP is still very much relevant.
And even on an individual level, PPP struggles with accuracy, because things are only ever roughly equivalent. There's a reason why so many individual people are trying to move from China and India to the US and EU, despite all the personal financial disadvantages of doing so.
This is what people seem to misunderstand about PPP. PPP applies for daily/internal market goods. The cost of milk, eggs, clothing, etc. Which is definitely important. On a more macro scale it also compares a VW Vento in Mexico with a VW Jetta in the US...two particularly different cars with ~6000usd gap in price.
In other words, it compares basic goods for living; fudges some basic "luxury" goods, and pretends that that's representative of lifestyles. It ignores (in Mexico, for example) the fact that consumer electronics are ~20-40% more expensive (if available at all), access to truly equivalent basic luxuries (a VW Jetta for a VW Jetta) is still slightly more expensive, access to equivalent security/infrastructure/business guarantees nigh impossible to receive, and just the vast gulf of wealth inequality that exists, etc.
That's demonstrably false cause the global super-powers (i.e. the US, Russia and China, maybe India, too) mostly depend on their internal markets only when it comes to their war industry and to paying their soldiers. When it comes to that PPP is a lot closer to the truth on the ground.
PPP in the real world is a bit of a fraud, at least in the way people commonly use it. A lot of things you compare between two countries are in fact very different in reality. You might actually end up paying a lot more in nominal dollars for a lot of things in countries which are supposedly "cheap" to get not even the same quality. I find that the cost to maintain the same quality of life between different countries ends up being much more similar between countries than the statistics would have you believe.
I'm in a relatively poor country at the moment. On paper meat costs a fraction of what it does in the US, but what you get at the local market tastes absolutely terrible, uneatable to my spoiled western standards. I think they literally feed the animals trash. To get quality meat you need to go to specialty stores in the rich neighborhoods that caters to the country's elite. There it's actually about 10% more than what I pay at a US supermarket and it still is not as good. The same thing goes for housing, household goods, clothes, etc. In many countries you pay a huge premium for goods imported from the west, and the selection is often quite limited.
This has been my experience everywhere in the world. Excluding a few cities where you pay a premium just on the basis of the local job market, you more or less get what you pay for no matter where you go. The differences that don't fit into spreadsheets are quite significant and almost fully account for the pricing differences from location to location.
Dead Comment
The history books say Western countries abandoned conquest many decades ago. The leaders who initiated colonialism are long dead. Nowadays all we have are handwavey analogies to colonialism when someone wants to be provocative.
Countries aren't people: https://www.youtube.com/watch?v=AXz0kbMKPu0
Rent was also super cheap.
On the other hand iPhones were pretty expensive. Enchiladas were super expensive too.
These aggregated stats have to guess what you’ll buy and base their estimate off of that. Your actual financial situation will be very dependent on what you need to buy.
GDP PPP is meaningless for both geopolitical power and what it means for the average citizen.
The average citizen in EU is much better than the one in China/India despite what the PPP numbers suggest as GDP per captaincy matters more.
China and Russia resort to bartering due to US sanctions because GDP matters, and not GDP PPP [1].
PPP should be used to compare only similar countries like USA/Canada/UK or those in EU. Or countries in SEA.
[1] https://www.intellinews.com/china-russia-to-reintroduce-bart...
I mean, the PPP numbers say the average citizen in the EU is way better off thant he average in India or China, so eh?
So yeah, we are getting poorer by the day and on the brink of a major economic crisis. Just look at what is happening in Germany.
European ICE vehicles are losing out in China because people there don't want to buy any more gas vehicles, at least most people are getting there. VWAG is losing marketshare in every segment that I see. It's not green power that is killing them, it's not many good cheap vehicles that are killing them - gas or EV.
Currently this also simulatenously gives those contries more money, so they can be even bigger pain in the ass in the future.
The sooner this flow can stop, the better.
PPP is cope.
Don’t get me wrong—I’m not a communist. But it’s clear to me, especially when you look at how the middle class is struggling worldwide, that capitalism in its current form isn’t sustainable.
What we need is some kind of “Capitalism 2.0” or “Capitalism++”.
It makes no sense that someone with 300 billion dollars pays less (or even nothing) than a person that makes 100k per year. And this happens on ALL countries.
EDIT for those downvoting: just watch this video: https://www.youtube.com/watch?v=QPKKQnijnsM and then tell me why I am wrong.
Dead Comment
Dead Comment
Russia literally talks about taking over the countries around them, bites off pieces and then subverts the countries that are left. That was all before the first piece of Ukraine was taken, Crimea.
NK - goal to destroy SK, has a big army and nukes. Worth trying to stop them.
China - Chains says the mere existence of Taiwan is worth destroying them. Also taking over the south china sea on the stupid dashed line that says they own the ocean down there. Dictatorships can't stand a functional democracy right next door.
India - if they don't plan to destroy the countries around them and take them over, then good on them. The US has been basically ignoring the fact that India is on a slow road to make their Muslim and other non-hindi citizens fail in every way in their society.
India said FU to the world and has been happy buying a lot of Russian oil that's under embargo. No one attacked them. The world isn't so simple as "western countries destroy all large growing competitors".
Including Americans who are paid for their labour with dollars and do not own assets
So wealthy Americans/companies see an influx of money, asset prices rise and every other country gets poorer relative to the USA
Prettiest horse in the glue factory
[0]https://fred.stlouisfed.org/series/M2SL
The US Government does gain a lot of wealth doing this, but it doesn't necessarily trickle down to Americans or American companies.
It absolutely does go to american companies—that's the entire point of the privatization movement america's been experiencing the last forty years. It's much more difficult to articulate how this reaches americans and builds actual wealth, though, and certain industries benefit more highly from being basically a private form of government (the defense industry, finance, airlines, critical tech companies, etc) than others.
If americans want to reap any windfalls from their "economy" (whatever americans even think that is—as best I can tell it functions in political discourse essentially the same way the Pontifex Maximus performing an augury functioned in ancient Rome) they're going to have to start demanding more concrete things than "jobs" and "stock performance" and "real estate markets".
right, but it makes it easier for the US gov to pay its dollar denominated debts to foreign holders; the huge advantage of being able to borrow in your own currency!
If I go visit my grandma over the weekend, my activities do not register on GDP. If I hire a care assistant for $800 per day to do so, that's $800 to national GDP. The encroachment of the market into society correlates with record levels of mental and physical health crisis. US life expectancy has declined over the past three years, even as 'the economy' has surged ahead. The measures are wrong - and we all know it - apart from the financial press it seems
Sure that create jobs, especially lower-skilled jobs which are important for society. But at the same time they didn't really need to exist. It feels like much like defense spending, it create jobs, but it doesn't create value.
The "value" is for the citizens that prefer suburbs style living.
People who prefer dense city living with mass-transportation and walkable errands like European cities or downtown NYC/Chicago are missing the fact that there's another group of people (possibly the majority) that actually prefer the suburbs. Yes, I know it seems illogical.
But don't suburbs have the dependency on cars, and those ugly "stroads", and the "parking lot deserts", and "soulless cookie-cutter housing", etc, etc?!? Yes, all of that is true and detractors can keep piling on more derogatory labels but it still doesn't change the fact that many people really like the suburbs. A lot of USA college kids living in dorms in the middle of a "walkable city" have aspirations of buying a nice house out in the suburbs and hope they can land a high-paying job so they can afford that dream. Why do so many of these young people who have actual experience of living in the city want to get away from that and live in the suburbs?
Furthermore, your assertion that the defense industry doesn’t provide value is questionable. Until you can convince the various state governments of the world to unite in a global superstate, defense spending is a necessary deterrent to invasion and exploitation by other states, so it is, in fact, valuable.
And while I agree that suburbs aren’t the ideal form of urban organization, they aren’t actually the cause of all the social ills that you imagine them to be. Depression and addiction are driven by loneliness, and loneliness is almost as high in urban societies as suburban ones. Obesity may be slightly aggravated by car dependence, but it is still historically high and a major problem in the walking/public transport countries of Europe.
So no, the demon of suburban car dependence does not provide the explanation for all ills.
This is the safest period in human history by a huge margin. It may not feel that way given the ultra connected, headline consuming nature of most people these days. But it is true.
Global trade has lifted more people out of poverty than anything else, and that was first enabled by maritime trade which was implicitly secured by the US Navy post WW2. The Internet is the second coming of that, the invention of which was a result of US military spending.
You may think that US defense spending is too high, or take other faults with the US military industrial complex. But to say that it provides no value is uninformed.
In other words, if you assume non-GDP activity is constant, then GDP does genuinely and accurately reflect economic growth.
Indeed, this is one reason why economists recommend GDP as a useful measure of growth in a country year-over-year, but not for comparing different countries' GDP directly -- the ratio of activity not counted as GDP may be quite different between countries.
Now, if you think that a massive social transformation is underway of non-GDP-registering activities to GDP-registering activities -- e.g. people used to care for their grandmas, now all those people have gotten jobs to pay for care assistants to do it instead -- then yes GDP will show "false growth" in productivity.
But that really doesn't seem to be a major factor. We really are seeing massive amounts of innovation in the economy that improve people's lives. Economists don't just look at GDP -- they look at lots of measures that all tell the same story. Productivity really is going up. GDP growth may not be 100.00% accurate, but it is mostly.
But isn't that the issue?
Before: one working-age person in the household worked part time, or did not work at all. She (it was usually a she) could get the kids off to school, pick them up after school, check in on grandma, do the shopping, cook a simple meal.
Now: the working-age person goes to work, perhaps because the family fell apart, perhaps because other rising costs (e.g. health care) forced it. Before and after school care is paid for. Someone is paid to check in on grandma. Walmart+ or Amazon occasionally delivers heat-and-eat meals.
GDP went way up! Amazon contractor has a job delivering boxes. Someone is paid to check in on Grandma, and someone else to watch the kids. Someone works in the factory making heat-and-eat meals.
But are we really better off? Is it better to staff out the kid- and Grandma-watching and to heat up a dinner in the microwave? I'm not sure anyone knows the answer to that question, but I'm certainly not sure that "we really are seeing massive amounts of innovation in the economy that improve people's lives."
And the whole reason it's a bad thing is that the human values that can't be converted to a measurable, tradeable commodity are often thrown away, because they're invisible to the commodification process.
One of the ways we seem to be absolutely destroying the social fabric for younger people is by eliminating ("privatizing") every last public space and time in which they're allowed to exist without driving there and paying a fee for a structured transactional recreation. We have privatized the commons in an analogous way to the Enclosure Movement in industrializing Great Britain.
Name some?
The issues people care most about atm seem to be getting worse (housing prices, cost of living, etc)
Things feel off,but you have (mostly well-off) people talking about how great things are going to be and are. I suspect a lot of this correlates to the stock market.
For the median millenial atleast, whatever you were taught growing up is just the wrong guide to understanding the world today.
I think social media by its very nature, has to be understood inverted. A high number of posts about how great things are suggests otherwise. Comparisons with Europe have gone exponential that tells you more about how the posters feel than anything else...
So whatever you feel - it’s all relative
There are some good talks of Mariana Mazzucato about it (and questioning of what we consider value in economy) [1]
[1] https://www.youtube.com/watch?v=bzZSdgQB99w
However, change in GDP can tell you something broader about a society. It is a compounding value, which means only a trivial amount of GDP change can be explained by moving some of a society's value into or out of the GDP measure. Over a century, the compounding effect eclipses the non-measured component.
So if two societies, over the long term, have different GDP growth numbers, one of those societies will end up rich and the other end up poor.
Slow down GDP growth even a little and you will impoverish your grandchildren. They will have to choose between becoming doctors in their poor society, or emigrating and waiting tables in the rich society.
For example in the case of Ireland people might be misled if they looked only at nomial GDP growth…
In your example of elderly care, an extended family in Italy may care for their own grandmother (and they'd probably live longer). But the market in Italy isn't so bouyont so the younger generation can't get high paying jobs and move out even if they wanted to.
The high spending and marketisation in the US skews the game for everyone whether they like it or not.
(no moral judgements here, just observations)
These things are difficult to predict, but already for example we notice some problems with ultra-marketisation in the UK where house prices are now 10-12x average annual salary (it used to average 6-8x for the last two decades), and all the social strife this is causing in society. For example it can eventually lead to mass violent protests against migrants or electing extreme political parties.
Another example is that it has seriously degraded public services, since nurses can barely survive on their salary there is huge shortage of medical employees leading to huge waiting list for medical, even critical, operations.
It goes both ways though, when shit hits the fan if your economy is based on airbnb and food delivery you're fucked.
Look at Russia, half the GDP of Germany but twice the steel production, 4 times the wheat production, 1st producer of fertilizer, huge amount of gas, &c. They had roughly the same military budget as Germany in 2020, yet the german army virtually doesn't exist.
It depends if you think our current mass productivism/consumerism practices are a bubble or the end game of humanity, history seems to prove that it goes in cycle of good and bad times. Poor countries would probably even fare better than most in case of major events, the bigger they are the harder they fall.
What doesn't show up in GDP numbers are cultures where people take their elderly relatives into their own homes and care for them themselves. Same as hiring someone to look after your kids, or taking them to day care, shows up in GDP; while having their grandparents or other family care for the kids while you're off to work does not.
And on a side note because US dollars are the reserve currency and only created in one country they can go shopping around hovering up every asset and resource.
Here’s How America Really Runs Britain | Aaron Bastani meets Angus Hanton
https://www.youtube.com/watch?v=uK7DINiVuPA
If it "costs" $1000 but that's just to get $100 from insurers who only pay 10% and I only have to pay 10% too? Still $1000 to GDP - I think.
Yes they do. How do you visit her? What do you do while you're together? Eat some food? There's almost no way your visit doesn't register on GDP.
In reality, economic growth makes peoples lives better in simple, concrete ways. Ironically, we've started to question this only because we've become so rich due to so much growth that we're no longer dealing with "simple" problems (hunger, cold, etc).
People typically eat food even when they don't visit someone as well, the total amount remains the same. It is really common to just cook food and eat together, your life doesn't get better if you go out to eat eating your parents home cooking doesn't register on the GDP.
How do you mean? There are travel expenses and you were also doing that instead of consuming. Saving shows up in the numbers so I'm really not following what you mean here.
Savings isn't part of GDP.
I give you $10,000 to eat a pile of shit.
You give me $10,000 to eat a pile of shit.
What's the result?
Two shit-eating grins and $20,000 added to the GDP.
When we had our second kid, the hustle wasn't worth it. Two kids in daycare took 90% of her take home pay. It was costing us more for her to work than to stay home with the kids.
Also, kids need their parents. An infant being away from their mom for that long is unhealthy for the infant
1. They are working from Monday to Saturday. They can't take Saturday off, so they hire a care assistant to take care of their grandma on Saturdays, they happen to hire each other.
2. They are working from Monday to Friday. They take care of their own grandma over the weekends.
Scenario 1 adds more to the national GDP.
Using GDP to measure the health or rank of a company is like rating writers by the number of words they produce.
Do you have a source for this ?
It's far more likely to be that teensy-weensy COVID-19 pandemic, both in terms of direct damage and also reduced care for everything else.
https://www.politico.com/news/2024/03/21/cdc-us-life-expecta...
Are you saying that you visiting your grandma one weekend is the same as someone washing, feeding and walking her every day?
In Germany a life saving brain surgery creates 5K USD of economic activity and the same surgery creates 500K USD of economic activity in the USA.
True story, a YouTuber I'm following recently had her mother operated in Germany and then again in the USA and she made a video about the experience and the numbers: https://www.youtube.com/watch?v=G-p1nP6hH6U
This obsession with GDP isn't healthy, among other obsessions like the "Number of gigantic companies" which is supposed to show that you are falling back in technology if you don't have extremely large companies by market capitalization metric.
It worries me because it's BS and BS can last just till a point. What happens if at one point in the future people start demanding benefiting from all that riches and success? I'm worried because I don't believe in(goodness of?) revolutions and the situation makes me anxious that the west with the US in particular is headed to some kind of revolution. They had one with the last election I guess but the revolutionaries appear to be pushing for the extreme version of the same thing which eventually might collapse with another revolution with the opposite thing like what UK ended up getting as a Labour landslide after Libertarian landslide.
That's strange, revolutions have been the some of the most acute moments that improved things for the world population and brought rights to the common people. I'd definitely not want to live through one because it sucks for those during it, but it's great for those that come after.
It doesn’t because the insurer doesn’t pay $500k.
Not to mention that if something costs $10k in the US that costs $5k in Europe, that $5k that doesn’t get spent on something else (which would also increase GDP)
It's what you do after that matters. If you keep on repeating the same mistake and never change the systems that led to the political instability in the first place, then you are bound to have the same results.
With any luck, what will happen is that future people will benefit from all those riches and success.
Housing accounts for easily half of people's spending these days, especially the younger generation.
So, here's how you calculate standard of living: Nominal GDP per capita / Case shiller housing index.
Chart this and you'll see that we peaked in 1998 and have been in decline ever since then. We're actually down about 34% since that peak.
I don't think you realize what's going on in the EU (failing into a third world continent at an alarming rate) or in China (where "little" cities of 30 million inhabitants are all about tech and feeling like you live in the future: not that everything is rosy in China).
EU carmakers are all in big trouble while Chinese EVs and Tesla are soaring. The EU has nothing to answer the mag 7, let alone SpaceX (the ESA was already way behind NASA).
That the US is growing at a faster rate than most other nation and continents is a fact and it's got nothing to do whether you or a care assistant goes to visit your grandma.
Just as an example, Tesla’s 2024 Q1 deliveries where below 2023’s Q1 deliveries hardly a sign of rapid growth. https://www.statista.com/statistics/502208/tesla-quarterly-v...
SpaceX is facing the limits of how much people want to send into orbit. Plenty of growth in the next few years, but Starlink is only generating ~6 billion a year in revenue and not much else really wants to put that much stuff into orbit. Worse, Starlink is facing ever increasing competition from cheaper ground based providers especially cellular internet, so that business may start to shrink.
Dead Comment
It's unclear how this is going to unwind. America can afford, apparently, to run their deficit hot, but not forever and without limit. So at some point they have to start cutting expenditure and paying that debt off. What happens then? Or will they somehow default on it? Or, will they manage to deflate it via growth. But it is a bit of a sword of Damocles hanging over the economy, like ZIRP over VC successes of the 2010s.
The crazy thing is just how much the debt increases in living memory. Under Clinton, it was as low as 60%, which is considered a really low level.
As evidence that the US Dollar plays a large enough role for this to be the case, half of the banks bailed out in the TARP program were foreign to the US (https://www.europeaninstitute.org/index.php/ei-blog/106-augu...) and trading is US Dollars.
Yes.
The BRICs economic group has been trying to launch their own currency for a while now. This is one of the reasons for it. Trump has threatened to impose 100% tax on them and on anyone else who ever tries.
https://www.msn.com/en-us/money/markets/trump-threatens-100-...
https://www.bloomberg.com/news/articles/2024-12-02/south-afr...
I also think that the USD is currently under attack as the reserve currency and running these deficits is a way to protect its position.
We will see in a couple of years how things play out.
They don't have to cut expenditures at all. Since the Fed controls rates, they can manage the debt by adjusting interest rates. There's nothing preventing them from driving interest rates below 0% and being paid to accept money. And the Fed can buy T-Bonds at below market rates and slowly destroy excess money in the economy in a controlled fashion.
Something to keep in mind is that US government debt is integral to the economy. It's a stable way for entities hold US dollars as cash, and it's the only mechanism for them to hold large sums of US dollars in cash.
It's fine (and expected) for US government debt to continue to increase forever, it's just a number in a spreadsheet. The only real risk is the potential for a default. But even then, if you have $4 trillion dollars, what are you going to do with it instead of buying t-bonds? Exchange it for Euros and risk the impacts of currency fluctuation? And what will the buyers do with those dollars? At some point, someone is going to want to bank those dollars in savings, and that means buying t-bonds (directly, or indirectly), and the risk of default merely becomes a factor in an equation for the holder.
The way you get shafted with debt is inflation. Barely a few years ago bond yields were around 0. If you lent money to the government then, you're already very behind because of inflation - you're not getting any interest, and by the time you are repaid, the money is worth far less than before.
Furthermore, the Fed can't really let interest rates diverge too much from inflation, since the mismatch drives inflation further. That's why the rates are around 4% now, even as the economy is slowing. They have to be up to contain inflation.
So then, as the election was playing out, you could see bond yields fluctuating in line with inflation expectation. Whenever Trump said something that sounded inflationary, like tarrifs, bond yields jumped up. That's not the Fed doing it, that's lenders demanding more interest from the US govt.
Now I agree the US can get away with this more than other places. They aren't far off Italian levels now, and that would be considered teetering around crisis levels. But it's fantasy to conclude the US can keep magicking money every year with no consequence.
I think it's interesting to compare other countries. 120 years ago the UK was the most powerful empire in history. Now 36% of UK children live in poverty, and 43% of single parent families and families with three or more children live in poverty. Over 40% of UK families from Asia/Caribbean live in deep, persistent poverty.
Many in the US are really close to that, and describe it as a "poor economy". They may have an iPhone, but they can't afford it.
You lend someone money based on whether you think they can pay you back. People still buy US debt because the US is good with its promises.
It’s the same reason the US dollar is the reserve currency… the US govt knows how to keep it reasonably stable and has decades of success at it.
Does the US use this to their advantage? Sure. But it doesn’t matter… you just need to be better than the next guy. Just observe the 100 year history of many countries: their institutions 100 years ago are much different from today. No one likes uncertainty.
You can't have it both ways!
Somehow it is never raised that the USA is doing absolutely incredible amounts of deficit spending that Canada dares not match, not even under this relatively more inclined to deficit spend current government.
Never raised that maybe some of their good metrics stems from the incredible amounts of deficit spending that is verboten.
That would make a great sci-fi story: somebody wakes up with amnesia within a John Rawls thought experiment. I'm not smart enough to write it, but I'm giving the idea away for free.
Dead Comment
Even government has been highly optimized for the ultra-weathly and tries to fuck over the poor. The poor get audited at a rate orders of magnitude higher than people who make $1M+/year, despite audits on the poor rarely recovering much in the way of unpaid taxes, but audits on the wealthy tend to make the IRS giant piles of cash, because rich people love to cheat on their taxes.
Then there's court fees. Get arrested, you're suddenly on the hook for a bunch of expenses. If you don't pay them - jail.
Further: look at the ease with which you can get hundreds of thousands of dollars in tax writeoffs for owning a bizjet.
Compare and contrast to the hoops a single mother has to go through every 6-12 months to keep "re-certifying" their children as qualifying for about ~$25 in monthly benefits for food for said kid. The appointments are only 9-5, M-F. Which means you have to take a day off from work; that means you lose at least $100 in income, which is a huge amount of money for a single mother working a minimum wage job.
The appointments are typically at state offices nowhere near major metropolitan cities or public transit, which means you need a car, or to take a taxi, or get a friend to drive you.
Apparently we need to be really concerned about single mothers just giving away their kids and still taking advantage of WIC at the tune of...$25/month?
Then there's all the administrative busywork generated by legislators who demand it so "taxpayers aren't ripped off."
Meanwhile, that bizjet sure does make a lot of weekend trips to Vail and the Bahamas in the winter...
Just a small example, stores that sell anything >30 USD don't put the real price of goods when they advertise them. They always put "<h5>x12</h5> <h1>{REAL_PRICE/12}</h1>" (show the price of the installment, while putting how many installments really small)
I had a data scientist friend who worked at a bank optimizing how much credit he could give out to people (while staying legal with the regulations). Like his goal was to get people to get more credit (usually credit card). My Bank app constantly bombard me with notifications about taking loans and getting credit cards.
This friend was not the most moral person I ever met and even him was disgusted after a few years working there, he was making a ton of money but he left anyway.
> additions and exits from this group can also be tracked. We get what we measure. Will this raise income inequality?
I'm not that smart but I'm pretty sure that X = Y here, and X - Y = 0.
I think a generous reading is Khosla was referring to capital rather than people, which is something similar to Gini coefficient. Very generous.
On the other hand, maybe people like that, who for no reason aside from their massive personal fortune have a huge megaphone, deserve less generosity and should give everything they write a sniff test first. Idk.
https://en.m.wikipedia.org/wiki/Ad_hominem
If the standard is that someone has to be unimpeachable before they can suggest a well-being metric than no one can.
None of our elites care about: a) 99% of us living a meaningful life b) technologically moving humanity forward (supports bullet a)
Install elites that care about those and then you can use any measure you want, any system you want, etc. Instead we’ve replaced god with money. Only an upgrade for the 1%.
I can tell you I am no happier now that I have email than I was back in the snail mail days. In fact, if anything it's a negative.
Take tech out of the equation and the US is pretty much on par with EU, and China and India are just burning the coal for everyone else.
Not at all obvious to me. Is there any particular measurable thing you're referring to, or is this just your personal feeling?
I don't really understand what you mean. While their reach is global, it's largely American companies that are creating the tech value, no?
China was wise to this trick already, which is why they've shielded themselves from the very beginning. Most countries haven't learned the lesson yet, but slowly the EU is waking up as well and pushing back.
The companies it empowers or Microsoft's (global at the end of the day) shareholders?
The actual effect of this is far less than you think. While it's true there's some amount of "exporting" of emissions from rich countries to china/india, the effect is small. Consumption based emissions (ie. accounting for imports) for US is only 11% higher than territorial emissions. Meanwhile the difference for China is also 11% (in the opposite direction, of course).
https://ourworldindata.org/consumption-based-co2
https://en.m.wikipedia.org/wiki/Disposable_household_and_per...
For all the workers are living paycheck to paycheck, they are sitting on a gigantic monetizable pile of money.
Consider this: the most popular languages in YouTube videos are English and Spanish. And did you ever notice how most videos, when they talk about units, talk about Dollars, Miles, Inches, Pounds and Degrees Fahrenheit? That is why...
To be a wealthy YouTuber seems to mean catering to people in North America (the US specifically).
You can have 10000 dollars of monthly disposable income and be well above the global average. You can have 9999 dollar rent with only a single dollar left. A single basic peanut butter and jelly sandwich could cost 100 dollars. Your disposable income is still massively above the average. Your discretionary income would be very low, though.
Part of the causality is the other way around: The largest language communities attract the most monetization. Europe being compartmented into 24+ languages is one reason that it’s harder to monetize.
If someone has the exact quote, I'd welcome it...
Anyway, the idea stuck with me. Anyone who wants to reject the point will have an easy time as it's such a broad claim, but I think it's worthy of reflecting on, and perilous to ignore.
There's a lot of ink splattered about technology these days, of course, but it's still rare enough that the larger picture of what's going on historically in terms of power structures is seriously reflected on.
Google should be reclassified under the equivalent of Dewey Decimal system publishers and magazine printers.
Netflix is a movie producer.
Adobe is an art supplies producer
Few companies today: apple, microsoft, etc qualify as tech.
This argument could be made for many industries. E.g. Boeing and Airbus together control almost 100% of the global passenger jet market. "Passenger jet value creation is being experienced everywhere, but being monetized in the US and EU stock market."
US GDP is misleading in the sense that it increasingly includes a large portion of economic activity that isn't actually producing tangible wealth.
An analogy would be that if you remove employment activity from my household finances then our economic picture is bleak.
Disagree. It's not just the nature of the technology itself but the whole ecosystem -- including VC and education -- in Sillicon Valley that develops cutting edge computer tech, plus generally looser business regulation in the US and a culture of greater optimism nationally, especially relative to EU.
Certainly having a unified market (not just in regulation, government, and currency but also linguistically) has helped too especially given the network/winner-take-all effects of tech you mention. Yes the nature of technology is part of it. But it's not everything. It's a whole gestalt.
I mean, consider where we are right now, who set it up, who hangs out there, etc.
India has 19 nuclear reactors it is planning to complete by 2030. 7 under construction now to be completed by 2026.