That's an excellent summary of the economic state of the world. This excerpt is depressing...
The challenge for other advanced economies is not just replicating America’s dynamism. It is to do so while retaining their cherished social safeguards.
For all its economic power, the US has the largest income inequality in the G7, coupled with the lowest life expectancy and the highest housing costs, according to the OECD. Market competition is limited and millions of workers endure unstable employment conditions.
The pessimistic take is that American FA*NG 'enshittification' and cheap Chinese plastic junk will continue to eat the world, while other nations abandon consumer- and labor-friendly policies.
> cheap Chinese plastic junk will continue to eat the world
That's a thing of the past. Check the consumer electronics produced today in China. Mobile devices, EVs, infrastructure, newer products are simply incredible, and I'd argue ahead of western technology on many fronts.
Cheap plastic stuff now gets produced in other less developed countries.
This is a fact that most in the US refuse to confront.
China has mastered making high quality goods at scale.
It does not matter how they got there, the fact is they did, and there are some pretty staggering military implications that are not really being discussed.
If you look at most of the “Europoor! Americans have so much more money!” articles, you’ll notice two things coming out of them — most understate the importance of quality of life and avoiding rapid Chinese growth of the past decade despite its own problems. It’s like a weird “no, no, ignore everything around you, we are literally the best despite everything!”.
I genuinely don’t know how I feel about this. I love parts of America. Half of my family lives there. But also, I have no inclination to move. Although I could make about 30% more, I have no idea how it would improve my life other than just more money in the bank. Unless I wanted to start a company, then yeah, probably bigger market and lax laws is advantageous… but other than that, it would be a huge downgrade from life perspective.
The difference between today and a half century ago is that today you either win first prize, or wind up dead. That stinks.
It stinks because companies that come in first are seldom worse at extracting value from customers than they are at providing value to customers, and therefore tend to be mediocrities.
And it stinks because such companies are seldom worse at extracting value from rank-and-file employees than they are at providing value to employees.
The world is better when there are societies that can afford to sacrifice a little competitiveness for a good quality of life. If that's over, it's a shame.
I expressed myself poorly. I implied that the plastic goods would be okay if they weren't cheaply made. I grew up in an era where stores sold furniture made of wood and steel. That was like... less than one human generation ago. So what I actually meant is: the plastic goods inherently are cheap garbage.
Very much this. One of the best accounts of this progression I’ve read is the “AI Superpowers..” book by Kai-Fu Lee. China held the “Knock-off/cheap copycat” moniker in the 90s, 00s, and early 1Xs, but the tides are shifting in terms of the quality of goods they produced. They’ve also taken a page from American business and begun outsourcing “cheap labor” to other third-world nations, in addition to playing loan-shark to the likes of Africa… You have to hand it to the way the Chinese have gained their footing in “capitalism” since the 1980s.
It's also correspondingly easier to get another job. In Europe, making it hard to fire people means it becomes equivalently harder to get a job in the first place.
Yep, and crucially, getting a first job from which you can build a career is relatively (to the US) hard in places like Germany because companies are super risk averse.
Having read literature on it, I still struggle to understand how most of the problems attributed to income inequality aren't really problems of poverty.
An example is that inequality usually materializes in higher asset prices: people with proportionately more money tends to buy assets, driving up the price.
Now, the less well of people cannot afford housing anymore and are priced out.
Ingerently this not because housing is expensive, but solely because of income inequality.
You can insist it is because of poverty. But making both groups 10 times as well off would make no difference. The less we'll off people would still struggle to access housing.
You can also say that poverty is a total consequence of income inequality.
Now come and tell me again how inequality makes the world a better place.
Edit: I take, as you have read the literature, that you perfectly know that the same is the case of capital and produce from that capital in general. And so you are perfectly enlightened now to understand that poverty is inequality.
People with substantial multiples of wealth largely do not buy the same class of assets that those with a fraction of theirs do.
Someone who earns $1000/month and someone who earns $10 million/month are not competing for the same housing. Their effect on each other is minimal compared to those with very similar incomes who are competing for the same housing.
The only exception to this would be if there isn't enough housing for everyone, but the outcome would be identical (someone not getting housing) regardless of the level of inequality.
The idea that poverty is inequality makes little sense. Poverty is lacking a basic standard of living. If everyone has everyone they could want and their neighbor discovers an antimatter reserve under them catapulting them to unheard of levels of wealth, nothing materially changes for everyone else.
Similarly if everyone has perfectly equal income and wealth and still doesn't have enough to eat, they're all in poverty, regardless of the lack of inequality.
Seems like you didn't read that literature after all.
You definitely would Understand that ownership also comes in the form of owning rentals, mortgages, and not just owner occupied housing. That ownership is stock and shares with increasing valuations where you require increasing yields - requirements that makes the produce of the companies more expensive to support these valuations - inflation without a basis for salary inflation (as that would make the incomes more equal, which you explicitly forbade).
If half the population (your naighbor in you analogy) amassed significant wealth, it most certainly would materially change your wealth and make you poor - their money would gravitate to equity, yours and your kids equity. Literally making your poor.
> it most certainly would materially change your wealth and make you poor - their money would gravitate to equity, yours and your kids equity. Literally making your poor.
That sounds like the "wealth is a fixed pie" theory, where for one person to have more, another must have less.
The proof that is false comes from the history of the US. In the 19th century, it was populated by poor immigrants with nothing more than a suitcase. The US turned into a global superpower. How do you explain that with the fixed pie theory?
> I say that equality is a way to make the pie bigger.
Your idea has been tried, literally tens of thousands of times. The pie got smaller.
Just in the US alone, 20,000 communes have been formed (they're not illegal). They all failed. Even the diehard communists can't stand living in a commune and sharing equally.
It sounds like what I missed it isn't worth reading.
Arguing poverty is essentially a relative measure of wealth or somehow other's wealth, even unexploited or unused wealth, somehow makes everyone poor with the sudden knowledge that it exists?
I am interested in economics here, not philosophy.
Presumably this means 'attempts to eradicate income inequality' because otherwise the paragraph sounds like nonsense from some libertarian think tank. Every nation on earth makes some attempt to lessen inequality. But pick any ill that exists in society - crime, prejudice, traffic accidents, noise pollution - and try to completely eradicate it, and chances are it will cause misery.
> American FA*NG 'enshittification' and cheap Chinese plastic junk
Another POV is that the services and software that does the design, marketing, logistics, testing, certification and etc of the plastic junk is more valuable than the plastic junk, and all that stuff is made in the US. It’s still labor, sometimes it’s even bespoke one off software labor which might as well be manufacturing, the thing that it is not is factories. I don’t know why factories above all else are glorified. There is lots of labor in services.
What I was driving at there is that we have seen a general shift (probably due to market consolidation, monopolisation, etc) away from quality and customer satisfaction. The plastic goods are just one tangible artefact.
