Doesn't comparing income after tax make it a bit of an apples and oranges comparison to begin with? Those taxes don't disappear. Those taxes buy services (national healthcare and free education comes to mind) that US middle class citizens would have to pay for with their net income. Would be interesting to see a quality of life comparison (if such a thing can be reliably quantified)
Exactly. The income includes retirement and unemployment benefits but doesn't include other public benefits such as public healthcare, public education, public transportation. Being "after tax" it discounts for taxes that are usually higher in Europe but it doesn't discount for expenses that Americans generally have to pay with their income after tax but which many or most Europeans pay via tax (or don't have to pay at all) such as health care, college, third or fourth family car, higher cost for religious activities, higher cost for litigation, higher cost for private security etc.).
It is difficult to make good comparisons without taking the public spending into account or deducting for the part of the private income that Americans must allocate to expenses that are paid over the taxes Western European countries.
For most Europeans the value of free or almost free public benefits such as public healthcare, public education (from kindergarten to university), public transportation, low crime rate etc. is substantial.
Having lived in three European countries (Scandinavian, Iberian and now in the Balkans) and in the US (New York) I have maintained for years that American median wealth seems smaller than Western European wealth and that there is a huge public investment backlog in the US: Roads, airports, subways, railroads, hospitals, schools etc. is very outdated in many places (probably because much of it was built decades before similar infrastructure in Europe).
In America I felt like we would have to struggle just to make it into what felt like "middle class life". In Western Europe middle class life is a base from where people build their lives.
To counter your anecdote with my anecdote, I've observed the complete opposite.
An American professional will easily afford a car (and two cars for a 2-adult household), will be able to go out to lunch regularly and go out to dinner when they please. If they want to see a specialist for a medical issue they'll have an appointment in a day.
A Danish professional may not have a car at all for a few years out of college and will likely struggle to have a second car for their partner even as a senior-level employee. They will bring their lunch every day and rarely if ever go out for dinner. Their medical issues will take weeks or months to be seen if deemed non-emergency and they'll have less choice in which doctor they see.
It's probably easier to be at the bottom of society in western Europe than in the US, but for anyone in the American middle class their quality of life would go down substantially if the moved to Scandinavia.
Being Danish myself I remember eating lunch out almost every day, and eating dinner out with my wife and kid several times a month. And this was at real restaurants without famous names or ads on tv, not at these fast food chain "restaurants" that I saw parents take their kids to in the Midwest :-)
As you mention is common, I biked to work or took the metro. It's really not necessary or even much of a convenience in Copenhagen to have a car. Don't Americans have more cars because American cities are sprawling, have little public transportation and few sidewalks? In New York, a compact American city with great sidewalks and great public transportation, almost no one I knew owned a car.
But I agree as for the waiting time to see specialists for non life threatening issues. That part of the Danish healthcare system is really not working well.
You are confusing lifestyle choices with lifestyle constraints.
Europe in general has a much less developed culture of going out for food. People will do it occasionally, but often prefer to prepare there own, even in a social setting. This is driven by culture, not but by money.
Much of China eats out at least once daily, often twice or three times, has cars or at least motorbikes/electric scooters, and doesn't pay any tax at all.
I don't know about that, I'd take European paid time off even if it meant giving up half my income. Who cares if I have two cars if I have no where to drive to except work?
This is a different lifestyle choice. I have many friends who could more than easily afford a car (or two), but they choose not to have one - the public transportation system is more than enough for them.
Also, I live in Serbia, and honestly even we don't wait "weeks or months" for non-emergency issues. As someone who has lived in the US as well, I've actually waited longer in the US hospital than in the Serbian one. I'm really not sure where that stereotype of "you have to wait months for surgery in Europe" comes from.
The National Health Service in the UK has this as a strong stereotype; and it is true in some places. But the only two times I've used a UK hospital, I've been done within 24 hours.
Part of me wants (without any evidence) to say this is not to do with the socially provided/not socially provided difference, but with how that benefit is provided.
I've lived in the Netherlands where the state healthcare took the form of (mandatory, price-fixed) insurance which you used by buying medical care and paying for with your insurance. That allowed me to use any hospital in NL or indeed the world (with the proviso that it was same, cheaper than NL).
There are ongoing battles in the UK to let that kind of "market portability" happen, but the way that the NHS bureaucracy works makes it hard; and maybe its the lack of that end consumer choice which lets things sometimes get so slow. (I think that's a similar complaint to HMO users in the US)
What's the point of being able to get an appointment in a day for a specialist if you'll eventually have to go into debt or file bankruptcy to be able to afford that specialist?
I have average health insurance. My insurance pays 80% of my costs until I have spent $5,000 and then it pays 100% after that.
As I said in my original post, I'm talking about the middle class not the poor. A maximum out-of-pocket of 5k or 6k should not bankrupt a middle class person.
The point is that the Heathcare system is there to take care of your health and not finances. Who cares you are bankrupt if you will be still alive? I never could understand why socialists are so crazy about healthcare being cheap and not about it being effective. So you'd like yo have cancer treated next year and be in good financial situation or have first chemo tomorrow and be bankrupt. Because you know, you can't have both.
> The point is that the Heathcare system is there to take care of your health and not finances. Who cares you are bankrupt if you will be still alive?
Lots of people -- particularly people who have other people depending on their resources for healthcare and other essentials -- which is why in addition to the cost of healthcare bankrupting people, it also discourages them from choosing timely (and more cost effective, though still expensive) interventions in many cases (because they gamble that maybe it will resolve on its own and not require the expensive intervention). Which results in later, more expensive, less effective interventions -- which takes care of both health and finances poorly, resulting in not only some people being bankrupt by high costs, but other people (sometimes the same people) being dead (and even more, alive but worse off than they would have been with earlier, cheaper intervention) because of the discouraging effects of the high costs.
> I never could understand why socialists are so crazy about healthcare being cheap and not about it being effective.
People interested in socialized medicine are generally concerned with it being accessible, "cheap" is seen as desirable as a means to that end.
So is the correct way to look at "middle class wealth" to take top line incomes and then determine a list of "middle class services" and then subtract the average cost paid for those services in each country? This has long been a pet peeve of mine in country v. country comparisons.
This sort of comparison would also be useful for South Africa, where the cost of maintaining a middle class lifestyle (security, education and healthcare) is relatively high. I usually regard my taxes as charitable donations to the millions who subsist on welfare payments- I've long since learned to view any services I receive from the state as a bonus.
Balkans consists of 10 "full blown" countries like Slovenia, Croatia, Bosnia & Herzegovina, Montenegro, Serbia, Macedonia, Bulgaria, Albania, Greece and Turkey and 2 half recognized or yet unrecognized territories like Kosovo and Republika Srpska.
Excellent point. So while the US middle class seems to be one of the richest in the world according to the graphs, they're actually doing a lot worse than that, due to the lack of government services.
I think when you factor in purchasing power parity it goes the other way. Food and non-coastal housing in the US is pretty cheap.
Also, it's much cheaper to live well in a certain style in the US away from the coasts than in Europe. Bubba has a large house, two trucks, a few acres of land, ATVs, a hunting cabin, and hunting licenses. Francois has a small house, pretty much no land, and a single small sedan. Francois might make more money in absolute terms but Bubba would never agree to swap.
Also, "Bubba" might have more cars but that's because his two teenage daughters need a car each to get to school since there is no subway, no busses and no sidewalks. Bubba's land might be 50,000 sq feet 40 miles from DC , but many people might prefer Francois' 5,000 sq feet plot in the outskirts of Paris. American cities are more sprawling, European usually compact - so it's really difficult to compare even simple things like land.
Bubba's McMansion is large, indeed, but it's built with a light frame construction with outer walls of plywood or composite and asphalt shingles as a roof. These American carton box houses just don't convince European home buyers. Francois lives in a brick house with clay tiles on the roof.
Bubba has little or no insulation against winter cold or summer heat. So his eight ACs are running on electricity all year around to heat up or cool down the home. Francois generally only turns up his radiators 5 months of the year and the district heating is very efficient. He only has AC in the three rooms facing South and there is rarely a need to turn them on. What is better?
And how about the quality and integrity of staple foods available to them. What if Bubba's kid grows up and decides she wants an education? Suddenly Bubba needs to pony up $30,000 a year for university or ask his daughter to take on a large debt.
You're absolutely wrong. Even for residents at the well-off University of Texas in the well-off state of Texas pay $5,000 per semester for tuition only (tons of fees added to this). That's $40,000 for four years. In Germany you'd be hard pressed to find tuition higher than 500 euros per semester.
And don't get me started on graduate and professional degrees. In Europe you study medicine, law, dentistry etc as an undergraduate in a 5-6 year program. In the US you need to do an undergraduate degree for four-years plus four more years of graduate school to become a physician. The cost of the graduate degree itself is anywhere from $150,000-$300,000.
I'd observe that if that is literally true, if neither would trade for the other's economic position, the question of which is better off is undefined, for any definition of "better off" that properly takes the subjective nature of value into account.
And that's not just a statistical sort of truth... it's actually profoundly true, something that touches deeply on the question of "affluence" and what wealth really is.
One small thing perhaps worth noting on the subjective side of things is that France has the most foreign visitors of any country, now of course this is offset by the fact that the US is relatively remote, but France as a country has a hell of a lot of things going for it even if it is a bit messed up economically.
I'd say that the higher $ man who lives in the city in a compact space with a compact car is more well off than the man living in an inland state with lots of acres and a hunting cabin.
Why? Because the man in the city can purchase that anytime he wants. Just like you can go take your money to China right now and teach English as a side thing. So that subjective value can still be wrapped around an objectively lookable thing; it's just that the city man is not indulging in that lifestyle yet -- or perhaps he wishes to take that wealth elsewhere.
Not true. In 2011, the ratio of French emigrants into the U.S. to Americans emigrants into France was ~1.7. Adjusting for population implies that the likelihood that a French person would emigrate to the U.S. is much larger than the likelihood that an American would move to France.
Not that it matters any more, but Oklahoma has two good world-class universities (and many smaller ones), and, about 10 years ago, subsidized education to the tune of about 66%: full time tuition (12 hrs) and fees was about $1500/semester
Even now, the junior college-to-university route is still pretty affordable.
Things are somewhat bad now —and getting worse— but it's a relatively new condition.
And so both get what they want. Both are used to 'their' way of living. More freedom would scare Francois because it also means less governement in health care, child-support, rent-support, 3 years of unemployment checks, etc etc.
Can we stop saying things like "more freedom"? Freedom is really poorly defined even to an individual, and tends to lead to sentences like "they hate our freedom".
You could very well argue that freedom means absolutely no laws, absolutely no government, no public sector, period. You could also very well argue that freedom means being able to be confident that you have access to medical care, education, and child-support regardless of who you are, or your income level.
Freedom doesn't actually _mean_ anything anymore, it's just a political catch-phrase.
Can I rephrase your post and say "less government support would scare Francois..."?
Freedom used to have a perfectly good definition: the absence of coercion. During the 20th century the word was co-opted by people, such as yourself, arguing that freedom should mean something else, such as "access to medical care, education, and child-support regardless of who you are, or your income level". Unless intended in a strong negative sense (that no-one can prevent anyone from procuring these services, which was by no means always the case), those freedoms can only be realised when someone else are ultimately coerced to provide them.
Those services might well be worthwhile enough to warrant such coercion, but it's downright Orwellian to insist on the coercion being called 'freedom'.
This use of freedom is much older than the 20th century. Already from the middle of the 19th century, socialists and others were arguing that freedom is contingent on the means to exercise them, and so that there is no true absence of coercion unless resources are distributed in such a way as to give people actual choice, not just legal choice.
I find it downright comical that you call this Orwellian, given that George Orwell was a lifetime socialist.
I take a fair amount of offense at this statement. I am stating that, given that the word "freedom" is commonly being used not as a word, but as a political catch-phrase with multiple, often contradicting meanings, I prefer to clarify the usage, either by substituting it with another word, or defining carefully what one means by "freedom". Far from attempting to redefine "freedom", I am attempting to _totally ban its usage goddamn it_, since, as you have pointed out, its definition has been co-opted to mean something entirely alien to its original meaning.
Edit:
To clarify, when I said ban, I was exaggerating. I am not supporting literally banning the word "freedom", nor sending anyone to the gulags. I simply would prefer if people were to choose other, more exact, less politically-charged words in the place of "freedom".
>Those freedoms can only be realised when someone else are ultimately coerced to provide them.
The same argument actually applies to pretty much anything you care to call "freedom".
If you say freedom means no slavery, you have to coerce people not to keep slaves.
This is why the word "freedom" is so useless. There is no such thing as a system with no coercion. What people mean when they say freedom is "coercion is only used to enforce the balances I think are important".
When I visited San Francisco some years ago I was appalled by the many comments on all the people living on the streets as being "homeless by choice". It also seems to me as if having to switch to the other side of the street or by having to circumvent a dangerous block as some form of coercion resulting from a very inconsiderate and self-serving illusion that everybody starts life with a similarly equivalent set of cards.
As a privileged individual (middle class, white, male, above average IQ) I've always found the liberal point of view naturally alluring but ultimately it seems to be dishonest and unethical no matter how many ideological writings on anarcho-capitalist theory I keep reading. So again, while I like the ideas of extreme freedom (voluntaryism, etc) in the end it seems like it's just extreme ideology disconnected from reality and actually resulting in less freedom.
It also seems to me as if having to switch to the other side of the street or by having to circumvent a dangerous block as some form of coercion resulting from a very inconsiderate and self-serving illusion that everybody starts life with a similarly equivalent set of cards.
Can you elaborate on the first part? I'm not sure I understand what you mean.
The point I was trying to make was essentially that it seems logical to me that a higher crime rate can be connected to substantial inequalities in terms of opportunities / wealth.
Having to switch to the other side of the street or having to circumvent a dangerous block is a loss of freedom, a kind of coercion born of inequality, normalized by the very inconsiderate and self-serving illusion that everybody starts life with a similarly equivalent set of cards.
Of course. I should have said freedom of choice. Francois has less choice. About a third of his wages (and 20% of everything he buys) is used for the different types of government support. In return, he has the welfare-state benefits.
What you call "choice" is empty of meaning or significant because you leave out the very relevant context in which that "choice" may be exercised. For example, it's dishonest to say a person with $20,000 in savings has the "choice" to pay cash or take a mortgage for a $200,000. Such "choice" is not real or meaningful, because it can't really be exercised. Likewise, it's dishonest to suggest that "choice" in America is not correlated strongly to income and wealth. The lower one's income and means, the fewer real, meaningful choices one has about a great many things--including medical care, food, housing, and basically everything else humans need to subsist.
I have lived in every income spectrum up through my current one--from severe poverty to relative affluence. One of the most important observations I've made is how little "freedom of choice" there is the further down the socioeconomic ladder one goes in this country. It's just an empty phrase most often spouted by people who have never known anything other than a life of upper-middle-class or better living.
Well, "most often" isn't "always", and that your family was on welfare doesn't mean anything with respect to the fact that you seem to not understand how empty the phrase "freedom of choice" is. The one has nothing to do with the other.
Still bad. I grew up in Norway. I moved to the UK at 25. Employment rights and social welfare in the UK is a joke compared to in Norway - the UK is "US light" in those respects.
Yet I felt I had much more freedom of choice in Norway: Becoming truly destitute in Norway is pretty much only possible if you refuse to apply for government support.
This, to me, meant I was free to make a lot of decisions without considering consequences that would put me at substantial risk in the UK, and much more so in the US. It is hard to describe the feeling. I've mentioned before, how I started my first company (an ISP) pretty much on a whim because we were dissatisfied with the available ISPs; we threw together a business plan, found an angel investor, found offices and moved into them (literally; three of us lived there for a while) in the span of a few months. During this time, not once did the potential consequences of failing enter my mind, for the simple reason that there'd pretty much not be any consequences: I'd be able to get government support if I needed it, and I'd "just" go back to my studies or find another job.
Not really needing to worry about healthcare, or housing, or whether or not you might starve, are important forms of freedom to me. I'd take that over a few percent lower taxes any day, and I'd argue that I get more freedom of choice from those benefits than what few percent more disposable income could buy me in other ways.
> About a third of his wages (and 20% of everything he buys) is used for the different types of government support.
If Francois makes enough to pay 1/3 of his wages in income taxes, he's earning enough that he'd pay roughly 1/3 of his wages in taxes in many pats of the US too. Sure, if Francois went to live in Utah, he'd be better off, tax wise. If he were to go to California, on the other hand, the difference would be minimal.
VAT makes up very little of the typical tax burden. I'm in the UK, and 20% VAT translates to about 4% of my gross wage, because most of my income does not go to products that are taxed at the 20% bracket (for starters, I pay tax with some of them; then I pay my mortgage, and so on; and food is zero-rated).
Tax differences are not as great as people tend to think. My tax burden in Norway was about 1-2 percentage points higher than in the UK. A salary giving me the same purchasing power in Silicon Valley, would cut my tax bill by about the same as my added costs for healthcare insurance, and certainly wouldn't cover my increased transport costs... I did the maths for this to excruciating detail because we were considering moving to the US at one point. There may be specific income levels where the differences are more pronounced due to differences in tax policies, and certainly some countries / states are more or less expensive (as I learned the other day: stay clear of Belgium... )
Agreed that the tax burden argument is bunk unless you live in a US state with no income tax.
I was recently surprised to find that if I earned $80,000 in Australia, married to a partner who does not earn, and with two children, my effective tax rate would be ~ 15% (!), even if self-employed, once you factor in the Family Tax Assistance payment ($500/mo) and the government rebate for private health insurance purchase. That doesn't include other benefits I could receive such as child care rebate (50% of child-care costs up to $7,500 per child).
Compare to NYC, where as a self-employed person I pay 30-40% on $80k, with high property taxes on top! And I get no government assistance and certainly not healthcare.
This is astounding. And yet Americans think these countries are "socialist" and "high tax." Not true, US scores lower on economic freedom and higher on government size and tax as %GDP.
There are so many cool things about living in the US, but raising a family here just sounds absurdly stressful and expensive.
That is completely irrelevant to the argument. Replace Norway with Sweden or Denmark. Or for that matter France or Germany or any number of other European countries. The argument would be exactly the same:
That strong welfare systems can provide more freedom of choice by removing a lot of concerns that you have to consider when those systems are not available.
The 2013 budget had a deficit of 3.3%, which it used capital from the oil fund to fill. The biggest deficit that they are allowed to have - and to cover with that kind of money - is 4.0%.
In addition to the direct 3.3% - Norway's petrochemical economy provide 36% of government funding through taxes.
In addition, 445 Billion dollars from the oil fund is in reserve for pensions.
Simply put, the Norway model is not repeatable unless you're have a natural resource reserve. One could argue that the US shale reserves should be used in similar fashion.
> In addition to the direct 3.3% - Norway's petrochemical economy provide 36% of government funding through taxes.
That is a pretty big industry. Crude petroleum and crude gas consists of over 50% of exports. A lot of economical activity leads to a lot of tax revenue. Imagine if this industry did not exist, that the petroleum simply did not exist to begin with - the people that work in this industry now would be working in other sectors and industries. (The real problem is to replace this industry with something else once the well dries up. But that is a problem brought by such a big oil industry, not a problem that exists in spite of it).
> In addition, 445 Billion dollars from the oil fund is in reserve for pensions.
I think the whole point of the fund(s) is for them to be pension funds. But it may vary how strictly they are ear marked.
Now you're undermining your original point of the oil sector subsidizing the budget. The whole point of the Pension Fund is so that the incumbent government can't go on a spending spree and leave the future generations in the mud.
Correct me if I'm wrong, but isn't Norway's welfare system funded by oil revenues (including returns on an enormous sovereign wealth fund created through said revenues)?
It's easy to have a rich developed country with a high quality of life when you have a small population and lots of natural resources.
This argument is entirely orthogonal to the argument I was making: That welfare systems can provide more freedom of choice than increased taxes takes away: The incremental "freedom" that a slight difference in taxation provides in the form of disposable income does not do much; the incremental freedom from having a lot of concerns pretty much taken away because the welfare system reduces the worst case impact substantially, on the other hand, is a big deal.
As I said in a response to someone else: Replace Norway with Denmark, or Sweden, or Germany, or France or any number of other European countries in my comment above, and the argument still stands.
No it doesn't. It would stand if Microsoft, Google, IBM, transistor, Apple, etc, etc were all from socialist (regulated economies) Europe and not capitalistic (economic freedom) US. If the system in Europe is so full of freedoms why people are not so creative there? Because they aren't. Whatever it is from IT to movies, from cinema to healthcare, most of the innovation always comes from the US. You tell me why.
It probably has to do more with being open to immigration and innovation than being ruthlessly capitalistic that the US has been able to maintain its competitive edge.
Immigrating to the US has become harder over the years and "regulators" are against potentially disruptive technologies like Bitcoin while countries like Denmark are trying to embrace those kinds of technologies.
It remains to be seen if the USA can maintain its position going forward. In any case it's tough times ahead for many highly privileged economies. I'm from Austria and the disconnect between what used to be and the current realities is often huge. I guess the most important thing is to not get blinded by your own success, then you survive and possibly even thrive.
Actually, the U.S. Supreme Court has a formal definition of freedom: "The right to be left alone." This is a very frequently quoted phrase in USSC decisions. BTW: the right to privacy is considered by many to be half of this.
Me again. I committed a serious spelling error. The Actual phrase is the "right to be LET alone."
This is actually quite explicit in the Fourth Amendment. Privacy was not "invented" by the Supremes. As far as citation, here is a list: http://law.justia.com/lawsearch?query=%22right%20to%20be%20l.... As I said, this is commonly quoted phrase. I stand by my original comment, with the change of one word.
You are off base here. I'm not aware of any SCOTUS definition of freedom.
The phrase you quote is most associated with Louis Brandeis' conception of a right to privacy (it was his in-a-nutshell definition).
Privacy and freedom are not the same, obviously. And, there is nothing explicitly in the Constitution (or the Amendments) about privacy per se, which is why Brandeis had to write the article grappling with the issue.
"Freedom" to me is defined as being able to do what I want with my life. Should I choose to be an ambitious workaholic, I should be allowed and encouraged to do so. Should I choose to live a simple life, I should be permitted. How can I do that in the US when there's so much "overhead" to living here? $700/mo to insure a family of two mid-30s adults and their two small children with a high deductible? $30,000 per year for university for the kids? High property taxes based on the market value of my house even though I bought and paid for it decades ago? This is all ludicrous and does nothing more than enslave you to a life of endless work to cover your overhead. And I'm so free that my beloved Congressmen don't let me play a hand of poker online should I want to do so.
Oh, yeah, freedom bonus: As a US citizen I'm forced to pay taxes on my worldwide income even if I no longer live in the US. And if I want to get rid of this beacon of freedom, my US citizenship, I have to pay an "exit tax" on my assets. Freedom my ass.
Oh, you mean "more dependence upon private and corporate interests".
Or, "less democratic control over the services provided, instead left to whoever has money to influence the market to decide".
[added]
I'm kidding (only slightly), because I took offense of Francois liking "less freedom". How about he has a different concept of freedom? That could be either equally valid, or less valid, or even more valid.
Basically, what you wrote, I understood as:
"I don't believe in democratic governance and voting, for me the government is some kind of enemy I want to see less of, and more wallet-voting".
Which if fine by me, but it should be stated more explicitly. Other people find wallet-voting mighty inneficient, and to me doesn't sound very different than "the rich get what they want".
Freedom?
A democracy with only two electable parties?
The world's highest incarceration rate bar none.
The world's highest military spending.
Huge prevalence of guns.
etc etc
Listen, the US is a wonderful country for many many reasons. But we should get off the high horse of 'freedom'.
Sure, for a rugged individualist who wants nothing to do with broader society, America might be better, but this is really a romantic fringe case, and most of rural or inner- America suffers from widespread poverty, high unemployment, drug abuse, etc. And it's less relevant as jobs and people continue to concentrate into large cities. The closer you live to your neighbors, the more it's in your best interest that they be stable, happy people.
I've lived in rural Normandy, and it's pretty cheap there too. You can get your large house, land, hunting licence, etc.
It's even cheaper in the bit in the middle where no-one lives.
Tax allowances in France mean you don't pay much (if anything) if you don't earn much.
No doubt the tax burden is higher in France than the US, but there's no political will to slash public services to US levels, nor would there be public support. Sarkozy tried to move in that direction, and despite being elected to do so, it was incredibly unpopular and he basically made no progress.
The problem is your "Bubba" is not remotely middle class, I'm struggling to think who could afford that as a middle class kind of dude. Maybe retired .mil officer double dipping into a career in police/fire administration (aka the local police chief). But the local police chief is not a middle class bubba that all HS grads can aspire to. Maybe a highly skilled laborer... my stationary diesel mechanic relative makes about twice what I make...
I am in the 80th percentile graph, far away (but not too far) from Chicago, for inflation / COL reasons I'm locally about 90th percentile, and my family is in a really nice suburb perhaps the 3rd wealthiest in the local area, but its a relatively cheap 1950s era 1600 sq ft house, a middle aged Prius and a brand new Yaris instead of two $75K trucks, only one acre of suburban land (which is actually pretty good, the mcmansion people only have 10 ft by 5 ft front lawns and no back lawn or side lawn at all). No hunting cabin, those cost almost as much as my house. Hunting licenses are dirt cheap, right up there with fishing licenses as we are a major deer hunting destination and every tourist business would scream bloody murder if the .gov discouraged their income stream. I could afford ATVs pretty easily but I'd have to give up some expensive technology hobbies, or perhaps give up a couple years of travel/vacation to afford that. The most expensive part of owning ATVs would be purchasing something capable of carrying them and then burning 10 MPG to go hundreds of miles away to use them. Its much like owning a boat in that way. Boats are pretty cheap, its the boating lifestyle that comes with owning a boat that gets extremely expensive, dock fees, tow vehicle, etc. So that's what 80th percentile income for a couple decades actually buys you.
I would expect Bubba at a 30% lower income percentile would be my situation minus the new imported cars, maybe a couple years old, or if trucks they would have to be 90s models to be affordable to Bubba, and a much dumpier suburb with virtually no land, higher crime etc. Needless to say bubba's not going to be able to afford an ATV much less multiple ATVs unless it becomes a hobby/rebuild project and bubba is handy. Your description of Francois sounds a lot more like Bubba, although Francois has better cheaper schools and better cheaper health care, so Bubba would move up to Quebec and swap in a heartbeat, plus or minus local relatives, language issues, etc.
"Bubba" is usually a local skilled blue-collar guy like a mechanic. The mainstream rural family with lots of toys like ATVs is living in a doublewide with a ten year old F-150, wife with an old Buick.
Until Bubba get serious illness or want to study or already have college debt to pay. Jobs that do not require college degree will not pay the above and if you have college degree you got that debt.
So essentially, your Bubba inherited the above or is not exactly the norm e.g, he has business that does exceptionally well. Exceptionally well doing business is not the norm.
I live in New York. I have a $200k house with over $6k in taxes, most of which for schools and public safety. Educational programs are flat or being cut, but employee expenses have ballooned over the last 10-15 years. The fully loaded cost of a $80-100k teacher includes about $25k in pension contribution, $15-20k in healthcare, etc. For the police/fire department, it's even crazier (they have 20 year retirement)
My personal experience is better than most. We have a good household income, and I've been promoted a few times in the last 10 years. On average our household compensation increases by 7%.
But... my net spending power is flat or down a little. Why? Property taxes up 30% since 2006. Health insurance up 150%. Food up ~30%. Utility bills up 50% (NY fail).
It's really not that bad. The U.S. / French per capita difference in 2010 looks to have been about $5000, if I squint at the graph. That's $20,000 after taxes for a family of four. U.S. out-of-pocket costs for health care[1] and education[2] aren't nearly that high, especially if, as the article claims, they're only counting real cash income and not employee-paid health premiums and other benefits.
The trend over time is still a story. WRT services provided, the USA has not advanced (very much) and the rest of the world has not backslid (very much), so its a fair comparison over time.
Also even if the perfect median Canadian vs the perfect median USA is open for debate, for absolutely everyone below median, the graphs indicate its a virtual certainty they'd be better off emigrating out of the USA.
There is no “before tax” values for any other similarly wealthy country: tax data collection elsewhere is done after most taxes, actually significantly more tax, that pay for free and better public education, free and better healthcare, etc. In anything, an after tax over-estimates US middle class wealth compared to Europe and Canada.
When I started looking for a job hey told us, at my French university, that I should aim for 50% to 100% more salary in US for the same "life standard". Having to pay for your kids education and for every medical act quickly adds up.
That's a bit of hyperbole. Yes, if you want your kids to go to a top private university, be prepared to pony up $200K. However, if you want them to go a state school, it's MUCH less.
And in terms of medical costs, for most people, private insurance covers a vast majority of medical expenses.
College is still very expensive, and student loan debt is not dischargeable in bankruptcy (although the rules on this have been changed for the better). Insurance is pretty expensive and/or comes with caps, plus if you ever have to make a claim on it a bunch of your valuable time goes into an administrative black hole. One thing I really miss about most European countries is that if you are sick enough that you have to go to hospital, not only are you not likely to suffer a severe financial hit, you don't have to deal with any paperwork besides your clinical care instructions. Medical staff tend to be paid fixed salaries rather than on a per-procedure basis and rates for care are standardized. The complexity of the US healthcare market leads to all sorts of weird economic distortions, like this: http://www.tampabay.com/news/health/florida-trauma-centers-c...
I won't argue that the US healthcare system isn't horribly inefficient.
My point simply is that the US not some horrible crap hole where everyone goes bankrupt when they get sick and kids can't go to college because it's too expensive.
Would be interesting to see a quality of life comparison (if such a thing can be reliably quantified)
The fact that it can't be reliably (more specifically, objectively) quantified is why we see so many nearly-worthless income comparisons instead: The content mill has to run, and less responsible journalists are often happy to print arbitrary crap masquerading as information rather than tackling hard topics with hard work (or just accepting that some things can't be accurately compared and moving on to things they can actually address in a meaningful way).
>Doesn't comparing income after tax make it a bit of an apples and oranges comparison to begin with?
True. OTOH, as long as they are using the same measure as before, then the report has meaning on a relative scale.
>Would be interesting to see a quality of life comparison
This would be interesting. I would like to see one world-wide (for instance, Americans may have been wealthier than Europeans for decades, but we also work harder).
It is hard to quantify, but even the comparison of a subjective measure of overall contentment could be revealing.
Would be interesting to see a quality of life comparison (if such a thing can be reliably quantified)
The Economist attempted to quantify quality-of-life and rank nations using the metrics they developed [1]. Their quality-of-life index is a bit out of date - almost 10 years old now - but interesting nonetheless.
That seems a questionable measurement. In their reasoning quality of life goes up if a "variable taking value 1 if country has either high rate of church attendance or trade-union membership" goes up. There is not a developed country in the world where church attendance or trade-union membership is going up. That said, interesting read.
But then I suppose you'd also need to compare the quality? Is the free healthcare paid for taxes as good as the paid healthcare after taxes? I'm not saying it is or it isn't, just makes it hard to compare. If someone doesn't take advantage of the free education what then?
Also so much of US taxes goes to military, which countries like Canada benefit from, in a sense our military spending subsidizes Canadian healthcare.
The WHO tends to rank US healthcare quite poorly compared to most other developed countries. Last report I saw, it placed around 37th place worldwide, and pretty much all of the countries above the US have universal, government funded healthcare systems.
It's worth pointing out too, that the US government actually pays more per capita for healthcare than most governments that provide universal healthcare, so US taxpayers pay more and need private insurance..
WHO healthcare ratings were torn apart to no end because of poor methodology. Jeez, they used literacy rates and "income inequality" for some of their metrics on judging healthcare.
The WHO ratings were more about politics than healthcare.
To quote myself from one of my comment on an older thread about cancer treatement difference between France and the USA for a rich family [1]
This quote and the study it talks about is relevant, because it directly aims at the access and quality of treatment for the poor and middle class.
>In 2000, the World Health Organization ranked the French health system as the best over all in the world. Do you agree?
>I question the W.H.O. methodology, which has serious problems with data reliability and the standards of comparison. A study I would take more seriously is one published last year by Ellen Nolte and Martin McKee in the journal Health Affairs. They examined avoidable mortality — that is, deaths whose risk of occurrence would be far lower if the population had access to appropriate health care interventions. In that study, based on data for the year 2000, France was also ranked No. 1, with the lowest rate of avoidable deaths. The United States was last, in 19th place, with the highest rate of avoidable deaths. That’s a severe indictment of our health care system in my judgment and calls attention, quite justifiably, to the high performance of the French health care system.
http://prescriptions.blogs.nytimes.com/2009/09/11/health-car....
Just in that first paragraph, the author goes way off course creating a straw man about what his opponents find objectionable about the ACA.
I'll bookmark it and read through it later, but from what I glanced at in the first half, it didn't get much better after that straw man. I especially like where it tried to say that government decisions are better because they're made on "evidence". Okay.
"in a sense our military spending subsidizes Canadian healthcare"
In the nonsense sense, yes. Your military spending subsidizes American defence contractors, who subsidize American politicians.
"Free" healthcare beats no healthcare. In 2007, 33 million Canadians had "free" healthcare. In 2007, 45.7 million Americans had no healthcare. It's nice to see Obamacare getting people coverage.
Rather than try to spin the story to make America look good, it would be more constructive to consider why America is declining and what it can do to reverse that trend.
In the software world, we're better at fixing bugs when we stop calling them undocumented features. That philosophy can work in the real world too.
No, it's certainly been true. Many world economics have avoided military buildups by piggy-backing on the back of the US buildup. In fact I've seen credible arguments that it has actually contributed to world peace significantly to have the US building up the way it has, yes, even despite the wars the US sometimes engaged in, by making it not worth it for anybody else of significant size. The rule about "democracies not going to war" may in fact have been false... it may merely have been Pax Americana happening to coincide with a lot of democracies.
As America becomes "enlightened" (heavy scare quotes) and withdraws its military umbrella, a strange world is left behind... how does Europe feel about having effectively no military with which to counter Russia's growing imperial ambitions? It's officially all smiles (or forced grins) while they're stuck depending on Russia now, but I'm sure wheels are spinning behind closed doors even now. If the US elects another President with ambitions to back off the foreign involvement even more, or if the situation deteriorates enough more on this one's watch, what are the odds that Europe has to start building up? And how many other places will have to follow?
And how will a social-benefit-addicted continent react to having to fund a military again? They certainly won't be able to maintain the current level of social commitments everywhere.
Maybe the US shouldn't be enforcing Pax Americana depending on your own personal values, but don't think for one second it hasn't had its benefits even outside of the US, and don't think that the end of Pax Americana is somehow going to occur with a burst of rainbows and puppies, where we go from one dominantly-powerful military to zero. The number can only go up.
That's a slight overstatement - the countries of the EU spend 38% of what the US spend on it's military - which given the arguable massive overspend of the US doesn't look completely unreasonable to me.
Now of course what Europe doesn't have is strong unified leadership in these areas - which, given our history, is probably no bad thing although not the greatest thing to have at the moment.
Russia spends less that the UK and France combined on defense:
The real difference between militaries is projection power. The US can credibly project most of its power all over the world. The European military certainly exists, but it's projection capabilities are greatly less than the US', even on a per-dollar/per-Euro basis. It could defend itself against a straight-up Russian attack (which is precisely why that will not be happening anytime soon), but it leaves Europe without pieces when Russia is playing chess on the world stage [1]. If Europe would be starting to assert itself more thoroughly in the world, against credible threats, it would need to spend a great deal more money to do so.
[1]: Diplomacy is not chess, but it has chess-like elements (along with the poker-like elements). Trying to play diplomacy without the ability to threaten anything, even with no real intent or prospect of following through on the threat, leaves you with a proportionally much weaker portion.
Pray tell, is your threat model a revanchist, bankrupt Russia from the 90s making a daring lunge across Alaska? Canada's only credible threat is, well, America.
>In fact I've seen credible arguments that it has actually contributed to world peace significantly to have the US building up the way it has,
Within the context of the Cold War, and say, NATO buildup in post war central Europe this may or may not be true. It was certainly a boost to West German/French economies that didn't have to invest quite so heavily in fending off the Warsaw pact.
Outside of the European theatre, that's a significantly weaker argument given the proxy wars the US/USSR engaged in throughout the third world.
> In fact I've seen credible arguments that it has actually contributed to world peace significantly to have the US building up the way it has, yes, even despite the wars the US sometimes engaged in, by making it not worth it for anybody else of significant size.
This claim is only true if Canadian military spending were to increase if the United States decreased its military spending and if such increase in Canadian military spending came at the expense of its healthcare spending. Do you have evidence that this is the case? In the 90s there was a downsizing of the U.S. military. Did Canada correspondingly increase it's military spending? I don't know but I doubt it.
Given that the U.S. healthcare system ranks behind many countries with public healthcare and that the U.S. spends way more as a percent of GDP on healthcare than any other country it's quite reasonable to believe that taxpayer healthcare is as good as paid healthcare after taxes and is cheaper.
Plus, short of maintaining the high cost of global force projection that no one but the US has been paying since the end of the Cold War, no country is positioned to invade Canada except the United States (which, you might note, has been the source of all previous invasions of Canada.) Defending against remote invaders without US-like projection capacity is fairly cheap.
Free education? That only comes by learning from other people's mistakes. If a classroom and professional teachers are involved it's anything but free. They cost big bucks.
Free, as in everyone paid for it collectively (via taxes) and you don't need to pay directly to the college/university anymore. Not free as in noone pays.
Pretty much everyone knows that the NHS is paid by taxpayers (NB I have met people working the UK public sector who had never given a moments thought to where the money they spent actually comes from, but they are pretty rare).
Its a local mythological belief that if you remove universal services which basically everyone requires from our universal tax collection system and insert vast teams of middlemen competing with each other to build a dilbertian confuseopoly, that those highly paid middlemen none the less somehow magically reduce aggregate net total cost to the society. Which would be hilarious as a parody if it wasn't being presented as factual policy.
I wouldn't hold up the NHS as the best possible health system but it does kind of work given the relatively small amount of money we pay into it - it is telling that the book by the founder of the NHS, Aneurin Bevan, called his book about its creation "In Place of Fear":
According to the graphs, the US middle class is actually still doing pretty good. I was expecting it to do a lot worse than that of many European countries, but there's only a few countries that have overtaken the US middle class, and then just barely.
Puts all those articles about the weak US middle class in perspective.
The real travesty is at the bottom. The worst 10% are actually doing worse now than 30 years ago. The few groups above that didn't benefit at all from the enormous economic growth of the past decades. The extreme growth of the wealthiest 10% is simply outrageous by comparison. But the middle class isn't doing quite as badly as I expected.
> The extreme growth of the wealthiest 10% is simply outrageous by comparison
Is the bottom decile worse off because the top decile is better off? I don't think so, I think everyone is better off with Gates, Jobs, Page, Brin making tons of money. Wealth is not a zero sum game. Don't get me wrong, I want to see a world where everyone can support themselves and provide for their families. I just don't think having super rich people prevents that from happening, I think it is just the opposite. The Gates Foundation is a million times more effective than any gang of UN Bureaucrats.
Well, if you consider that the top decile is the reason why American factories close up shop and all of the bottom decile loses their jobs as a result of cost-cutting measures by the top decile to increase their own bonus package, then yes, the bottom is worse off because of the top.
There are super wealthy who actually use their wealth to make the world a better place; then there are super wealthy who use their wealth to stack the odds ever in their favor, at the expense of everyone else.
Unfortunately, it seems most of the super wealthy are part of the latter group.
Simply tying some European countries isn't really that great a performance when the U.S. is so much more productive overall. For example, our PPP GDP per capita is 20-25% higher than Canada's. So if Canada edges us out in terms of median income, even just barely, that's not a great showing.
Well, it's necessary to remember what GDP actually measures, and that's the sum of all economic transactions. This does not necessarily make a country richer or improves its quality of life. For example, if the US healthcare system operated on the same level of efficiency as the average European one, the US GDP would instantly shrink by at least 5% (probably quite a bit more). There are lots of things that the US does inefficiently (not always a bad thing, some inefficiency is the price of freedom).
As Robert Kennedy once put it:
"Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans."
It's actually a good bit worse than the article makes it out to be because it's after tax income. Almost all of the European countries that have been gaining on the US have substantially more services paid for by their tax dollars. So their income is far less stressed than in the US.
> I was expecting it to do a lot worse than that of many European countries
I would say that the median quality of life is slightly better in western Europe. The charts compare income after taxes – but the taxes pay for services like free healthcare and free education (in some countries, you even get paid for studying).
Another important note is that Americans work more hours per year.
> The worst 10% are actually doing worse now than 30 years ago.
But that is largely due to the fact that the bottom 10% are more likely to be new immigrants now than they were 30 years ago. If you correct for that, by only doing the comparison with the same pool of population (people who lived here 30 years ago or their descendants), the inequality is quite a bit smaller.
I agree. The middle class of other parts of the world catching up to rising US[] is a good thing from any perspective except for the most cynical realpolitik subscribers. Even from a pure US centric point of view, it provides a larger market for US goods.
However, the poor doing worse than 30 is really bad. Even if you believe that a high gini coefficient is needed to encourage upward mobility, a falling living standard for the poor indicate that it is not working.
[] I'd really like to see the comparison in income after tax+education+health care. Health care and education is more or less mandatory for the middle class, and the details of how it is financed (tax, savings, insurance) shouldn't affect the comparison of living standard.
> Even if you believe that a high gini coefficient is needed to encourage upward mobility, a falling living standard for the poor indicate that it is not working.
Yeah, social mobility in the US is pretty low nowadays. I don't have any numbers at hand, but wasn't there a recent story on HN about how most European countries had more social mobility than the US now?
Trickle down doesn't work. Money flows up. The poor spend it immediately (because they need it to pay for stuff they need but can't buy, which is what makes them poor), whereas the rich can afford to hoard it.
I think the article should have compared the US with the Australian middle class, as it would be more relatable to Americans. Australia has the lowest tax burden amongst developed countries, a fair, means-tested welfare system that targets those who actually need it, and a highly innovative, effective government that remains smaller than the US government. Australia strikes a good balance between capitalism and social welfare, IMO. Link to sources below[1].
And Americans, especially if they live in the northeast or California, pay very high income taxes, and get almost nothing in return compared to other developed nations. We have to pay high university tuition in cash, and don't get healthcare, either. So keep in mind while an American will use that after-tax income to pay back student loans and purchase expensive health insurance (self-employed, anyone?), the Australians and Europeans et al aren't.
This has always confounded me why people like to point to Europe as the best example for free social services. When in fact, both political parties here could be looking at Australia for their talking points.
I agree that Australia seems to have a very good balance of capitalism and social welfare programs.
Comparing income after taxes doesn't seem very useful to me: In many countries, especially in Europe, things like health insurance, schooling and universities, pension and many more are "included" in the taxes you pay, so even if the available income in USD is lower, the effective purchasing power will probably be on par or even higher in my opinion.
Also, these income comparisons don't take into account that Europeans usually work much less than Americans: In Germany and France most employees only work 30-40 hours per week, and have usually at least 30 days of paid vacation per year.
I wonder if there are studies that try to take these things into account.
and why should it be the richest? anything special about it being "American"?
i would wager the the stats aren't the full truth. it lists german middle class below, which is hilarious - income alone doesn't mean shit in countries with top notch public infrastructure and well organised health care. that US middle class family needs to pay health insurance on top, if their kids want to go to college an ever increasing tuition, pretty likely need multiple cars to get anywhere and have less vacation time.
if more US citizens would travel their view on how much they're getting ripped off would change drastically. US immigrants from india, china, africa still get an improvement, but for northern Europeans, incl the Swiss, Austrians, moving here is a step down in a lot of factors.
if more US citizens would travel their view on how much they're getting ripped off would change drastically.
For many Americans, especially the richer ones that can afford a trip to northern Europe, it would be a case of cognitive dissonance: "gosh everything is so nice here / here is not America / America is the best / I can drive my SUV in America / these Europeans are crammed into tiny cars / thank god I'm an American!" or whatever the chain of reasoning is that gets you back to "thank god I'm an American!" from the world-crushing "gosh everything is so nice here".
Germany had to re-assimilate East Germany during the time of the graphs, as well. I suspect that accounts for the downward spike and then recovery in their incomes.
I have occasionally thought, not kidding either, that the only hope for the future for most Americans is being invaded by Canada, perhaps after one of our periodic financial collapses.
Other than the Hockey and Poutine thing, I can't imagine the general public having anything to complain about in that scenario.
Wait until the divide between thee rich-middle/poor class becomes
so great we turn into Mexico; where the rich are kidnapped
while sipping coffee, and the police could care less.
The rich take so much for granted. By the way a lot of you tech guys are considered middle class now; but with the low barrier to entry of this world--I see a vast shift to the
poverty level in just a few years.
Not that I have many facts to back this up economically, but I think at some point the top percentile have invested interest in either paying the bottom percentiles more or making it easier for them. Everyone at the top 10% somehow relies on the other 90% to consume something they create. Look at what Henry Ford did to pay his workers more, in the hopes they would buy their own Model T.
Buy I'm an optimist, so add salt to taste.
In the modern USA, the rich wield too much political power to be kidnapped and ignored by police. Also note that the USA doesn't have a severe gang problem like Mexico does.
And low barrier to entry? Maybe, but I keep hearing all the time about companies not being able to find the talent and experience in people that they need/want.
USA doesn't have a severe gang problem only if you look the other way (which is easy to do, as wealth is, it isn't distributed equally). Those Mexican gangs all have subsidiaries in the USA for a start...
The running gag from Archer springs to mind. "Do you want a severe crime problem? Because extreme income inequality is how you get a severe crime problem."
Canada's more liberal immigration policy, which is attracting educated and highly skilled immigrants, may have something to do with their doing so well. Over time the average education level and IQ of Canadians should end up higher than Americans.
Thankfully the US still attracts the very best immigrant entrepreneurs, such as Elon Musk.
Canada does not have a strong entrepreneurial culture, however. While there is a fairly new program for startups, the immigration policy is generally geared towards bringing in people for traditional jobs, which tends to have the opposite effect on incomes.
What did happen in the mid-2000s was a rise in commodity prices. By 2010 we were seeing record high prices for some commodities. Commodities are what Canada does and it stands to reason that incomes for everyone will tend to rise as demand for extracting those commodities increases.
I'm not sure how true this is anymore. There have been numerous changes in the last decade that have made the environment very entrepreneur-friendly. It's still a mixed bag, true ... but things do look like they're on an upswing here. Link below is to a 2013 report (Canada at a glance)
> Canada does not have a strong entrepreneurial culture, however.
I agree..also we do not have the same level of capital available to fund new ideas.
However I think that the longer the internet is around which allows (for the most part) the same ideas, information and tools to everybody the less cultural differences are going to matter as everything is becoming border-less and super competitive...the only differences will be languages and local regulations.
I see many comments pointing out that European nations spend more on public benefits like healthcare. This is demonstrably false. The US gov't spends more on healthcare - per taxpayer - than do European nations.
The US government is simply extremely inefficient and wasteful. But the money is spent.
Here's a chart. Note that in the US, public health spending accounts for 45% of total health spending:
The gap between the US and the rest of the West is clearly (if you look at the charts) closing due to rapid catch-up growth from the others, not decline in the US.
Wouldn't it be kind of odd if the rest of the developed world did not catch up to US lifestyle standards with the spread of technology and capital?
My understanding is that all first world countries are experiencing growing income inequality, it's just that the US/UK have much larger income inequalities.
closing the gap should mean empowering people to earn a better living. What it actually means is taking more money from the wealthy and middle class and giving it to the poor through taxes.
It would be interesting to see these graphs for discretionary income, or at least income compared to cost of living. I moved to Europe and part of that means I no longer need to own a car, saving a good deal. I also find I spend less on energy and rent (but perhaps that's because I lived in very expensive places in the US before; the bay area and Santa Monica). I _feel_ much wealthier than I was before, but I wonder how much of that is due to lower overhead? Would the average person experience the same?
I think it would be better to break up the data into a per state comparison with Europe countries. I think of the states as vastly different from state to state. NY vs Florida for example.
How much of this can be explained by exchange rates, i.e. the falling US dollar vs other major world currencies in the last 10-15 years? Those plots are all in US dollars, so I would expect if all else is equal that non-US salaries would go up just from that.
I'm not an expert on this stuff, is the falling exchange rate in any way a symptom of the underlying issue, a cause, both, neither? Everytime I try to reason through exchange rates and the world economy I get a headache.
And of course the size of your take home check is all that matters. It doesn't matter that you then have to pay for a number of services that other parts of the world paid for with their pre-tax income.
What about after-tax median income after student loan payments and self-purchased health insurance? What about all the monthly payments the rest of the developed world gets to support their raising of children in the middle class? What about the costs of transportation that are imposed on Americans when their European counterpart takes subsidized rail to work?
I had no idea that the bar for middle class was so low. Most of us here are nowhere near middle class status. Not that it matters, but before now I would've considered myself and most of us to be.
My experience is that most college-educated people don't really understand this, because they look at themselves and everyone they know and extrapolate their definition of "the middle class" from what that population makes, which skews their perspective considerably. So you get discussions about how people making $100,000/year or $250,000/year are "middle class," when statistically speaking they are very much not.
One useful economic definition of middle class is obtained by applying Frederick Strobel's distinction between those who are labor-dependent those who are capital-enhanced.
The middle class are the ones who fluctuate between the two categories: They have to keep working, but as long as they do, they have some surplus income. If they spend too much and go into debt, their surplus income goes away, and they have to work more.
This is useful because it explains how some can consider themselves to be "working class" or "middle class" and yet have income that is both above average and above median. They still have working class (or middle class) anxieties, mostly because of their local economy or their bad spending habits.
The important thing I try to always remember is that it's the 'middle' class, not the center class. Civilization can't survive with mostly middle management and mechanics - somebody has to actually do something at some point, rather than designing something, directing something, or fixing something. The middle class is a buffer between the bulk of people who work with their bodies, and the tiny number of people who try to maximize the ratio of those people's output vs. their compensation.
The middle class has never characterized America, it's just the class that writes all of the characterizations.
Outside of the handful of major metro areas you can get a respectable house for around 100k and a really nice one for perhaps 200-300k. Can you even buy a trailer home in the Valley for 100k?
Edit: I went and looked on Redfin and most trailer homes in the valley go for quite a bit over 100k there are maybe 4 listings for trailers for 100k or less.
It's not. This article is using the "American" definition of middle class, which most others refer to as "working class." Conflation between what we used to call middle class, and what we call middle class today is a huge source of confusion in pop economics.
Per capita income is per person. So if a family of four -- two adults and two children -- live in a neighborhood where the per capita income is $20k, then the expected income of that family is $80k. In other words, it counts children who don't even earn an income.
As such, median per capita income is always going to be considerably lower than, say, median HHI.
(Apologies if you already knew all this--I had to make a guess as to which figure from the article specifically you were referring to.)
The people in the middle are still poorer in your example. The article doesn't suggest the richest Americans are poorer than the richest people in other countries.
My point still stands. I wouldn't define the "middle class" as the median salary. It's a band around the median. Throw in a couple higher salaries just above the median and a country could have a wealthier middle class, but the median is lower.
"Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation. "
This is incredible. Since 2000, there is no increase in median per capita income after adjusting for inflation ? Statistics like this bring in the 1% question at times and the comparison between the really rich and the rest of the population.
Also multiplying the median income by four seems absurd. My children certainly don't bring home the bacon like that. I seriously doubt that the median family of fours income is anywhere near 4 times the median personal income.
It's interesting that the graphs there exclude a few countries with higher GDP per capita than the US, such as Switzerland, Hong Kong and Singapore. I imagine the numbers for the US would look less favourable if such comparisons were made.
I'm not sure why being #1 is so important. Who cares where our position is in the ranks as long as we are happy with our state. If we aren't happy we can make improvements, but again it's not a race so how we compare to others doesn't really seem significant unless we are far behind. I suppose the real significance is the trends, but I guess that doesn't strike at the heart strings of the common person as losing at some newspaper editor's arbitrary rules for a game nobody knew we were playing.
I urge people to check out Sweden once in their lives, it's such an open and fair place in comparison to most countries in the world. Even though I'm reading a lot of anarcho-capitalist theory recently (yes, because I like Bitcoin) I still believe all of the liberals miss (or subconsciously omit?) some fundamental social truths which the Swedes seem to recognize pretty consciously.
Could you give some examples of the social truths? I'm not saying you're wrong, but I'm finding myself becoming less and less liberal and want to know what exactly you're talking about.
To me it ultimately boils down to fairness and having a sense of "being in this together". A very good example to me is the firefighter mentioned in the article, he probably does a much more productive job (saving lives) than someone like myself who might get lucky in playing the entrepreneurial / technologist bootstrapping game by striking it rich with some cost-reducing / profit-boosting tool-building. Alas, it's problematic to make these kind of comparisons though (you could argue some tool saves even more lifes, etc).
The "smells" of extreme ideology..
In any case I still believe it's fair to try to spread the wealth more evenly as you and I couldn't even build stuff without the solid framework of society.
I answered your question somewhat in another comment in this article's thread:
The result here is pretty interesting, but the characterization ol of being about the middle class is wrong. Median income doesn't define middle class, middle class is generally defined as elite workers (professionals and executives) that are still primarily workers rather than capitalists. Median income workers are generally working-class, not middle class.
Yeah, but the days where that was arguably even approximately true -- when a majority or something reasonably close to it of Americans were in middle class (as well as professionals and executives, yeoman farmers -- a formerly very common thing in the US, but now vanishingly rare -- are part of the middle class -- as are others whose primary support is independent business that they own but which is still dependent on their labor [if it wasn't, they'd be straight-up upper class capitalists]) -- are past. Now, most of the Americans who identify as middle class are working class whose identification reflects aspiration rather than reality.
For me to agree with you, I would have to agree with the premise that we know better about class labels than Americans at large. I would not presume so much.
If 100% of Americans consider themselves "middle-class", it doesn't bother me. At the end of the day it's all semantics and disagreeing about what "middle-class" means is not interesting.
You clearly have some opinions about shortcomings of the American labor market. Perhaps there's a better way to phrase your concerns that would further the discussion in a more substantive direction.
> You clearly have some opinions about shortcomings of the American labor market.
Not that are relevant to this discussion -- I just have a belief that there is a difference between being middle class (the class between the working class and the capitalist class, at least, in the usual definition applicable in post-feudal economies) and identifying as middle class.
Historically, the working class being larger than the other two combined is the norm and America's brief period with a very large middle class was something of an aberration resulting from the rapid application of agriculture by a small population to a large land area before that agriculture was effectively consolidated by large commercial entities.
I'd love to see a comparison between the U.S. and all of Europe. In a way Greece and Spain are the European version of our lower income brackets. There's no real equivalent of our upper 1% in Europe but I think Americans would be complaining a lot less if the distribution at the bottom was fairer.
If this is truly the case, then we in technology must take much of the blame.
Over the past 30 years--even the past 15--automation of tasks which were once done by people in the lower-to-mid tiers of the middle class. Word processors have replaced secretarial pools. Robots have replace assembly line workers. Self-service web-sites have replaced data entry clerks. "On-line" (web, e-mail,etc) have replaced tellers, postal workers, etc.
I know I'm personally responsible (due to proposing and implementing automation projects) for replacing over 1500 people since 1995. Is this a good thing or a bad? I don't know. The Industrial Revolution killed off craftsmen, but created millions of other jobs. The question is, what will the Technology Revolution leave in its wake?
So before we start pontificating on taxes, social welfare programs, and ever increasing calls for "wealth distribution"--remember to look in the mirror and ask how many people's jobs have you eliminated today?
> If this is truly the case, then we in technology must take much of the blame.
Except technology also saves lives, keeps people connected across large distances, makes work safer, democratizes creativity, and innumerable other benefits.
The Industrial Revolution also killed off farm jobs and many domestic jobs but baling hay by hand and scrubbing laundry with a washboard are certainly steps backward.
If the problem is that some workers cannot earn a living, then let's look a policies that solve that problem directly (like a more aggressive earned income tax credit).
Police, prisons, prosecutors, parole officers, TSA, ICE, etc. are all part of our GDP. A lot of those jobs have replaced factory jobs, yet what do they produce? Is that really a contribution to the economy, or does our GDP number contain a lot of economic drag masquerading as "output" and "productivity." And then there is the size of our military. All that is supposedly a contribution to GDP and a positive element of productivity.
Are there alternative economic output measure that count that stuff as deadweight?
The graph/animation of inflation-adjusted after-tax income over time by percentile is one of the nicest data visualizations I've ever seen. Simple, pretty, descriptive.
