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Culture War Roundup for the week of September 8, 2025

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European growth these past few years has been remarkably bad? (source is world bank data if anyone has a better data source I'll accept that

From 2009 to 2024 we went from European countries being frequently ahead of the USA gdp wise (ex Netherlands, norway, ireland denmark) to functionally even (Finland, belgium, sweden) to only moderately behind (Germany, france UK), to by 2024 only Ireland being ahead, Norway being basically even, Denmark and the Netherlands moderately behind and everyone else significantly behind.

I never realized how big the eurozone crisis of 2014 was to Europe, it basically wiped a bit less than a decade of growth from the countries. Sure us Growth from 2019 until 2024 has been much greater than that of say germany (31% vs 17%) but in the 2009 - 2018 time frame the 4 countries that were ahead of the US grew 1.5% (netherlands) NOR 3.84% Ireland 54.87% (I know everyone goes Ireland cheats, but Irish GDP per capita isn't really any greater than New york, and it's only slightly higher than the state of california) DEN:4% while US growth was 33.29%

Yes Us growth is still dramatically higher than europe even excluding 2014, but 2014 provides a major thorn in the side. US grew at a 5.64% annualized growth rate from 2019 to 2024 while Germany only had a 3.22% annualized growth rate.

(also why are these growth numbers so high??? is the world bank doing nominal gdp and not RGDP?)

Still with these trajectories California will have a GDP higher than the country of germany by 2030.https://www.gov.ca.gov/2025/04/23/california-is-now-the-4th-largest-economy-in-the-world/ (6% growth compounded vs 3% growth)

There's probably something I fundamentally misunderstand (though NVIDIA has a higher market cap than the entire german stock market) so maybe it's more "wtf uS growth is that big compared to northwestern europe why didn't I notice this before"

In retrospect a lot of apparent British prosperity at the time was fake - a temporary boom resulting from laissez faire economics and financial trickery. This fake prosperity created - as it was meant to - a lot of second-order fake prosperity as international investment came in. What we've seen in the last two decades is this process unwinding itself.

TL;DR one reason why British growth looks anaemic is that we weren't starting from where the graph says we were starting.

One man's excessive laissez-faire in finance is another man's government strangling every other industry. But that was largely baked in by the time Thatcher came to power.

I know everyone goes Ireland cheats, but Irish GDP per capita

Every time someone uses Irish (or microstate) economic (specifically GDP, especially GDP/capita) I die inside. I implore everyone, please stop abusing statistics.

yeah well I should have mentioned this, the reason I chose states as a comparison is because states are an example of "what happens when you shrink the size of countries" (Standard deviation increases)

So "country with financial hub and less than 5 million residents" = economic superpower because variance

(The state of california though is less cheating than the country of ireland because it's got a much bigger population.)

My oppinion as a western european:

1 Demographic: The U.S. population has been growing at roughly 1% annually, compared to only about 0.2% in Europe. On top of that, Europe is also aging more rapidly, and migrants to Europe are generally less high quality than those entering the U.S. As a result, the U.S. benefits from a larger and younger and more high quality consumer base.

2 Regulation: Europe also places more regulations and barriers on businesses, which dampens activity and slows innovation. Generally capital flows to where it can generate the highest returns. While Europe does offer opportunities, the U.S. market generally provides a more favorable environment because investments can often go much further.

3 Goverment spending: Another important difference is the role of the state. In Europe, government spending accounts for about 51.5% of GDP, compared to around 36.2% in the U.S. Since state spending is generally less effective at generating long-term growth than private entrepreneurship, this also tilts the balance in favor of the U.S. (See higher income tax and more taxation in general)

There are definitely more factors, but these are just the ones that come quickly to mind right now.

My take is that its the fragmented regulatory, consumer and financial markets that are the biggest problems here. It's not that there is a ton of regulation its that there are 20+ versions of the onerous regulations.

It's too difficult to scale a business in europe because despite efforts and the goal of the EU it is in no way a single market. When you want to scale your business rather than just export consumer products this becomes a massive issue, which is why every notable new company in europe usually starts in their own country (and perhaps very similar neighbours) and then rather than expanding into Europe they launch in America and eventually list themselves there, and only then start expanding into the rest of Europe.

I know everyone goes Ireland cheats

Well, we do. Strip out the American multinationals we have been assiduously courting for decades, and the real figures are much lower.

Second, the 2008 crash really hit us hard. We went from Celtic Tiger to "down there with Greece with the begging bowl" economy and the years of austerity budgets to make up for that. Primarily due to some very bad decisions by our finance minister and government about bailing out the banks, but that's a whole other complaint.

When the bubble burst, it burst very hard and we're still not quite back to where we were. Then when things began to look a little better, along comes Covid and shuts down the country (and indeed the global economy) for practically an entire year.

@DaseindustriesLtd and @Bingbong are both partially right but a big reason is actually just that after the dotcom bust in 2001 the dollar had a decade of extremely, uniquely, ahistorically poor performance against pretty much every other currency (both EM and developed market) that distorted nominal dollar-denominated GDP figures.

For example, the pound went from being $1.45 in 2000 to $2.01 in 2007. The British economy wasn’t hugely stronger and this was a low point for Silicon Valley stocks, the cause was a bunch of investment and trade flow stuff, reallocation out of the US toward emerging markets and big commodity producers, the Australian and Canadian dollars did very well, US equity markets had a lost decade. The Euro also did well. That kind of thing. The GFC was the beginning of the end of this process but it didn’t really finish until after the oil boom finally ended in 2014.

After 2014, trillions of dollars in speculative capital flowed into American capital markets from the entire world because of the tech sector. That wasn’t unprecedented - the same thing happened in the 1880s and 1890s with European money headed for railroads and some other American industrials. But the reverse flows boosted the dollar artificially, exaggerating although not inventing comparatively more advanced American prosperity. Those capital inflows boosted every aspect of the American economy in comparative terms, making for a tighter labor market and therefore higher wage growth, more consumer spending etc in a virtuous cycle.

But European weakness doesn’t date back to 2014 or even 2009. If anything, there’s probably some kind of macro story around the unfathomable economic costs of German reunification and early Eurozone labor market distortion in the late 90s and early 2000s that was obscured by that asset reallocation discussed above but I don’t know enough to tell it.

It's not an illusion due to the stock bubble, Europeans are poorer and only now starting to dimly appreciate how much poorer. But Conrad Bastable had a good blog post on this back in 2020. Unequal Growth: The Zero-Sum Games You Don’t See. Since then, everything became even more grotesque. I strongly recommend reading.

This essay began with one observation: In the first decade of the 2000s, the top 2 nations generated 31% of all the Economic Growth. In the next decade, their share double to 60% of Global Economic Growth. Growth is now a 2-player game.

……… The only escape is to grow faster than the median. Salary, investments, wages, bonuses, stock options, etc. etc. Whatever it takes. If you can grow faster than the average person, you’ll grow your personal Wealth quicker than the costs of these mandatory purchases are being raised.

That’s the only path to individual Wealth.

But the lesson applies at the national level too. Grow faster than the median or cost disease will eat your Wealth.

The first iPhone launched in mid-2007. You think Apple is going to lower prices in foreign markets just because those markets aren’t growing?

Don’t be silly. This chart applies all through your economy, for consumer and industrial goods alike.

Sure, there’s a bottom-tier product that exists to capture the revenue potential of whoever exists at the bottom of the market. But the top-tier product, the new technology, the new release, will continue to be priced under the assumption that those who purchase it are growing.

“Just economize, silly, nobody needs the newest iPhone” — yeah, I agree, I’m still using my 2016 model #pleb. But there’s a huge middle class in Japan and Europe that expects to have a certain purchasing power. A certain economic relevance. They’ve had it for 60+ years in most cases.

One imagines that feeling it slip away is a painful experience.

………

Conclusion

If United States GDP shrinks by $264B, while German GDP shrinks by $332B, as happened in 2009, both nations are hurting.

And Germany clearly hurts more — $68B more on an absolute basis, and by a greater percentage of its 2008 GDP. That difference widens the gap between the two nations.

But if the United States GDP grows by $2.5 Trillion while German GDP grows by $0.5 Trillion, as happened from 2016-2018, the gap between the productive capacity of the two nations widens by ~$2 Trillion.

Relative to the United States, Germany perhaps performed better in 2009 than 2016-2018.

Rationalists will be quick to point out that this is an unreasonable lens, as rational human actors should rather increase their personal income by $[X] even if their neighbour’s income increases by $[2X], than see their own income decrease by $[Y]. Assuming prices are static, I agree wholeheartedly.

But the lesson of Considerations on Cost Disease, The Bermuda Triangle of Wealth, and The Uncharity of College is that prices for the most important purchases will rise to consume most of the increased Wealth a society generates.

Globalization means the societal reference frame for many prices now becomes [the Most Productive society on Earth].

US GDP growth isn’t going to skyrocket your local rents in Germany (although Chinese GDP growth does appear to impact rents in Vancouver), but some of your favourite consumer goods will be priced according to US growth expectations.

You can grow or not grow, but that new iPhone will cost more regardless.

There is some silliness here. The existence of a zero sum game at the top of a field doesn't mean everyone has to be involved.

Only one person can have the absolute best house. It's a zero sum game. And there can be an arms race / wealth race to own that house. But there is no limit on how many people can have an excellent house.

Zero sum competition seems to be the game in top end places like New York or San Francisco. But you can travel to any other metropolitan area, find a software or finance job at one of the many companies based in that city and be at the top end of middle class wealth in that city.

Competition for Ivy League schools can drive kids crazy, but a good state school is not hard to access.

I live in a good house, in a good neighborhood, in a good area, with good schools, and our family income is through good well paying jobs. None of these things in my life are the best. There are better houses / neighborhoods / schools / jobs / etc. But I'm happy at the current trade-off point.

I am continually confused by people that seem willing to burn all of their wealth and happiness to compete for the best in something. I often find that quality growth in a product or service is linear. And price growth is linear, except for the top end of the market where things go exponential.

It's not about comfort, or affording things that are "good". It's closer to "status", which is inherently comparative. A lot of people have difficulty coping with a neighbor (or even a friend!) who appears to be doing materially better than themselves. It's yet one more reason social media is hell - "keeping up with the Joneses", but on a nigh-global scale. Bad for your mind, bad for your heart, but not easy to purge from your mindset. If you've done it, congrats, and I mean that without a hint of sarcasm. I still have work to do on myself and my own mindset.

I wouldn't say I purged it so much as never had it in the first place. Or at least haven't had it much as an adult. I have some vague recollections of jealousy from elementary school. Pretty sure puberty switched my priorities.

I thought most adults were similar. I guess that was typical mind fallacy.

There are a bunch of philosophies/religions that try to curb that jealousy. Marxism being a major exception that encourages everyone to embrace that jealousy, and tells them that it is fully correct.

There are large financial returns on embracing a search for the good, rather than simply trying to do better than a neighbor or friend. There are also social gains to be made in cutting off status competitions with friends.

that new iPhone will cost more regardless

That is extreme nitpicking, but this is not true. iPhones do cost basically the same over decades for the the base model, and the pro models even got cheaper:

https://i.redd.it/fo16m7rgh4nb1.png

The launch price of the iPhone 6S in 2015 was $650. Inflation-adjusted that had the buying power of $885.01 today. And 10 years later now the new iPhone 17 costs only $799 (exactly the same price price as the iPhone 12 five years ago).

Until very recently, top of the line iPhones were totally getting more expensive. And iPhone is not the luxury phone any more, that's more like some overengineered thi-fold Huawei (to be matched by a folding iPhone when it comes out). But fair, iPhone index is worse than Big Mac index and if we want to study premium consumption, we need something else.

It seems to be that, weirdly, luxury goods (like iPhones) are getting cheaper or at least more affordable, while the basics (rent, food) are going up in price and zooming up in some instances.

We're getting a version of that Agatha Christies quote: "I never thought I'd be rich enough to own a car, or poor enough not to have servants".

There is this famous graph of consumer price changes in the last 20 years:

https://www.visualcapitalist.com/wp-content/uploads/2023/02/price-changes-goods-services.jpg

Massively cheaper: Technology like software, computers, big hd televisions.
More or less same: Material consumer products like furniture or clothing More expensive: Food and Housing Massively more expensive: Services like childcare, college, hospital services

I don't know the first thing about economics, but it certainly feels like my purchasing power has been going down over the past 10 years.

I know this is going to sound strange but are you by any chance moderately rich?

A lot of the growth in the past few years in the USA has been driven by rising wages for the poorest people, so stuff like fast food has gotten way more expensive.

This means that while certain things got cheaper (TVS phones ect) and certain things got more expensive, the things that are more expensive tend to be the "upper middle class" purchases (ex restaurant food)

I wish.

I'm...lower middle class? Honestly I'm not sure how the classifications go, exactly. I'd call myself "working class" in light of my actual circumstances, if that didn't have historical baggage. I'd like to identify as middle class, but I clearly don't fit in economically on account of my complete lack of property.

ok, so that means you probably were hit the hardest by price changes!

The biggest changes price wise in the positive direction are medical care, housing and restaurant food.

So basically if you live in an apartment and eat out a lot you were hit the hardest by the recent changes in relative prices.

I believe it's a combination of US growth being distorted by a small group of stocks absolutely ripping, Europeans not really reaping much benefit from the SAAS boom and generally treading water. Most of it's kinda pointless since it's disappearing up the navel of arbitrary software growth so that we may all dashboard business intelligence for key stakeholders.

I was listening to a talk by a couple of Finnish financial speakers earlier this year and one of them said that if you don't include the Big Five tech companies (not sure what the exact definition he was using at that point) then US and EU growth would have been equal, but haven't bothered to check this claim.

At least this got me thinking about how the US continues to reap huge economic benefits precisely from the sort of American cultural domination that underpins a lot of global tech sector success. The online world continues to run on American mores, even local non-American forums and such. That also of course highlights how, say, UK has been unable to recently utilize its own vast cultural capital (not as dominant as American, of course, but UK still punches way above its weights in these matters, globally speaking).

Does the US reap enormous economic benefits from the top end of the stock market ripping? Helps with foreign exchange but even most people involved in those machines are living in areas with absurd cost of living and not really realizing a ton of affluence.

People overstate the cost of living aspect. Most costs, except for real estate, are a rounding error compared to the generous compensation. And even real estate just means you do have to plan and save a couple years for it like everyone else in the US; two people in tech can easily afford a detached single family home in a nice neighborhood in San Francisco. And when you hit whatever number you're aiming for, you can retire decades early.

That's all with minimal risk and a reasonable work life balance.

Big Tech now has high but not stupidly high PE ratios (except Tesla) - Apple/Google/Microsoft really are some the most profitable private-sector companies (sorry, Aramco) in history. Both that profit and the expenses (mostly pay and benefits) used to generate it count to US GDP. The fact that almost anyone with a raw IQ above 130 and a willingness to put up with corporate bullshit can learn to code and get a $250k tech job has driven up upper-middle class incomes in the US across the board. And the upper-middle class in California (and other Blue Tribe places which compete with California for mobile talent) pay a fuckton of taxes which secure the loans from the Red Chinese which allow normie-Americans to enjoy a comprehensive welfare state for the old without paying for it.

Software isn't the entirety of why America now has a higher GDP-per-hour-worked than Western Europe, but it is the biggest part of it. My tl;dr for why America won the early 21st century economically would be "America was already dominant in software by 2000, and software ate the world before anyone else could make a serious effort to catch up."

Think of all the sectors hollowed out by competition from Big Tech (most obviously newspapers and B&M retail). In Europe, those sectors have been hollowed out by foreign competition with the same kind of social impact (but on a smaller scale) as the China Shock hollowing out US manufacturing.

...and American dominance in software is downstream, among other things, from the huge national security state investment campaign obviously connected to tech industry right from the start in various ways, as well as general American cultural dominance (Listen to American music, watch American shows, go see American films - obviously you're going to play American games as well, and how much of social media is downstream from already-existing forums culture created in large part by games forums? And that is just one, probably not even the most important, example of building on the existing that I've thought about a lot recently).

One of EU's tragedies is trusting on regulatory state to make up for driving down the elements of you-can-just-do-things state, ie the sort of direct state intervention to bolster business that America has always done in spades while hypocritically preaching laissez faire to the rest of the world. (Of course there has been direct state intervention in the EU and by EU too, but building bridges in Slovakia, while undoubtedly important for Slovaks, is probably less effective in staying globally competitive).

...and American dominance in software is downstream, among other things, from the huge national security state investment campaign obviously connected to tech industry right from the start in various ways

National security state tech has been around much longer than FAANG, is smaller, and has fairly little overlap with it. Aside from simply providing general support services like government clouds and Microsoft Windows/Office, the biggest overlap is likely Oracle. They are largely distinct sets of companies and employees. Google has tried to dabble in that and mostly failed.

Silicon Valley has much deeper roots than FAANG. The semiconductor industry had the national security complex as a primary investor and a primary customer.

This seeded the regional expertise ecosystem--VC, academia, local talent--that enabled companies further up the value chain to develop and succeed.

The semiconductor industry grew out of the telecommunications industry. William Shockley's being an asshole led to the founding of Fairchild Semiconductor by the Traitorous Eight. Former Fairchild employees founded a whole bunch of other semiconductor companies, including Intel. There was certainly defense involvement but an enormous commercial component. The next wave was the microcomputer revolution, which had even less defense involvement. Then Google and the current wave, very little defense involvement at the start.

It really is possible for American companies to be successful without the government being the prime mover.

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Listen to American music, watch American shows, go see American films - obviously you're going to play American games as well

Games is the software sub-sector where the US is least dominant (Nintendo exists, for example), so this isn't the story.

You're right, I was probably thinking more about American presence as gamers contributing to the creation of an American internet culture that a lot of other stuff was built upon.

Before social medias like Facebook ate everything there were localized social medias in other countries (at least Irc-Galleria in Finland, built on site where IRC users could post pics about themselves and evolving to a generalized social media for some time), but it was easy for many people to move to American sites since they already had American contacts from, among other things, using Internet forums.

Also, is the American Music industry that disproportionately successful? Especially compared to Britain. For something like movies America clearly is dominant but for music it doesn't feel as clear to me.

Perhaps things have become lopsided since I greatly cut down on listening to new music some time in the early 10s.

Canada has some protectionist policies on media (Canadian content requirements, probably some tax breaks but I don't know specifics) that I believe are generally credited with why they punch above their weight in music and TV production.

The UK has state-sponsored premier TV and radio networks that manage similarly, I think. Less clear on the specifics, but preference for British actors on British projects (the Harry Potter movies, for example) are accepted. I can't say I've heard of an American movie getting grief for casting non-Americans, except maybe in very specific roles. I was (slightly) miffed that Masters of the Air cast an almost exclusively British cast to play American flight crews, but I haven't seen anyone else care.

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Software is a major employeer in Europe. In Stockholm programmer is the most common job for men. The numbers vary wildly when I google but there are millions of developers in the EU.

The issue is that the devs in Europe don't end up in fields with high growth potential. Many end up writing code for car companies, banks and government. There are lots of devs working for traditional industries or maintaining a billing system. To a great extent it is a mindset issue. Our financial elites try to run tech companies as if they were running a steel mill and end up with great software for their industrial products. However, it doesn't scale. A hospital record keeping system isn't going to turn into a trillion Euro company.

Much of the blame should be placed upon the business community. There really needs to be two business schools, one for tech and one for traditional industries. The mindset among investor in Europe is so far from the silicon valley mindset.

If someone tried to pitch open AI to a European investor they would be focused on how it can be sold to mid sized companies by a sales team and what the profit margin of that would be. Then they might pitch in 500k Euros.

Inversely, it feels like the "tech industry" is eating American software and other areas of the economy are often left in sort of a software desert. We come in as Europeans and think we have garbage solution and surely noone in America could ever want our garbage, only to discover that it's somehow, unfathomably, even worse in the US.

Obviously the tech industry is fabulously financially successful but sometimes I wonder if it would be better if it was a bit less profitable so American software talent could be spread a bit more evenly throughout the economy.

Inversely, it feels like the "tech industry" is eating American software and other areas of the economy are often left in sort of an software desert.

It's what are called "H-1B dependent companies" (eg. WiPro, Infosys) and directly hired H-1Bs who eat the lower end of American software -- the people writing boring bespoke business logic for companies in other industries. Big Tech isn't killing them; it did kill some of the IT support infrastructure for some of those companies (since you don't need it to rent machines on AWS/Azure; only "some" of those companies as others are not willing to give up physical control of their machines for various reasons)

I mean "killing" them by eating the talent. They didn't disappear, the quality is just shockingly low.

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