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There is something I really like in this Ygeslias article. Whatever is causing more partisan politics it’s not the economy. We’ve done well the past few years.
https://www.slowboring.com/p/how-obama-and-trump-and-biden-beat
Macroeconomic management has been actually really good the last 15 years. Someone can argue we could have had a few million more people employed between 2010-1016, but that’s like 2% of gdp. Trump did close that gap and I’m not sure if he was brilliant or lucky but he yelled at the Fed for being too hawkish.
I like how he led with the shale Revolution. I’ve been saying this for years. Tech gets all the fan fare but if Tech was the Jordan of the economy American energy independence over this time frame was the Scottie Pippen in creating wealth for America. I think part of the reason it doesn’t get the fanfare is because it doesn’t create 12 figure networth people. Its a constant costs business versus moat building business. Of course if the businesses are not as profitable then the surplus value went to consumers in the form of lower energy costs versus companies having high margins. Also likely led to America not needing to write giant checks to the Saudis which meant our trade deficit could fund other things and those depend more on price leading to the strong dollar. People working in constant-costs businesses (farming, manufacturing, energy) tend to vote red; people working in wide moat with ability to extract economic rents or winner take all markets tend to vote blue. Someday I should write a long article on this because I have not seen anyone write about it. But the split in voting patterns makes a lot of sense based on the economics of their business. It would even make sense to have different tax regimes for these businesses but would be impossibly hard to execute. As a driver of political views it seems as powerful as male-female splits which seems a lot more talked about.
I think maga and the left like to cite American wealth not making it to the middle class etc. But honestly this much wealth creation can’t just be consumed by the 1% it pretty much has to flow to others. Perhaps, the middle class isn’t doing as well as we want them to be doing but the counter factual (Europe) would be poorer than what we got.
The GDP numbers are more pronounced because we calculate things in currencies and the cited figures were when the dollar was weak. The gap has definitely shifted in favor of the US but I do think this overstates the change.
The Tea Party seems underrated to me. They put a halt to more government spending. Less fiscal policy meant the fed could keep rates lower which basically crowded-in private investment in tech and shale and a host of things with cheap money. The current situation is the opposite of this where we increased federal spending from about 20.5% last decade to 24% now. And that’s caused a massive change in rates to get inflation close to target.
Culture Wars seem to have little to do with economic mismanagement by either side. I think the right is correct that the fall of small towns is bad but I think that largely came from economic forces (like productivity) gains that couldn’t be prevented. And there small towns have also been hurt by the people (probably like myself) who would be logical local elites moving away.
As much as national divorce or something always sound appealing it’s just going to make us all poorer. To break up economic integration would make our economy much more like Europe. We would run into something like Brussels that is ineffective at macro management and lose the economy of scale.
The US is the only major developed country (excl. Eastern Bloc) where living standards have significantly improved since 2008. This is pretty undeniable and economists have argued and will continue to argue about why this is (there are wider reasons like tech acting as a lightning rod to create huge foreign investor inflows into US markets after the comparatively worse 2000-2008 period when EM and to a lesser extent Eurozone growth was all the rage). My suspicion has always been that Poland, Romania and other EE countries entering the common market, plus the depth of the debt crisis and resulting youth unemployment in the PIGS countries, flooded labor markets in Northern/Western Europe with enough cheap labor that wages remained extremely depressed in a kind of doom cycle even in the richer parts of Europe throughout the 2009-2020 period. You only need a relatively small relative increase in immigration to depress pay significantly (see Canada vs the US, for example).
The outperformance of the US versus the EU doesn't have anything to do with the EU's governing structure, Brussels, or anything related to it. Even its relation to the ECB is limited, the ECB was not in any major sense more irresponsible than the Fed since 2011 (there are some big regulatory problems, but not 'the economy is stagnant because of this'). The deep problems with European entrepreneurial culture, extremely hard-to-access capital, low social mobility between the middle class and genuinely rich and a population largely willing to coast on its current wealth can't be fixed by central banks or supranational organizations - or at least not reasonably, and not solely.
They can't even (and this is something fewer people say) be fixed merely by pressing the 'more capital' button, because a big problem is that quality new businesses simply aren't being started in great enough numbers. If you speak to Spaniards and Italians about their golden age of cheap debt in like 2004-2007 they'll tell you that it was stuff like a couple, aged 35, who wanted to start a bed-and-breakfast or a restaurant in their dead little town being lent €800,000 euros by BMPS or whoever. It wasn't going to things that were ever going to generate real economic growth.
For whatever reason, Americans want to be rich more than Europeans do. You notice this even in casual conversation. In America, money is everything, and the acquisition of more money is a driving force in the personal motivation of the vast, vast majority of the population. In Europe, perhaps because status is more multifaceted, perhaps because the baseline social safety net is nicer, perhaps because economic growth has been slower for longer, perhaps for many other reasons, this isn't the case. Sure, people still 'want to be rich', the same way the average fat American 'wants to be skinny', but they don't do anything about it. This is underestimated as a cause of the divergence between the EU/Europe and US.
I'm gonna need you to substantiate this claim.
Can you name a counter-example? Australia is the largest I can think of, but even there, growth has been slower since 2014 while the US has pulled ahead, so I think I'm still right.
Australia's GDP per capita is significantly higher than in 2008
South Korea's GDP per capita is significantly higher than in 2008
Germany's GDP per capita is significantly higher than in 2008.
Probably there are other examples, but 3 should do.
Are you genuinely claiming that living standards have substantially improved in Germany since 2008? I'm unsure whether you understand my question, it's not a pure GDP/capita play.
As for Germany:
So a growth of 6,000 euros since 2000. In the US, which started the century at a similar level, per capita increases in average income sum to approximately 300% of that figure.
Well, I invited you to explain what exactly you were claiming and you didn't really clarify. If gdp per capita isn't what you're talking about, what is? And what do you mean by "substantial"?
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