Saturday, April 27, 2024

"America and Europe Are Equally Poor"

From Palladium Magazine, April 26:

"Honey, don’t worry,” I said, reassuring myself as much as her. “I see a big crowd up ahead. It’ll be fine.” We were wandering down Market Street in San Francisco, after sundown. Despite the towering buildings looming over us, designed to host tens of thousands of people, the streets were quiet and empty. Except, of course, for the shadowy figure shuffling around without direction on the other side of the street, and the occasional and deeply unnerving scream.

There is no shortage of anecdotes about Americans who visit Europe for the first time and are shocked to discover streets that are safe at night, food that is tastier yet healthier, and large cities that are nonetheless beautiful and walkable. The reverse is much rarer, if only because true Europeans don’t write about their experiences on the internet in English. As a dual European-American citizen from birth, I have spent roughly half my life in North America and half in Europe, so neither continent is capable of giving me culture shock. The same was not true of my wife, a true European whom I was hazing with a not-so-grand tour of the great cities of the United States of America.

“I’ll call an Uber up there, okay?” Even for me, the haunted atmosphere was a bit much and significantly worse than I remembered from just a few years before. But there were clearly people in the distance ahead of us, I thought, so we shouldn’t inordinately frighten ourselves. But, fast-walking forward, it didn’t take us long to realize that those weren’t tourists or late-night shoppers strolling down from Union Square, but what must have been a hundred homeless people hanging out, sprawled out on the pavement, and doing drugs. Many Europeans, my wife included, will gripe incessantly about the alleged lack of public safety and order in Europe. Suffice it to say, she has not mentioned it a single time since visiting San Francisco—on paper, one of the richest cities in the richest country in the world.

Comparing the World’s Paper Wealth
The discrepancy between America’s paper wealth and its real wealth is not something that can be ignored when comparing America’s wealthiness to the rest of the world, especially Europe and East Asia. Since 2008, nominal U.S. GDP has outpaced that of the European Union to the point that the EU is now just two-thirds the economy that the U.S. is, rather than the prior near-parity. U.S. nominal GDP per capita is nearing Singapore’s, while all of Europe except for small rich states like Norway or Monaco are significantly behind. After a decade of sluggish growth, Europe’s fortunes compared to America’s took another sharp turn for the worse following the 2020 COVID-19 pandemic and then the 2022 Russian invasion of Ukraine.

But these aren’t reasons for American triumphalism, let alone reasons to claim that America is now unfathomably wealthier than Europe. To begin with, just looking at more numbers makes the picture far less dramatic. Europe’s GDP was also one-third smaller than the United States’ in 2000, before growing to parity by 2008 and again falling behind. Simply adjusting for purchasing power to remove the distortions caused by exchange rate fluctuations takes the GDP per capita of Germany—the largest country and economy in Europe—from less than two-thirds of America’s to nearly 90% of it. By this metric, the EU as a whole was 75% as affluent as the U.S. in 2022.

The OECD gives less favorable, but still fathomable, figures: in 2021, the average household in the European Union had 61% of the gross disposable income of the average household in the United States. Germany was at 77% of the U.S. figure. Then again, the same numbers say that Japan is poorer than Lithuania and that South Korea is poorer than Portugal. We might want to take the significance of such numbers with a grain of salt. The gap between what statistics purport to capture and what they actually capture means we can use them as pieces of evidence, but we still require a principled model of reality in which to fit and judge them—as well as interaction with reality itself....


 Regarding the built environment:

Urban planners and security experts both know: Empty streets are dangerous streets. And once you've gotten to that point, turning things around is so difficult that most people choose to just move away.
If they can.