> Why is Luxembourg so extreme? Well, that’s because roughly half of its workforce are Belgian commuters who show up in the denominator but not the numerator.
Other way around? They would be amongst the workers of Luxembourg (numerator) but not amongst the population of Luxembourg (denominator).
It's about the EPR. The commuters are in employment but not in resident population, which is what drives the 0.765, so for that it's numerator rather than denominator. But you are describing the consumption per hour flip of that correctly.
I moved from the US to New Zealand (temporarily, mostly to hike), and I am getting paid 1/3rd as much as I had been for the same job. I went from having a one bedroom to myself to living with two flatmates. I think much more about filling up the tank and about grocery prices than I ever had before, and my spending on healthcare is a much higher portion of my income (partly a consequence of my visa status). A medication I am on that is generic and a standard first line treatment in the US and most developed countries is not funded here, so my pharmacy imports it from the US and I pay more for it than it costs without insurance in the US. For a lot of cancers or autoimmune conditions the gold standard treatments are not available here except for the very wealthy.
If we’re focusing on “richer”, strictly speaking, then your post is of course on topic and quite good (though I didn’t see you point to the recent debate over current vs constant price indices, which I might’ve missed).
However we’re usually comparing because we actually DO want to link “richer” to something with intrinsic value (such as consumption) or overall and ill-defined “QOL”.
In these cases it isn’t sufficient to hand-wave away things like the consumption bundle itself or preferences for leisure / hours worked. Your reasons for doing so are sound in your strict accounting exercise, but were I doing proper country comparison analysis I’d get into the weeds of it all.
E.G. Europe has lower hours worked both because of structurally higher unemployment but also because of “better” vacation policy. Also, less incarceration. Dunno about informal employment, or consumption levels being higher for unemployed in Europe than in the U.S., but I’d consider this to matter too. Ibid for Americans consuming luxury healthcare but also wasting a tonne of it. Quality of goods is hard to measure, as is longevity, quality of cities, security, natural environment, etc.
Fundamentally it’s impossible to collapse down to a single vector, so I’ve no objection to how you’ve framed your essay, but I wanted to raise these points because it isn’t that they don’t matter if we want to make these comparisons about the things we care about, just that they’re virtually impossible to reconcile neatly with a simplified comparison and therefore “don’t matter” if we’re insisting on measuring who’s “richer”.
1. If the US is such a great place to be if you’re rich, why did Peter Thiel move to Argentina?
2. > Stated plainly, I actually think it’s hard to see America’s trade deficit as a bad thing
What do you think of the towns that are now full of meth and fentanyl addicts after all the factories shut down and the jobs went overseas? That’s unambiguously a good thing?
3. > People want to spend on healthcare. It is a superior good for a society.
No bro, no one wants to become obese eating junk food, develop diabetes and have to start shooting expensive insulin all day, spend 12 hours a week getting dialysis, go blind from diabetic retinopathy, and then have their legs amputated. Are you out of your mind? The US has the fattest people in the world outside of a few island countries, and as of 2023, was ranked #56 in the world for life expectancy. This supports my thesis that Americans do not understand basic facts about our own country, which is a big reason why we keep losing wars.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
> No bro, no one wants to become obese eating junk food, develop diabetes and have to start shooting expensive insulin all day
You have completely misunderstood what I'm saying. People who are obese, who have diabetes, who are old, who have cancer, etc., they want to be able to spend on healthcare. People also want to spend on the health of others for signaling reasons and for delusional reasons.
Would you write a similar comparison on health and happiness? I'm curious how consumption related to these two. At the end of the day, we want to live long happy lives, don't we?
I am a bit curious about how to think about assets in this context. In a way NIIP shows some of the US consumption is borrowed from the future compared to places like Switzerland. I guess mean adult net wealth if we divide net government assets per capita and private net wealth is added. That will make trade deficits or government debt show more and also boost up places like Norway based on implicit future consumption. I liked the post though not sure this is needed or that it will move the US that much. The more stuff you add the more assumptions are gonna be off and then we have to add the Alps bonus or whatever...
I don't understand the insistence on using PPP to determine which country is "richer." "Riches" or "wealth" should be counted in gold. PPP is only relevant to discussions of quality of life or trying to quantify yearly consumption.
Ridiculous. Investment is a part of aggregate demand: Ebenezer Scrooge has insanely high investment.
Also "low aggregate demand" is an equilibrium object that is typically a function of tight money. There's no reason the Scrooge society would have particularly bad monetary policy.
What surprised me: Singapore is not a member of the OECD. Therefore Singapore is not on your list. Yet Singapore is incredibly wealthy and an important country to analyze.
What are the lessons to learn from Singapore?
Also, how can we measure the opportunity cost of bad policies? What should be the income of each of these countries if they fixed their dumbest policies and how long would the repairs to their economies take? Can we quantify the specific policies that have caused the Eastern European countries to grow at different rates since the USSR collapsed?
> Why is Luxembourg so extreme? Well, that’s because roughly half of its workforce are Belgian commuters who show up in the denominator but not the numerator.
Other way around? They would be amongst the workers of Luxembourg (numerator) but not amongst the population of Luxembourg (denominator).
It's about the EPR. The commuters are in employment but not in resident population, which is what drives the 0.765, so for that it's numerator rather than denominator. But you are describing the consumption per hour flip of that correctly.
I moved from the US to New Zealand (temporarily, mostly to hike), and I am getting paid 1/3rd as much as I had been for the same job. I went from having a one bedroom to myself to living with two flatmates. I think much more about filling up the tank and about grocery prices than I ever had before, and my spending on healthcare is a much higher portion of my income (partly a consequence of my visa status). A medication I am on that is generic and a standard first line treatment in the US and most developed countries is not funded here, so my pharmacy imports it from the US and I pay more for it than it costs without insurance in the US. For a lot of cancers or autoimmune conditions the gold standard treatments are not available here except for the very wealthy.
If we’re focusing on “richer”, strictly speaking, then your post is of course on topic and quite good (though I didn’t see you point to the recent debate over current vs constant price indices, which I might’ve missed).
However we’re usually comparing because we actually DO want to link “richer” to something with intrinsic value (such as consumption) or overall and ill-defined “QOL”.
In these cases it isn’t sufficient to hand-wave away things like the consumption bundle itself or preferences for leisure / hours worked. Your reasons for doing so are sound in your strict accounting exercise, but were I doing proper country comparison analysis I’d get into the weeds of it all.
E.G. Europe has lower hours worked both because of structurally higher unemployment but also because of “better” vacation policy. Also, less incarceration. Dunno about informal employment, or consumption levels being higher for unemployed in Europe than in the U.S., but I’d consider this to matter too. Ibid for Americans consuming luxury healthcare but also wasting a tonne of it. Quality of goods is hard to measure, as is longevity, quality of cities, security, natural environment, etc.
Fundamentally it’s impossible to collapse down to a single vector, so I’ve no objection to how you’ve framed your essay, but I wanted to raise these points because it isn’t that they don’t matter if we want to make these comparisons about the things we care about, just that they’re virtually impossible to reconcile neatly with a simplified comparison and therefore “don’t matter” if we’re insisting on measuring who’s “richer”.
fact check: true
1. If the US is such a great place to be if you’re rich, why did Peter Thiel move to Argentina?
2. > Stated plainly, I actually think it’s hard to see America’s trade deficit as a bad thing
What do you think of the towns that are now full of meth and fentanyl addicts after all the factories shut down and the jobs went overseas? That’s unambiguously a good thing?
3. > People want to spend on healthcare. It is a superior good for a society.
No bro, no one wants to become obese eating junk food, develop diabetes and have to start shooting expensive insulin all day, spend 12 hours a week getting dialysis, go blind from diabetic retinopathy, and then have their legs amputated. Are you out of your mind? The US has the fattest people in the world outside of a few island countries, and as of 2023, was ranked #56 in the world for life expectancy. This supports my thesis that Americans do not understand basic facts about our own country, which is a big reason why we keep losing wars.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
—Sun Tzu
> If the US is such a great place to be if you’re rich, why did Peter Thiel move to Argentina?
He says he was hedging against political and economic risks in the U.S.
> What do you think of the towns that are now full of meth and fentanyl addicts after all the factories shut down and the jobs went overseas?
They're unrelated. The Rust Belt's decline is actually linked to protectionism rather than trade: https://x.com/cremieuxrecueil/status/1908718807129960490
> No bro, no one wants to become obese eating junk food, develop diabetes and have to start shooting expensive insulin all day
You have completely misunderstood what I'm saying. People who are obese, who have diabetes, who are old, who have cancer, etc., they want to be able to spend on healthcare. People also want to spend on the health of others for signaling reasons and for delusional reasons.
Switzerland is not a tax haven. It's the country usa founders wanted to create
Would you write a similar comparison on health and happiness? I'm curious how consumption related to these two. At the end of the day, we want to live long happy lives, don't we?
Thanks for this piece, it is great!
I am a bit curious about how to think about assets in this context. In a way NIIP shows some of the US consumption is borrowed from the future compared to places like Switzerland. I guess mean adult net wealth if we divide net government assets per capita and private net wealth is added. That will make trade deficits or government debt show more and also boost up places like Norway based on implicit future consumption. I liked the post though not sure this is needed or that it will move the US that much. The more stuff you add the more assumptions are gonna be off and then we have to add the Alps bonus or whatever...
Nice writeup
Let's ignore the article. 300k a year for a junior position is crazy.
You should apply for it!
I don't understand the insistence on using PPP to determine which country is "richer." "Riches" or "wealth" should be counted in gold. PPP is only relevant to discussions of quality of life or trying to quantify yearly consumption.
This is a discussion of quality of life and consumption, the things that most signify actually being richer.
Ebeneezer Scrooge has a bad quality of life and low consumption, but everyone knows he is very rich.
We are talking about countries, not particular fairytale misers.
Any metric that would count a country of Ebenezer Scrooges as not rich is a poor metric of richness.
A country of Ebenezer Scrooges would have aggregate demand so low that its economy wouldn't function, and it would wind up very poor indeed.
Ridiculous. Investment is a part of aggregate demand: Ebenezer Scrooge has insanely high investment.
Also "low aggregate demand" is an equilibrium object that is typically a function of tight money. There's no reason the Scrooge society would have particularly bad monetary policy.
What surprised me: Singapore is not a member of the OECD. Therefore Singapore is not on your list. Yet Singapore is incredibly wealthy and an important country to analyze.
What are the lessons to learn from Singapore?
Also, how can we measure the opportunity cost of bad policies? What should be the income of each of these countries if they fixed their dumbest policies and how long would the repairs to their economies take? Can we quantify the specific policies that have caused the Eastern European countries to grow at different rates since the USSR collapsed?
Singapore is substantially less wealthy than the U.S. Their GDP per capita is massively inflated by being a tax haven. I have posted on their AIC before: https://www.cremieux.xyz/p/grading-the-worlds-shortest-manifesto
Singapore is also a city state, so not sure how many lessons would apply to the US.
Only 10-15 % of the country is ‘rich.’