What happened to Europe?

[Agent327]

In the 90s and early 2000s, Europe seemed so squarely ahead of us in the US. That switched so hard. What happened, and why did it happen?

Can;t say I've noticed this - or even what is meant here exactly. But not to worry: once The Trump is president, Europe will be light years ahead again.

 

[FriendlyFire]

what does this mean

Wages are stagnate but the cost of things are rising = the price you pay for inflation.

 

[Hygro]

Wages are stagnate but the cost of things are rising = the price you pay for inflation.

wages are "stagnant" because they are measured against inflation. The cost of things are rising but so are incomes. What allows merchants to raise the price of things if not raised incomes?

 

[FriendlyFire]

wages are "stagnant" because they are measured against inflation. The cost of things are rising but so are incomes. What allows merchants to raise the price of things if not raised incomes?

perhaps this would be a better explanation.

Increase in real value of the minimum wage since 1990: 21%
Increase in cost of living since 1990: 67%
One year's earnings at the minimum wage: $15,080

http://www.motherjones.com/politics/2011/06/speedup-americans-working-harder-charts

 

[Hygro]

Sneaky words there. "Real value" by definition accounts for inflation, aka "cost of living". So that quote is telling me that minimum wage has outstripped inflation for a gain of 21%. That doesn't sound right to me, but the website isn't working right with my browser.

 

[aelf]

As to education, the EU doesn't crack the top five in the OCED's rankings of tertiary education whereas the US is number four or five. The future prospect for most EU nations to catch up isn't promising either.

Spoiler :

Is this really an achievement?

The idea of the knowledge economy is appealing. The only problem is it is largely a myth. Developed western economies such as the UK and the US are not brimming with jobs that require degree-level qualifications. For every job as a skilled computer programmer, there are three jobs flipping burgers. The fastest-growing jobs are low-skilled repetitive ones in the service sector. One-third of the US labour market is made up of three types of work: office and administrative support, sales and food preparation.

The majority of jobs being created today do not require degree-level qualifications. In the US in 2010, 20% of jobs required a bachelor’s degree, 43% required a high-school education, and 26% did not even require that. Meanwhile, 40% of young people study for degrees. This means over half the people gaining degrees today will find themselves working in jobs that don’t require one.

Source

The best answer is probably that austerity has really messed things up in Europe.

 

[Zkribbler]

The austerity measures are beginning to pay off as almost all countries that underwent reforms (Portugal, Cyprus, etch) see their economies grow again.

The U.S. recovery started in April 2009.

Europe is just starting to recover now. IMHO, it's recovery isn't due to austerity; its despite austerity.

 

[Mega Tsunami]

I was going to write a post which basically went: “What’s happened to Europe is 1. The Euro, 2.The Euro and 3.The Euro”

But, coincidentally in today’s Guardian is a piece which explains what’s wrong with Europe, especially in comparison with the US.

It’s a good read but I have just included a few bits below:

Brexit may be the best answer to a dying Eurozone
<snip>
The equivalent of the bigger, African elephant was the shocking state of the eurozone after the failure of the single currency experiment. This went unremarked by Carney, although it is relevant to the debate about Europe.
Why? Because, although Britain is likely to stay in the EU, Brexit will remain a live issue unless the eurozone can sort itself out. That means either admitting that the euro has been a terrible mistake, or going the whole hog and integrating further, with a single banking system, a Europe-wide treasury, and a democratically elected finance minister with the power to raise money in Germany and spend it in Greece. This is not going to happen any time soon, and perhaps never. Countries that joined the eurozone gave up a considerable amount of economic power when they adopted the euro, but they retained the right to raise their own taxes and make their own spending decisions.
<snip>
The eurozone crisis is about more than Greece. It is about Italy, where the economy is barely any bigger now than it was when the single currency was introduced. And France, where unemployment is double the level of the UK or the US. And Finland, one of the most tech-savvy countries in Europe, where the economy is 7% smaller than it was before the start of the financial crisis. And even Germany, where an export boom and high corporate profits have been paid for by workers in the form of below-inflation pay increases.
Our investigations took us back to the last time Britain held a referendum on EU membership, when during the cabinet discussions Tony Benn warned that Britain was signing up for something that was undemocratic, deflationary and run in the interests of big business. “I can think of no body of men outside the Kremlin who have so much power without a shred of accountability for what they do,” Benn said.
Economic policy has been relentlessly deflationary. The interests of bankers have been given a higher priority than workers’. Greece, Ireland, Portugal, Cyprus and Spain have been the laboratory mice in a continent-wide neoliberal experiment of a sort Tea Party Republicans in the US can only fantasise about.
Given the obscene level of long-term unemployment, the idea of Europe as the guardian of labour rights is laughable. The gap between the US and Europe has widened, not narrowed, since the launch of the single currency
A different Europe is needed, but it is stretching credibility to imagine that the Europe of Greece and the Transatlantic Trade and Investment Partnership can easily morph into America with the nice people in charge. The eurozone is economically moribund, persists with policies that have demonstrably failed, is indifferent to democracy, is run by and for a small, self-perpetuating elite, and is slowing dying. The wrong comparison is being made. This is not the US without the electric chair; it is the USSR without the gulag.

http://www.theguardian.com/commenti...nswer-to-dying-eurozone-eu-undemocratic-elite

 

[El_Machinae]

That's a wild chart. I don't think the doubling time of inflation is 15 years by most measures; that would be 5% inflation. That said, including healthcare and education into the current CPI calculation would change things.

Stagnant wages could be a sign of inflation, just in a form we don't measure. IMO, we've been trickling in money mostly from the top since the start of fiat, and I think that explains both a major part of why wealth has been trickling upwards and why inflation is so hard to modulate. Wages are sticky downwards, but layoffs are easy.

 

[Lohrenswald]

Europeans used to make Americans look dumb.

Probably back then americans only saw and heard liberal and social democratic europeans, but now the conservatives have gotten a much larger voice.

And to some extent it's been the opposite in America.

If I'm misunderstanding you now it's because you aren't clear enough

 

[christos200]

The social democrats did such a good job that almost all of Southern Europe bankrupted and the conservatives had to fix their mess.

 

[GoodSarmatian]

I'd really like to see some examples of conservatives fixing social democrats messes, preferably without decreasing the standard of living and raising suicide rates.

 

[christos200]

Its the effects of "shock therapy". Short term pain for long term economic growth. Austerity measures are paying off and European economies are more competitive now.

 

[Lexicus]

Its the effects of "shock therapy". Short term pain for long term economic growth. Austerity measures are paying off and European economies are more competitive now.

I think you mean austerity measures were totally counterproductive and delayed recovery by many years.

Seriously, read some economics!

 

[GoodSarmatian]

I'd still like a specific example.
And as I've mentioned already in this thread, Germany didn't do austerity and didn't really have a crisis. Keynesianism doesn't need seven years of "shock therapy" before there's eventually a payoff. It just works.
The problem with southern Europe is not social democracy, because that works pretty well in the north. The problem is a culture of corruption that's carried over from the time of military dictatorships. Spain, Portugal and Greece only started to become democratic in the seventies and didn't have much of a democratic tradition.

 

[Lexicus]

I'd still like a specific example.
And as I've mentioned already in this thread, Germany didn't do austerity and didn't really have a crisis. Keynesianism doesn't need seven years of "shock therapy" before there's eventually a payoff. It just works.
The problem with southern Europe is not social democracy, because that works pretty well in the north. The problem is a culture of corruption that's carried over from the time of military dictatorships. Spain, Portugal and Greece only started to become democratic in the seventies and didn't have much of a democratic tradition.

I think this is accurate though probably not the whole story.

Also, keep in mind it's not that austerity doesn't "work." It "works" to enrich the rich at the expense of everyone else. That is what it's supposed to do.

 

[warpus]

Yeah, OP is being a bit secretive about providing examples, maybe he's trying to get us to do his homework for him or something.

 

[christos200]

The problem in Greece is not the military dictatorship (which did pretty well economically speaking) but that it has a large and inefficient public sector (result of the socialist policies of PASOK which came in government in 1981) which overly regulates the private sector. Economic liberty in Greece is worse than that of many African countries. Before 2010 we had a semi-soviet economy. The reforms and austerity measures have decreased (although not enough) the public sector and have allowed Greece to make a (slow albeit) recovery (which now stopped due to Syriza ruining the economy). Keynesianism is a total and complete failure.

 

[christos200]

I think this is accurate though probably not the whole story.

Also, keep in mind it's not that austerity doesn't "work." It "works" to enrich the rich at the expense of everyone else. That is what it's supposed to do.

Then why countries with high economic liberty do well and their citizens have better life than those living under leftist regimes like North Korea and Cuba?

 

[Tahuti]

I'd still like a specific example.
And as I've mentioned already in this thread, Germany didn't do austerity and didn't really have a crisis. Keynesianism doesn't need seven years of "shock therapy" before there's eventually a payoff. It just works.
The problem with southern Europe is not social democracy, because that works pretty well in the north. The problem is a culture of corruption that's carried over from the time of military dictatorships. Spain, Portugal and Greece only started to become democratic in the seventies and didn't have much of a democratic tradition.

A culture of corruption is endemic to the whole of Europe. Where did those loans come from? German, Dutch and British banks. Why did Greece take them and those banks granted these loans? Because Greek politicians and financial executives stood to gain here.