What make EU so much poorer than US?

[Lexicus]

Racism might be bad for your mom and pop store, or for your blue-collar construction enterprise with 15 employees, but it sure as hell is profitable...

Ultimately, it's not, though. Because racist structures prevent people who are racialized from contributing to economic development as much as they would in the absence of these structures.

 

[yung.carl.jung]

Ultimately, it's not, though. Because racist structures prevent people who are racialized from contributing to economic development as much as they would in the absence of these structures.

I would heavily question this. You are already thinking in terms of a single society where some people are racialized. This is not at all the case with outsourcing or traditional slavery. Yes, racism is bad financially if you have a society with massive ethnic plurality like the US. Definitely agree there. Also yes, racialized people(s) would likely contribute much more with the absence of these power structures. But that is only for a very specific society, and that is from a very US-centric pov.

Racism is incredibly profitable if you have a society like Oman, where your slave-workers are not even citiziens, and are usually sent back or "discarded" after their work is done. Omanis never see/carry the downsides of racism, only the origin countries of the slave workers see the negative effects.

Similiarly, it would be silly to argue that Europeans did not profit immensely off of colonialism. The ones suffering economically were Africa and Latin America, it was never Europe. Seems crystal clear to me. I also doubt that legitimate economic cooperation without any racism would have nearly been as profitable for European colonialists. Almost nothing is more profitable than an unhinged plutocracy.

 

[Cutlass]

I have a pretty cool hypothesis, it goes as follows: Those countries that had assloads of money pumped into them by the US, Nato and friends after WW2 somehow ended up doing pretty well. Those that don't somehow ended up not doing well. It's pretty far fetched, I know

Or, to be a bit hyperbolic, what do Germany and South Korea really have in common, aside having a weird sense of humor?

Sorry to rain on your informative post, I quite enjoyed it. I feel like sometimes there's just a pretty simple explanation, and me being German and all it's pretty easy to question the common narrative of how our wealth came about (we worked super duper hard and rebuilt everything and.. stuff). My historical and cultural research into S. Korea revealed a strikingly similiar history.

I don't agree with this at all. You can dump any quantity of money on a country you want, and it won't become a developed country if it has too bad of a government. And that means that you can artificially pump it up, but once the money is spent, it will go back to being poor. For a nation to be rich, the workers and industry have to have high productivity. And that just doesn't happen in any country, or it already would have. And there wouldn't be poor countries in the world any longer.

I believe this is demonstrably false. Not only is slavery one of the most lucrative enterprises in all of history, but also a great amount of western wealth is directly based on colonialism, racism and slavery.

Much of our current "outsourcing", which is an insanely lucrative enterprise for the few at the top, is based on racism and a complete disregard for human rights and safe workplaces.

Racism might be bad for your mom and pop store, or for your blue-collar construction enterprise with 15 employees, but it sure as hell is profitable...

Then you don't understand the situation. Racism, slavery at the extreme, is about one group of people taking wealth from another group of people. No wealth is being created here. It's just being redistributed by force. It's theft. On a potentially colossal scale, sure. But it's still theft, and not wealth creation.

Wealth creation comes from the invention of new products and processes which create more value with less labor input. And this doesn't happen in a slave society. It's not an accident that the North in the US at the time of the Civil War was so much more advanced than the South. In the North people were largely free to pursue their own best interest. In the South, they were not. And this wealth disparity persists to this day. The North is freer than the South, so the North is richer than the South. And that's not to say that the North doesn't have problems, or that the South doesn't have bright spots.

But you are looking at wealth as a zero sum game. And it is not. And by doing so, you miss the understanding of it. It is not about who takes the largest share, it is about who creates the largest share. And whenever you focus policies on the taking, rather than the making, then you end up with less in the long run.

And that's what racism does. It takes wealth rather than making wealth. That's what "supply side economics" does, it takes wealth rather than making wealth. That's what "muh free markets!!!!!!" does, it takes wealth rather than making wealth.

And in the long run, that means that a handful of individuals may be fabulously wealthy, but the nation is poor.

 

[AntSou]

The EU isn't so much poorer than the US.

GDP isn't very useful to measure distribution of wealth and income in a society.

 

[AmazonQueen]

I would heavily question this. You are already thinking in terms of a single society where some people are racialized. This is not at all the case with outsourcing or traditional slavery. Yes, racism is bad financially if you have a society with massive ethnic plurality like the US. Definitely agree there. Also yes, racialized people(s) would likely contribute much more with the absence of these power structures. But that is only for a very specific society, and that is from a very US-centric pov.

Racism is incredibly profitable if you have a society like Oman, where your slave-workers are not even citiziens, and are usually sent back or "discarded" after their work is done. Omanis never see/carry the downsides of racism, only the origin countries of the slave workers see the negative effects.

Similiarly, it would be silly to argue that Europeans did not profit immensely off of colonialism. The ones suffering economically were Africa and Latin America, it was never Europe. Seems crystal clear to me. I also doubt that legitimate economic cooperation without any racism would have nearly been as profitable for European colonialists. Almost nothing is more profitable than an unhinged plutocracy.

Profitable for a minority but a drag on economic development. One of the reasons why slavery and serfdom were abolished was because they weren't particularly productive.

 

[yung.carl.jung]

I don't agree with this at all. You can dump any quantity of money on a country you want, and it won't become a developed country if it has too bad of a government.

Korea literally had an American-led, American-interest-focussed military dictatorship that killed thousands of dissidents, journalists, and opposition people, never focussed on social policies and was extremely corrupt. By what metric is that a "good government"?..

Profitable for a minority but a drag on economic development. One of the reasons why slavery and serfdom were abolished was because they weren't particularly productive.

Yeah, but that's what I'm saying though. Profitable for a small minority for a limited amount of time. I never claimed more than that.

Then you don't understand the situation. Racism, slavery at the extreme, is about one group of people taking wealth from another group of people. No wealth is being created here. It's just being redistributed by force. It's theft.

That is literally exactly what I said.., like I even used the word "kleptocracy", no idea how you could miss that. It is obvious that it shifts wealth. We are both arguing the same thing. I merely said that slavery was profitable for the slavers, which is simply factually true. And the wealth/ressources they stole constitute some amount of Europes wealth today, which is also factually true.

Though one could argue that slavery does also "create" wealth for the few, because capital accumulates. Having a few thousand pounds in 1800 and investing them, inheriting them, investing them, over and over does create massive wealth for heirs in 2020.

And in the long run, that means that a handful of individuals may be fabulously wealthy, but the nation is poor.

That is also exactly what I said, almost word for word, re: colonialism. I don't see where you get the disagreement from.

 

[AntSou]

No wealth is being created here. It's just being redistributed by force. It's theft. On a potentially colossal scale, sure. But it's still theft, and not wealth creation.

This is false. Slave labour creates wealth, otherwise there would be no value to it. Those who enslave do so because they can generate wealth and fully extract the wealth created for themselves.

Wealth creation comes from the invention of new products and processes which create more value with less labor input.

The Soviet Union experienced rapid (if unsustainable) economic growth through the application of 5 year plans which led to the famine of millions.

And this doesn't happen in a slave society. It's not an accident that the North in the US at the time of the Civil War was so much more advanced than the South. In the North people were largely free to pursue their own best interest. In the South, they were not. And this wealth disparity persists to this day. The North is freer than the South, so the North is richer than the South.

Industrialisation led to rapid economic growth in Europe long before the mass of the population were actually enjoying the vast amounts of new wealth being generated. It wasn't slave labour per se, but the conditions of the average worker were abysmal nonetheless.

But you are looking at wealth as a zero sum game. And it is not. And by doing so, you miss the understanding of it. It is not about who takes the largest share, it is about who creates the largest share. And whenever you focus policies on the taking, rather than the making, then you end up with less in the long run.

Wealth is somewhat of a zero sum game. Slave owners were generally worse of without slaves. They would not have ended up with more in the long run, which is exactly why they wanted slaves and why they fought to keep them. It's the same reason Africa is filled with millionaires who extract the wealth from the population. These people would not be better of with policies which are favourable to the majority of the population. It's the entire reason poverty exists, since those with power have no intention of relinquishing their power.

That's what "supply side economics" does, it takes wealth rather than making wealth. That's what "muh free markets!!!!!!" does, it takes wealth rather than making wealth.

This is somewhat of a contradiction of what you posted earlier. Granted that libertarianism allows for the same kind of extractive policies usually seen in authoritarian regimes, since the problem is the same: those with power have no interest to implement policies which are favourable to the majority of the population.

Nonetheless, free markets (NOT absolute deregulation) are necessary to achieve long-term national economic growth. Like you said earlier, the North is richer because they are free to pursue their own interests. They are free to pursue their own interests because of legislation which ensures people are free to sell their labour, start businesses and request patents without fearing the government will use its power to extract it from them. This is what a free-market is.

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TLDR: Policies which offer the best prospects of long-term national growth and the rise of median incomes are generally at odds with the individual interests of the elites in power. Countries which have managed to implement systems of checks and balances are usually best placed to prevent the elites from abusing their power.

But as the US proves, however, having a good system of political checks and balances isn't bullet proof. The American system is pretty good at preventing Authoritarianism, but then has all kinds of mechanisms in place to ensure the continuation of a Plutocratic system.

The US generates tons of wealth, yet middle incomes in the US haven't changed much since the 80s.

Spoiler :

Evidence the US have generated tons of wealth in the last 60 years

Evidence the huge increases in wealth have barely been felt by middle class and working families

 

[yung.carl.jung]

I really have been enjoying your posts @AntSou , both here and on the Civ Forums, and I hope we'll have you over as a regular here in Off Topic

 

[AntSou]

I really have been enjoying your posts @AntSou , both here and on the Civ Forums, and I hope we'll have you over as a regular here in Off Topic

I try not to! Off-Topic sub-forums are great for accidental procrastination . I have low self-control when it comes to getting into discussions on the internet and I've found the best way is to avoid temptation altogether .

Unfortunately for me this thread popped up in the Civfanatics front page...

Edit: On the topic of Poverty, I enjoyed Why Nations Fail.

 

[Arwon]

Forget the 35,000 people of Liechtenstein.
There are also small countries that do not have high GDP per capita in West Europe, and did not have that for more than a century.
Small countries can have many perks or little perks, A random effect.
Bigger countries have usually less bandwidth in perks.

Take Belgium, just after Napoleon the French speaking South part had the most important perks to get heavy industry developed and the higher GDP per capita there
With now heavy industry less important and trade more important the Flemish North part with the Port of Antwerpen has the better perk and has the higher GDP per capita there.
The two states added together as Belgium score that whole period 1800-2000 well though not excessive.

A good way to look at GDP is to look as well to the regions.
Here a map with GDP in PPS per capita per region of the EU
The "music" is basically along the old Hanseatic Spices Route from the Italian City States, along the Rhine to the Sea. The subroute is from the South of Germany to the gate of East Europe Vienna (near Prague, Bratislava, Budapest) and going to Timisoara-Sibiu-the Black Sea will emerge back over time as well as higher GDP area.. The other old route in South Poland the Silesia route to the East.
And do note, comparing 2004 and 2014, that the 2008 GFC and subsequent Eurocrisis had a differing effect on the regions. You always need to prepare for storms, but that cannot be by staying safe in your harbors. The defenses you build up in the good times must be both static (absorbing the blow) as dynamic (what to do now). How you come out of the storms counts !!! Because storms are inevitable.
And if getting back goes to slow the next storm will hit before you had your defenses up again.

View attachment 557194

https://brilliantmaps.com/regional-eu-gdp/

Now do rural Mississippi

 

[civvver]

The US skews high because we have a ton of billionaires. The wealth is concentrated. Our poor are much worse off than the poor in the EU.

 

[Hrothbern]

Now do rural Mississippi

 

[yung.carl.jung]

The US skews high because we have a ton of billionaires. The wealth is concentrated. Our poor are much worse off than the poor in the EU.

Also, California. Some Comparisons just do not make sense. Yes, you could compare the US to the EU, but you could also compare rural Mississippi to Romania, or California to Sweden, and you'd probably have a more meaningful comparison there.

 

[Marla_Singer]

I have this weird tenderness for the US old South. I guess it started all with the movies "Fried Green Tomatoes" and "Forrest Gump" in the 1990's.


Link to video.

 

[Lexicus]

I would heavily question this. You are already thinking in terms of a single society where some people are racialized. This is not at all the case with outsourcing or traditional slavery. Yes, racism is bad financially if you have a society with massive ethnic plurality like the US. Definitely agree there. Also yes, racialized people(s) would likely contribute much more with the absence of these power structures. But that is only for a very specific society, and that is from a very US-centric pov.

No, that analysis applies to the economy and society of the whole planet.

Similiarly, it would be silly to argue that Europeans did not profit immensely off of colonialism. The ones suffering economically were Africa and Latin America, it was never Europe. Seems crystal clear to me. I also doubt that legitimate economic cooperation without any racism would have nearly been as profitable for European colonialists. Almost nothing is more profitable than an unhinged plutocracy.

Again, though, everyone would be richer if the "developing world" were as rich as the developed world. Any system of inequality means that those on the losing side cannot contribute as much as they would otherwise be able to.

In case you're misinterpreting me, my point is that systems of domination are maintained not because they are economically efficient in any sense, they are maintained because the social inequality is the point. It's a variant of Kalecki's old argument in Political Aspects of Full Employment, which is basically that while a more equal society would likely be more profitable for capitalists, they will prefer to maintain inequality and sacrifice profits in order to maintain their status as the ruling class.

 

[civvver]

Also, California. Some Comparisons just do not make sense. Yes, you could compare the US to the EU, but you could also compare rural Mississippi to Romania, or California to Sweden, and you'd probably have a more meaningful comparison there.

Comparing states to countries as raw gdp is fine, but per capita it's still the same issue, CA is skewed high by silicon valley, LA, san fran. I know in Michigan, once the auto companies fled detroit and flint and saginaw and stuff those communities became very poor. Maybe some EU nations have that too? But it doesn't seem as drastic, maybe in part because they have better social services?

 

[yung.carl.jung]

No, that analysis applies to the economy and society of the whole planet.

In that case I fully agree with you, it seems we were never in disagreement in the first place.

 

[Colon]

I also strongly recommend to read Why Nations Fail. In particular because Acemoglu's thesis doesn't easily fit in the typical narratives of the left and right. Landes has also written an enjoyable totem on the question of why some countries are rich and others poor, called Wealth and Poverty of Nations, but he doesn't really arrive at a coherent theory.

 

[Cutlass]

This is false. Slave labour creates wealth, otherwise there would be no value to it. Those who enslave do so because they can generate wealth and fully extract the wealth created for themselves.

This is wrong. There is not more wealth in the system because of slavery. If anything, there is less. What is true is that different, and fewer, people have the wealth that exists. So it can appear to be large fortunes. But the but the sum total of all of the people in the system have a sum total of equal or less total wealth.

The Soviet Union experienced rapid (if unsustainable) economic growth through the application of 5 year plans which led to the famine of millions.

Which doesn't disagree with anything I said. The USSR used 'extractive growth', which is the term for confiscating the wealth of some for the use by others for whatever their goals were. In the USSR's case, at least for some years, that was to industrialize the economy. Later it was more about having a huge military, and even later, about enriching the party elite.

Industrialisation led to rapid economic growth in Europe long before the mass of the population were actually enjoying the vast amounts of new wealth being generated. It wasn't slave labour per se, but the conditions of the average worker were abysmal nonetheless.

The productivity of the workforce was rising. This comes from adopting new methods, tools, products.

Wealth is somewhat of a zero sum game. Slave owners were generally worse of without slaves. They would not have ended up with more in the long run, which is exactly why they wanted slaves and why they fought to keep them. It's the same reason Africa is filled with millionaires who extract the wealth from the population. These people would not be better of with policies which are favourable to the majority of the population. It's the entire reason poverty exists, since those with power have no intention of relinquishing their power.

No. Economics can be made to function as zero sum. This is why the 3rd World remains the 3rd World, even now. But it never is unless bad government policies cause it to be. The poor would absolutely be better off with better policies. Because there would be more wealth in total to go around.

This is somewhat of a contradiction of what you posted earlier. Granted that libertarianism allows for the same kind of extractive policies usually seen in authoritarian regimes, since the problem is the same: those with power have no interest to implement policies which are favourable to the majority of the population.

Nonetheless, free markets (NOT absolute deregulation) are necessary to achieve long-term national economic growth. Like you said earlier, the North is richer because they are free to pursue their own interests. They are free to pursue their own interests because of legislation which ensures people are free to sell their labour, start businesses and request patents without fearing the government will use its power to extract it from them. This is what a free-market is.

"Free Markets" is a loaded political term. Laisses faire doesn't work. But people should be given latitude to pursue their own interests, so long as they don't violate rules which harm others. "muh Free Markets" is shorthand for people who want to profit through harm to others.

---

TLDR: Policies which offer the best prospects of long-term national growth and the rise of median incomes are generally at odds with the individual interests of the elites in power. Countries which have managed to implement systems of checks and balances are usually best placed to prevent the elites from abusing their power.

But as the US proves, however, having a good system of political checks and balances isn't bullet proof. The American system is pretty good at preventing Authoritarianism, but then has all kinds of mechanisms in place to ensure the continuation of a Plutocratic system.

The US generates tons of wealth, yet middle incomes in the US haven't changed much since the 80s.

Spoiler :

Evidence the US have generated tons of wealth in the last 60 years

Evidence the huge increases in wealth have barely been felt by middle class and working families

 

[AntSou]

This is wrong. There is not more wealth in the system because of slavery. If anything, there is less. What is true is that different, and fewer, people have the wealth that exists. So it can appear to be large fortunes. But the but the sum total of all of the people in the system have a sum total of equal or less total wealth.

The productivity of the workforce was rising. This comes from adopting new methods, tools, products.

So tons of wealth can be generated while paying subsistence wages but not even bothering paying wages somehow results in less or no new wealth being generated. Right.

Sorry, but free labour is still labour and the product of their labour doesn't disappear into thin air.

Besides, there's data demonstrating the tons of wealth that were generated through slave labour. Don't really see the point of denying this.

No. Economics can be made to function as zero sum. This is why the 3rd World remains the 3rd World, even now. But it never is unless bad government policies cause it to be. The poor would absolutely be better off with better policies. Because there would be more wealth in total to go around.

You seem not to understand where the problem lies, which is in politics, not economics.

On the one hand you recognise the poor would be better off with better policies, on the other you fail to recognise it's a zero sum game between those who hold power and those who don't. Those in power aren't idiots. They don't choose bad policies because they are uninformed. They absolutely choose the best policies, only it's the best policies to fulfil their own interests.

If you think better policies would be beneficial to all, you're demonstrably wrong. Isabel dos Santos is one of richest billionaires in Africa because of the extractive policies undertaken while her father was in power, and policies which would have favoured the mass of citizens in her country absolutely would not have favoured her.

That's why it is a zero sum game. Saying "it's a zero sum game only because those in power want it to" isn't a very useful statement. It's just saying the obvious.
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TLDR: There's no magic set of policies which is beneficial to all (that's the whole reason politics even exists in the first place). The policies which may be favourable to most, are, at the very least, not favourable to some, and those "some" just so happen very often to be the ones who have the power to make decisions.