
5 Myths About Sick Old Europe - danw
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/05/AR2007100501041.html?sub=AR
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tx
The article is right and wrong at the same time, mostly because the topic is
complex and there is no way to properly lay it out on just two pages. They did
not mention a few crucial differences between two economies such as military
spending for example.

For those interested in the subject I highly recommend the following book:
"United States of Europe". That book tries to _carefully_ compare US and EU as
two major competing nations/economies.

~~~
davidw
> mostly because the topic is complex and there is no way to properly lay it
> out on just two pages

 _Way_ more complex. You're absolutely right. I think I could write a book
about it...

> United States of Europe

I didn't like it very much. It's kind of superficial, and I think he actually
gets a lot of things wrong.

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nextmoveone
I lived in Germany for 7 months last year. Everything looks good to me, they
have a very strong consumer market as opposed to what I've seen here in the
States.

~~~
kingkongrevenge
As ridiculous as things have got here with the welfare state and the size of
government, the problem is much worse in Europe. There is just no way they can
continue to afford the government payrolls and social benefits they have.

The US has a chance of navigating out of the failing socialist systems. The
cultural heritage of individual independence and government mistrust means
it's possible. But Europeans exhibit nothing but obstinate rigidity, even with
a more serious problem. It's a ticking fiscal time bomb.

~~~
ardit33
Europe is not just one thing. There are many countries in europe that have
very different labour laws and regulations.

South\Eastern Europe is now the place with the most growth, like an "up and
comming" neighborhood, and you can get away with a lot more there.

Back home, most of my friends that have "starter" jobs, are actually doing it
under the rug. Go to work, regurarly, get paid, but they don't officially
result in the payroll of the company (to avoid all the obligations that come
with it).

After a couple of years of work, once you gained some experience you move
there, or somewhere else in a more stable status.

I am assuming a startup will probably be the same. First years it will all be
under the rug. Remember, laws are made to be broken to a certain extent, but
they also prevent large companies from treating employees just as a disposable
thing, with no rights, no vacation, no health care, no paid maternity leave as
you have in the US.

Sure some large companies do provide them, but some don't (ala Walmart), and
this nation leaves it's citizen under the mercy of capitalism (which just
wants you healthy enough to perform your duties).

Remember, Europeans work to live, Americans live to work.

~~~
anamax
> large companies from treating employees just as a disposable thing, with no
> rights, no vacation, no health care, no paid maternity leave as you have in
> the US.

My US company has those things. If it didn't, I'd find another company. Having
lots of companies makes this feasible.

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cmars232
What about taxes in Europe compared to the US?

~~~
bjelkeman
I have lived in California & Massachusetts as well as the UK and Sweden.
Sweden has the highest taxes in the world according to the Economist. With
that comes cheap healthcare for all. My experience is that it is better than
both UK and the US healthcare I have been exposed to. Yet the US pays
$6100/capita/year for healthcare compared to Swedens $2800/capita/year. And in
the US not everyone is covered.

In addition to that we have free schooling, and Swedish schools are not bad,
not as good as the top US ivy league, but better than the average US state
university. We have very low CO2 emissions, partially due to geography, but
also due to extensive investments by local government on biofuel district
heating networks. We also have good public transport. Sweden is about the same
size as California, but has a superior public transport infrastructure,
despite only having 9 million people (compared to 34 million in CA). Nearly
all of the Swedish transport system was publicly funded.

On top of this Sweden is consistently ranked among the top countries for
standard of living. Despite all the taxes. Now, just like others have said,
there is a big difference between different countries in Europe. Bigger than
most who have never visited imagine. But high taxes does not automatically
mean crappy lifestyle.

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curi
They are proud of a positive trade balance for the EU (of 3 billion, which
seems tiny for a 16 trillion GDP). That's silly:

<http://en.wikipedia.org/wiki/Mercantilism>

 _David Hume famously noted the impossibility of the mercantilists' goal of a
constant positive balance of trade. As bullion flowed into one country, the
supply would increase and the value of bullion in that state would steadily
decline relative to other goods. Conversely, in the state exporting bullion,
its value would slowly rise. Eventually it would no longer be cost-effective
to export goods from the high-price country to the low-price country, and the
balance of trade would reverse itself. Mercantilists fundamentally
misunderstood this, long arguing that an increase in the money supply simply
meant that everyone gets richer.[20]_

Countries with trade surplus are _giving loans_ of wealth and capital to other
people who are better at actually using stuff. In return for their _giving up
their stuff_ they get money, which has only one use: getting some stuff back
later. Whereas countries with trade deficits are like new companies that get a
loan and go do something useful with it -- they are the ones who are best at
using stuff.

~~~
kingkongrevenge
> giving up their stuff they get money, which has only one use: getting some
> stuff back later

It's not just for "getting stuff back." It's capital. It can be used to buy up
or create dividend producing assets. Nations that accumulate capital can
invest it, and through the magic of compounding interest and capital
investment they can race ahead of competitors.

> countries with trade deficits are like new companies that get a loan and go
> do something useful with it

This way of thinking is so at odds with historical reality I need to know
where you encountered it. Every great and ascendant nation has run consistent
trade surpluses. Nations with trade deficits are either banana republics or
headed that way.

The US trade deficit is not from imported capital goods. The US imports
consumer products.

The US now runs a trade deficit with every region of the world. The US has a
net trade imbalance in every category of industrial/scientific machinery and
high-tech products.

Sorry, there is no way to spin trade deficits as positive.

~~~
binarybits
<http://en.wikipedia.org/wiki/Trade_surplus>

"Milton Friedman, the Nobel Prize-winning economist and father of Monetarism,
argued that many of the fears of trade deficits are unfair criticisms in an
attempt to push macroeconomic policies favorable to exporting industries. He
stated that these deficits are not harmful to the country as the currency
always comes back to the country of origin in some form or another (country A
sells to country B, country B sells to country C who buys from country A, but
the trade deficit only includes A and B). In fact, in his view, the "worst
case scenario" of the currency never returning to the country of origin was
actually the best possible outcome: the country actually purchased its goods
by exchanging them for pieces of cheaply-made paper. As Friedman put it, this
would be the same result as if the exporting country burned the dollars it
earned, never returning it to market circulation."

It's worth keeping in mind that trade is not a race or competition. It doesn't
hurt us in any way if Europe accumulates wealth quickly.

I think the idea that trade deficits are bad and trade surpluses are good is
largely an artifact of the way we talk about it. It wouldn't sound as scary if
Lou Dobbs talked about "America's looming capital account surplus," even
though a capital account surplus is logically equivalent to a trade deficit.
Right now, foreigners are buying up a small share of our capital goods and
sending us consumer goods in exchange. At some point in the future, those same
foreigners will sell the capital goods and use them to purchase consumer goods
from us. In an of itself, neither situation is something to be concerned
about.

~~~
kingkongrevenge
> It's worth keeping in mind that trade is not a race or competition. It
> doesn't hurt us in any way if Europe accumulates wealth quickly.

This isn't quite true. The nations that accumulate capital tend to buy up the
high return assets of financially weaker nations. Now that the dollar is
tanking, due to the deficits and monetary irresponsibility, you see foreigners
snapping up American companies and properties. The dividends from those things
are now less likely to be invested here.

~~~
stuki
Foreigners, who almost by definition have less local knowledge than locals
(duh), are more likely to be stuck overpaying for less than premium assets,
rather than getting the prime ones. The most talked about European investments
in the US as of late seems to have been in Chrysler and subprime mortgages.
Hardly stellar examples of high return assets.

Hollywood has been riding high on this principle for decades, sucking in
foreign money like a turbocharged vacuum cleaner on crack, and promptly
distributing it to themselves, their lawyers, surgeons, trainers and
decorators, as salaries and bonuses. All the while, the local insiders/studios
keep the choicest releases to themselves. They only need financing 'help' for
the risky, read subprime, stuff.

What's really sad, for European savers at least, is that despite being fully
aware of this, their homegrown movie industries continue to be an even
shittier bet.

