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[flagged] America Is Regressing into a Developing Nation for Most People (ineteconomics.org)
141 points by monsieurpng 24 days ago | hide | past | web | favorite | 64 comments



> The FTE citizens rarely visit the country where the other 80 percent of Americans live: the low-wage sector.

This assertion is completely unsupported, and as it turns out wrong: https://www.pewresearch.org/fact-tank/2017/06/05/through-an-....

> Overall, regardless of how middle class fortunes are analyzed, the material standard of living in the U.S. is estimated to be better than in most Western European countries examined.

The median disposable household income in the US is $60,000, versus $44,000 in France. That’s the median—it’s not skewed up by the very high incomes at the top. (Even that requires some adjustment. The median age in the US is 38, versus say 47 for Germany. The median German is at the top of their lifetime compensation curve, the median American is not there yet.)

At least in Maryland, California, etc., at that income level, a family qualifies for ACA subsidies that limit health insurance premiums to 8-10% of income, comparable to the health insurance payroll taxes in many european countries.

There is an attempt to popularize the idea that in the US it’s the top breaking away from everyone else, and that doesn’t happen in Europe. If you dig into the data, where the US diverges the most noticeably is actually the bottom 10-20%. And that’s a direct result of the middle 70%. The pay far lower taxes than in Europe, which funds a much less generous welfare state.


>The median disposable household income in the US is $60,000, versus $44,000 in France.

That’s an apples-to-oranges comparison, since the French household receives many essential services - such as comprehensive health care and low-cost higher education - that the US household does not.

I wonder if anyone has done a study that attempts to quantify and compare benefits across countries, or whether such comparisons are even possible.


I'm actually surprised the difference is that small. I'd guess the increased retirement savings, unemployment insurance, disability insurance, college savings, daycare costs, and so on the US household would have to purchase to match the effective benefits to a French household would be way more expensive than $16,000/yr. Like, double that.


You know that child care isn’t free in France, the health system has significant co-insurance payments, and the social security system isn’t that generous? You have to dig into the actual details of these programs, not Americans idealized view of them: https://www.forbes.com/sites/pascalemmanuelgobry/2013/04/17/....


Still ways ahead of the US in all of those areas (European here, so not an American with an "idealized view of them").


Those services are definitely better in France, but how much are they worth to the median person, in dollar terms?

1. The median person doesn't graduate college in either country. So how much is free college worth to them? Even if you do go to college, the average tuition at a public college in the U.S. is about $40,000 over four years. Would you trade 33% higher income over your entire career for a $40,000 one-time savings?

2. For households in the middle of the income band in the U.S., they spend on average 7.9% of their income on out-of-pocket healthcare expenditures. For the median U.S. household income of about $60,000, that's less than $5,000 annually.

3. Childcare in France isn't free, although it's subsidized. For a median household, it's about 15% of average income in France versus 30% in the U.S. A difference of about $11,000/year at the median, but something you might pay for only 6-8 years over a 35-year working life.

4. Transit is better in France. But average commutes are 50% longer than in the U.S. https://www.oecd.org/els/family/LMF2_6_Time_spent_travelling.... Is the cost-savings from better public transit worth the almost half-hour per day extra spent commuting?

5. The French have state-subsidized pensions, but Americans have Social Security and 401ks. Median income for retirement-aged people in France is about 21,600 euro ($24,600), much higher than in Germany, the U.K., Italy, or Spain: http://www.seniorobservatory.com/in-france-the-median-annual.... The median income for those 65+ in the U.S. is $23,400: https://acl.gov/sites/default/files/Aging%20and%20Disability....

People assume that Americans are just irrational that they won't vote for these things that Europe has. But the median U.S. voter makes somewhere north of $70,000 household income, spends less than $5,000 of that on out-of-pocket medical expenses, lives in a suburb with less than a 30-minute commute, has 3 TVs and 2-3 cars, lives in a 2,000+ square foot house, etc. For those people, the French way of life would yield perhaps more security, but a significant pay cut, not much lower out-of-pocket health expenses, one less TV, one less car, a 35% smaller house, etc.


> The median person doesn't graduate college in either country

That sounds intentionally oversimplified. Sure, the median is often better than the arithmetic mean to summarize a population, but in this case, you're misapplying the median to falsely imply that graduation rate is irrelevant as long as it's less than 50% of the population. The reality is that tuition is a barrier to enrollment and completion, so eliminating it with public funding makes sense if you care about investing in your country's future. Besides, even if you yourself would never attend college and would never dream of encouraging anyone in your family to go, you still indirectly benefit when your studious compatriots have ample opportunity to study, graduate, and find work in the country.

> 4. Transit is better in France. But average commutes are 50% longer than in the U.S.

Did you misread the source you linked to? It shows a bar plot of "average" (probably mean) commute times. France's average commute looks like maybe 3-5% longer than the USA, and this difference disappears when you blur your eyes and compare men and women.

For a more meaningful glimpse into the reality of these countries' commutes, check out this worldwide ranking of the 10 best and 10 worst cities by commute experience [1]. France takes 4 out of the 10 best spots (Nice, Toulouse, Lyon, Strasbourg). Only one US city landed in the worst 10 (Miami), but the reality is that on average, commuting in the US sucks compared to France. I'd rather read on a train than die a little inside a car.

You're right: transit is better in France.

[1] https://www.expertmarket.co.uk/focus/best-and-worst-cities-f...


> Sure, the median is often better than the arithmetic mean to summarize a population, but in this case, you're misapplying the median to falsely imply that graduation rate is irrelevant as long as it's less than 50% of the population.

We're doing a snap-shot comparison of the life of someone around the middle of the income demographic. The median person does not complete college in either the U.S. or France. (Even among those 25-34, college attainment rates are less than 40% in both countries.) In reality, most people don't really need to go to college, or aren't cut out for tertiary education.

So it's really important to ask how much college is worth to someone in the middle when, statistically, that person won't be going to college, and may not be qualified to go to college.

That is especially important when you're talking about asking people in the middle to pay for something that disproportionately benefits people in the top half. France's tax system is quite regressive: https://www.oecd.org/tax/revenue-statistics-france.pdf. While the U.S. collects almost half its tax revenue from income and corporate taxes (which are disproportionately paid by the upper classes), France collects just 23% of revenue from those sources. France relies much more heavily on payroll and sales taxes, which are disproportionately paid for by the middle class. So, statistically, someone right at the median is paying for this free college system, but is unlikely to actually take advantage of it.

> The reality is that tuition is a barrier to enrollment and completion, so eliminating it with public funding makes sense if you care about investing in your country's future.

Graduation rate is only relevant to the extent that it increases your country's average income. If you can, like Germany, maintain a high average income with a relatively low graduation rate, that's better than having to send more people to college (which imposes a large opportunity cost) to achieve the same average income. Regardless, college degree attainment rates in the U.S. have been much higher than in France for decades. France only catches up in the youngest demographic (29-34): https://www.in.gov/che/files/DMatthews.pdf. Your median voter is still in a demographic (35-44), where the college attainment rate in the U.S. is 39% versus just 23% in France.

> For a more meaningful glimpse into the reality of these countries' commutes, check out this worldwide ranking of the 10 best and 10 worst cities by commute experience [1]. France takes 4 out of the 10 best spots (Nice, Toulouse, Lyon, Strasbourg).

You're reading it wrong. The first chart is data from 1999 to 2010. I'm referencing the table after that, which focuses on 2008-2010. For all commuters, France has an average commute of 73 minutes, versus 48 minutes for the U.S.

> For a more meaningful glimpse into the reality of these countries' commutes, check out this worldwide ranking of the 10 best and 10 worst cities by commute experience [1]. France takes 4 out of the 10 best spots (Nice, Toulouse, Lyon, Strasbourg).

The OECD data set is a much better basis of comparison. Comparing commutes in big cities is not particularly relevant in the U.S., because most Americans do not live in a big city. Commute times in New York or Washington, D.C. are 70+ minutes round-trip, as similar to the average in France: https://www.census.gov/content/dam/Census/library/visualizat... (note the data is one-way, so double it to compare to the OECD chart above). Although, Paris is even worse at 90+ minutes round-trip: https://www.thelocal.fr/20160418/parisians-spend-23-days-a-y.... But even by the time you get to Atlanta you're significantly better than the French average, and in Iowa or North Dakota you're looking at a commute that's half as long as the average in France.

> I'd rather read on a train than die a little inside a car.

Have you been in a French metro during commuting times? It's not like you can really sit down and read. You're standing up the whole time scrunched up against other people.


The figures don’t reflect that, however. “Disposable income” in the study is just after tax income. Who knows what the comparison is net of the costs that you mentioned.


Right. I'm just thinking, if someone handed me $16,000/yr and was like "use only this money buy all your benefits, retirement, kids' college tuition, childcare, et c. up to the same level as a French person, for your household" I'd be like "LOLWUT? There ain't no way." Heh, not to mention, what, 7 weeks time off plus 10 holidays? Hahahaha, $16,000's only a start. That the figures are that close makes French people look way better off. And theirs is "automatic"—no time wasted shopping around trying not to get screwed (and probably failing).


Yeah, seriously. “All of that for only $16k/yr - sign me up!”


A median US household receives employer-sponsored healthcare. Also, the median French person pays taxes to support low cost higher education, but the median French person does not receive a college degree. It’s actually a regressive transfer to the upper middle class. (Especially because the French tax system relies more on regressive taxes, like VAT.)


A median US household receives employer subsidized health care. In many cases, those plans are high-deductible and thus inadequate, because it could still mean having personal expenses to the tune of $7000-8000 a year of post-tax dollars.

This is also being done at the expense of those who are not eligible for subsidies on the Health Care marketplace, but do not receive employer subsidized health care.


I have several "median US household" friends who nearly got homeless after a health incident which would be irrelevant to treat in France (one got hit by a bullet by a gang while mowing his lawn in some BS initiation thing and had to spent a month or so in the hospital, the other got a mild treatable cancer), and that's with 2 people working relatively cushy jobs...


The median person never runs into a life- or employment-threatening health issue during their working life. If you happen to get unlucky, the French system is no doubt better. But for everyone else, they have more money in their pocket.

That's definitely a trade-off. How much do you value the security versus the increased consumption possible with more money. But it is a trade-off. It's not some irrational choice that Americans made that doesn't yield a tangible upside for them.


>The median person never runs into a life- or employment-threatening health issue during their working life.

The median person might not, but for "employment-threatening health issue" a quite big percentage of people get into them, and for life threatening ones a large enough percentage to matter (I'd say 10% or more easily, due to cancer and heart attacks alone).

https://www.commonwealthfund.org/publications/newsletter-art...

And of course the key words here are "during their working life". If we imagine that until 60-65 or so, this has been extended by people unable to get pension in a reasonable age or with savings eaten by health and such issues and forced to come back into working life.


There is an attempt to popularize the idea that in the US it’s the top breaking away from everyone else, and that doesn’t happen in Europe.

The idea that the top is breaking away is being popularized because it is irrefutably true, as the income growth of the top percentiles is accelerating at the expense of the lower percentiles (from data available from a wide range of sources, but probably best expressed in this chart: https://www.nytimes.com/interactive/2017/08/07/opinion/leonh...). But I agree that Europe is not immune. However, unlike the US, Europe provides essential services like transportation and healthcare to its citizens, so that even someone with no income enjoys better healthcare and transportation than many middle-class Americans.


We're not in disagreement. The premise of the article that 80% of Americans live in squalor that isn't present in Europe is designed to convince middle class Americans that they're worse off than middle class people in Europe. Which I don't think is true, or at least, it's not obviously true.

It's hard to contest, however, that the lower 10-20% of people are better off in Europe.


"Squalor" is a bit of a stretch; the article seemed more focused on the existence of two economies in the US, which in my experience is not far off the mark. And the use of after tax income in the article you cite is disingenuous: of course Europeans pay higher taxes, they also get much better services across the board. Your article reluctantly admits this in a single sentence, buried near the end:

"But to the extent that governments in Western Europe are more likely to provide services to households that may not be captured in household income, such as the National Health Service in the UK, it is possible that differences in the quality of life between the U.S. and Western Europe are narrower."

When you figure in the massive student loan debt and catastrophic impact of medical bills on many middle class families, this can only be regarded as a gross understatement.


> The median disposable household income in the US is $60,000, versus $44,000 in France. That’s the median—it’s not skewed up by the very high incomes at the top.

You can't compare raw numbers. What's the cost of life? Cost of transport? Cost of healthcare? Job security? Quantity and quality of public services?


The figures are OECD figures, which are adjusted for cost of living. Stuff like healthcare and public services are a difference, but at the median, Americans have employer-paid healthcare (which covers 80% of premiums on average). And if you’re in an ACA state, your premiums are capped at 10% of your income.


You may be interested in Jones and Klenow (AER 2016) http://klenow.com/Jones_Klenow.pdf, which incorporate consumption, inequality, leisure, and life expectancy to correct for these factors.


> At least in Maryland, California, etc., at that income level, a family qualifies for ACA subsidies that limit health insurance premiums to 8-10% of income, comparable to the health insurance payroll taxes in many european countries.

Are California's ACA plans any good? Ours are all still ruinously expensive if you happen to actually get sick and are poor enough to qualify for any help with the premium. Even the more expensive "good" ones suck.


I think the problem is as you stated comparing middle class in a relative way. If you apply US income standards to other countries, the portion of the other countries population that's living in middle drops significantly.

> When the Western European countries the Center analyzed are viewed through the lens of middle-class incomes in the U.S., the share of adults who are middle class decreases in most of them. The greatest decline is in Italy, where the middle-class share in 2010 falls from 67% under that country’s national income standard to 44% under the U.S. income standard. In other words, 44% of Italians had the same standard of living as 59% of Americans who were in the middle class in 2010.

The research is a bit old, but I couldn't find a more recent source. I imagine the relationship hasn't changed much as US has experienced significantly growth since 2010 relative to Europe.

[0] https://www.pewresearch.org/fact-tank/2017/06/05/through-an-...


Yes, the median American family income is beaucoup high - problem is, actual people turn out to not be continuous intervals in the $cash dollars$ domain. There actually are a growing amount of people in this country living under increasingly shittier conditions. If you do not believe the words you are reading, then take a few weeks vacation for a road trip through Kentucky, Virginia, Pennsylvania, etc, and go through the random towns and talk to the rural population for yourself.

addendum - Our country is wildly diverse, probably moreso than even most Americans realize.


Try places outside of Appalachia, too.


Are you taking into account PPP and health insurance, cost of education childcare, pensions and number of work hours / vacation days / benefits in your comparison? Also I would say the income gap and dual economy is a global trend also happening in France. For example automation plays a role and that’s not specific to US.


> The median disposable household income in the US is $60,000, versus $44,000 in France.

I don’t think median disposable incomes are very comparable across countries because of what people chose or have to use this money for.


The French person with a $44k/year salary has probably received free education, healthcare, childcare, pensions paid by employer, and other benefits over decades which together have more than made up the difference.


More importantly, disposable income is just income after tax and thus not a very useful reference: a difference in tax rates and services (e.g. cost of rent / mortage, healthcare, transportation, …) will skew this to very limited usefulness.

Either gross or discretionary income is a somewhat more useful point of comparison, disposable seems the least informative / most misleading comparison possible.


If it's disposable income, it doesn't matter if you put it in a pile and set it on fire, or choose to do home renovations. The fact that it's disposable means that it's left over after all of your necessities are taken care of.


No, the disposable income is just income after taxes. You're thinking discretionary income.

Which would probably a better point of comparison as disposable income is greatly skewed by how necessities are taken care of (aka how much is handled by the state — and thus through taxes — versus left to the individual).


The definition of disposable income here is merely income net of taxes.


Does it? I wonder if it accounts for how much more middle class Americans have to spend on their healthcare infrastructure than their french counterparts.


Thank you for pointing this out. Another thing that is implied by this "doom and gloom" article is that there is no way out of poverty for those 80%. This is categorically incorrect.

I grew up in poverty. A family with 9 kids, a widow, an underemployed older step-father, living on SSI and survivor benefits. We had to drink powdered milk because our welfare couldn't afford real milk. We didn't have any money for school or college. We didn't have any medical benefits or healthcare, so when we got sick or needed stitches, our mom would have to use butterfly bandages and hope we got better.

I worked hard, had a job since I was 12 delivering newspapers, and somehow saved enough to go to school without going into massive student debt. I moved out of flyover country to the NYC area. Today, I'm an accomplished software engineer with a wife and 2 kids, making $500K+ and saving over 50% of my income because I'm not going to make my kids have to live in the poverty I grew up in.

Very few other places in the world allow this upward mobility, in a single generation, from poverty, to upper middle class. All you have to do is work hard and educate yourself. You can learn how to be a software engineer from free material online, and even if you don't have enough money to buy a computer to do so, you can wash dishes or deliver newspapers like I did to save up enough money to do so.

People do it all the time. I'm living proof. The wealth gap is troubling, but to act as if there is no upward mobility is disingenuous.


>This assertion is completely unsupported, and as it turns out wrong

The link has nothing to do with proving the claim wrong. Not to mention the research itself is totally bogus, as it hints at at the end:

"Overall, regardless of how middle class fortunes are analyzed, the material standard of living in the U.S. is estimated to be better than in most Western European countries examined. But to the extent that governments in Western Europe are more likely to provide services to households that may not be captured in household income, such as the National Health Service in the UK, it is possible that differences in the quality of life between the U.S. and Western Europe are narrower."

Not only they are narrower, but the low wage life in the US is nothing like much lower wage life in Europe. I've been to both European countries (where I live) and poor US states (e.g. Alabama, Mississippi, South Dakota, and so on) and the former is more like third world conditions...


Having spent my early youth in a "developing nation", this is laughable.


Indeed, I grew up in a 'developing nation' that was quite livable. Not starving children in the streets. Even then, no where near the US standard of living. Small island, no running water, ate fish caught from the sea, electricity for 2 hours on Friday, one or two small trucks, transportation was on handmade fishing boats built from the palm trees.

I only visited the US a few times in my childhood, and it stood out like a fairytale land in my dreams. Today, the standard of living in the US is even more advanced than when I was a child 30 years ago. The US is still a mythic land of legend for most of the world today.


As someone living in a third world country, I can't help chuckling every time I see people discussing "poverty in America".


Yeah, I tend to agree

Developing nations don't have a long queue of people trying to get in unless a really hard issue comes along (think Venezuela and Syria level problems)


The title may be a bit overstated, but I think the separation between low income working class people and those in more high paying professional jobs is pretty real. I grew up in a rural area, paid for college by serving in the military, then hustled my way into tech (like lots of others). Very few of my friends from high school or the military have had similar luck getting a stable job. When I talk to my current tech coworkers about anything that was very normal as a child (hunting, owning guns, working 20-30hrs a week after school, etc) - its like we are from different planets.

This was on PBS a while back, I think it gets at some of the differences pretty well: https://www.pbs.org/newshour/economy/do-you-live-in-a-bubble...


Similar background (minus the military), and I agree the differences are staggering, but the nice thing about the US is that a poor kid actually can do this, rise from poverty to upper-middle class in a single generation.


This has sure been my experience. I graduated with a CS degree from a typical state school in May, with a couple internships under my belt, and have only had job offers so far have been less than half what is reported to be the median pay. Most places don't respond at all even to decline, I'm given no indication many times that they read my resume / cover letter.

Is this what a 'industry that can't fill its positions' looks like? Is this what unemployment being 'too low!' looks like? All these indicators seem fraudulent, and the facts on the ground seem more akin to what this author is postulating. It is hard to imagine what the economy used to be like at its peak, where one could allegedly find a reasonable job at the median pay-rate for the industry, when you are pretty much qualified, without applying to several hundred places.


There are several on-ramps to higher paying positions in the industry:

Location - the tier 1 or 2 metro areas will have more jobs available and they will pay much more than areas with lower demand.

Skills - either really hot (today, JS/fullstack I suppose) or really niche (know COBOL?) skills will boost your chances at landing a good high paying job early in your career.

Credentials - anything with gatekeeping such as a security clearance or tons of required certs will tend to pay well.

There are probably others. Networking is a great way to get past HR goalkeeping and connect with people who are one or two degrees away from a hiring manager. Go to meetups!


The SW market is saturated for entry-level positions and geography can change things drastically. I don't doubt your experience because I had a similar one that I managed to progress past. But the US is far from developing nation just based on anecdata from someone having a hard time finding a job in a field.


I agree there's a phenomenon happening here and elsewhere where being "normal" doesn't cut it anymore, meaning if you're just an average person of average intelligence you have it harder now than someone in your shoes 40 years ago to live a good life. OTOH, if you're extraordinary in some way, and smart enough to know how to capitalize on it, you're in a much better position now than someone who was equally extraordinary a few decades ago.



To me, the most important characteristic of a developing nation is widespread corruption down to the lowest levels. I don't mean just politicians being bought by lobbyists, that happens everywhere, but when you have to bribe every public official to get anything done, or have to bribe doctors in hospitals before they even look at you. Is this the case for most people in America? I didn't have that impression when I visited.


Title should say 2017


Title should also say "Citizens/inhabitants of the United States of America". America is a continent (also Africa, Asia, Europe, Oceania - listed in alphabetical order)(not counting the N/S Poles). Americans are the people who live in said continent. I also think we gave the website the HN-kiss-of-death :)


No reasonable person interprets "America" to mean the "continent of America". In fact, there is no continent called "America". There is only "North America" and "South America", which are 2 distinctly different continents. And within North America, which contains the US, Canada and Mexico, neither people in Canada, nor Mexico consider themselves to be "American" or within "America".


> In fact there is no continent called "America". There is only "North America" and "South America", which are 2 distinctly different continents.

...in English.


Fine. But that's the language of this article and this conversation thread. No reasonable person would assume some other language is relevant in this conversation.


HN has an international audience and the subtleties of naming the country vs the continent can be easy to miss.


It's true that American infrastructure is terrible. I think the root cause is political incompetence, especially at the state and city levels. Often the money is there but gets squandered by people who cannot plan or are driven by personal vendettas that don't correlate with the needs of the constituency.


The site seems to be struggling so I put a mirror on IPFS https://ipfs.io/ipfs/Qmbw1uWRag96q189CESdoz1DGU3QLxovQmXFv7M...


I've been talking about the decline of the interior for a decade or more, and listening to politicians and academics on both the left and the right (who mostly live on the coasts) deny it.

If nothing is done about this we are going to get someone way worse than Trump. Whether it's a right or left totalitarian probably depends on which side can field a compelling demagogue first. Ultimately the politics won't matter much as long as pitchforks are handed out.


> The primary goal of the richest members of the high-income sector is to lower taxes.

I would add a qualifier here, lower taxes for themselves. The Wall Street had no problem taking handouts from big government in 2008 made possible by taxes.


Those weren't from taxes, that money was lent from the central bank, to the central bank, to be further lent to Federal Reserve member banks, and some foreign banks as well.


Not one graph in an article about an economic issue which the author claims affects most people? Hrmm.


I only got 4-5 paragraphs in, but this is pointedly a story, not a piece of documentation.


My bad, I thought it was journalism not opinion.


No problem :)

There are multiple ways to get a point across. Some people respond well to stories. Some people respond better to data.

Some people are helpful. Some people are condescending.

It's a wonderfully diverse world.


> America’s underlying racism has a continuing distorting impact. A majority of the low-wage sector is white, with blacks and Latinos making up the other part, but politicians learned to talk as if the low-wage sector is mostly black because it allowed them to appeal to racial prejudice, which is useful in maintaining support for the structure of the dual economy — and hurting everyone in the low-wage sector. Temin notes that “the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.”

Contrary to what this paragraph implies, this is a misperception that both parties exploit. All too often does the left claim that white privilege lets one go through life on easy-mode [1].

[1] https://www.politifact.com/truth-o-meter/statements/2016/mar...




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