Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The US economy and the EU were the same size in 2008, the US is now nearly 2X

twitter.com

Post reply on HN
Print view View original

481–490 of 767 posts

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#481

Post by Gareth321 »

mrb wrote: post #122
dogma1138 wrote: post #101

Earlier quoted context omitted.

No one uses PPP for measuring growth, GDP PPP can increase whilst your economy contracts. PPP isn’t a good measure for population’s wealth or quality of life especially for developed economies either. The economy of the US is still twice that of the EU and its global purchasing power has also pretty much doubled.

" GDP PPP can increase whilst your economy contracts. " Still, if PPP GDP increases, with all else being equal (eg. stable population) it would imply the standard of living is increasing. That is why PPP GDP captures a more accurate measure of the real world. Said another way, what truly matters isn't "GDP growth", but changes in purchasing power/quality of life.

> Still, if PPP GDP increases, with all else being equal (eg. stable population) it would imply the standard of living is increasing.

With some important caveats:

1. Balance of trade. The goods and services in the poorer nation are worth less, comparatively. Any trade with the richer nation will lead to a wider balance of trade deficit. This causes all kinds of structural economic and budget problems in the long term.

2. Foreign purchasing power. Customers have to substitute goods and services away from the richer nation to poorer nations. If one’s preferred television, for example, is produced in the richer nation, these will become more expensive, and will force consumers to purchase other options. This is especially acute in cases where a nation has a de facto monopoly on certain industries.

In reality, both nominal and PPP GDP figures are important to monitor for different reasons.

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#482

Post by [deleted] »

dogma1138 wrote: post #240
HWR_14 wrote: post #226

Earlier quoted context omitted.

Isn't PPP per capita a better measure of quality of life than nominal GDP per capita? I care about what I can buy. Obviously, nominal GDP per capita matters for international vacations.

No, GDP PPP doesn’t measure what you can buy it measure how much things cost. It doesn’t know how much money you have, it doesn’t measure the purchasing power of individuals. It also is based on a basket of 3000 fungible goods and services without accounting for value of quality or outcomes; as explained already in this thread. It doesn’t take into account median income, income and wealth inequality, unemployment rat…

[deleted]

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#483

Post by ffhhttt »

nostrademons wrote: post #465
landemva wrote: post #169

Earlier quoted context omitted.

>> it would imply the standard of living is increasing. In USA, GDP includes the explosion of numbers of hospital admin staffers, energy prices doubled, and production of munitions which are given to Europe. That GDP does not increase my quality of life.

That's exactly what the PPP adjustment is supposed to capture. If a dollar buys half as much energy in the U.S. as the USD/EUR conversion does in Europe, that adjusts the EU PPP for the energy sector up by 2x. (Not exactly a great example, Europe has its own energy crisis.) I'm surprised at the number of people who are confidently arguing against mrb - they're exactly correct here. The point of PPP adjustments is to…

> status as reserve currency is exactly why the US GDP has been overtaking the EU

USD was the reserve currency in the 90s and mid 2000s. Back then the Euro was very strong and some large European countries were close to overtaking US in GDP per capita.

The last 10 years have more or less been a lost decade in most of Western Europe because (amongst other things) it almost entirely missed out on the tech boom.

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#484

Post by paganel »

dogma1138 wrote: post #101
mrb wrote: post #96

Note this chart shows nominal dollars, not PPP-adjusted. The EU has certainly kept up with the US when looking at PPP GDP from 2008 to 2022: US grew from $14.8T to $25.5T EU grew from $14.3T to $24.3T What that means is that the prices of goods are inflated in the US compared to similar goods in the EU. That's all. Want something interesting? Look at China who grew from $10.0T to $30.3T over the same period (!) Sourc…

No one uses PPP for measuring growth, GDP PPP can increase whilst your economy contracts. PPP isn’t a good measure for population’s wealth or quality of life especially for developed economies either. The economy of the US is still twice that of the EU and its global purchasing power has also pretty much doubled.

> No one uses PPP for measuring growth,

I've just started to read Graham Allison's Graham Allison (supposedly based on this article [1]) and the exact opposite remark is made at the beginning of that book, i.e. that one should use PPP numbers instead of nominal GDP numbers when looking at the quality of life.

[1] https://www.theatlantic.com/international/archive/2015/09/un...

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#485

Post by paganel »

codedokode wrote: post #231
mrb wrote: post #122

Earlier quoted context omitted.

" GDP PPP can increase whilst your economy contracts. " Still, if PPP GDP increases, with all else being equal (eg. stable population) it would imply the standard of living is increasing. That is why PPP GDP captures a more accurate measure of the real world. Said another way, what truly matters isn't "GDP growth", but changes in purchasing power/quality of life.

PPP is a misleading figure. If your PPP-adjusted income is 2 times higher than someone's else does it mean that you can buy 2 times more MacBooks or trips to Korea?

Who needs MacBooks or trips to Korea if housing and groceries are (relatively) more affordable in places with higher PPP (vs. comparatively lower GDP)? I cannot live in a laptop.

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#486

Post by imtringued »

Tade0 wrote: post #461

The title is misleading. The Eurozone does not include the entire EU - there are quite a few countries with their own currencies(notably Czechia, Poland, Romania), which coincidentally saw some of the highest growths in the region during the last two decades. Meanwhile some Eurozone countries like Greece, Italy and Spain actually saw a decline. Hard not to draw such conclusions when your set includes all the troubled…

>which coincidentally saw some of the highest growths in the region during the last two decades.

That isn't some coincidence. The biggest beneficiary of the Eurozone relies on the suffering of its less successful members and this is ultimately reflected by the fact that poorer countries in the Eurozone don't catch up with the rest of the EU and in fact the opposite happens. Meanwhile for EU countries outside the Eurozone it is smooth sailing because they don't have to suffer for the benefit of a country that is role playing as the hero of the Eurozone.

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#487

Post by imtringued »

e4e5 wrote: post #232
rafaelero wrote: post #110

Earlier quoted context omitted.

US wages have not followed US productivity for the last 50 years as well.

I don't understand this argument. If everyone has become more productive, why would wages rise? Wouldn't we see that as inflation then? I think the rise of productivity is more seen in the growth of the GDP

If the price level is stable and productivity rises, then you would expect incomes to grow to reflect the increase in productivity.

If incomes stay the same, you would expect the price level to fall (aka deflation).

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#488

Post by SideburnsOfDoom »

Alupis wrote: post #70
mepian wrote: post #50

Earlier quoted context omitted.

Ah yes, the good ol' trickle-down economics.

It's very difficult to argue in good faith "trickle-down" economics was/is a failure. A rising tide obviously raises all ships, including the nation's poorest. To create vast wealth generally requires vast resources, which requires vast amounts of people. Behemoths the size of Amazon, Walmart, Microsoft, Google, et al employ significant chunks of the population - and not just directly. Trickle-down doesn't mean every…

> It's very difficult to argue in good faith "trickle-down" economics was/is a failure. > A rising tide obviously raises all ships, including the nation's poorest.

Let me ask you one thing in addition: can you explain why "trickle-down" economics is superior to "trickle-up" economics: where the money goes directly to those poorest who need it, cutting out the middle-men; and then when they spend it until it inevitably trickles up to businesses and the more well-off?

How does does "trickle-down" economics compare to that?

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#489

Post by paganel »

jandrewrogers wrote: post #398
oneTbrain23 wrote: post #392

Earlier quoted context omitted.

Still cheaper and sturdier than the cardboard house in USA. European houses typivally made of brivks and mortar. Cant say that in USA. Even 5mil house in San Fra, a significant portions the house is made of wood and drywall. Pounching through American wall is hollywood pastime. Cant find a similar think in other countries hollywood.

I’d like to see a European brick and mortar house survive a Magnitude 8 earthquake, which is a requirement in San Francisco. The US used to have lots of brick and mortar construction, just like Europe. After those buildings were all destroyed by strong earthquakes, they switched to steel and wood, which can survive a strong earthquake. Europe style construction is not allowed in much of the US because it demonstrably…

> I’d like to see a European brick and mortar house survive a Magnitude 8 earthquake, which is a requirement in San Francisco.

Sorry to put it this way, but is this a joke? I do live in Bucharest, in Eastern Europe, on the 8th floor of an apartments building built in the early 1980s, and I sure do hope that this building can withstand a Magnitude 8 earthquake seeing that we've had a 7.5 earthquake back in 1977 and a 7.7 one back in 1940 (and a 7.1 earthquake back in 1986, which I do remember).

Re: The US economy and the EU were the same size in 2008, the US is now nearly 2X

#490

Post by ffhhttt »

beebeepka wrote: post #426
FredPret wrote: post #344

Earlier quoted context omitted.

US economic performance is all the more OP if you take into account that it's a huge country of 350m people and has a diversified economic base. For a tiny banking nation or petrostate to be rich is unsurprising. But when it's half a continent, the world really ought to take out their notebooks and go into full copycat mode - at least as far as economic policy and attitudes are concerned.

Are you suggesting the EU should start pillaging countries? What petrostate should we liberate to becone self-sufficient? As luck would have it, the US achieved that right after conquering Iraq

Are you saying that the war in Iraq was in anyway profitable for the US?

> As luck would have it, the US achieved that right after conquering Iraq

Yes? A whole of of things happened back. I’m really not sure what are you implying here? Did they secretly ship Iraqi oil to the US and pretend it was extracted there?

> What petrostate should we liberate to becone self-sufficient

Uhm.. Libya? Or did everyone already forget that?

Post reply on HN