As illustrated by my recent three-part series (here, here, and here), I care about helping the poor rather then hurting the rich.
More broadly, I want a bigger economic pie so that everyone can have a larger slice. And I don’t particularly care if some people get richer faster than other people get richer (assuming they are earning money honestly and not relying on government favoritism).
In other words, it doesn’t bother me if someone like Bill Gates is getting richer faster than I’m getting richer, so long as there’s an economic environment that gives both of us a chance to prosper based on how much value we are providing to others.
But some folks are fixated on how the pie is sliced.
For instance, the Peterson Institute for International Economics recently tweeted that there is too much inequality in the United States (compared to Europe) and that something should be done to “fix” this supposed problem.
This type of data irks me because some people will assume that rising levels of income for the rich somehow imply falling levels of income for everyone else.
That may be true in nations with despotic socialist governments, such as Cuba, North Korea, and Venezuela, where the ruling class lines it pockets at the expense of the general population.
However, let’s focus on the United States and Europe, since the Peterson Institute wants readers to think that politicians in Washington should “fix” the distribution of income in America so that we resemble our friends on the other side of the Atlantic Ocean.
But first we must answer two very important questions: Are the non-rich in the United States suffering because rich people are doing well? And are the non-rich in Europe better off than the non-rich in America?
Earlier today, I answered those questions with three tweets.
I started with this tweet pointing out that average living standards are far higher in the United States than they are in Europe.
I then shared this tweet pointing out that the bottom 10 percent of people in America would be middle class compared to their counterparts in Europe.
I then concluded with this tweet showing that the bottom 20 percent of people in the United States have incomes higher than the average income in most European countries.
The moral of this story is that ordinary people are better off in America.
And that’s almost certainly because there’s generally more economic freedom in the United States – including lower tax burdens and less enervating redistribution.
P.S. While the Peterson Institute is very misguided on the tradeoff between inequality and growth, it is quite good on trade-related issues (see here, here, here, here, here, here, and here).
[…] And based on comparative living standards, the United States is far ahead. […]
[…] After all, it’s a very bad idea to copy the economic policies of nations such as Italy, France, and Greece(unless, of course, you want much lower living standards). […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] would sap economic vitality and depress growth, undermining the huge advantage Americans enjoy as measured by per-capita living […]
[…] would sap economic vitality and depress growth, undermining the huge advantage Americans enjoy as measured by per-capita living […]
[…] After all, it’s a very bad idea to copy the economic policies of nations such as Italy, France, and Greece(unless, of course, you want much lower living standards). […]
[…] United States wins that contest. Americans earn more and they get to keep […]
[…] They think it would be a good thing to copy Europe. But I think that would be crazy since European living standards are much lower because of bloated welfare […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] I also like to share data showing that lower-income Americans often are better off than average-income […]
[…] consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or […]
[…] But this raises the very obvious point about whether we should copy other nations with their bigger welfare states and higher tax burdens. After all, European nations suffer from weaker economic performance and lower living standards. […]
[…] But some of us don’t want to surrender and doom the United States to European-style economic stagnation. […]
[…] But some of us don’t want to surrender and doom the United States to European-style economic stagnation. […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] notice he offers no evidence for that assertion. That’s because all the evidence clearly shows that you get more prosperity where government plays a smaller […]
[…] notice he offers no evidence for that assertion. That’s because all the evidence clearly shows that you get more prosperity where government plays a smaller […]
[…] for those who like comparisons, it’s worth observing that living standards in Europe are significantly below American levels precisely because politicians in places such as Greece, France, and Italy have made even more of […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] We do not think copying Europe and imposing more redistribution is the right approach. Americans enjoy far-higher living standards than people on the other side of the Atlantic Ocean, thanks in part to our smaller fiscal […]
[…] consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] there is a relationship between national prosperity and economic liberty. And I’ve shared plenty of data showing that ordinary Americans have significantly higher living standards that their counterparts […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] cite the OECD’s data on “actual individual consumption” to show that the average American enjoys higher living standards than the average […]
[…] OECD’s data on “actual individual consumption” to show that the average American enjoys higher living standards than the average […]
[…] people are stunned by the data I shared early last year showing that ordinary people in the United States tend to be much richer than their peers in […]
[…] people are stunned by the data I shared early last year showing that ordinary people in the United States tend to be much richer than their peers in […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] that’s true even though Americans are much richer, thus showing how the substitution effect can outweigh the income effect. At least in the short […]
[…] that’s true even though Americans are much richer, thus showing how the substitution effect can outweigh the income effect. At least in the short […]
[…] that’s true even though Americans are much richer, thus showing how the substitution effect can outweigh the income effect. At least in the short […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] And our superior level of societal capital is related to our lower burden of government, which is related to our higher living standards. […]
[…] And our superior level of societal capital is related to our lower burden of government, which is related to our higher living standards. […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] net result is lower living standards for the American people. The only open question is how far we […]
[…] net result is lower living standards for the American people. The only open question is how far we […]
[…] net result is lower living standards for the American people. The only open question is how far we […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] you read these numbers, don’t forget that Hungarians are much poorer than Americas (notwithstanding nonsensical analysis from the […]
[…] After all, if we’re going to make America more like Europe, shouldn’t we try to understand what that might mean for the well being of the citizenry? […]
[…] it’s usually because I want to make the point that people on the other side of the Atlantic have lower living standards in large part because there is a more onerous fiscal burden of […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] So why is Europe falling behind the United States when it should be growing faster because of lower living standards? […]
[…] In some cases dramatically lower. […]
[…] living standards are far higher? Do they not understand that low-income people in the United States often have more income than middle-class people on the other side of the Atlantic […]
[…] Not that we should be surprised. If the United States becomes more like Europe, we’ll be more likely so suffer from European-style anemia. […]
[…] when you do that, the clear takeaway is that it’s crazy to “catch up” to nations that are actually way […]
[…] it is impossible to have a European-sized government and still maintaina big economic advantage over Europe. Higher spending and higher taxes will combine to reduce work, saving, investment, and […]
[…] is not a good idea. Americans are richer than their counterparts on the other side of the Atlantic. Even more remarkably, lower-income […]
[…] that will translate into lower living standards for the […]
[…] that will translate into lower living standards for the […]
[…] As you can see, the United States has a higher fertility rate than almost every other nation on the list, which certainly suggests that childcare subsidies are not an effective way of encouraging more babies. Moreover, U.S. fertility of 1.71 is higher than the OECD average of 1.61. And when you compare the United States to peer nations (“OECD rich nations” and “EU-15 nations”), the fertility gap is even larger, 1.71 to 1.52.One moral of the story is that government handouts are not an effective way of increasing fertility. And the other moral of the story is that it’s not a good idea to copy nations that are economically weaker. […]
[…] it is impossible to have a European-sized government and still maintaina big economic advantage over Europe. Higher spending and higher taxes will combine to reduce work, saving, investment, and […]
[…] it is impossible to have a European-sized government and still maintaina big economic advantage over Europe. Higher spending and higher taxes will combine to reduce work, saving, investment, and […]
[…] living standards are far higher? Do they not understand that low-income people in the United States often have more income than middle-class people on the other side of the Atlantic […]
[…] lower-income people in the United States often are better off than middle-class people in […]
[…] living standards are far higher? Do they not understand that low-income people in the United States often have more income than middle-class people on the other side of the Atlantic […]
[…] consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or […]
[…] And the other moral of the story is that it’s not a good idea to copy nations that are economically weaker. […]
[…] Well, if that kind of evidence matters, the answer surely is negative. […]
[…] when you do that, the clear takeaway is that it’s crazy to “catch up” to nations that are actually way […]
[…] when you do that, the clear takeaway is that it’s crazy to “catch up” to nations that are actually way […]
[…] it is impossible to have a European-sized government and still maintaina big economic advantage over Europe. Higher spending and higher taxes will combine to reduce work, saving, investment, and […]
[…] living standards are far higher? Do they not understand that low-income people in the United States often have more income than middle-class people on the other side of the Atlantic […]
[…] goal was to emphasize my oft-stated point about people in the United States enjoying higher living standards – in large part because […]
[…] I routinely share this column from January, which looks at three different measures of comparative prosperity – all of […]
[…] fiscal agenda would made the United States more like Europe and the economic data unambiguously demonstrate that Europeans suffer from significantly lower living […]
[…] fiscal agenda would made the United States more like Europe and the economic data unambiguously demonstrate that Europeans suffer from significantly lower living […]
[…] We can learn a very important lesson about the effect of big government by comparing living standards in the United States and other developed […]
[…] when you look 20 years or 30 years into the future. Indeed, this explains why Americans enjoy much higher living standards than Europeans (and also why Democrats are making a big economic mistake to copy European fiscal […]
[…] when you look 20 years or 30 years into the future. Indeed, this explains why Americans enjoy much higher living standards than Europeans (and also why Democrats are making a big economic mistake to copy European fiscal […]
[…] living standards are far higher? Do they not understand that low-income people in the United States often have more income than middle-class people on the other side of the Atlantic […]
[…] It’s worth noting that the United States has much less regulation of labor markets than the average European nation. Which may help to explain why American living standards are so much higher. […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] So I always explain that there’s a downside. The economic data clearly show that there’s been less growth in Europe and this has real-world consequences. […]
[…] So I always explain that there’s a downside. The economic data clearly show that there’s been less growth in Europe and this has real-world consequences. […]
[…] After all, it’s a very bad idea to copy the economic policies of nations such as Italy, France, and Greece(unless, of course, you want much lower living standards). […]
[…] After all, it’s a very bad idea to copy the economic policies of nations such as Italy, France, and Greece (unless, of course, you want much lower living standards). […]
[…] P.S. Some advocates of the handouts say we need to copy Europe, but they never explain why “catching up” is a good idea when Europeans have much lower living standards. […]
[…] consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or […]
[…] living standards are far higher? Do they not understand that low-income people in the United States often have more income than middle-class people on the other side of the Atlantic […]
[…] living standards are far higher? Do they not understand that low-income people in the United States often have more income than middle-class people on the other side of the Atlantic […]
[…] He wants us to think that big government means a “better America,” but all the economic data tells a different story. A bigger fiscal burden means much lower living standards. […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or […]
[…] consider the income data showing how average Americans enjoy much higher living standards than their European counterparts (either in Nordic nations or […]
[…] means more economic stagnation for Europe (and those of us in America face that possibility as […]
[…] He wants us to think that big government means a “better America,” but all the economic data tells a different story. A bigger fiscal burden means much lower living standards. […]
[…] He wants us to think that big government means a “better America,” but all the economic data tells a different story. A bigger fiscal burden means much lower living standards. […]
[…] Lather, rinse, repeat. Until the United States is Europe. And that will definitely be bad news for ordinary people. […]
[…] the evidence from Europe is any indication, adopting bigger welfare states is not a recipe for more […]
[…] the evidence from Europe is any indication, adopting bigger welfare states is not a recipe for more […]
[…] The bottom line is that if you adopt European-style fiscal policy, you get anemic European-style levels of income. […]
[…] The bottom line is that if you adopt European-style fiscal policy, you get anemic European-style levels of income. […]
[…] it is impossible to have a European-sized government and still maintaina big economic advantage over Europe. Higher spending and higher taxes will combine to reduce work, saving, investment, and […]
[…] it is impossible to have a European-sized government and still maintain a big economic advantage over Europe. Higher spending and higher taxes will combine to reduce work, saving, investment, and […]
[…] Lather, rinse, repeat. Until the United States is Europe. And that will definitely be bad news for ordinary people. […]
[…] Lather, rinse, repeat. Until the United States is Europe. And that will definitely be bad news for ordinary people. […]
[…] Lather, rinse, repeat. Until the United States is Europe. And that will definitely be bad news for ordinary people. […]
[…] of big government, let’s shift from hypothetical examples to real-world data. Most relevant, OECD data shows that the average low-income person in the United States is better off than the average […]
[…] the real problem is that Boot seems oblivious to most important data, which shows that Americans enjoy far more prosperity than […]
[…] the real problem is that Boot seems oblivious to most important data, which shows that Americans enjoy far more prosperity than […]
[…] of big government, let’s shift from hypothetical examples to real-world data. Most relevant, OECD data shows that the average low-income person in the United States is better off than the average […]
[…] either. Heck, none of them have ever given me a good reason why we should copy Europe when incomes are so much lower on that side of the Atlantic […]
[…] either. Heck, none of them have ever given me a good reason why we should copy Europe when incomes are so much lower on that side of the Atlantic […]
[…] that means we have lots of data showing what that means for our future. Unfortunately, it means Americans will enjoy less […]
[…] that means we have lots of data showing what that means for our future. Unfortunately, it means Americans will enjoy less income […]
[…] The bottom line is that the United States is becoming more like Europe and the economic data tells us that means less prosperity and lower living standards. […]
[…] been warning that the United States should not copy Europe’s fiscal policy, largely because living standards are significantly lower in nations with large welfare […]
[…] been warning that the United States should not copy Europe’s fiscal policy, largely because living standards are significantly lower in nations with large welfare […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] The bottom line is that the United States is becoming more like Europe and the economic data tells us that means less prosperity and lower living standards. […]
[…] First, I want to laugh at anyone who thinks Europeans have a better distribution of income. […]
[…] First, I want to laugh at anyone who thinks Europeans have a better distribution of income. […]
[…] The bottom line is that the United States is becoming more like Europe and the economic data tells us that means less prosperity and lower living standards. […]
[…] The bottom line is that the United States is becoming more like Europe and the economic data tells us that means less prosperity and lower living standards. […]
[…] P.P.P.P.S One obvious takeaway from Cochrane’s data (though not obvious to President Biden) is that the United States should not be copying Europe. Unless, of course, one wants ordinary Americans to be much poorer. […]
[…] you look at both types of data, you learn that ordinary Americans are much better off than ordinary people in other nations – which is the opposite of what is implied by the […]
[…] means more economic stagnation for Europe (and those of us in America face that possibility as […]
[…] means more economic stagnation for Europe (and those of us in America face that possibility as […]
[…] means more economic stagnation for Europe (and those of us in America face that possibility as […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] state, the blue state model of high taxes and big government is not working (just as it isn’t working in countries with high taxes and big […]
[…] favor policies that would make the United States more like Europe, so it’s worth noting that lower-income people in America are usually better off than middle-class people on the other side of the […]
[…] why on earth would we want to copy nations where living standards are far below American levels? Heck, poor people in America tend to be more prosperous than middle-class people in […]
[…] why on earth would we want to copy nations where living standards are far below American levels? Heck, poor people in America tend to be more prosperous than middle-class people in […]
[…] Or cite at least one person who could have pointed out that low-income people in the United States enjoy higher living standardsthan middle class people in nations with bigger welfare states? […]
[…] Or cite at least one person who could have pointed out that low-income people in the United States enjoy higher living standards than middle class people in nations with bigger welfare states? […]
The Peterson Institute changed a lot after its namesake died. He’d torch the place Wyatt-style now.
Does gov’t transfer payments figure in this? Why certainly.
Very well done article!
Mr. Mitchell,
I agree wholeheartedly with you.
Kevin
Susquehanna County, PA
Sent from my Behemoth Dell 690
The big thing that I noticed in the Peterson Institute graph was that it looked at BEFORE TAX income, not after tax income. I’m sure the numbers would be more equal after taxes because the rich pay most of the taxes in the United States, whereas the poor are overly burdened with taxes in Europe.
Silly you. You think logic works?
Inequality is not the problem, it is the unequal treatment by government, by legislators and their lobbyists, along with the rest of the swamp creatures.
Yes, those 1% vs bottom half comparisons are fairly meaningless.
BEFORE:
* Top 1% makes $500k, or 15% of total.
* Bottom 50% makes $30k, or 20% of total.
* Joe makes $50k.
Joe then creates and sells an innovative new hover car that everyone really likes. Joe becomes fabulously wealthy. Here’s the After picture (for simplicity, assume no other incomes change):
AFTER
* Top 1% makes $600k, or 16% of total.
* Bottom 50% makes $30k, or 19% of total.
* Joe makes $5 Billion.
Now, the top 1% earns a higher share of total income. But it’s because one person went from middle-class to fabulously wealthy (by supplying society with a desirable product), so is this really a problem?
Now, the bottom 50% earns a lower share of total income. But it’s because Joe earns more, NOT because the bottom half earns less, so is this really a problem?