Challenging the Narrative of European Decline

e40

Krugman sure is a good, probably even great, writer. His prose is almost effortless to consume. On the content, very interesting.

pirate787

Krugman so badly wants this to be true. But handwaving away massive difference in IT innovation and in practical data like housing size and vastly greater American consumption does not make it true. Just 20% of European homes even have air conditioning. European industrial energy costs are more than 2x the U.S. Don't ignore the data. Europe is behind and falling behind at an ever-faster clip. And the strategic issues of continued vast unskilled migration into Europe and the need to re-arm in a post-NATO world are further economic burdens that will tip most of Europe into middle-income status.

summa_tech

It's difficult to consider Krugman's takes seriously after his very flawed 1998 predictions. Perhaps he's uniquely poorly suited to understanding the role of technology in economic development, and is best described as an economist with a very limited outlook outside his narrow discipline? https://www.snopes.com/fact-check/paul-krugman-internets-eff...

ismailmaj

> The risk of being cut off from strategically important technologies, once minimal, is now very real. Good timing given the Fable 5 story.

comrade1234

"When we compare the European, or at least northern European, economy with that of the United States some points should be indisputable." So is he comparing Europe to the USA or just Northern Europe? And is he including Switzerland, Norway, Iceland, etc or just the EU? It's rather confusing and I wouldn't even know where to begin in trying to do these comparisons. I live in Switzerland and have worked on projects all over Europe and work cultures and efficiency are so different everywhere. I definitely have a better quality of life here though than when I lived in the USA.

RickJWagner

Krugman. He couldn’t write a single sentence in an article about Europe without mentioning Trump. This is the same guy that said the internet was not going to be a big thing, made wildly incorrect predictions about everything from post-Covid inflation to Obama-era growth predictions, and was oblivious to the downsides of zero interest rate policy. At this point, Krugmans work should be considered entertainment at best, or maybe political comedy.

pjc50

> Yet productivity growth as conventionally measured has in fact been much faster in the US than in Europe. How can this be consistent with the fact that there has been virtually no change in the relative value of goods produced per hour? That’s the apparent US-Europe paradox. What explains it is the fact that the US and European economies produce different mixes of goods – a qualifier that is not picked up in the conventional measures of productivity. And that difference in mixes of goods affects the prices at which productivity measures should be calculated in order to make a meaningful comparison across countries One of the most important things to recognize is that the vernacular meaning of "productivity", which would be something to do with how hard people work and how many widgets they turn out, is not the same as the technical economic term "productivity", which is roughly GDP divided by hours worked. This causes a lot of discourse with people talking past each other. The examples relate to tech companies. If you think about, say, Youtube, that (a) contributes a lot to US GDP and (b) doesn't cost European consumers all that much. Indeed, a lot of stuff produced by Silicon Valley is ""free"" (ad-supported or free tier) at the point of use. This is before we get into complicated cases like international attribution of revenue, such as Apple Ireland.

ragebol

> 10% of the US economy is IT The US is the IT-supplier of the world. I don't know how large a % of that comes for outside the US. But with all the 'shenanigans' of the Trump regime and the trust the US has lost due to that, that should lead to losing IT business from the rest of the world. In other words, If Europe would disavow using US IT, as would be the wise choice I think, then Europe might close the gap. I just hope this is not just wishful thinking though.

merksittich

> What should worry Europe, instead, are the geopolitical implications of US/Chinese leadership in advanced technology. We used to have a global economic system overseen by a mostly benign and in any case law-abiding hegemon. That system was, however, gradually eroding with the rise of China, and has now taken a drastic hit with America’s abandonment of the rules it largely created. This is the underlying theme of Europe 2031, a scenario ostensibly in the spirit of AI 2027. ( https://europe2031.ai/ ; discussed in https://news.ycombinator.com/item?id=48489996 )

diego_moita

So, what he says is that productivity gains in the U.S. are: 1. Only apparent when measured at 2017 prices but not when measured at PPP (purchase power). 2. In the US most of productivity gains are concentrated at the tech industry and California. The rest of the economy (and most of non-California states) are less productive than Europe. Personally, I am not entirely convinced but these are interesting arguments. It is loudly obvious to any non-American that the US healthcare is very far away from being "productive".

tokai

Its interesting that voices going on about European decline gets louder and louder the more the US slips into fragmentation, autocracy, debt, lower life expectancies, trust, and so on.

lp4v4n

As someone who lives in Europe, my impression is that the continent's first priority is how to keep paying the fat pensions it pays to its retired class, the second priority is how to keep paying the pensions followed by a distant third about how to keep paying the pensions. For me it's remarkable how the continent lives looking at the past and not at the future. The older people I talk to show no concern about Europe's economic future, they're always dismissive about the problems Europe faces. They're stuck in the 70's, 80's or 90's it seems.

RicoElectrico

The apologetism of American socioeconomic system is a thing endemic to HN. Even Reddit with its USA-skewed demographic is far less delusional, for all its other faults. Same for other social media like YT. I suppose it's a distinction of well-to-do SWEs (and VCs alike) vs actual working class majority.

shevy-java

> Last week I wrote about the question of whether Europe is really falling behind the United States economically. The USA has a few key areas where it benefits a lot - for instance, the oil mafia that is controlled by the USA, e. g. the old petrodollar deal, though with the defeat of the USA against Iran (look at the "Memorandum of Understanding" signed by Trump recently) this may change a little. But an even more important area of US dominance is the software situation. The US corporations control WAY too much already. That is not good. Then add the fact that the arms industry as well as the nuclear arsenal, is also heavily controlled by the USA; arms industry is more varied, but the nuke issue is a problem, even more so when you see that Putin has Trump by the ... precious. Europe needs to disentangle as much as possible from the USA in every area. And this is not happening. Quite the opposite, Merz is constantly surrendering and submitting to Trump. He is like the ultimate US politician. Recently the EU parliament also submitted to defeat by agreeing to Trump's selfish trade deal. And european nukes? Where are these? So unfortunately, Europe is not doing well. It is not doing completely wrong either, but it is acting like an old man who wants to submit to others. And I don't see the current generation of politicians in the EU to want to change this. They get too much financial kickback to hold down other european citizens right now. Nobody will fix the EU either, so - a deadlock situation.

weatherlite

Why did he reduce Europe to north Europe in the beginning of the article? The EU is not just North Europe. It sounds to me a bit like cherry picking to make his case.

hurrrr

I'm European. I think Europe’s main problem is that its leaders and citizens are more concerned with how to distribute wealth than with creating it. In many countries, much more importance is placed on pensions than on the education of the younger generations. Krugman’s analysis may well be accurate, but the problem is that China is now beginning to assert itself in sectors where Europe used to be strong (manufacturing, automotive, etc.). If our software is American and our hardware is Chinese, who will pay for the pensions?

tschellenbach

Dutch living in Colorado. You can spin stats any way you like. But if you look at the last few waves of companies. Machines for making chips, manufacturing chips, designing chips, search, social, mobile, AI. If this was a soccer match the score would be 10-1 (yee ASML). Not only that the winners in these industries tend to compound and grow. There are many great things about the EU, that are outside of this competitive ecosystem. But I don't think sticking our heads in the sand is really a great idea.

Gud

I work in the energy sector for a manufacturer you’ve definitely heard of. The USA is ahead in certain industries, mostly information technology, but decades behind in others. Literally, you have technology most of Europe moved away from in the 80s(air insulated HV switchgear), where most of Europe now mostly builds gas insulated switchgear. Europa has a GDP on par with the USA. Honestly what do people think the product is, wine and cheese?

classified

The US is going down in flames, so there may be some solace to be found in portraying the EU as going down too. Misery loves company.

SJetKaran

related - https://archive.ph/nGFnv