WMN: t3_316pae_t1_cpyz7yp

[TITLE]

CMV: The European economic crisis is the hoax of the century. Most European economies are doing far better than the US where it counts.

[selfhatingyank]

The past 4-5 years have seen media hyperbole over a debt/economic crisis in Europe (especially but not exclusively southern Europe) that has been used to implement Republican-lite economic, labour, and healthcare reforms throughout the continent, as well as in Canada (Stephen Harper), Australia (Tony Abbott), and Japan (Shinzo Abe). It is unfortunate that they are implementing these reforms in response to a crisis that doesn't actually exist. Even in a deep recession, most Europeans are far better off than their American counterparts in terms of income equality, life expectancy, education (test scores), environmentally responsible consumer habits, mothers' and children's rights, nonviolence, economic mobility (Europe and Canada are the true lands of opportunity and moving there is the best career move for an American who can get a work visa), inequality-adjusted HDI, and even Credit Suisse median wealth estimates. The US ranks dead last or near-last in most measures of development when compared to its peer countries. Even Jeb Bush concedes this: http://www.politifact.com/florida/statements/2014/nov/06/jeb-bush/us-workers-least-mobile-developed-world-jeb-bush/ The only people who don't are European and Canadian, etc. elected officials who are convinced that their countries are staring down a phantom crisis and so are implementing austerity and labor "reforms" to please the "confidence fairy" (who doesn't exist, either). Many of their arguments to act are based on completely specious reasoning (saying that Denmark is uncompetitive because its hourly labor cost is the highest in the EU is bullshit when its hourly GDP is more than high enough to justify it; the error is comparing hourly costs to per-capita GDP, and the "US is the richest country in the world" is based on mean, not median, wealth figures). I'm not implying a conspiracy here, but left-wing European social democracy is proven to work and "the crisis" is a complete phantom based on bad statistics and silly misunderstandings; even Jeb Bush recognizes that. _____ > *Hello, users of CMV! This is a footnote from your moderators. We'd just like to remind you of a couple of things. Firstly, please remember to* ***[read through our rules](http://www.reddit.com/r/changemyview/wiki/rules)***. *If you see a comment that has broken one, it is more effective to report it than downvote it. Speaking of which,* ***[downvotes don't change views](http://www.reddit.com/r/changemyview/wiki/guidelines#wiki_upvoting.2Fdownvoting)****! If you are thinking about submitting a CMV yourself, please have a look through our* ***[popular topics wiki](http://www.reddit.com/r/changemyview/wiki/populartopics)*** *first. Any questions or concerns? Feel free to* ***[message us](http://www.reddit.com/message/compose?to=/r/changemyview)***. *Happy CMVing!*

[HilariousEconomist]

Most of those things you said such as health and education levels don't change over the short/medium term and cannot reflect the current economy. For example high unemployment generally has no dramatic impact on average life expectancy or maternal mortality rates so those aren't good metrics for the health of the economy. Now why is the health of the economy important? Because without a growing economy you get less taxes and employment and business investment, which places a large burden on the government and society at large, and thus reduces things like healthcare and education in the long run. The reason Sweden has a good social system is because they have a good economy to back it up. The opposite is true with Cuba for example.

[Ajorahai]

Why are you comparing these countries to the US in an attempt to argue against austerity? The US hasn't implemented anything close to austerity since 2001. I don't understand your argument that the crisis is a hoax. It sounds like you're saying that not every country is having a crisis, therefore no crisis exists. I don't understand this. It is entirely possible for some countries to have a crisis, while others have a possibility of a crisis which they averted with preemptive actions, and others have no threat of a crisis at all. What would you call the situation in Greece if not a crisis?

[selfhatingyank]

What I was saying is that the crisis is effectively a front that national and international governments are using to implement failed American policies

[Ajorahai]

Then why are you talking about austerity? Austerity has largely not been an American policy in modern history except for a brief period of time from 1998 to 2001

[selfhatingyank]

The goal of austerity is to make govt smaller and more American . The cost of labor stuff is all saying that Europeans aren't miserable enough to be docile employees and we should make them more like Americans.

[Ajorahai]

No, that is not the goal of austerity. The goal of austerity is to reduce government deficits and debt. That can *sometimes* result in a smaller government. However, it has nothing to do with being more American, and it is a stark contrast to actual policies America has implemented. [STA-CITE]>The cost of labor stuff is all saying that Europeans aren't miserable enough to be docile employees and we should make them more like Americans. [END-CITE]I find it difficult to believe that someone is actually making this argument. Can you provide a source of someone who is arguing for lower wages because they think their people aren't miserable enough?

[selfhatingyank]

It's undeniably implied in saying "the cost of labor is too high" even when hourly productivity is through the roof in a country like Denmark (no debt problem, but still lots of cutting back and dubiously ethical privatizations). Lowering the cost of labor means cutting back on wages and benefits which uniformly lead to suffering.

[Zeabos]

[STA-CITE]>Lowering the cost of labor means cutting back on wages and benefits which uniformly lead to suffering. [END-CITE]What? This is simply a statement you cannot make. No aspect of it is true.

[selfhatingyank]

[STA-CITE]> Lowering the cost of labor [END-CITE]which means paying them less (either in wages or benefits) in response to an imaginary problem (in the case of Denmark, hourly cost of labor reflects mindblowing levels of productivity) [STA-CITE]>means cutting back on wages and benefits [END-CITE]Intuitive (how else do you cut the cost of labor?) [STA-CITE]>uniformly lead to suffering. [END-CITE]Would you gladly give up your wages and benefits? No? How about the wages and benefits that were negotiated in your country through the political process? If so, that is suffering as you're being forced to accept a set of values that are alien to your country; i.e. cultural genocide.

[Zeabos]

[STA-CITE]>which means paying them less [END-CITE]Or it means increasing output per person. [STA-CITE]>Intuitive (how else do you cut the cost of labor?) [END-CITE]By being more efficient. Also, I know people from Denmark. I would not call their productivity "mind blowing". [STA-CITE]>Would you gladly give up your wages and benefits [END-CITE]Depends what I'm getting in return. In macro economics it generally means cheaper goods and services.

[selfhatingyank]

[STA-CITE]>In macro economics it generally means cheaper goods and services. [END-CITE]But it may also mean lower life expectancy, more crime and poverty, and other things that Joe Dane may or may not be willing to trade for slightly (or greatly) cheaper refrigerators, especially if the government's budget is cut. If however these lifestyle factors are baked into Danish culture, values, and city planning (i.e. cycle paths), then the system of government is somewhat irrelevant.

[huadpe]

So if we define "where it counts" as employment, I think you've got a problem with the breadth of your claim. One of the more robust statistics for measuring the wellbeing of workers is the unemployment rate. Unemployment sucks for workers; and unemployment is independent of currency fluctuations and such. Here are the [current unemployment rates](http://stats.oecd.org/index.aspx?queryid=36324) for most of the developed world. Some parts of Europe are doing good, but a lot is doing exceptionally lousy. 9.8% unemployment translates to a *lot* of workers suffering. Canada is doing okay, but not quite as good as the US. Country | Unemployment (Feb 2015) -------|----------------------- Japan | 3.5% South Korea | 3.9% Germany | 4.8% **United States** | **5.5%** Denmark | 6.2% **Canada** | **6.8%** Netherlands | 7.1% Sweden | 7.9% Belgium | 8.5% Finland | 9.1% **European Union** | **9.8%** France | 10.6% Italy | 12.7% Spain | 23.2%

[Stokkolm]

From the same site i extracted a graph that shows the change in unemployment rates since 2005: http://i.imgur.com/AxhWeny.png Huge changes for Greece and Spain after 2007-2008. Slight increase for Italy and UK, nothing noticeable for France, and Germany is actually doing better since the crisis started.

[huadpe]

Yeah, Europe is complicated. Definitely not something where you can make a blanket US v. Europe comparison.

[selfhatingyank]

Unemployment numbers don't mean anything in a less workaholic country like Finland where the unemployed have as much security as a middle-class American. At least prior to the crisis, unemployment in most Western European countries was a better choice in terms of benefits than many low- and moderate-wage jobs in the US.

[DeliriousPrecarious]

[STA-CITE]>Unemployment numbers don't mean anything in a less workaholic country like Finland where the unemployed have as much security as a middle-class American. [END-CITE]Have you ever been unemployed? It sucks. You lose a lot of your self worth when you feel like you have nothing to contribute to society because you *apparently* can't do anything worth being paid for. It's incredibly depressing and is correlated with poor mental health in *all* countries - even those with good social safety nets. Furthermore you can't just hand wave away unemployment. High long term unemployment will almost necessarily lead to reduced economic growth - growth that is necessary to fund the European style social safety nets you like. You are already seeing population reduction in the West with fewer workers available to fund services for an aging population. If you add in a weak economy with double digit unemployment how do you expect to actually continue funding those programs. The reason people are taking the European crisis seriously is because examples of what happens when your economy falters while you maintain an expensive safety net are visible to us. Greece is not an anomaly - they just happened to be the most vulnerable. However the same issues plaguing Greece now will spread to the rest of Europe if they can't get their economies going again. And that's not to say austerity is the best means of accomplishing this. I think austerity is stupid and am a much bigger fan of US style Quantitative Easing which, so far, has been more successful.

[Red473]

[STA-CITE]>It's incredibly depressing and is correlated with poor mental health in all countries - even those with good social safety nets. [END-CITE]I don't doubt that this is true but do you have a source for this?

[huadpe]

I'm not /u/DeliriousPrecarious but [here's](http://www.sciencedirect.com/science/article/pii/S0001879109000037) a good start to look at the research on the question.

[Red473]

Wow this is pretty thorough. Thank you.

[huadpe]

That's a fairly extraordinary claim. I agree Finland's system provides more social insurance than the US, but that doesn't mean it doesn't suck to be unemployed in Finland. If you're long term unemployed, you get 25 EUR/day. That's not a lot. Also, the 9.1% figure is for Finns who want to work but can't. So basically 1/11 Finns is finding the labor market unable to supply what they need, versus about 1/20 Americans.

[silverionmox]

I think it's questionable to claim that; in the USA people who are unemployed for a year are removed from the statistics. So long-term unemployment in the USA is statistically invisible. https://img.washingtonpost.com/wp-apps/imrs.php?src=https://img.washingtonpost.com/blogs/wonkblog/files/2013/09/EmployPop2554Aug.jpg&w=1484

[DeliriousPrecarious]

[STA-CITE]>So long-term unemployment in the USA is statistically invisible. [END-CITE]No it's not. [The BLS publishes U6 unemployment which accounts for that](http://www.bls.gov/news.release/empsit.t15.htm). From the U.S. side the data is available to make an apples to apples comparison. All you have to find out is what methodology the Europeans are using to measure their unemployment.

[huadpe]

Also, U3 (the headline number people talk about) doesn't exclude the long term unemployed. It excludes discouraged workers, aka those who have stopped looking for work. But as long as you are looking for work and not currently working, you're in U3. Even if it's been 2 years.

[huadpe]

Being unemployed over a year doesn't remove you from the statistics. The statistic is done by [a household survey,](http://www.bls.gov/cps/) and anyone who answers no to "Last week, did you do any work for pay?" and yes to "are you currently looking for work?" is considered unemployed. The government also publishes lots of alternative statistics and lets researchers look at the raw numbers. And Finland also [has alternate measures of unemployment showing higher rates](http://www.helsinkitimes.fi/business/12222-finland-s-official-unemployment-rate-hides-deeper-problems-2.html?ref=nl-hs-aamu). Edit to add: that table also uses harmonized rates, so they adjust for measurement differences between countries to make it an apples-to-apples comparison.

[catastematic]

A few simple problems with your argument. 1. The nature of the economic crisis of the Eurozone is that the Eurozone *is in fact* an area that uses one currency, but is not an "optimal currency area", or in other words, it is not tightly integrated. The precise problem this causes is that some economies are experiencing growth and very low unemployment while other economies are experiencing depression and very high unemployment. (Normally these two situations call for the opposite Central Bank policy; but for the European Central Bank, it is impossible to pursue two opposite polices at once.) So *of course* you would expect that many economies have low unemployment! 2. Macroeconomic crises have macroeconomic effects. This isn't a pissing contest. Whether the Rockies or the Alps are more majestic has nothing to do with whether Europe is having an economic crisis, and whether the Eurozone is to blame. So no outcomes other than unemployment, growth, and inflation/deflation are relevant here. If you don't think macroeconomic effects matter (which is a totally fine position), then you shouldn't say the European economic crisis *doesn't exist*, you should say it *doesn't matter*. 3. You have to compare apples to apples. If you want to look at whether the Eurozone or the US is doing better economically as a test of which region is having a crisis/is more awesome/has better economic policy, you have to compare the entire Eurozone to the entire US. This is *especially important* for questions like inequality, because inequality is a measure of the difference between the richest and the poorest, so combining rich regions and poor regions always increases the Gini. 4. You seem concerned with the "Republican-lite" policies Merkel &co. are pushing, but I think you are misunderstanding the terms of the debate. The denialist position is that there was a *Greek* economic crisis, which was caused maybe by American chicanery but by nothing that was the fault of any Europeans, except for those lazy, stubborn Greeks. These people think that if the Greeks just tighten their belts they would get "expansionary austerity", that is, they would improve their welfare by suffering. The Euroskeptic position was that the whole thing was the ECB's fault, and the Eurozone needs to take much more collective responsibility for banking regulation, fiscal stabilization, stimulus, and other measures to fake economic integration until the Eurozone finally achieves economic integration.

[flynavy88]

[STA-CITE]> Even in a deep recession, most Europeans are far better off [END-CITE]Your definition of "better" seems to be highly **subjective** based upon the metrics that *you* find valuable: * Income equality * Life expectancy * Education (test scores) * Environmentally responsible consumer habits * Mother's and children's rights * Nonviolence * Economic mobility * Inequailty-adjusted HDI etc. You say those are the measures of development for the US, but for lack of a better term, you "cherry picked" the statistics that define development based upon your subjective belief in their value, when there are so many others that can define development as well - not to mention, I'd argue quite a few people would disagree with your metrics as the defining measures of human development such as mother's and children's rights (which vary considerably even in Europe) and environmentally responsible consumer habits (for instance, Europe is far more reliant on foreign oil from the Middle East or Russia, all questionable regimes, than the US which gets most of its oil from Canada, Mexico, or domestically). Not to mention, quite a few of these metrics are debatable to begin with. For instance, education (test scores): aside from the fact that test scores between countries are considered only one of many metrics to measure actual educational performance/attainment, you're also ignoring the other metrics that paint the US in a far different light when it comes to education. As an example, the US dominates the top university rankings in the world, with a disproportional number of schools. You can see that quite clearly when you consider that the US has more international students than any other country in the world by a fair margin - [18% of all total worldwide international students](http://www.uis.unesco.org/Education/Pages/international-student-flow-viz.aspx) go to the US for their studies. [STA-CITE]>I'm not implying a conspiracy here, but left-wing European social democracy is proven to work and "the crisis" is a complete phantom based on bad statistics and silly misunderstandings; even Jeb Bush recognizes that. [END-CITE]Proven to work? I'm not sure one can conclude that so quickly when there are social democracies in Europe that have serious problems today (I'm looking at you, Greece) that haven't been resolved for years. Not to mention, quite a few of those countries have only recently adopted social democracy and so the long-term impacts are only now being gauged. In addition, there are countries that are potentially ticking time bombs (like Spain). And if you recall, from the 2008 crisis, a lot of measures put in place were designed to fix the fact that European banks were even more overly-leveraged than US banks, an issue that may be compounded with growth problems in the future. The issue that a lot of economists are worried about is the low growth rate of a lot of the countries in Europe, something that might not be an issue a few years at a time, but something that will grow increasingly problematic in the future, especially as the center of the world economy shifts increasingly away from Europe and towards the rapidly growing economies in Asia and elsewhere in the developing world. A lot of what the US faced a few decades ago when it had the highest development in the world (and its cost of living far outstripped many others in the world) are also starting to show up in Europe. For instance, a lot of American corporations once outsourced work to Europe in places like Italy or Eastern Europe after the Cold War ended - but as the development levels in Europe has picked up and costs increased there, those jobs are being re-outsourced to cheaper countries in the world. In addition, Europe has a high rate of youth unemployment. Again, that might not be an *immediate problem*, but what if that continues for another 5-10 years? We're already complaining about the low growth rate, increasingly competitive and scarce job market - what will those currently unemployed 18-30 year olds be like if they continue to be doing if unemployed in 2020 or 2025? These issues compound - a year or two of low growth rate can be understandable. A decade of barely beating inflation, or even outright falling behind inflation? Everyone might be more economically equal today, but if everyone is getting poorer together, especially relative to the world, it is inevitably going to bring those rankings down in the long-term because worldwide development doesn't stop. Stop growing, however, and your development will stop as well.

[ReallyLegitAccount]

You raise a lot of very good points; but there are some things I'm not too sure about: [STA-CITE]>You say those are the measures of development for the US, but for lack of a better term, you "cherry picked" the statistics that define development based upon your subjective belief in their value... [END-CITE]Which specific metrics and subjective values put the US in a more positive light than Europe? You are probably right in that it comes down to a person's individual values, but still some statistics would (I'm guessing) give OP some more perspective. You mention: [STA-CITE]> As an example, the US dominates the top university rankings in the world, with a disproportional number of schools. You can see that quite clearly when you consider that the US has more international students than any other country in the world by a fair margin - 18% of all total worldwide international students go to the US for their studies. [END-CITE]Certainly, the best universities in the world are located in America. But is the *average* American university any better than the *average* European/Asian one? Not to mention that in the US we have an expectation that students fund their entire education, sometimes through personal debt; a concept that doesn't really exist in the rest of the world. So I think the picture here is a little more nuanced. [STA-CITE]> The issue that a lot of economists are worried about is the low growth rate of a lot of the countries in Europe, something that might not be an issue a few years at a time, but something that will grow increasingly problematic in the future, especially as the center of the world economy shifts increasingly away from Europe and towards the rapidly growing economies in Asia and elsewhere in the developing world. [END-CITE]But, is it the European economic model specifically that caused this slowdown? Or are there other factors at play? Countries like Germany and Sweden seem to be doing rather well economically with their social welfare systems; others, like Spain and Greece (as you mentioned), are not. Then again I don't really have a deep enough knowledge of economics to say with certainty how effective the European economic system is.

[riggorous]

[STA-CITE]> the European economic system is. [END-CITE]Europe is not a sovereign state. It does not have a single economic system.

[ReallyLegitAccount]

You are correct. I'm just talking about the general trend of European nations to heavily tax the wealthiest individuals/corporations and use the revenue to fund a large social welfare program. Obviously, each individual nation does this differently, but the general trend is there.

[riggorous]

So? The macro policy toolkit is pretty small. You've got 2 choices when it comes to fiscal: expand or contract. You shouldn't expect to see a lot of variation here. The reason different EU economies do differently is because they are different economies, i.e. they have different populations that produce different things to make their livelihoods. Duh.

[ReallyLegitAccount]

[STA-CITE]> The reason different EU economies do differently is because they are different economies, i.e. they have different populations that produce different things to make their livelihoods. Duh. [END-CITE]OK...I'm pretty sure I tried to say something like this in my first comment. The question that I was debating is whether or not high taxing and spending is *necessarily* harmful to an economy. Clearly, that isn't the case since other factors play a role.

[riggorous]

[STA-CITE]> The question that I was debating is whether or not high taxing and spending is necessarily harmful to an economy. [END-CITE]Aw crap, did I miss the libertarians? Few things are necessarily harmful. That said, the thing with higher spending in democratic countries is that social benefits tend to be sticky and require a lot of political costs to be repealed - which we see now with, say pensions and retirement age. Because successful economic policy very much hinges on making the right changes at the right time, this can be a problem (and is).

[piwikiwi]

[STA-CITE]> The issue that a lot of economists are worried about is the low growth rate of a lot of the countries in Europe, something that might not be an issue a few years at a time, but something that will grow increasingly problematic in the future, especially as the center of the world economy shifts increasingly away from Europe and towards the rapidly growing economies in Asia and elsewhere in the developing world. [END-CITE]What would be the solution to this problem in your view? I live in the Netherlands myself and a lot of us are aware that things need to change but knowing agrees on what actually needs to change. [STA-CITE]>Proven to work? I'm not sure one can conclude that so quickly when there are social democracies in Europe that have serious problems today (I'm looking at you, Greece) that haven't been resolved for years. [END-CITE]This is problem is a bit more complicated than that. There are a lot of countries in Europe that do manage to balance capitalism with social welfare state.

[selfhatingyank]

The problem is that the "crisis" is neither European nor debt-based. It is to a greater or lesser extent coloring political debates in every developed country save the US, with even countries like Finland and Norway seeing the same poor-shaming in spite of lower debt-to-GDP ratios. The same phenomena are going on in non-European countries like Canada and Japan. The insistence that the quality of life in these countries is too high, which politicians have actually said in an unironic fashion, spits in the face of the Western Enlightenment and five centuries of economic history. Furthermore, the recent research by Rognlie and Piketty as well as the experiences of Florida, Nevada, Spain, Ireland, and increasingly Scandinavia (highest household debt on Earth) imply that policymakers are treating a housing and urban planning crisis like a failure of social democracy.

[Kirkaine]

This reads like you just put six different posts in a blender. Take a deep breath and figure out what your point is.

[selfhatingyank]

The point is the same as the old saw about the Holy Roman Empire being neither holy, nor Roman, nor an empire. It's not a European crisis. The same policies and rhetoric are appearing in Canada, Australia, and Japan. It's not about debt. Finland (lower debt-to-GDP ratio than the US), Canada (AAA credit rating), Australia (AAA credit rating), and even Denmark (AAA credit rating) are seeing service cuts and crippling reforms as well based on fearmongering alone. If anything, it appears to be a housing crisis gone berserk. It's not a crisis. I mentioned above that Europe is doing better than the US on many metrics, and the Nordic countries are cutting based on the possibility of a debt crisis that probably will never reach them.

[Doncuneo]

He seems pretty dedicated to whatever his view was, or at least his own understanding of it, I feel as though theres some cognitive dissonance going on, many of the posts here, especially /u/flynavy88 are extremely well written and informative and I praise him for that. Also OP I think it would be easier when you dont Lump the EU together then choose the "best" examples like the nordic countries to argue your point, theres already an issue with the north/south divide in Europe, some use the Euro, some dont, then we have the whole Issue with greece, the ever present threat of Russia and the growing buddy system between russia and greece.

[selfhatingyank]

[STA-CITE]> choose the "best" examples like the nordic countries to argue your point [END-CITE]Quite the opposite. I am using the Nordic countries as examples of countries that have no debt problems on the horizon but still are cutting, privatizing, and [promoting trade agreements like TTIP that would disproportionately impact them](http://www.computerworlduk.com/blogs/open-enterprise/ttip-update-xlii-3585291/), costing up to 2% of GDP for Northern Europe.

[Zeabos]

You seem to be making assumptions about tiny Nordic states and comparing them to the US and then extrapolating them as being representative of all of Europe. Everyone points to Nordic social programs are -- why don't we all use it? Well, Norway, for example, is able to back it's social programs because it know if they ever collapse they are backed by the largest government pension fund in the world. Great! Except most countries aren't able to derive the largest fund on the world purely on the back of their surplus of oil reserves. It's called "The Oil Fund" and is basically a unique insurance policy that is impossible for other states.

[selfhatingyank]

The point I'm making is that it has nothing to do with economic fundamentals -- *even these Nordic countries that are effectively post-scarcity countries are cutting back* when they have resources to give every man, woman, and child $300,000 lump sums from their oil fund alone! What is going on, even in Norway which has more poor [whites than it did ten years ago](http://www.theguardian.com/cities/2015/feb/12/ban-beggars-norwegian-cities-homeless), is complete ideologically-motivated rubbish that is divorced from economic realities! It is, quite simply, an attack on all social democracies, even those small countries with exceptional national resources; exactly the opposite of what you're saying. Ideological conservatism is being used, via economic manipulation, to force a specific economic model on countries that have no need for it. TL;DR: Norway has everything going for it and is still adopting neoliberal policies. Therefore, the state of the real economy is irrelevant to the politics of conservatism.

[Zeabos]

Ok. First off the Nordic states are *in no way even close to beginning to be* post scarcity economies. You are looking at Nordic European countries through rose-tinted glasses as thick as soda cans. Second, you seem to think that they are living in paradise and these neo-cons have something to gain by ruining it. The cons there think they could be doing even *better* than they currently are. So they want to implement new policies to do this. Also, you look at such a narrow view. The Nordic countries have been doing this well for lol 20-25 years, that's so little time. 20 years ago the Us was riding high on it's sweet new internet money. Should everyone have just claimed victory for laissez-faire and been done with it?

[selfhatingyank]

Wow... you addressed every one of my viewpoints there. This one [STA-CITE]>Also, you look at such a narrow view. The Nordic countries have been doing this well for lol 20-25 years, that's so little time. 20 years ago the Us was riding high on it's sweet new internet money. Should everyone have just claimed victory for laissez-faire and been done with it? [END-CITE]in particular is a killer; maybe the Nordic miracle simply reflects good luck. The Nordic countries had a crisis in the 1990s [similar to that of Southern Europe](http://en.wikipedia.org/wiki/Economy_of_Sweden#Crisis_of_the_1990s) and may well be heading into one now thanks to housing debt. Taking Scandinavia at its best point in a quarter-century and comparing that to the US is actually pretty shitty statistics. ∆

[riggorous]

I debated whether to respond to you or simply to post this to /r/badeconomics and be done with it, but decided on the former. You have 2 separate views here: 1, where you have some misunderstanding about what it means to be in economic crisis, so you come up with pearls like "The European crisis is the hoax of the century", and 2, where you are saying that you disagree with the economic indicators we use to measure economic wellbeing (I am talking about your assertion that the EU is doing great based on things like gender equality and HDI). I will start with CMV1. "Economic crisis" is a bit of a hand-wavy word, but what it's getting at is the general conditions of a recession, which has a specific definition: it means negative GDP growth for two consecutive quarters or more. [As we can see here] (http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries/EU?display=graph), the EU experienced a double-dip recession starting in 2008 and is currently in recover from the second dip, which began in 2011 - which is exactly what you would have been told in any mainstream media outlet. Since a recession is a sufficient condition for calling a situation an economic crisis, I think we can agree here. But, on top of that, it is extremely true that the unemployment situation in the South is very bad, as is the fallout from the social security obligations which you like so much. The latter two issues are examples of the EU's structural economic crisis, which is the specific thing everybody's worried about. It differs from your run of the mill recession because it is caused by the economic system not working, and can only be fixed by reengineering that system. Next, you're making the common American mistake of assuming that the EU is a country. Which it's not. We must further make a distinction between the EU and the Eurozone (which countries like the UK or Sweden don't belong to), and the Schengen area. The EU crisis, debt or otherwise, disproportionately affects the Eurozone, because the price of the Euro essentially reflects everything every Euro country does. Finally, because of the way EU legislation works, each country is basically free to implement whatever economic policies they want, which makes a whole lot of variation in economic performance across the board, which you also will have heard in any mainstream media outlet: some EU countries are doing pretty well through the crisis, but other EU countries are not, and on average the EU is in the shitter. Edit: [this map of male unemployment by EU country just got posted on dataisbeautiful] (http://static1.squarespace.com/static/53fe168be4b0826cfdf954c8/t/551bf89de4b0f5016a1c4a6b/1427896480378/?format=1000w). I'm linking it here as an example of the extreme discrepancies in economic health within the Union. Take Italy. Its financial system actually got through 2009 almost unscathed, because Italian banks are highly conservative lenders. However, because Italy relies in large part on a luxury export economy, its employment and housing prices went down by a lot and still have not recovered. 20 years of economic mismanagement under Berlusconi (both huge fiscal obligations and corruption) came to fruition during the crisis, and here's your debt crisis - which cannot be solved by fiscal contraction because of Italian politics. But more seriously, Italy, like many other southern EU economies, is suffering from a structural problem: it has no viable productive economy with which to make money. This structural issue has laid unsolved for several decades, as is reflected demographically: the average marriage age in Italy is ~32, and 54% of people aged 20-34 still live with their parents, largely due to [economic problems] (http://www.demogr.mpg.de/papers/workshops/000906_paper01.pdf). Whilst Italians receive all sorts of social benefits, they are paid less than Americans before taxes, and pay more in taxes on top of that, which results in a less mobile population, especially economically. Indeed, countries like Sweden are microcosmic exceptions: their economic model doesn't create prosperity in other countries of the EU. So, CMV2. The notion that we use too narrow a set of, or even the wrong indicators to measure economic prosperity has been brought up multiple times in the discipline. Joseph Stieglitz and Amartya Sen, among others, have been the most illustrious critics of using GDP and its derivatives to measure economic development, but also economic well-being. However, this debate is not GDP vs. people's feelings: this debate is about present value of consumption vs. future value of consumption. The reason GDP is a shitty overall indicator is that it doesn't say anything about where the economy is going - only where it is right now. For instance, oil-rich countries today may have a GDP of a billion zillion dollars, but once they run out of oil or oil prices crash, so does their GDP. Economic well-being, on the other hand, is meant to reflect an economy that can be reasonably resilient to the things life throws at it - a diversified economy governed by stable institutions. We believe that robust sources of revenue are manufactured goods, technological innovation, human and institutional capital, so on - and we try to track for those with measures like HDI. But these indices are fundamentally attempts to shadow-price intangibles in addition to production - they're not meant to replace GDP. You could say that, hey, in many countries of the EU, people are more educated than in the US, they are more equal than the US, they live longer than the US - doesn't the EU have good human capital? And yes, it does. But many countries in the EU fall behind on issues like the tax burden, the ease of opening a business, dependency ratio (aging populations coupled with high fiscal obligations to seniors are a huge problem in countries like France, Italy, UK, by the way), youth employment, etc. The overall health of the economy is hard to measure, but generally speaking, the US finds it far easier to jump-start its economy after economic crises because it doesn't face legislative roadblocks or sticky benefits in any way at all close to how big these problems are in the EU. And US inequality does, nonetheless, drive hard work. Without a doubt, the average EU citizen has a higher quality of life, but what we're worried about today is whether that quality of life is sustainable in the long term. Economic well-being is very simply the ability to maintain a constant or growing consumption in the economy every year. In order to consume, you have to produce (which is why GDP is important). Things like unemployment, debt, lack of consumer confidence, extreme wealth inequality, delayed entry of young people into the workforce all have a depreciatory effect on production, which, even if it doesn't affect the economy that much today, will catch up with us later. That's why the EU is in deep crisis - because the things I have named are screwed up for structural reasons, meaning they won't get fixed when the global economy gets fixed - they will only get fixed when the EU gets its shit together and manages itself properly. tl;dr economists aren't neoliberal overlords. Sometimes they have useful things to say about the world.

[boyonlaptop]

I agree with most of what you've said but [STA-CITE]>I think we can agree here. But, on top of that, it is extremely true that the unemployment situation in the South is very bad, as is the fallout from the social security obligations which you like so much [END-CITE]Is pretty bad economics in itself. Social security obligations do not cause unemployment. If anything it removes more people from the labour force decreasing unemployment. Obviously, public debt is a problem and arguably the implementation of austerity has lead to a reduction in employment but that's a separate issue. [STA-CITE]>Whilst Italians receive all sorts of social benefits, they are paid less than Americans before taxes, and pay more in taxes on top of that, which results in a less mobile population, especially economically. [END-CITE]How on earth does high taxes reduce mobility?

[riggorous]

[STA-CITE]> Social security obligations do not cause unemployment. [END-CITE]I think you will find that I do not claim otherwise. [STA-CITE]> How on earth does high taxes reduce mobility? [END-CITE]*do Because taking away people's incomes on one hand without contributing to government spending on these people on the other will reduce how many economic opportunities they have. This is a distributional question. Tangentially, I don't mean to say that I disagree with European social programs. I mean that their success is highly variable depending on what country you're looking at.

[gepeg-libre]

I think the question kind of boils down to, what is the point of the economy? Which to an economist might be an absurd question, but it sort of exposes a big problem in mainstream economics, because it assumes that the self-evident point of the economy is to be a bigger economy, perpetually and forever. On the other hand, if you think the point of the economy is to create a high and egalitarian standard of living and then keep it, wouldn't it be the case that the United States and neoliberal policies in general have been shown to be more or less a dismal failure?

[riggorous]

[STA-CITE]> I think the question kind of boils down to, what is the point of the economy? [END-CITE]*diction: the economy is a natural phenomenon. Your question equivalently reads "what is the point of gravity?" You should say, what is the point of economic policy? Nevertheless, if we modify the language, this is a very good question. My view isn't exactly common, so vary your mileage, but I agree that maybe the time has come to slowly start deprioritizing economic growth as the number one goal of economic policy. A simple explanation for the necessity of economic growth is that, if population keeps growing, then the economy must keep growing or we will have a Malthusian crash. Technically, the reason that economic growth is considered important is because the math works out that way. If you try to deduce how to ensure constant consumption from the assumptions of neoclassical economic theory, you find that consumption comes from economic growth once you account for capital depreciation. I'm not qualified to say how that could be modified to prove a different result, but different results do exist. Economic growth is also confounded with technological growth, economic development, etc, but that's another can of worms. [STA-CITE]> On the other hand, if you think the point of the economy is to create a high and egalitarian standard of living and then keep it, wouldn't it be the case that the United States and neoliberal policies in general have been shown to be more or less a dismal failure? [END-CITE]Our economic system is very much reliant on economic growth. In order to maintain consumption with 0 growth, we would need to majorly restructure the way we pay for shit we consume - essentially, we wouldn't be able to have any more loans with interest (because how do you repay interest if your future earnings aren't greater than your present earnings?), which would imply a wholly different system of incentives. You may believe that, in theory, the economy is better served by institutions that focus on things besides economic growth, therefore neoliberal policies are inefficient, but until we restructure our economy, that must remain a belief.

[selfhatingyank]

I am of this school of thought...economic growth in already developed countries should focus on quality rather than quantity. When a mature human being gains weight, you don't say she's growing (good) but that she's obese (bad). True growth in a mature person or economy comes from improving quality of life and human capital, not simply bloating it. Unfortunately, this concept is incompatible with the current system of loans and investments that dominate the global economy. ∆

[riskyrainbow]

the economy is not at all analogous with people getting fat, not even close. Dont try to do a total rethinking of the fundamentals of economics when you have absolutely no idea what youre talking about.

[DeltaBot]

Confirmed: 1 delta awarded to /u/riggorous. [^riggorous's ^delta ^history](/r/ChangeMyView/wiki/user/riggorous) ^| [^delta ^system ^explained](/r/ChangeMyView/wiki/DeltaBot)

[selfhatingyank]

The question is why countries that don't have the immediate problems of Greece (a deficit + no control over own finances + no federal government to transfer wealth from more prosperous regions) are still adopting the same policies. The only thing Canada, Spain, Greece, Japan, and Finland have in common is that they have more government involvement (taxes and redistribution/benefits for the poor) than the US and therefore their government is on the hook for more during a downturn.

[riggorous]

According to a lady from the IMF who advised one of these countries during 2008-2009, some of that is preventative measures. People got really scared by what happened to Greece and Iceland. But, this is just anecdotal - you don't have to believe that I know a lady from the IMF or that she said that. That said, Canada, Spain, Greece, Japan and Finland are whole areas of study and it's very dismissive to lump them in together like that. Maybe they have similarities, maybe they don't - I don't know enough to say. Maybe they each have their own unique problem, and all choose austerity to solve it. The fact that you vaguely know something general about the fiscal policy of 5 totally different countries doesn't really tell us anything at all.