"It's not that hard to move between Europe and the U.S., but not that many people do it."
This statement is very incorrect. And since this is a very load-bearing part of your argument, that's a problem downstream of the point. But yours is a misconception so widely held by Americans that it's important to clarify it here for the readership, generally:
It's *extremely* difficult for Europeans to move to the Untied States and vice-versa, as I can well-attest from the POV of an American living in Europe long-term. Most people in rich countries absolutely cannot "vote with their feet" in either direction. EU/EEA residents can't even easily move to the UK, and vice-versa, *within* Europe, anymore! And that changes the terms of these types of arguments, fundamentally.
For Europeans who aren't married to an American, the narrow pathway to moving to the US to work and live is via: 1/ the tiny-and-closing pathway of the H1-B visa 2/ an L-1A/B intracompany transfer or 3/ an O-1 for "extraordinary ability."
You've talked about the H1-B here before, so you know that it's capped at 85,000 professionals per year, which is a minuscule amount relative to *global* (overwhelmingly Asian) candidates and the unmet domestic American demand for that talent.
As for the L-1, it's also such a small volume as to be meaningless: you're talking a scale of a few tens of thousands. I know a few fellow tech workers who were transferred to the US on that basis (e.g. at Amazon or other American multi-nationals) to pursue global leadership roles, but the process within your corporation is extremely stringent, given the costs and complexities involved to sponsor. You're going to need to clock several years and reach upper-middle-management at your company for them to even consider it. Or else, yeah, be one of the tiny pool of charmed talent "working 80 hours a week building the future of AI."
And as for the O-1, it should be self-explanatory that this is an infinitesimally small pool. I suppose you could now double this exclusive pool with Trump's new "Golden Visa" for plutocrats. But it's not material to your argument.
Out of a US workforce of 160 million people and a EU/EEA/UK workforce of 250 million, then, we're looking at maybe ~50,000 Europeans who even *could* transfer to the US per year.
So when Trump asks why Norwegians and Danes aren't moving to the US instead of people from "shithole countries," the boring answer is because they literally can't. Many more Nordic people would if there was a pathway for them to do so.
Just like all of us know several dozen Americans who would *love* to move to Denmark or Norway if they were actually able to. Because do you have any idea how impossible that is for Americans!? One doesn't simply move to Europe. You've got a parallel situation to the one that greets Europeans trying to move to the US: a very limited and very stringent allotment of work visas, EU Blue Cards, or Critical Skills Visas available for the choicest American workers. I was able to get the latter, but a tiny percentage of American workers would qualify. The overwhelming majority of the millions of Americans residing Europe are either stationed there for the US military or other government reasons, retired on Golden Visas, or married to a European. There's no clean total of Americans just working in Europe on work visas, but the number granted per year is roughly equivalent at ~50,000, given the difficulty.
As in the US, your real scale path in to Europe is via family ties: Millions of Americans have a Polish or Italian or Greek grandparent that would be their "ticket" to EU citizenship, often without their knowledge. Others marry-in. But even finding a European to marry for your pathway is arguably even more onerous than it is on the American side, with years-long administrative delay, sizable costs, formidable red-tape (which is very different by country), and practical challenges that can be insurmountable (like families literally having to remain separated for 12-18 months and maintaining households on two continents). I am married to a European but that would have been the hardest way for me to secure residency, ironically.
So saying that people in rich countries reveal their preferences by moving (or not) is incorrect.
You're right that I overstated the ease of moving between Europe and America; I meant that it's easier to move between Europe and America than it is to move between poor countries and either Europe OR America.
BUT.
Your claim that this statement is "load-bearing" is wrong. Remember that I concluded that migration between Europe and America probably doesn't show anything conclusive!
AND
If you assume that moving between Europe and American is DIFFICULT, then the fact that 1% of the population of a bunch of North and West European countries is living in America becomes much more informative. Under that alternative assumption, it becomes more likely that America is an overall better place to live than Europe (though selection effects are still an issue).
SO
I was being generous to the pro-European side by making the assumption of easy mobility. If you'd like me to be less generous to the pro-European side, then we can change this to "Hey, look. Even though it's hard as hell to move from Europe to America, a sizeable fraction of North and West Europe's population do it anyway!"
Language is a very significant barrier, it's far easier on that measure alone for an European to go to the US than the reverse, as many Europeans speak English to a high standard.
Related, I always wondered why I'd meet so few undergrads from the US in good European universities with English programmes, given the cost difference. I suspect that it's easier for people from smaller European countries to move abroad as international mobility is "culturally obvious" within the EU (Erasmus programme, etc), whereas fewer young US citizens see international mobility as "natural" (the US being such a large entity with overall less international contract), or their future employers may not be as familiar with European degrees. In any case, the US-Europe migration flows seem a poor indicator.
"Even though it's hard as hell to move from Europe to America" It's hard as hell to go from America to Europe. I don't know which direction might be harder overall. But the only people I know who managed to move from the US to Europe were quite wealthy, and they were able to emigrate to Portugal via an expensive investment route that I believe is even less accessible now. I have a sibling who married a Swedish citizen and still faces large hurdles--which is one reason they live in the US.
"The fact that 1% of the population of a bunch of North and West European countries is living in America..."
What does this mean, firstly? That there are: 1/ a lot of Italian-Americans or that 2/ many Italians alive today have emigrated to the United States in the last several decades or that 3/ a certain percentage of young Italians today emigrate to the United States per year or what?
There is, for example, a very sizable Swedish-American population in the United States (though largely emigrated there in the late 19th Century). Millions of self-described Swedish-Americans, if you go pretty loose on ancestry (as hyphenated Americans are wont to do). But there are also a decent number of *Swedish-born* Swedes in the United States today. Probably around 1% of the current Swedish population, in fact, though statistics are very iffy. Not very surprising, given historical migration patterns and kinship. The velocity of Swedish migration to the United States might tell us something interesting, but it was actually relatively higher Mid-Century than today. And that was at a time that Sweden was undergoing a decades-long economic miracle, so that doesn't really jive with our story, either.
So what does any of this tell us, if anything? That Swedes are or were "voting with their feet?" Like other Europeans, whose countries also have sent a statistically relevant diaspora to the US, including Germany, England, and Ireland?
No. My point is that this is just an irrelevant variable. Not only is the volume of migration extremely low, but the implications of it don't fit your narrative.
Because there are also, famously, a sizable percentage of Americans living in places like Portugal, Spain, France, Germany, Ireland, the UK, and Netherlands, among other places. What does this prove to us, if anything? Are these Americans also "voting with their feet?" How about the even larger number who now live in Mexico? Are we to believe, then, that Mexico is a more successful national example than the United States?
And 1% of the (huge) American population is 3.5 million people, so that'd a lot more individual migration stories than the ~150,000 or so Swedes who decided to move to the US sometime in their lives for love or money or the ~1 million Germans who did. About 5-8 million Americans lives overseas at any given time (which is only about 1.5-2.5%), and they do tend cluster in certain places. But why they move to those places is diverse: Mexico and Portugal are popular for retirees. Germany and Japan are hosting a lot of the military posted aboard. Americans in Ireland, the Netherlands, or Switzerland are tending to move for work. I have friends and family members abroad on religious missions or doing non-profit work in much more exotic places, too, though the latter has really died up of late. Almost none of these people "fled" the United States, regardless of what you often read in trend pieces during the Trump Era.
And how many of these Americans even really "ran toward" the place where they're now living, rather than just ending up their via happenstance? I didn't personally really plan for either Ireland or Sweden to live in ahead of my immediate choice to go, and my move had no wider political or existential salience. Similarly, almost no Swedes or Germans who moved to America did so out of desperation in their homeland. Quite the opposite, usually, in both cases, since emigration between rich countries is, in practice, the luxury purview of the already successful!
Even with the people who do purposely point to a place on a map and go: we're talking about people who already have abundant options just expressing those options to fulfill certain lifestyle preferences. And some people prefer a bagel and others a baguette. And we haven't even discussed the primary reason why people actually move to the United States: for love or family!
To ascribe the aggregation of all those reasons to some larger trend around national decline or other push-pull factors plays well in headlines or Substack hot takes. And it's engaging, sure! You got my goat. But it's also foolish.
Thank you for pointing this out. As a Dutchman who would love to move to the US, I was amazed at Noah's statement that it's "not that hard", when it is in fact nigh on impossible for all but a very tiny percentage of people.
I am continually surprised by the number of Americans and Europeans who think you can just move to the other side of the Atlantic... just like that.
The answer for 99% of people who might think about it it: "Sorry, you can't."
Even the ones who think it "would be hard" tell me things like, "How would I learn the language!?" Or, "wouldn't it be expensive to move all my stuff?" Friends, these are the *least* of your problems!
No, the ability to immigrate is not “ very load-bearing part of your argument”. Smith includes far more numeric data that has nothing to do with migration.
You could delete the entire section on migration and it would not change the argument at all.
I have separately addresses the weaknesses in the rest of his argument, too.
But this point is "load-bearing" insofar as he frames countries and their systems or successes as something that individuals can *chose* via either migration or policy change. I am throwing water on that general claim.
Most people *can't* vote with their feet to move anywhere, especially not now. So the people who pull out the "if you don't like it, get out!" bit are committing a fundamental error, just like the people crowing about how attractive their country is for attracting inbound "brain drain." They both assume that people can just move places and mostly they can't.
The wider part of his claim that I addressed in another comment is that Europe is "Europoor" because of bad policy choices or prioritization. This is also largely incorrect because the structural factors that make the United States so uniquely successful in some areas are 1/ nothing new and 2/ nothing that you can really opt into or out of. The United States is rich and powerful mostly because of what it is, not because of anything Americans alive today earned or decided upon. It's structural.
There's only one other country that is roughly analogous to the United States structurally today, and that's China. It's no coincidence that both countries are now vying for superpower status and largely leaving other countries and groupings (like Europe/EU) behind. China was poor in the 1980s just like it was in the 1880s because of bad policy choices or prioritization. But, historically, it was usually the richest country on the planet, and often the most powerful. That's structural. The fact that China could spend most of the 20th Century doing everything wrong and still bounce back so quickly to lead the pack in my lifetime shows you just how structural power really is and how little politics really affects it.
I would say the same thing about Trump and other misguided presidents like Bush before him: they have screwed things up so thoroughly for the United States in so many ways and *still* the country remains rich and powerful despite poor policy choices and (needless) political chaos.
Until being a unified, continent-sized country with a lot of arable land, huge population, copious energy resources, long coastlines, integrated riverine transport, and natural protective borders is no longer useful for building wealth and power, China and the United States will have it in a way that nobody else can match. Add to that political and cultural unity and deep state capacity and you have the makings of a superpower.
Europe had its own structural factors that were incredibly useful for key centuries in the Early Modern Period (when it first really rose to world-historical dominance), but lacks some of the key components of power today. Not the least a lack of political and cultural unity and state capacity above the national level at the European regional level. Which is not to say that Europe is "doomed," but just that it won't have the (often dubious) fruits of running the world any more. Europeans are quite happy to not be the agents of history for the last two generations, and to focus, instead of living good lives. And Europe's history reminds us that suddenly the ground can shift and structural advantages can become unexpected weaknesses. Perhaps the 21st Century will be split between China and the United States. But perhaps the 22nd won't be very kind to either.
Though I don't see this as being a "load-bearing" part of Noah's argument, your summary of the emigration reality is correct. My wife and I, Americans who don't have any _recent_ European ancestors, have investigated this thoroughly in recent years.
Broadly speaking, I think this is true, but with one noticeable caveat that does, I think, demonstrate where people 'vote with their feet': student visas. This is because, in the US (at least until recently) and in a lot of Europe, student visas function as a bit of a 'pay-to-play' mechanism. By forking over for international student fees, you get a much easier shot at immigration systems that would otherwise be impenetrable.
The main difference is cost. Continental European universities, even with international fees, are often a bargain compared to their non-public US counterparts. The cost of a US university for a non-American who cannot bag a scholarship is, on the other hand, usually pretty steep. If you are American and want to take this route, it's usually much easier for you than the other way around.
Although I think you'd need to do, or find, a study to confirm this, my anecdotal impression is that it's pretty common for Americans to study in Europe to take advantage of lower costs or a better quality-of-live/cultural experience. Once they finish, they either go back to the US straight away, or stay around for a couple of years and then move back by choice. The Europeans who study in the US, on the other hand, often do it because it's a gateway to working in the US. If they come back, it's because they either couldn't find a job, or their immigration status lapsed and they had to leave.
I went to a very International-heavy university in the United States, and even in the early 2000s, Europeans studying there were very outnumbered by South and East Asians or Latin Americans. Only about 100,000 Europeans a year study in the US at any given time out of 1 million International students. Why?
For the reason you state: an American degree is a pathway to American work-permissions. But that pathway also has less utility for a European coming from a wealthy economic bloc where there are copious opportunities for recent graduates. And the economic upside for an elite Indian, Chinese, or Korean was much higher than for an elite German.
Because, remember, we're not talking about "regular people," here. You have to pay *cash* for that $200K+ American degree. Even a middling American college is a luxury good, especially without FAFSA. Rich families in poorer countries run the ROI on that house-sized investment and decide it's worth it. It's a hard sell for Europeans.
My wife studied in the United States, but she chose the single undergraduate program that she could get a four-year degree in only two in order to save money and worked the entire time through it. The Swedish state subsidized some of it via no-interest loans, but not enough to make four years affordable. Her fellow Swedes very rarely do the same because American universities at list-price are just massively unaffordable and not worth any access to the American workforce that you'd (maybe) get.
For Americans studying in Europe, the situation is very different: it's often a much cheaper way to get education than at home. Almost double as many Americans study in Europe: ~200,000 per year. But most of them are short-term students, looking to save some money and have an experience. The number of long-term students is also capped by the limited number of English-only programs. So Americans studying in Europe are mostly not "investing" in job-market access. Like the Europeans, they have that at home and don't really need it.
I don't think, then, that this is much of a useful data point for this essay's argument. Neither Americans nor Europeans are using this pathway much to access the others' job market. And the composition of the two groups is very different, with one being elite/rich (Europeans) and the other being more upper-middle-class (Americans).
Trump2 policies and utterances have also doubtlessly lowered the desirability for Europeans of studying in America.
Except possibly, for Hungarians nostalgic of the early Orban days, when the gerrymanders were still incomplete, and the media hadn't yet been gobbled up by administration-compliant magnates. Ahhhh, the memories.
The policies even more than his utterances. Europeans are genuinely afraid of being swept up in ICE raids as tourists or students for various thought crimes... or for no apparent reason at all! I don't know if the extremity of this new state of affairs is quite clear to Americans.
It makes studying in the United States uncomfortably similar to studying or working in China: something for the most adventurous to consider, and always with the background risk of being constantly shadowed by the surveillance state and potentially being lost into a political prison one day.
Even during the GWOT, there was this idea that getting pushed into a van by rough people in tactical gear was something that happened to "other people." It wasn't a palpable risk for normie Europeans just visiting the United States. Now it is.
I think this ties back into the growth/entreprenurial ventures segment of the EU economy (and also ties into Draghi of course) - as a general matter if you're college graduate with ambition or focus outside of "traditional" in growth ventures terms - new segments etc - the US ecosystem is just much more flexible and expansive.
the degree to which European entrepreneurs with growth/venturing companies (regardless of sector, although IT tech is visible) move to US when they can is a signal - lack of capital markets (fragmented and tin) and wide choice of non-bank financing, rules fragmentation etc - your earlier points.
(equally one sees if one is looking comparatively, southern Med locating northwards [internal EU or from south-side up into EU] as comparatively still EU and notably N.EU or even French ecosystem better than home)
this is narrower than general economy but it is meaningful for the sort of cutting edge.
You're right that the top-tier opportunities in certain cutting-edge sectors are more copious in the United States. It's been said many times recently that the entire American economy is held aloft by data-center build-outs and AI investment right now. And if what we colloquially call "tech" (meaning a specific segment of IT) is where you want to build your career, the US is definitely where it's at. I've had a great tech career myself outside of Silicon Valley, but it's not as straightforward. Unfortunately, though, that tech vertical is increasingly the only game in town in the US, forcing people to hyper-compete for the same pool of jobs in the same few (extremely expensive) cities.
My welfare would immediately materially plummet if I had the same tier of tech job in San Francisco or NYC, despite making a higher salary. It's just too expensive to live there (and especially with all the stuff you have to buy privately in the United States at dear cost which are just included in your taxes in Europe). That's something that's often not factored in.
I will say this for the US: it is the undisputed capital of rent-seeking for the healthcare vertical, meaning that what's bad for patients and for affordability is great for very well-paid doctors, nurses, administrators, and sellers of all manner of pharmaceuticals and medical devices at high markups that don't exist in Europe. I wouldn't blame any doctor who decided to move there for quadruple the salary.
But, on the other hand, the US is increasingly shallower when it comes to other professional career paths: You can build a very nice career and life in Europe working in finance, pharma/biotech, law, green energy, education, or high-end manufacturing.
And for some of these fields, the opportunities have been drying up in the United States: My mom was a university professor for a half-century who loved that vocation but it's something she would never recommend to any young person today. Teaching is still a great job in most European countries, though. Working for Boeing was a much better job 30 years ago than it is now, but Europe's Airbus is still doing great. The biggest maker of high-end chips (being sold for that AI investment) is HQ'ed the Netherlands, but the salad days of America's Intel are long behind it. And Denmark is selling so many of those obesity drugs (especially to Americans) that the profits eclipse the actual economic output of the rest of the country and they need to break out their stats into GNI instead of GDP!
People really tend to fixate on one aspect of this debate at the expense of others and lose all nuance. And they're honestly doing it not to figure out the truth, but to serve a patriotic or ideological narratives. The reality is that the United States and European countries are all great places to live and very lucky places to be born. They're different, but it's pretty foolish to declare one or the other just "best" uncategorically.
Well long text on personal preferences etc. are fun to type but... irrelevant.
My comment was on growth-venture and as someone from venture financing background (beyond Tech), its quite clear for that kind of area what is more advantategeous and where the flow is.
Perosnal opp and lifestyle selection is a separate topic.
It's easy for any European to immigrate to the US. Just fly to Mexico and walk in! Tens of millions have done it. There's a catch of course. Doesn't matter if you are the best software engineer in Europe, no tech company will touch you with a 10 foot pole without a visa.
But isn't it funny that while the same exact laws say that say a tech company can't hire an illegal engineer also say that a construction company can't hire an illegal laborer, and yet they hire millions of them while the authorities just look the other way? One country, two systems!
Thanks for this Noah, a really good overview of what's going on here. For what it's worth, in this specific context, I agree more with Garicano's way of looking at real income than Krugman's, though I understand it is to a certain extent subjective and context-dependent. Over very long periods of time, and we're really talking decades here, you have to have something that accounts for how much our consumption has changed qualitatively. If, say, Americans buy more cars and phones relative to Europeans, who may spend more on eating out - a hypothetical, but plausible example - we have to take into account the fact that cars and phones are vastly better in 2026 than in 2000. Eating out isn't, however, unless we're talking about delivery services, which Americans definitely spend more on.
I think to properly look at this, both economically and sociologically/politically, it's important to separate two things: European economic performance, which is pretty heterogeneous, and cultural preferences for what to do with wealth, which aren't. For the first, zooming in on real output per hour worked is absolutely the correct thing to do. This is where the gap opens up in the aggregate, something Mario Draghi's report showed pretty conclusively. The underlying reason is also obvious: the gap started opening up in the late 1990s, when the US tech boom started. The same thing did not happen here in Europe to nearly the same extent.
That said, there are clear outperformers. The Netherlands, Sweden, and Switzerland have all done pretty well compared to the US and other European countries. Others, like Italy and the UK, are notable laggards. The two things that stand out about the outperformers are that (1) they have relatively deep capital markets by European standards and (2) they are small but open economies whose businesses orient themselves around selling goods and services into much bigger markets. They also tend to have more flexible labour market arrangements for formal and permanent employees than some big European countries, like France and Spain. That said, the UK also has deep capital markets and relatively flexible labour laws, and that clearly hasn't helped them very much.
Cultural preferences - how to spend it - are a totally different story. Visually, there is honestly not much to separate nice suburbs of London, Paris, Milan, Zurich, and Amsterdam, aside from the weather and some aesthetic architectural details. They all resemble each other a lot more than they do a nice American suburb. If you go to Switzerland, where labour productivity is pretty much dead-on American levels, they do not live in huge, air-conditioned houses, or drive cars that are the size of a light tank. The most noticeable differences between them and other European countries are how punctual the trains are, and how much Swiss people talk about going on holiday in the Maldives. In other words, they plough that extra wealth into very European things - better public transport, and nicer holidays.
The economic outliers also don't have vastly different social models to other European countries. Switzerland in particular does have lower government spending relative to its GDP. But that's not really true of the Netherlands or Sweden, and Switzerland still has a robust social insurance-based system. If you go to the doctor, become unemployed, or retire, it's still far more like it is elsewhere in Europe than in the US.
Taking this: "(1) they have relatively deep capital markets by European standards and (2) they are small but open economies whose businesses orient themselves around selling goods and services into much bigger markets. They also tend to have more flexible labour market arrangements for formal and permanent employees than some big European countries, like France and Spain. That said, the UK also has deep capital markets and relatively flexible labour laws, and that clearly hasn't helped them very much."
It strikes me that there is a point of reflection on the specific sub-set of economic activity that is entrepreneurial - the weakness of European venture financing options (that is financing options for entrepreneurial growth oriented companes) as compared to US is flagrant and part of that is certainly the quite limited capital markets options generally - and by extension non-bank routes. In same line the labor market rigidities and ridiculous expenses in the 'Latin' markets - Iberians, Spain, I think Italy - are real penalisers.
UK issues one has to suspect that UK has overwhelmed its cap markets and labor code flex with other factors (Brexit, gross NIMBYism, really poor domestic skill base although offset in S.E. by strong immigration).
(some items Noah fixates on like air-conditioning or dryers seem a bit overly Market Taste versus Economic Choice driven, I think his points stand and probably better not to grab hold of some very American taste driven illustrative points [ I mean I have lived in Med climate when on other side of Atlantic and frankly never felt a need for aircon and find NY offices damned icebox aircon now quite irritating... but quiblling over these anectdotal and taste-driven details detracts from the real point which stands)
I think the UK is interesting. It has periods where it has sudden spurts, and noticeably outperforms other big European countries. Then it gets knocked back, and takes a long time to recover, losing ground in the process.
Personally, I believe the latest episode of this demonstrates the importance of having a big market - internal or external - to sell into. The UK had an amazing decade-and-a-half run in the 1990s and early 2000s versus most of the rest of Europe. The catalyst for this was a wave of worldwide financial services deregulation, aided by changes in British and US policy, the USSR's collapse, and China's Reform and Opening Up. Because of this, a big new market opened up for a sector that the UK already had a comparative advantage in.
That market only remained there for the taking for a time, however, and the UK's fortunes reversed after the 2008 financial crisis. Since then, it's been particularly noteworthy that labour productivity growth in London, the global financial hub, has actually lagged the rest of the country. That's been driven by stagnation in sectors that previously benefitted from finance's spill-over effects, like professional services (e.g., accountancy and consulting).
The UK suffers from two problems: 1/ London sucking up all the oxygen and 2/ underinvestment, generally.
If everyone who wanted to do anything had to move to NYC or the Bay Area, the American economy would suffer stagnating productivity growth. Just as a function of how increasingly unaffordable it would be for talent to live in those cities near the fixed pot of opportunities. This is London in the UK today. (It's also Paris in France, to a milder degree).
And, during a time when the US was throwing helicopter money out the window to restart the Great Recession-ravaged economy and then letting loose the cannon during COVID, the UK was still (foolishly... disastrously...) committed to Conservative austerity. Was it good for their fiscal situation? Turns out no! Both the UK and the US are heavily indebted, but one of them has actual economic growth and productivity to grow their way out of it.
"If you go to Switzerland, where labour productivity is pretty much dead-on American levels, they do not live in huge, air-conditioned houses, or drive cars that are the size of a light tank.".
Nope, nope.
I can't speak for the homes (but I'd bet they prefer newer, larger homes if they can afford it), but the cars they drive are ABSOLUTELY better than other countries cars. Every time I travel on the highway in Italy, it's guaranteed that if license plate is Swiss then the car, on average, is much better than the average Italian car. Audis, BMWs, Mercedes, stuff like that. And not basic models. It's a meme.
Well yes, but an Audi station wagon is still a station wagon. My own experience in Ticino, which I visit frequently, is that even without the plates there’s a noticeable difference in the brand of car people drive and how new it is. But the proof point lots of Americans use in these debates is the size of car you drive, and they’re not necessarily bigger than their Italian counterparts.
Also Italy is more American than Switzerland in one metric: cars per capita. The reason for this is obvious - worse public transport in much of Italy - but it suggests that the number of cars, something Americans also commonly cite, doesn’t say much either.
My point was that the "not bigger cars" argument was a bit misleading, in the sense that in the US a lot of people who can afford them buy cars that are "bigger" (be it pick-up trucks or muscle cars), here in Europe of course you won't buy pick-up trucks or muscle cars if you have the money (even though I see more and more Ford pick-up trucks here in Italy too) but you'll see much more Germany sports/luxury cars, if people can afford them.
In Italy too, there is absolutely a difference in "which cars you buy" between richer and poorer cities/zones.
Interesting perspective and charts, thanks Noah! What I can add from a Swiss perspective: owning a single family home on its own separate piece of land more and more becomes a privilege for the top income percentiles or heirs. There is just not enough land for single family homes for everyone that would like to own one, if we want to protect the green areas around the overbuilt spaces. Relative to my childhood where owning a single family home was considered the standard for the middle class, this can be considered a loss in wealth even though on paper we are wealthier than ever (on average). We compensate by building generous flats in so-called "high quality densified" urban areas and investing in nice green spaces and parks. Public transportation is so good that cars are considered an expensive luxury for broad segments of the population. And wherever you live in Switzerland you can quickly get by public transportation to beautiful nature and enjoy outdoor activities. However we have very strong immigration and don't build enough and because of that renting or owning a flat has become absurdly expensive in many places. There will be an interesting vote on June-14 about capping the population size at 10 Million. I hope that it gets voted down, but our growth problems are causing real pain. Would be interested in your perspective on Switzerland.
I'm sorry, but how is it "not that hard" to move from Europe to the US? I'm from the Netherlands and I'd love to, but the only way to have even a chance of moving to the US from Europe is to either marry a US citizen or be one of the incredibly small group of people with very specific professional or academic qualifications that are wanted/needed in the US. It's either that or the green card lottery and I'm sure you know the chance of winning that.
I'm not sure how difficult it is the other way around, but there is absolutely no way for 99% of regular Europeans to move to the US, even if they really wanted to. And from what I hear, even for those lucky enough to qualify, the process of becoming a US citizen takes years.
So yes, it is in fact incredibly hard for Europeans to move to the US, so it's not so strange the migration numbers between Europe and the US are low (though I agree, the fact that quality of life will seem somewhat equal, depending on what you value, also contributes to this).
Yes, true. It's actually a LOT easier for Americans to move to Europe, thanks to Schengen and ancestry laws. Which I guess makes it more striking that so many more Europeans move to America than the reverse.
I think one nuance people should realize is that labor productivity isnt how hard people are working but more like how much value added a worker is providing for a company per hour. Since value added is revenue - intermediate inputs. You can basically think of productivity almost like profit. (Well obviously value added is more than profit, basically how much of the piece goes to workers, government, investors, debtors, capital owners, etc. But you get my point.)
As a result, productivity is also a function of that fact that america has more high margin companies than Europe does, aka our technology industry and our semiconductor design firms.
You can see it in our companies. Google and Ford have roughly the same amount of employees (~180K) with the same dollar amount of cost of goods sold ($150B), but Google's revenue is double than of Ford's. If COGS is your proxy for intermediate inputs, then Google's value added is ($350B - $150B)/(180K) meaning Google's value added per worker is $1.1M. For Ford its ($175B -150B)/(180K), making value added $140K per worker in Ford. Google has roughly 8x the value added per worker than Ford, not because of hard work but Google is just a higher margin firm. A lot of american productivity is just more of the american labor force allocated to higher margin sectors than european or Canadian equivalents.
good point and Europe has been very good for US big tech: a market of hundreds of millions consumers they can access without huge costs or investments.
Useful review. While I found myself desiring to quibble about indeed - as signaled in the arty itself - on various items (say housing size and degree of taste/desire driven), in end the core is not any single factor but the overall growth rate and the relative comparative decline in productivity on labor.
The Draghi report is a necessary read - although in EU context going from yet-another-report to reforms...
100% agreed on the Draghi report. Essential for understanding how bad our situation is in Europe now and why this is the case. But it's mostly being ignored - or at least its most important conclusions are. I think that's because there's either aversion or unwillingness to argue for its main prescription: a more federal EU with a much bigger and coherent internal market, more economies of scale to fund public goods, and a genuine single safe asset to underpin a large and deep capital market.
Absolutely. Absolutely: "a much bigger and coherent internal market, more economies of scale to fund public goods, and a genuine single safe asset to underpin a large and deep capital market."
These feed back into entreprenurial growth aspects of the economy where Europe is just really under-performing in a flagrant manner compared to where it should be based on other factors.
ETA an observation from having worked in investment support context with both US Gov and EU and EU national (Ger) instruments
US deep pockets but my god applied rule sets are fucking nightmare, I point to an interesting note from a guy I knew back-in-the-day from crossover on some risk capital financing: Stephen Koltai on the https://stevenkoltai.substack.com/p/usaid-and-government-inefficiency - gist of note from Koltai's experience going into USGov re econ dev w now-ex-USAID - rule sets bogging everything down. Worth a read.
EU mechanism: actually when they put their mind to it can be cleaner (i.e. not as bogged down once actually in operation, and less picayun bogging down, of course that has risk involved (ahem, Greece) but in end perhaps worth some slosh rather than getting totally bogged down.
German: fuckme it was like a rewind to the 1970s on dossiers submissions (so when I read developers doing German-German things getting bogged down, I can understand - the luxuries of the rich not affordable when one's no longer sitting on top...)
Just to clarify on crime… violent crime is significantly higher in the US. Property crime is comparable in Europe.
For the European readers… I am 66 and have lived in 7 different major metro areas in the US and no member of my extended family has ever been a victim or even seen a violent crime.
I’ve always found this discussion/argument to conceal a fair amount of cope on both sides. Americans tend to mask their anxieties about our increasingly toxic and chaotic culture and politics by running into our massive McMansions and cranking the AC and watching our big screen TVs (insert screed from Network here) and saying to ourselves with all this stuff we’re doing just fine. Europeans mask their anxieties about their increasing irrelevance on the global stage and their own chaotic politics by walking to a nice cafe and checking a website somewhere that says they live 2 years longer than fat ass Americans so everything is fine.
Both sides need to wake up and realize that yes they have chosen differently in terms of what to value economically (Americans like stuff and innovation, Europeans like stability and quality of life), but they are both facing major issues in their respective societies. Trying to dunk on Americans for being fat or having guns or whatever wont install AC units in Italy, and pointing out that the French have lower median income than Americans won’t get rid of MAGA. We need to figure out a way to acknowledge some of these differences but also balance ourselves better. Europe could learn something from America and vise versa, it’s not a zero sum game.
As always, great post Noah and I think technically I’m restating your points from an earlier article but whatever it was important then it’s important now.
Few people understand just how big the difference is for educated professionals in the US versus Europe (any of them, but particularly where I come from; Sweden).
I earn 8x (!) times more net in the US compared to Sweden. People can talk about "free healthcare" all they want, it isn't free when much of my income was taken to pay for it.
"If you like living in an urban apartment, strolling past picturesque old buildings to cute cafes, and taking a lot of vacation every year, then Europe is obviously for you."
I know this is the image but this is also only true for some few people living in the absolute city centers of places, most will live in modern tiny ugly boxes outside the center (300-700 square feet usually). And they've intentionally made flights so expensive here (*climate*) that travel is increasingly just becoming a thing for rich people again.
Noah, one issue you don't seem to address is medical insecurity. In Europe, the average person person's income is bolstered by access to free or low-cost medical care. In the United States, many go without such medical security and are subject to medical bankruptcy or the health Impact of untreated or undertreated disease. Are medical benefits included in this income comparison for Europeans and Americans?
By my back of the envelope calculation, decent health insurance costs about $18,000 per year. Shouldn't the median European be viewed as having an $18,000 boost to their annual income?
Thanks for the clarification. However, for complete clarity I'd like a clear explanation of how medical benefits are calculated for Americans and Europeans.
That seems like a bit of a handwave. The phrasing is "Harmonized into a common framework, LIS datasets contain household- and person-level data on labor income, capital income, pensions, public social benefits (excl. pensions) and private transfers, as well as taxes and contributions, demography, employment, and expenditures."
I assume that the health care is covered under "public social benefits," but the exact way that is calculated is nebulous.
There are other weaknesses in the argument, too, which really undermine it: Let's look at the section around food. You've measured average calories intake as a proxy for wealth. Historically, this was useful. But it's, at best, a mixed signal today. It's also now a measure of ingestion of highly-processed food. Or just having a nation of people who are overweight.
In your chart, who else shared top-calorie-intake with the US? Serbia. Not a famously rich place. And Ireland. A rich place, per capita, yes, but also a country with an unusually unhealthy diet relative to European norms, with high rates of obesity. Are Americans, Brits, and the Irish fat because they are rich? Or just because they all share the same culture around convenience food? How about Hong Kong, which consumes 1,000 fewer calories per capita than China, but is 4x as rich per capita? Any country on this chart that has 3,000-4,000 calories supplied per person per day is producing too many (probably low-quality) calories, rich or not.
Left unsaid here is also that all these calories aren't consumed evenly in the United States, by any means. Anywhere from 10-13% of American households experience food insecurity in a typical year. That's double the rate in Europe. So who's poorer? The country where a lot of people eat too much highly-processed food and a tenth to a seventh can't afford even enough of that crappy food? At the very least, the implication is mixed.
Noah's article provides strong evidence about the US economic overperformance relative to Europe, but on the other hand Europeans generally live longer lives and are exposed to much less crime.
The most frustrating aspect of this debate is that many commentators seem to believe, although rarely explicitly state, that there are tradeoffs between these two aspects, that somehow one cannot have both American wealth and European long and peaceful lives, when there is little reason to think so (Matt Yglesias has a good article on this https://www.slowboring.com/p/on-the-4th-of-july-thinking-about). In fact, countries such as Switzerland or Denmark have American levels of wealth and a life expectancy in line with other Western European countries.
Most people agree that the US has a better economic performance than Western Europe mainly due to more flexible labour markets, deep (less regulated?) capital markets, fewer trade barriers in the US vs the EU (internal non-tariffs barriers in the EU are equivalent to a 40% tariff in goods and 115% tariff in services), and stronger universities. Different people will weight these factors differently, but no one plausibly argues that, if the EU adopted these US policies, life expectancy would drop by any amount.
Conversely, Americans have a lower life expectancy due to, among other factors, much higher crime, mostly because of an easier access to firearms, more driving accidents, as they drive more due to their urbanism, and possibly the lack of universal health coverage. Changing any of these things to be in line with Europe would not make America give up its financial or labour policies.
These tradeoff arguments are usually made in bad-faith, IMO. There is no tradeoff between European-style Social Democracy and a dynamic, wealthy American-style economy.
If anything, countries like Sweden show that a social democratic underlay can be *better* for encouraging the social capital, entrepreneurship, and labor flexibility that could make for an even more dynamic economy:
-There is no minimum wage in Sweden. There doesn't need to be.
-People don't have to stay at a less dynamic job just because they "need the healthcare." Social services aren't linked to their employer.
-People can leave their job and start a business because the downside risk isn't that they'll face utter ruin. And they do start businesses at higher rates than Americans.
-And everyone talks about the burden of taxation on employers and employees, but what about the burden on American employers for incredibly expensive and complex benefits packages?
Similarly, since the 1990s, Sweden has become more "neoliberal," for better or for worse in key ways that arguably increase economic dynamism. Swedes still have (increasingly longer) and more peaceful lives, even if they can't rely on stable, lifetime employment at the same unionized factory, anymore.
And Sweden's situation is very distinct from other European countries. Just like California's situation is distinct from Texas' in the United States. There's no either-or here.
The Swedes do a good job, probably as good as anyone in the EU/NAMER.
Do you have recent data for the claim "(Swedes) start businesses at higher rates than Americans"? I know that's true historically but post-pandemic US small business formation increased by ~2/3rds, so I wonder if we're in the same ballpark now. Probably not a coincidence it happened after Americans checked their healthcare options and realized they could get non-employer healthcare through the exchange.
Quite. I often hear an argument that there's an underlying cultural cause: Americans tolerate less regulation but also get themselves into more health-destroying and life-ending jams because they're less risk-averse. I think, however, that this argument falls down when you meet a Dane or Swiss person, and realise that they're not exactly cowboys.
Many cultural arguments are just system-design arguments.
If you travel to Nigeria, it will strike you that Nigerians seem much less risk-averse than Americans. Your hair turn white at driver behavior on Lagos' roads. Have they no fear of death!? You'll wonder why Nigerians are so willing to get out there with starting a small new business, even if the context seems hopeless? Nigerians are also profoundly religious, deriving an unflappable optimism from Evangelical Christianity or charismatic Islam that helps them get through difficult days with faith that God will protect them no matter what. Is all this just cultural?
Or is it just the fact that Nigeria is a very poor, very corrupt, sadly under-developed country where there's just no such thing as avoiding risk for the average person! The roads are chaotic and inherently risky because they aren't designed well, maintained, or policed. If you try to navigate safely and with consideration, you will fail.
And you can't just settle down for a safe, boring job in a bank or something in Nigeria because those just hardly exist. Gritty, risk-on entrepreneurship is your only option for most people in an economy like Nigeria's. It's hustle or die. Is this good? Well, most Nigerians are still poor. All this efflorescence of entrepreneurship hasn't made the country rich, And even those who hustle hard all day every day mostly don't make it. But they give themselves at least a slightly better chance.
Being a secular-materialist who looked at all of this disorder and unfairness with a clear eye would also probably be pretty intolerable for your average Nigerian. So why not declare, "Once more into the breach! God will save me!" Again, believing deeply in a Prosperity Gospel to a degree that would put an American Evangelical to shame doesn't generally help Nigerians materially, but it does wonders psychologically.
The United States is somewhere between Switzerland and Nigeria in these terms, and the principle remains: Most Danes and Swiss people aren't cowboys because *they don't have to be.* Cowboys were cowboys because they lived in the Wild West! Americans may "live fast and die young" because a lot of the things that allow you to live a genteel, stable, Swiss life just don't exist in the United States.
And for poorer Americans, you see a much riskier behavior profile than middle-class Americans for the same reason. People will scold the poor for smoking, or having children out of wedlock, or not staying in school or whatever. But can a middle-class person really understand how hopeless it is to be a normie when you're born amongst poverty and disorder? Americans like to make fun of "white trash" or "ratchet" or "ghetto" behavior among their poor, but they're really describing what results when people exist among systems that don't work. Similarly, in Norway, they describe anything "crazy" as “helt Texas” or "completely Texas," but could a Norwegian really understand why Texans kind of *have to be crazy* to exist in a state with zero safety net?
Noah seems to think that American and European suburbs are more or less analogous. The fact is that they were respectively built for two different demographics. American suburbs were built for middle and upper middle class people — think the Drapers from Mad Men. European suburbs were built for the working classes and immigrants from former colonial territories. That explains a lot about why American and European suburbs look so different. Comparing middle-class housing in one country to working-class housing in another isn’t really a comparison of national wealth — it’s a comparison of who each country’s housing system was built to serve
You’re correct. People were able to move to the suburbs thanks to programs like the GI Bill, FHA loans, and federally subsidized mortgages. And many of those people were teachers and union workers. But those programs were largely closed to Black families doing the same jobs at the same wages — FHA underwriting explicitly redlined Black neighborhoods, restrictive covenants kept Black buyers out of new developments, and the GI Bill’s housing benefits were administered through local institutions that systematically excluded Black veterans. So the suburbs did democratize homeownership, but along a racial line.
I think you have the social pact in America backwards - the promise of the suburbs was that anyone could live like a rich man. If you read classic books about the LA suburbs like "Holy Land" or the Easy Rawlins novels, the initial inhabitants of suburbia were teachers, mechanics, factory workers - all working class people. What drew people to suburbia was that they could own their own land, their own house, and drive to work the same way their boss did.
I don't think this disproves anything that Krugman wrote. The upshot being that Americans consume more, but Europeans work less and are far less vulnerable to negative shocks. All of which continues to beg the question of why we should care. Yes, your median American has a bigger living space, a more expensive car, and probably replaces their iPhone more frequently than the median European. But the median European vacations more, doesn't go bankrupt if they get sick, and lives longer.
If Europe fails to deliver an adequate quality of life, and its citizens express the same, that would be a cause for concern. But really, it seems that it's just a different set of lifestyle choices that reflect a different set of priorities. If you're a highly educated 23 year old who wants to make a lot of money by working at a high-flying company or starting your own, you're far better off being in America. But if you're a random worker whose ambitions amount to having a secure 9-5 job, 4-6 weeks of real vacation, and a safety net, you're far better off being in Europe. And that feeds into the migration discussion-- Europeans who want to come to America are... by and large the ambitious people who want to make more money. Americans who might want to come to Europe are more likely either underappreciated knowledge workers or just poor and middle-income people who are vulnerable to a shock. The former find it much easier to move than the latter.
I'm not sure how true that is anymore. There was a time when, for example, unemployment benefits in many European counties were almost absurdly generous. If you look today UI might be 10% more than you'd get in many US states.
France still has iron clad job security for those who can land an employment contract but it also has a vast underclass without those protections. And in France life can be very difficult, without an employment contact, to secure an apartment, borrow money, buy a home, etc.
Getting sick is the biggest shock one can endure, and you're indisputably better off getting sick as a lower income working person in Western Europe than in the US. And while the level of UI differs, the duration is substantially different. In the US, it generally doesn't last beyond 6 months. In France, for instance, it can't last less than 6 months, and can last for over 2 years.
"you're indisputably better off getting sick as a lower income working person in Western Europe than in the US."
How so? Out of pocket healthcare costs are higher in Europe as a percentage of income.
"As of 2026, the maximum Federal SSI payment for an individual is $994 per month, and $1,491 for couples. In Germany, the Grundsicherung provides a standard monthly benefit of €563 for single individuals and €506 per partner for couples, plus reasonable costs for housing and heating, which are usually covered in full."
So similar to various programs in NY State:
"SSI recipients in New York State can access housing assistance through federal Section 8 vouchers, state-supported housing programs, and NYC-specific rental subsidies (like CityFHEPS), often managed by local social services."
The point about air-conditioning is also very irrelevant. What is another reason the United States uses much more AC than Europe? Maybe the same reason that Americans use more AC than Canadians? It's just hotter there!
This is like claiming that Russians are richer than Americans because they use more heating.
I don't have central AC in my house in Sweden. I have a portable unit I drag out of the collar for the 3 weeks a year I kind of need it. But I've been in literal shacks in Southeast Asia where they have the AC blasting constantly. AC is used much more in poor parts of the world that are also hot than in Europe for obvious reasons.
By contrast, I've got a *BIG FUCKING HEAT PUMP* for my winter heating needs in Sweden. It's vastly overbuilt for what I would have needed in the Mid-Atlantic Region in the US, where it snowed maybe once per winter and barely every went below freezing. That heat-pump, as efficient as it is, uses more than half of my total household energy costs in the winter in a way that Americans outside of the Upper Midwest or New England would find unfamiliar.
When I lived in Ireland, neither heating nor cooling were really material to my consumption. In the British Isles, the weather is basically just March-like all year round. Not very cold, but also not very hot. Just gray, cloudy, and drizzly almost all the time. Housing stock is terrible there, so you can still end up spending more than is reasonable to shift indoor comfort around the margins, but neither AC nor heating would have been a good proxy for wealth. Ditto for places like Northern France, Belgium, or the Netherlands, with a similar mild, oceanic climate.
What is the average age of a dying from the heat. I’m guessing that the age is quite high and the health of the person is poor. If their lives are saved by ac it may not be for very long.
Yes, you are right. There are parts of Europe where AC would increase not just comfort, but also reduce mortality. Paris in 2003 is the canonical example. But Paris isn't Phoenix. Most of the year, Paris isn't hot. And the historical housing stock in most of France is optimized for cold, instead.
That is now changing along with the Climate, obviously. And not just in Europe: We also saw a lot of suffering during the recent heatwaves in the Pacific Northwest, where more Irish climates usually prevail, yet temperatures shot up past 100F suddenly. Should everyone in Seattle and Portland get AC now? Maybe! But it makes sense that they didn't have it before, doesn't it? And it makes sense that my family in New England mostly doesn't have it, and not because they are poor.
Because your argument was that Europeans don't have AC because they're Europoors. And my rebuttal is that they don't have AC because historically they haven't really needed it the way Americans have. And that historical context is locked into the existing housing stock, the design of dwellings, and even city planning.
Retrofitting Paris with ACs for every Parisian is nowhere near as easy, cheap, or practicable as it is to build a new suburban housing tract in the Sun Belt with central AC. Same story in older American cities like Boston or NYC, where AC is also not at all universal and people rely on jerry-rigged window units, at best.
And the cost isn't the only or even the primary impediment in that case: Believe me, I've fretted about whether or how to best get an AC split unit installed in my 105-year-old wooden house, here in Sweden, too... without it looking like shit, costing unreasonable amounts of installation costs, disrupting all manner of other things, or even getting me in trouble with the local historical preservation codes! And when I weigh all that against the relief I'd really only need for about 3 weeks in peak summer, it stops seeming like a priority.
I am 47 and in the 1990s, summers in Czechia were rarely hot enough to require cooling.
In the 2010s and 2020s, there were some horrible scorching summers and therefore new middle class homes tend to have built-in AC.
But for the huge housing stock from before 2010, retrofitting it to have AC is technically complicated. Many people use portable units as a provisional fix. IDK how those turn up in the stats.
Most of Sweden has an average July high temperature below 22C/72F. That's April/October weather where I come from.
Stockholm hits 30C maybe once a year.
I've lived in the subtropical DC climate so long I don't even turn on the air-conditioning till it hits 34 *and* the humidity hits the oppressive level.
"It's not that hard to move between Europe and the U.S., but not that many people do it."
This statement is very incorrect. And since this is a very load-bearing part of your argument, that's a problem downstream of the point. But yours is a misconception so widely held by Americans that it's important to clarify it here for the readership, generally:
It's *extremely* difficult for Europeans to move to the Untied States and vice-versa, as I can well-attest from the POV of an American living in Europe long-term. Most people in rich countries absolutely cannot "vote with their feet" in either direction. EU/EEA residents can't even easily move to the UK, and vice-versa, *within* Europe, anymore! And that changes the terms of these types of arguments, fundamentally.
For Europeans who aren't married to an American, the narrow pathway to moving to the US to work and live is via: 1/ the tiny-and-closing pathway of the H1-B visa 2/ an L-1A/B intracompany transfer or 3/ an O-1 for "extraordinary ability."
You've talked about the H1-B here before, so you know that it's capped at 85,000 professionals per year, which is a minuscule amount relative to *global* (overwhelmingly Asian) candidates and the unmet domestic American demand for that talent.
As for the L-1, it's also such a small volume as to be meaningless: you're talking a scale of a few tens of thousands. I know a few fellow tech workers who were transferred to the US on that basis (e.g. at Amazon or other American multi-nationals) to pursue global leadership roles, but the process within your corporation is extremely stringent, given the costs and complexities involved to sponsor. You're going to need to clock several years and reach upper-middle-management at your company for them to even consider it. Or else, yeah, be one of the tiny pool of charmed talent "working 80 hours a week building the future of AI."
And as for the O-1, it should be self-explanatory that this is an infinitesimally small pool. I suppose you could now double this exclusive pool with Trump's new "Golden Visa" for plutocrats. But it's not material to your argument.
Out of a US workforce of 160 million people and a EU/EEA/UK workforce of 250 million, then, we're looking at maybe ~50,000 Europeans who even *could* transfer to the US per year.
So when Trump asks why Norwegians and Danes aren't moving to the US instead of people from "shithole countries," the boring answer is because they literally can't. Many more Nordic people would if there was a pathway for them to do so.
Just like all of us know several dozen Americans who would *love* to move to Denmark or Norway if they were actually able to. Because do you have any idea how impossible that is for Americans!? One doesn't simply move to Europe. You've got a parallel situation to the one that greets Europeans trying to move to the US: a very limited and very stringent allotment of work visas, EU Blue Cards, or Critical Skills Visas available for the choicest American workers. I was able to get the latter, but a tiny percentage of American workers would qualify. The overwhelming majority of the millions of Americans residing Europe are either stationed there for the US military or other government reasons, retired on Golden Visas, or married to a European. There's no clean total of Americans just working in Europe on work visas, but the number granted per year is roughly equivalent at ~50,000, given the difficulty.
As in the US, your real scale path in to Europe is via family ties: Millions of Americans have a Polish or Italian or Greek grandparent that would be their "ticket" to EU citizenship, often without their knowledge. Others marry-in. But even finding a European to marry for your pathway is arguably even more onerous than it is on the American side, with years-long administrative delay, sizable costs, formidable red-tape (which is very different by country), and practical challenges that can be insurmountable (like families literally having to remain separated for 12-18 months and maintaining households on two continents). I am married to a European but that would have been the hardest way for me to secure residency, ironically.
So saying that people in rich countries reveal their preferences by moving (or not) is incorrect.
You're right that I overstated the ease of moving between Europe and America; I meant that it's easier to move between Europe and America than it is to move between poor countries and either Europe OR America.
BUT.
Your claim that this statement is "load-bearing" is wrong. Remember that I concluded that migration between Europe and America probably doesn't show anything conclusive!
AND
If you assume that moving between Europe and American is DIFFICULT, then the fact that 1% of the population of a bunch of North and West European countries is living in America becomes much more informative. Under that alternative assumption, it becomes more likely that America is an overall better place to live than Europe (though selection effects are still an issue).
SO
I was being generous to the pro-European side by making the assumption of easy mobility. If you'd like me to be less generous to the pro-European side, then we can change this to "Hey, look. Even though it's hard as hell to move from Europe to America, a sizeable fraction of North and West Europe's population do it anyway!"
Language is a very significant barrier, it's far easier on that measure alone for an European to go to the US than the reverse, as many Europeans speak English to a high standard.
Related, I always wondered why I'd meet so few undergrads from the US in good European universities with English programmes, given the cost difference. I suspect that it's easier for people from smaller European countries to move abroad as international mobility is "culturally obvious" within the EU (Erasmus programme, etc), whereas fewer young US citizens see international mobility as "natural" (the US being such a large entity with overall less international contract), or their future employers may not be as familiar with European degrees. In any case, the US-Europe migration flows seem a poor indicator.
"Even though it's hard as hell to move from Europe to America" It's hard as hell to go from America to Europe. I don't know which direction might be harder overall. But the only people I know who managed to move from the US to Europe were quite wealthy, and they were able to emigrate to Portugal via an expensive investment route that I believe is even less accessible now. I have a sibling who married a Swedish citizen and still faces large hurdles--which is one reason they live in the US.
"The fact that 1% of the population of a bunch of North and West European countries is living in America..."
What does this mean, firstly? That there are: 1/ a lot of Italian-Americans or that 2/ many Italians alive today have emigrated to the United States in the last several decades or that 3/ a certain percentage of young Italians today emigrate to the United States per year or what?
There is, for example, a very sizable Swedish-American population in the United States (though largely emigrated there in the late 19th Century). Millions of self-described Swedish-Americans, if you go pretty loose on ancestry (as hyphenated Americans are wont to do). But there are also a decent number of *Swedish-born* Swedes in the United States today. Probably around 1% of the current Swedish population, in fact, though statistics are very iffy. Not very surprising, given historical migration patterns and kinship. The velocity of Swedish migration to the United States might tell us something interesting, but it was actually relatively higher Mid-Century than today. And that was at a time that Sweden was undergoing a decades-long economic miracle, so that doesn't really jive with our story, either.
So what does any of this tell us, if anything? That Swedes are or were "voting with their feet?" Like other Europeans, whose countries also have sent a statistically relevant diaspora to the US, including Germany, England, and Ireland?
No. My point is that this is just an irrelevant variable. Not only is the volume of migration extremely low, but the implications of it don't fit your narrative.
Because there are also, famously, a sizable percentage of Americans living in places like Portugal, Spain, France, Germany, Ireland, the UK, and Netherlands, among other places. What does this prove to us, if anything? Are these Americans also "voting with their feet?" How about the even larger number who now live in Mexico? Are we to believe, then, that Mexico is a more successful national example than the United States?
And 1% of the (huge) American population is 3.5 million people, so that'd a lot more individual migration stories than the ~150,000 or so Swedes who decided to move to the US sometime in their lives for love or money or the ~1 million Germans who did. About 5-8 million Americans lives overseas at any given time (which is only about 1.5-2.5%), and they do tend cluster in certain places. But why they move to those places is diverse: Mexico and Portugal are popular for retirees. Germany and Japan are hosting a lot of the military posted aboard. Americans in Ireland, the Netherlands, or Switzerland are tending to move for work. I have friends and family members abroad on religious missions or doing non-profit work in much more exotic places, too, though the latter has really died up of late. Almost none of these people "fled" the United States, regardless of what you often read in trend pieces during the Trump Era.
And how many of these Americans even really "ran toward" the place where they're now living, rather than just ending up their via happenstance? I didn't personally really plan for either Ireland or Sweden to live in ahead of my immediate choice to go, and my move had no wider political or existential salience. Similarly, almost no Swedes or Germans who moved to America did so out of desperation in their homeland. Quite the opposite, usually, in both cases, since emigration between rich countries is, in practice, the luxury purview of the already successful!
Even with the people who do purposely point to a place on a map and go: we're talking about people who already have abundant options just expressing those options to fulfill certain lifestyle preferences. And some people prefer a bagel and others a baguette. And we haven't even discussed the primary reason why people actually move to the United States: for love or family!
To ascribe the aggregation of all those reasons to some larger trend around national decline or other push-pull factors plays well in headlines or Substack hot takes. And it's engaging, sure! You got my goat. But it's also foolish.
Thank you for pointing this out. As a Dutchman who would love to move to the US, I was amazed at Noah's statement that it's "not that hard", when it is in fact nigh on impossible for all but a very tiny percentage of people.
I am continually surprised by the number of Americans and Europeans who think you can just move to the other side of the Atlantic... just like that.
The answer for 99% of people who might think about it it: "Sorry, you can't."
Even the ones who think it "would be hard" tell me things like, "How would I learn the language!?" Or, "wouldn't it be expensive to move all my stuff?" Friends, these are the *least* of your problems!
No, the ability to immigrate is not “ very load-bearing part of your argument”. Smith includes far more numeric data that has nothing to do with migration.
You could delete the entire section on migration and it would not change the argument at all.
I have separately addresses the weaknesses in the rest of his argument, too.
But this point is "load-bearing" insofar as he frames countries and their systems or successes as something that individuals can *chose* via either migration or policy change. I am throwing water on that general claim.
Most people *can't* vote with their feet to move anywhere, especially not now. So the people who pull out the "if you don't like it, get out!" bit are committing a fundamental error, just like the people crowing about how attractive their country is for attracting inbound "brain drain." They both assume that people can just move places and mostly they can't.
The wider part of his claim that I addressed in another comment is that Europe is "Europoor" because of bad policy choices or prioritization. This is also largely incorrect because the structural factors that make the United States so uniquely successful in some areas are 1/ nothing new and 2/ nothing that you can really opt into or out of. The United States is rich and powerful mostly because of what it is, not because of anything Americans alive today earned or decided upon. It's structural.
There's only one other country that is roughly analogous to the United States structurally today, and that's China. It's no coincidence that both countries are now vying for superpower status and largely leaving other countries and groupings (like Europe/EU) behind. China was poor in the 1980s just like it was in the 1880s because of bad policy choices or prioritization. But, historically, it was usually the richest country on the planet, and often the most powerful. That's structural. The fact that China could spend most of the 20th Century doing everything wrong and still bounce back so quickly to lead the pack in my lifetime shows you just how structural power really is and how little politics really affects it.
I would say the same thing about Trump and other misguided presidents like Bush before him: they have screwed things up so thoroughly for the United States in so many ways and *still* the country remains rich and powerful despite poor policy choices and (needless) political chaos.
Until being a unified, continent-sized country with a lot of arable land, huge population, copious energy resources, long coastlines, integrated riverine transport, and natural protective borders is no longer useful for building wealth and power, China and the United States will have it in a way that nobody else can match. Add to that political and cultural unity and deep state capacity and you have the makings of a superpower.
Europe had its own structural factors that were incredibly useful for key centuries in the Early Modern Period (when it first really rose to world-historical dominance), but lacks some of the key components of power today. Not the least a lack of political and cultural unity and state capacity above the national level at the European regional level. Which is not to say that Europe is "doomed," but just that it won't have the (often dubious) fruits of running the world any more. Europeans are quite happy to not be the agents of history for the last two generations, and to focus, instead of living good lives. And Europe's history reminds us that suddenly the ground can shift and structural advantages can become unexpected weaknesses. Perhaps the 21st Century will be split between China and the United States. But perhaps the 22nd won't be very kind to either.
You seem more interested in changing the topic, rather than commenting on Smith’s main point: that Europeans are poorer than Armericans.
Writing very long and tedious comments off the topic of the article only proves this.
Though I don't see this as being a "load-bearing" part of Noah's argument, your summary of the emigration reality is correct. My wife and I, Americans who don't have any _recent_ European ancestors, have investigated this thoroughly in recent years.
Broadly speaking, I think this is true, but with one noticeable caveat that does, I think, demonstrate where people 'vote with their feet': student visas. This is because, in the US (at least until recently) and in a lot of Europe, student visas function as a bit of a 'pay-to-play' mechanism. By forking over for international student fees, you get a much easier shot at immigration systems that would otherwise be impenetrable.
The main difference is cost. Continental European universities, even with international fees, are often a bargain compared to their non-public US counterparts. The cost of a US university for a non-American who cannot bag a scholarship is, on the other hand, usually pretty steep. If you are American and want to take this route, it's usually much easier for you than the other way around.
Although I think you'd need to do, or find, a study to confirm this, my anecdotal impression is that it's pretty common for Americans to study in Europe to take advantage of lower costs or a better quality-of-live/cultural experience. Once they finish, they either go back to the US straight away, or stay around for a couple of years and then move back by choice. The Europeans who study in the US, on the other hand, often do it because it's a gateway to working in the US. If they come back, it's because they either couldn't find a job, or their immigration status lapsed and they had to leave.
I went to a very International-heavy university in the United States, and even in the early 2000s, Europeans studying there were very outnumbered by South and East Asians or Latin Americans. Only about 100,000 Europeans a year study in the US at any given time out of 1 million International students. Why?
For the reason you state: an American degree is a pathway to American work-permissions. But that pathway also has less utility for a European coming from a wealthy economic bloc where there are copious opportunities for recent graduates. And the economic upside for an elite Indian, Chinese, or Korean was much higher than for an elite German.
Because, remember, we're not talking about "regular people," here. You have to pay *cash* for that $200K+ American degree. Even a middling American college is a luxury good, especially without FAFSA. Rich families in poorer countries run the ROI on that house-sized investment and decide it's worth it. It's a hard sell for Europeans.
My wife studied in the United States, but she chose the single undergraduate program that she could get a four-year degree in only two in order to save money and worked the entire time through it. The Swedish state subsidized some of it via no-interest loans, but not enough to make four years affordable. Her fellow Swedes very rarely do the same because American universities at list-price are just massively unaffordable and not worth any access to the American workforce that you'd (maybe) get.
For Americans studying in Europe, the situation is very different: it's often a much cheaper way to get education than at home. Almost double as many Americans study in Europe: ~200,000 per year. But most of them are short-term students, looking to save some money and have an experience. The number of long-term students is also capped by the limited number of English-only programs. So Americans studying in Europe are mostly not "investing" in job-market access. Like the Europeans, they have that at home and don't really need it.
I don't think, then, that this is much of a useful data point for this essay's argument. Neither Americans nor Europeans are using this pathway much to access the others' job market. And the composition of the two groups is very different, with one being elite/rich (Europeans) and the other being more upper-middle-class (Americans).
Trump2 policies and utterances have also doubtlessly lowered the desirability for Europeans of studying in America.
Except possibly, for Hungarians nostalgic of the early Orban days, when the gerrymanders were still incomplete, and the media hadn't yet been gobbled up by administration-compliant magnates. Ahhhh, the memories.
The policies even more than his utterances. Europeans are genuinely afraid of being swept up in ICE raids as tourists or students for various thought crimes... or for no apparent reason at all! I don't know if the extremity of this new state of affairs is quite clear to Americans.
It makes studying in the United States uncomfortably similar to studying or working in China: something for the most adventurous to consider, and always with the background risk of being constantly shadowed by the surveillance state and potentially being lost into a political prison one day.
Even during the GWOT, there was this idea that getting pushed into a van by rough people in tactical gear was something that happened to "other people." It wasn't a palpable risk for normie Europeans just visiting the United States. Now it is.
I think this ties back into the growth/entreprenurial ventures segment of the EU economy (and also ties into Draghi of course) - as a general matter if you're college graduate with ambition or focus outside of "traditional" in growth ventures terms - new segments etc - the US ecosystem is just much more flexible and expansive.
the degree to which European entrepreneurs with growth/venturing companies (regardless of sector, although IT tech is visible) move to US when they can is a signal - lack of capital markets (fragmented and tin) and wide choice of non-bank financing, rules fragmentation etc - your earlier points.
(equally one sees if one is looking comparatively, southern Med locating northwards [internal EU or from south-side up into EU] as comparatively still EU and notably N.EU or even French ecosystem better than home)
this is narrower than general economy but it is meaningful for the sort of cutting edge.
You're right that the top-tier opportunities in certain cutting-edge sectors are more copious in the United States. It's been said many times recently that the entire American economy is held aloft by data-center build-outs and AI investment right now. And if what we colloquially call "tech" (meaning a specific segment of IT) is where you want to build your career, the US is definitely where it's at. I've had a great tech career myself outside of Silicon Valley, but it's not as straightforward. Unfortunately, though, that tech vertical is increasingly the only game in town in the US, forcing people to hyper-compete for the same pool of jobs in the same few (extremely expensive) cities.
My welfare would immediately materially plummet if I had the same tier of tech job in San Francisco or NYC, despite making a higher salary. It's just too expensive to live there (and especially with all the stuff you have to buy privately in the United States at dear cost which are just included in your taxes in Europe). That's something that's often not factored in.
I will say this for the US: it is the undisputed capital of rent-seeking for the healthcare vertical, meaning that what's bad for patients and for affordability is great for very well-paid doctors, nurses, administrators, and sellers of all manner of pharmaceuticals and medical devices at high markups that don't exist in Europe. I wouldn't blame any doctor who decided to move there for quadruple the salary.
But, on the other hand, the US is increasingly shallower when it comes to other professional career paths: You can build a very nice career and life in Europe working in finance, pharma/biotech, law, green energy, education, or high-end manufacturing.
And for some of these fields, the opportunities have been drying up in the United States: My mom was a university professor for a half-century who loved that vocation but it's something she would never recommend to any young person today. Teaching is still a great job in most European countries, though. Working for Boeing was a much better job 30 years ago than it is now, but Europe's Airbus is still doing great. The biggest maker of high-end chips (being sold for that AI investment) is HQ'ed the Netherlands, but the salad days of America's Intel are long behind it. And Denmark is selling so many of those obesity drugs (especially to Americans) that the profits eclipse the actual economic output of the rest of the country and they need to break out their stats into GNI instead of GDP!
People really tend to fixate on one aspect of this debate at the expense of others and lose all nuance. And they're honestly doing it not to figure out the truth, but to serve a patriotic or ideological narratives. The reality is that the United States and European countries are all great places to live and very lucky places to be born. They're different, but it's pretty foolish to declare one or the other just "best" uncategorically.
Well long text on personal preferences etc. are fun to type but... irrelevant.
My comment was on growth-venture and as someone from venture financing background (beyond Tech), its quite clear for that kind of area what is more advantategeous and where the flow is.
Perosnal opp and lifestyle selection is a separate topic.
It's easy for any European to immigrate to the US. Just fly to Mexico and walk in! Tens of millions have done it. There's a catch of course. Doesn't matter if you are the best software engineer in Europe, no tech company will touch you with a 10 foot pole without a visa.
But isn't it funny that while the same exact laws say that say a tech company can't hire an illegal engineer also say that a construction company can't hire an illegal laborer, and yet they hire millions of them while the authorities just look the other way? One country, two systems!
This is true, moving to the US from Europe as a physician was a pain in the ass.
Great Insight...thank you
Thanks for this Noah, a really good overview of what's going on here. For what it's worth, in this specific context, I agree more with Garicano's way of looking at real income than Krugman's, though I understand it is to a certain extent subjective and context-dependent. Over very long periods of time, and we're really talking decades here, you have to have something that accounts for how much our consumption has changed qualitatively. If, say, Americans buy more cars and phones relative to Europeans, who may spend more on eating out - a hypothetical, but plausible example - we have to take into account the fact that cars and phones are vastly better in 2026 than in 2000. Eating out isn't, however, unless we're talking about delivery services, which Americans definitely spend more on.
I think to properly look at this, both economically and sociologically/politically, it's important to separate two things: European economic performance, which is pretty heterogeneous, and cultural preferences for what to do with wealth, which aren't. For the first, zooming in on real output per hour worked is absolutely the correct thing to do. This is where the gap opens up in the aggregate, something Mario Draghi's report showed pretty conclusively. The underlying reason is also obvious: the gap started opening up in the late 1990s, when the US tech boom started. The same thing did not happen here in Europe to nearly the same extent.
That said, there are clear outperformers. The Netherlands, Sweden, and Switzerland have all done pretty well compared to the US and other European countries. Others, like Italy and the UK, are notable laggards. The two things that stand out about the outperformers are that (1) they have relatively deep capital markets by European standards and (2) they are small but open economies whose businesses orient themselves around selling goods and services into much bigger markets. They also tend to have more flexible labour market arrangements for formal and permanent employees than some big European countries, like France and Spain. That said, the UK also has deep capital markets and relatively flexible labour laws, and that clearly hasn't helped them very much.
Cultural preferences - how to spend it - are a totally different story. Visually, there is honestly not much to separate nice suburbs of London, Paris, Milan, Zurich, and Amsterdam, aside from the weather and some aesthetic architectural details. They all resemble each other a lot more than they do a nice American suburb. If you go to Switzerland, where labour productivity is pretty much dead-on American levels, they do not live in huge, air-conditioned houses, or drive cars that are the size of a light tank. The most noticeable differences between them and other European countries are how punctual the trains are, and how much Swiss people talk about going on holiday in the Maldives. In other words, they plough that extra wealth into very European things - better public transport, and nicer holidays.
The economic outliers also don't have vastly different social models to other European countries. Switzerland in particular does have lower government spending relative to its GDP. But that's not really true of the Netherlands or Sweden, and Switzerland still has a robust social insurance-based system. If you go to the doctor, become unemployed, or retire, it's still far more like it is elsewhere in Europe than in the US.
Taking this: "(1) they have relatively deep capital markets by European standards and (2) they are small but open economies whose businesses orient themselves around selling goods and services into much bigger markets. They also tend to have more flexible labour market arrangements for formal and permanent employees than some big European countries, like France and Spain. That said, the UK also has deep capital markets and relatively flexible labour laws, and that clearly hasn't helped them very much."
It strikes me that there is a point of reflection on the specific sub-set of economic activity that is entrepreneurial - the weakness of European venture financing options (that is financing options for entrepreneurial growth oriented companes) as compared to US is flagrant and part of that is certainly the quite limited capital markets options generally - and by extension non-bank routes. In same line the labor market rigidities and ridiculous expenses in the 'Latin' markets - Iberians, Spain, I think Italy - are real penalisers.
UK issues one has to suspect that UK has overwhelmed its cap markets and labor code flex with other factors (Brexit, gross NIMBYism, really poor domestic skill base although offset in S.E. by strong immigration).
(some items Noah fixates on like air-conditioning or dryers seem a bit overly Market Taste versus Economic Choice driven, I think his points stand and probably better not to grab hold of some very American taste driven illustrative points [ I mean I have lived in Med climate when on other side of Atlantic and frankly never felt a need for aircon and find NY offices damned icebox aircon now quite irritating... but quiblling over these anectdotal and taste-driven details detracts from the real point which stands)
I think the UK is interesting. It has periods where it has sudden spurts, and noticeably outperforms other big European countries. Then it gets knocked back, and takes a long time to recover, losing ground in the process.
Personally, I believe the latest episode of this demonstrates the importance of having a big market - internal or external - to sell into. The UK had an amazing decade-and-a-half run in the 1990s and early 2000s versus most of the rest of Europe. The catalyst for this was a wave of worldwide financial services deregulation, aided by changes in British and US policy, the USSR's collapse, and China's Reform and Opening Up. Because of this, a big new market opened up for a sector that the UK already had a comparative advantage in.
That market only remained there for the taking for a time, however, and the UK's fortunes reversed after the 2008 financial crisis. Since then, it's been particularly noteworthy that labour productivity growth in London, the global financial hub, has actually lagged the rest of the country. That's been driven by stagnation in sectors that previously benefitted from finance's spill-over effects, like professional services (e.g., accountancy and consulting).
100% agree - esp. having biggest market possible.
The UK suffers from two problems: 1/ London sucking up all the oxygen and 2/ underinvestment, generally.
If everyone who wanted to do anything had to move to NYC or the Bay Area, the American economy would suffer stagnating productivity growth. Just as a function of how increasingly unaffordable it would be for talent to live in those cities near the fixed pot of opportunities. This is London in the UK today. (It's also Paris in France, to a milder degree).
And, during a time when the US was throwing helicopter money out the window to restart the Great Recession-ravaged economy and then letting loose the cannon during COVID, the UK was still (foolishly... disastrously...) committed to Conservative austerity. Was it good for their fiscal situation? Turns out no! Both the UK and the US are heavily indebted, but one of them has actual economic growth and productivity to grow their way out of it.
"If you go to Switzerland, where labour productivity is pretty much dead-on American levels, they do not live in huge, air-conditioned houses, or drive cars that are the size of a light tank.".
Nope, nope.
I can't speak for the homes (but I'd bet they prefer newer, larger homes if they can afford it), but the cars they drive are ABSOLUTELY better than other countries cars. Every time I travel on the highway in Italy, it's guaranteed that if license plate is Swiss then the car, on average, is much better than the average Italian car. Audis, BMWs, Mercedes, stuff like that. And not basic models. It's a meme.
Well yes, but an Audi station wagon is still a station wagon. My own experience in Ticino, which I visit frequently, is that even without the plates there’s a noticeable difference in the brand of car people drive and how new it is. But the proof point lots of Americans use in these debates is the size of car you drive, and they’re not necessarily bigger than their Italian counterparts.
Also Italy is more American than Switzerland in one metric: cars per capita. The reason for this is obvious - worse public transport in much of Italy - but it suggests that the number of cars, something Americans also commonly cite, doesn’t say much either.
My point was that the "not bigger cars" argument was a bit misleading, in the sense that in the US a lot of people who can afford them buy cars that are "bigger" (be it pick-up trucks or muscle cars), here in Europe of course you won't buy pick-up trucks or muscle cars if you have the money (even though I see more and more Ford pick-up trucks here in Italy too) but you'll see much more Germany sports/luxury cars, if people can afford them.
In Italy too, there is absolutely a difference in "which cars you buy" between richer and poorer cities/zones.
Going to the doctor is exactly like Switzerland the Swiss healthcare system is almost exactly Obamacare.
Interesting perspective and charts, thanks Noah! What I can add from a Swiss perspective: owning a single family home on its own separate piece of land more and more becomes a privilege for the top income percentiles or heirs. There is just not enough land for single family homes for everyone that would like to own one, if we want to protect the green areas around the overbuilt spaces. Relative to my childhood where owning a single family home was considered the standard for the middle class, this can be considered a loss in wealth even though on paper we are wealthier than ever (on average). We compensate by building generous flats in so-called "high quality densified" urban areas and investing in nice green spaces and parks. Public transportation is so good that cars are considered an expensive luxury for broad segments of the population. And wherever you live in Switzerland you can quickly get by public transportation to beautiful nature and enjoy outdoor activities. However we have very strong immigration and don't build enough and because of that renting or owning a flat has become absurdly expensive in many places. There will be an interesting vote on June-14 about capping the population size at 10 Million. I hope that it gets voted down, but our growth problems are causing real pain. Would be interested in your perspective on Switzerland.
I'm sorry, but how is it "not that hard" to move from Europe to the US? I'm from the Netherlands and I'd love to, but the only way to have even a chance of moving to the US from Europe is to either marry a US citizen or be one of the incredibly small group of people with very specific professional or academic qualifications that are wanted/needed in the US. It's either that or the green card lottery and I'm sure you know the chance of winning that.
I'm not sure how difficult it is the other way around, but there is absolutely no way for 99% of regular Europeans to move to the US, even if they really wanted to. And from what I hear, even for those lucky enough to qualify, the process of becoming a US citizen takes years.
So yes, it is in fact incredibly hard for Europeans to move to the US, so it's not so strange the migration numbers between Europe and the US are low (though I agree, the fact that quality of life will seem somewhat equal, depending on what you value, also contributes to this).
Yes, true. It's actually a LOT easier for Americans to move to Europe, thanks to Schengen and ancestry laws. Which I guess makes it more striking that so many more Europeans move to America than the reverse.
Great read Noah
I made a similar comparison between america and canada.
https://yawboadu.substack.com/p/yaws-6k-q-and-a-whats-going-on-in?utm_source=share&utm_medium=android&r=garki
I think one nuance people should realize is that labor productivity isnt how hard people are working but more like how much value added a worker is providing for a company per hour. Since value added is revenue - intermediate inputs. You can basically think of productivity almost like profit. (Well obviously value added is more than profit, basically how much of the piece goes to workers, government, investors, debtors, capital owners, etc. But you get my point.)
As a result, productivity is also a function of that fact that america has more high margin companies than Europe does, aka our technology industry and our semiconductor design firms.
You can see it in our companies. Google and Ford have roughly the same amount of employees (~180K) with the same dollar amount of cost of goods sold ($150B), but Google's revenue is double than of Ford's. If COGS is your proxy for intermediate inputs, then Google's value added is ($350B - $150B)/(180K) meaning Google's value added per worker is $1.1M. For Ford its ($175B -150B)/(180K), making value added $140K per worker in Ford. Google has roughly 8x the value added per worker than Ford, not because of hard work but Google is just a higher margin firm. A lot of american productivity is just more of the american labor force allocated to higher margin sectors than european or Canadian equivalents.
good point and Europe has been very good for US big tech: a market of hundreds of millions consumers they can access without huge costs or investments.
Useful review. While I found myself desiring to quibble about indeed - as signaled in the arty itself - on various items (say housing size and degree of taste/desire driven), in end the core is not any single factor but the overall growth rate and the relative comparative decline in productivity on labor.
The Draghi report is a necessary read - although in EU context going from yet-another-report to reforms...
100% agreed on the Draghi report. Essential for understanding how bad our situation is in Europe now and why this is the case. But it's mostly being ignored - or at least its most important conclusions are. I think that's because there's either aversion or unwillingness to argue for its main prescription: a more federal EU with a much bigger and coherent internal market, more economies of scale to fund public goods, and a genuine single safe asset to underpin a large and deep capital market.
Absolutely. Absolutely: "a much bigger and coherent internal market, more economies of scale to fund public goods, and a genuine single safe asset to underpin a large and deep capital market."
These feed back into entreprenurial growth aspects of the economy where Europe is just really under-performing in a flagrant manner compared to where it should be based on other factors.
ETA an observation from having worked in investment support context with both US Gov and EU and EU national (Ger) instruments
US deep pockets but my god applied rule sets are fucking nightmare, I point to an interesting note from a guy I knew back-in-the-day from crossover on some risk capital financing: Stephen Koltai on the https://stevenkoltai.substack.com/p/usaid-and-government-inefficiency - gist of note from Koltai's experience going into USGov re econ dev w now-ex-USAID - rule sets bogging everything down. Worth a read.
EU mechanism: actually when they put their mind to it can be cleaner (i.e. not as bogged down once actually in operation, and less picayun bogging down, of course that has risk involved (ahem, Greece) but in end perhaps worth some slosh rather than getting totally bogged down.
German: fuckme it was like a rewind to the 1970s on dossiers submissions (so when I read developers doing German-German things getting bogged down, I can understand - the luxuries of the rich not affordable when one's no longer sitting on top...)
Just to clarify on crime… violent crime is significantly higher in the US. Property crime is comparable in Europe.
For the European readers… I am 66 and have lived in 7 different major metro areas in the US and no member of my extended family has ever been a victim or even seen a violent crime.
I’ve always found this discussion/argument to conceal a fair amount of cope on both sides. Americans tend to mask their anxieties about our increasingly toxic and chaotic culture and politics by running into our massive McMansions and cranking the AC and watching our big screen TVs (insert screed from Network here) and saying to ourselves with all this stuff we’re doing just fine. Europeans mask their anxieties about their increasing irrelevance on the global stage and their own chaotic politics by walking to a nice cafe and checking a website somewhere that says they live 2 years longer than fat ass Americans so everything is fine.
Both sides need to wake up and realize that yes they have chosen differently in terms of what to value economically (Americans like stuff and innovation, Europeans like stability and quality of life), but they are both facing major issues in their respective societies. Trying to dunk on Americans for being fat or having guns or whatever wont install AC units in Italy, and pointing out that the French have lower median income than Americans won’t get rid of MAGA. We need to figure out a way to acknowledge some of these differences but also balance ourselves better. Europe could learn something from America and vise versa, it’s not a zero sum game.
As always, great post Noah and I think technically I’m restating your points from an earlier article but whatever it was important then it’s important now.
Few people understand just how big the difference is for educated professionals in the US versus Europe (any of them, but particularly where I come from; Sweden).
I earn 8x (!) times more net in the US compared to Sweden. People can talk about "free healthcare" all they want, it isn't free when much of my income was taken to pay for it.
"If you like living in an urban apartment, strolling past picturesque old buildings to cute cafes, and taking a lot of vacation every year, then Europe is obviously for you."
I know this is the image but this is also only true for some few people living in the absolute city centers of places, most will live in modern tiny ugly boxes outside the center (300-700 square feet usually). And they've intentionally made flights so expensive here (*climate*) that travel is increasingly just becoming a thing for rich people again.
Noah, one issue you don't seem to address is medical insecurity. In Europe, the average person person's income is bolstered by access to free or low-cost medical care. In the United States, many go without such medical security and are subject to medical bankruptcy or the health Impact of untreated or undertreated disease. Are medical benefits included in this income comparison for Europeans and Americans?
By my back of the envelope calculation, decent health insurance costs about $18,000 per year. Shouldn't the median European be viewed as having an $18,000 boost to their annual income?
In fact, I do address that! Government health benefits are included in the "Median income per year (after tax)" measure.
Here's the original data:
https://ourworldindata.org/grapher/median-income-after-tax-lis?time=2000..latest&country=USA~DEU~SWE~FRA~NLD~ITA~GBR&overlay=download-vis
So yes, that $18,000 is part of that chart.
The chart shows the median American comfortably ahead of the median European, AFTER all those health benefits are taken into account.
Thanks for the clarification. However, for complete clarity I'd like a clear explanation of how medical benefits are calculated for Americans and Europeans.
Speaking of background costs.... how about national defense ? That seems like an embedded cost in the US, but not in Europe.
That seems like a bit of a handwave. The phrasing is "Harmonized into a common framework, LIS datasets contain household- and person-level data on labor income, capital income, pensions, public social benefits (excl. pensions) and private transfers, as well as taxes and contributions, demography, employment, and expenditures."
I assume that the health care is covered under "public social benefits," but the exact way that is calculated is nebulous.
I promise you, it's in there.
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Impact_of_health_social_transfers_in_kind_on_income_distribution_and_inequality
New York City must be really poor because people live in small homes, don’t have cars, and lack huge, manicured lawns.
There are other weaknesses in the argument, too, which really undermine it: Let's look at the section around food. You've measured average calories intake as a proxy for wealth. Historically, this was useful. But it's, at best, a mixed signal today. It's also now a measure of ingestion of highly-processed food. Or just having a nation of people who are overweight.
In your chart, who else shared top-calorie-intake with the US? Serbia. Not a famously rich place. And Ireland. A rich place, per capita, yes, but also a country with an unusually unhealthy diet relative to European norms, with high rates of obesity. Are Americans, Brits, and the Irish fat because they are rich? Or just because they all share the same culture around convenience food? How about Hong Kong, which consumes 1,000 fewer calories per capita than China, but is 4x as rich per capita? Any country on this chart that has 3,000-4,000 calories supplied per person per day is producing too many (probably low-quality) calories, rich or not.
Left unsaid here is also that all these calories aren't consumed evenly in the United States, by any means. Anywhere from 10-13% of American households experience food insecurity in a typical year. That's double the rate in Europe. So who's poorer? The country where a lot of people eat too much highly-processed food and a tenth to a seventh can't afford even enough of that crappy food? At the very least, the implication is mixed.
I think that’s a good point. It seems that in the US poorer people are more overweight.
Noah's article provides strong evidence about the US economic overperformance relative to Europe, but on the other hand Europeans generally live longer lives and are exposed to much less crime.
The most frustrating aspect of this debate is that many commentators seem to believe, although rarely explicitly state, that there are tradeoffs between these two aspects, that somehow one cannot have both American wealth and European long and peaceful lives, when there is little reason to think so (Matt Yglesias has a good article on this https://www.slowboring.com/p/on-the-4th-of-july-thinking-about). In fact, countries such as Switzerland or Denmark have American levels of wealth and a life expectancy in line with other Western European countries.
Most people agree that the US has a better economic performance than Western Europe mainly due to more flexible labour markets, deep (less regulated?) capital markets, fewer trade barriers in the US vs the EU (internal non-tariffs barriers in the EU are equivalent to a 40% tariff in goods and 115% tariff in services), and stronger universities. Different people will weight these factors differently, but no one plausibly argues that, if the EU adopted these US policies, life expectancy would drop by any amount.
Conversely, Americans have a lower life expectancy due to, among other factors, much higher crime, mostly because of an easier access to firearms, more driving accidents, as they drive more due to their urbanism, and possibly the lack of universal health coverage. Changing any of these things to be in line with Europe would not make America give up its financial or labour policies.
These tradeoff arguments are usually made in bad-faith, IMO. There is no tradeoff between European-style Social Democracy and a dynamic, wealthy American-style economy.
If anything, countries like Sweden show that a social democratic underlay can be *better* for encouraging the social capital, entrepreneurship, and labor flexibility that could make for an even more dynamic economy:
-There is no minimum wage in Sweden. There doesn't need to be.
-People don't have to stay at a less dynamic job just because they "need the healthcare." Social services aren't linked to their employer.
-People can leave their job and start a business because the downside risk isn't that they'll face utter ruin. And they do start businesses at higher rates than Americans.
-And everyone talks about the burden of taxation on employers and employees, but what about the burden on American employers for incredibly expensive and complex benefits packages?
Similarly, since the 1990s, Sweden has become more "neoliberal," for better or for worse in key ways that arguably increase economic dynamism. Swedes still have (increasingly longer) and more peaceful lives, even if they can't rely on stable, lifetime employment at the same unionized factory, anymore.
And Sweden's situation is very distinct from other European countries. Just like California's situation is distinct from Texas' in the United States. There's no either-or here.
The Swedes do a good job, probably as good as anyone in the EU/NAMER.
Do you have recent data for the claim "(Swedes) start businesses at higher rates than Americans"? I know that's true historically but post-pandemic US small business formation increased by ~2/3rds, so I wonder if we're in the same ballpark now. Probably not a coincidence it happened after Americans checked their healthcare options and realized they could get non-employer healthcare through the exchange.
Under Trump regime, EU needs to shoulder more of their own defense. The effect of that will worsen the EU budget crisis. That bill will come due.
I also don’t think this will reverse even if a Dem wins the next presidency.
Quite. I often hear an argument that there's an underlying cultural cause: Americans tolerate less regulation but also get themselves into more health-destroying and life-ending jams because they're less risk-averse. I think, however, that this argument falls down when you meet a Dane or Swiss person, and realise that they're not exactly cowboys.
Many cultural arguments are just system-design arguments.
If you travel to Nigeria, it will strike you that Nigerians seem much less risk-averse than Americans. Your hair turn white at driver behavior on Lagos' roads. Have they no fear of death!? You'll wonder why Nigerians are so willing to get out there with starting a small new business, even if the context seems hopeless? Nigerians are also profoundly religious, deriving an unflappable optimism from Evangelical Christianity or charismatic Islam that helps them get through difficult days with faith that God will protect them no matter what. Is all this just cultural?
Or is it just the fact that Nigeria is a very poor, very corrupt, sadly under-developed country where there's just no such thing as avoiding risk for the average person! The roads are chaotic and inherently risky because they aren't designed well, maintained, or policed. If you try to navigate safely and with consideration, you will fail.
And you can't just settle down for a safe, boring job in a bank or something in Nigeria because those just hardly exist. Gritty, risk-on entrepreneurship is your only option for most people in an economy like Nigeria's. It's hustle or die. Is this good? Well, most Nigerians are still poor. All this efflorescence of entrepreneurship hasn't made the country rich, And even those who hustle hard all day every day mostly don't make it. But they give themselves at least a slightly better chance.
Being a secular-materialist who looked at all of this disorder and unfairness with a clear eye would also probably be pretty intolerable for your average Nigerian. So why not declare, "Once more into the breach! God will save me!" Again, believing deeply in a Prosperity Gospel to a degree that would put an American Evangelical to shame doesn't generally help Nigerians materially, but it does wonders psychologically.
The United States is somewhere between Switzerland and Nigeria in these terms, and the principle remains: Most Danes and Swiss people aren't cowboys because *they don't have to be.* Cowboys were cowboys because they lived in the Wild West! Americans may "live fast and die young" because a lot of the things that allow you to live a genteel, stable, Swiss life just don't exist in the United States.
And for poorer Americans, you see a much riskier behavior profile than middle-class Americans for the same reason. People will scold the poor for smoking, or having children out of wedlock, or not staying in school or whatever. But can a middle-class person really understand how hopeless it is to be a normie when you're born amongst poverty and disorder? Americans like to make fun of "white trash" or "ratchet" or "ghetto" behavior among their poor, but they're really describing what results when people exist among systems that don't work. Similarly, in Norway, they describe anything "crazy" as “helt Texas” or "completely Texas," but could a Norwegian really understand why Texans kind of *have to be crazy* to exist in a state with zero safety net?
Noah seems to think that American and European suburbs are more or less analogous. The fact is that they were respectively built for two different demographics. American suburbs were built for middle and upper middle class people — think the Drapers from Mad Men. European suburbs were built for the working classes and immigrants from former colonial territories. That explains a lot about why American and European suburbs look so different. Comparing middle-class housing in one country to working-class housing in another isn’t really a comparison of national wealth — it’s a comparison of who each country’s housing system was built to serve
You’re correct. People were able to move to the suburbs thanks to programs like the GI Bill, FHA loans, and federally subsidized mortgages. And many of those people were teachers and union workers. But those programs were largely closed to Black families doing the same jobs at the same wages — FHA underwriting explicitly redlined Black neighborhoods, restrictive covenants kept Black buyers out of new developments, and the GI Bill’s housing benefits were administered through local institutions that systematically excluded Black veterans. So the suburbs did democratize homeownership, but along a racial line.
I think you have the social pact in America backwards - the promise of the suburbs was that anyone could live like a rich man. If you read classic books about the LA suburbs like "Holy Land" or the Easy Rawlins novels, the initial inhabitants of suburbia were teachers, mechanics, factory workers - all working class people. What drew people to suburbia was that they could own their own land, their own house, and drive to work the same way their boss did.
I don't think this disproves anything that Krugman wrote. The upshot being that Americans consume more, but Europeans work less and are far less vulnerable to negative shocks. All of which continues to beg the question of why we should care. Yes, your median American has a bigger living space, a more expensive car, and probably replaces their iPhone more frequently than the median European. But the median European vacations more, doesn't go bankrupt if they get sick, and lives longer.
If Europe fails to deliver an adequate quality of life, and its citizens express the same, that would be a cause for concern. But really, it seems that it's just a different set of lifestyle choices that reflect a different set of priorities. If you're a highly educated 23 year old who wants to make a lot of money by working at a high-flying company or starting your own, you're far better off being in America. But if you're a random worker whose ambitions amount to having a secure 9-5 job, 4-6 weeks of real vacation, and a safety net, you're far better off being in Europe. And that feeds into the migration discussion-- Europeans who want to come to America are... by and large the ambitious people who want to make more money. Americans who might want to come to Europe are more likely either underappreciated knowledge workers or just poor and middle-income people who are vulnerable to a shock. The former find it much easier to move than the latter.
"are far less vulnerable to negative shocks"
I'm not sure how true that is anymore. There was a time when, for example, unemployment benefits in many European counties were almost absurdly generous. If you look today UI might be 10% more than you'd get in many US states.
France still has iron clad job security for those who can land an employment contract but it also has a vast underclass without those protections. And in France life can be very difficult, without an employment contact, to secure an apartment, borrow money, buy a home, etc.
Getting sick is the biggest shock one can endure, and you're indisputably better off getting sick as a lower income working person in Western Europe than in the US. And while the level of UI differs, the duration is substantially different. In the US, it generally doesn't last beyond 6 months. In France, for instance, it can't last less than 6 months, and can last for over 2 years.
"Last more than six months" there are literally millions of Americans who live permanently on sickness-related benefits.
"you're indisputably better off getting sick as a lower income working person in Western Europe than in the US."
How so? Out of pocket healthcare costs are higher in Europe as a percentage of income.
"As of 2026, the maximum Federal SSI payment for an individual is $994 per month, and $1,491 for couples. In Germany, the Grundsicherung provides a standard monthly benefit of €563 for single individuals and €506 per partner for couples, plus reasonable costs for housing and heating, which are usually covered in full."
So similar to various programs in NY State:
"SSI recipients in New York State can access housing assistance through federal Section 8 vouchers, state-supported housing programs, and NYC-specific rental subsidies (like CityFHEPS), often managed by local social services."
The point about air-conditioning is also very irrelevant. What is another reason the United States uses much more AC than Europe? Maybe the same reason that Americans use more AC than Canadians? It's just hotter there!
This is like claiming that Russians are richer than Americans because they use more heating.
I don't have central AC in my house in Sweden. I have a portable unit I drag out of the collar for the 3 weeks a year I kind of need it. But I've been in literal shacks in Southeast Asia where they have the AC blasting constantly. AC is used much more in poor parts of the world that are also hot than in Europe for obvious reasons.
By contrast, I've got a *BIG FUCKING HEAT PUMP* for my winter heating needs in Sweden. It's vastly overbuilt for what I would have needed in the Mid-Atlantic Region in the US, where it snowed maybe once per winter and barely every went below freezing. That heat-pump, as efficient as it is, uses more than half of my total household energy costs in the winter in a way that Americans outside of the Upper Midwest or New England would find unfamiliar.
When I lived in Ireland, neither heating nor cooling were really material to my consumption. In the British Isles, the weather is basically just March-like all year round. Not very cold, but also not very hot. Just gray, cloudy, and drizzly almost all the time. Housing stock is terrible there, so you can still end up spending more than is reasonable to shift indoor comfort around the margins, but neither AC nor heating would have been a good proxy for wealth. Ditto for places like Northern France, Belgium, or the Netherlands, with a similar mild, oceanic climate.
This isn't just wrong -- it's wrong in a way that's getting a huge number of Europeans killed.
https://www.noahpinion.blog/p/europes-crusade-against-air-conditioning
By some estimates, if Europe were to.use air conditioning as much as America does, 100,000 European lives would be saved EVERY YEAR.
What is the average age of a dying from the heat. I’m guessing that the age is quite high and the health of the person is poor. If their lives are saved by ac it may not be for very long.
Yes, you are right. There are parts of Europe where AC would increase not just comfort, but also reduce mortality. Paris in 2003 is the canonical example. But Paris isn't Phoenix. Most of the year, Paris isn't hot. And the historical housing stock in most of France is optimized for cold, instead.
That is now changing along with the Climate, obviously. And not just in Europe: We also saw a lot of suffering during the recent heatwaves in the Pacific Northwest, where more Irish climates usually prevail, yet temperatures shot up past 100F suddenly. Should everyone in Seattle and Portland get AC now? Maybe! But it makes sense that they didn't have it before, doesn't it? And it makes sense that my family in New England mostly doesn't have it, and not because they are poor.
Because your argument was that Europeans don't have AC because they're Europoors. And my rebuttal is that they don't have AC because historically they haven't really needed it the way Americans have. And that historical context is locked into the existing housing stock, the design of dwellings, and even city planning.
Retrofitting Paris with ACs for every Parisian is nowhere near as easy, cheap, or practicable as it is to build a new suburban housing tract in the Sun Belt with central AC. Same story in older American cities like Boston or NYC, where AC is also not at all universal and people rely on jerry-rigged window units, at best.
And the cost isn't the only or even the primary impediment in that case: Believe me, I've fretted about whether or how to best get an AC split unit installed in my 105-year-old wooden house, here in Sweden, too... without it looking like shit, costing unreasonable amounts of installation costs, disrupting all manner of other things, or even getting me in trouble with the local historical preservation codes! And when I weigh all that against the relief I'd really only need for about 3 weeks in peak summer, it stops seeming like a priority.
I am 47 and in the 1990s, summers in Czechia were rarely hot enough to require cooling.
In the 2010s and 2020s, there were some horrible scorching summers and therefore new middle class homes tend to have built-in AC.
But for the huge housing stock from before 2010, retrofitting it to have AC is technically complicated. Many people use portable units as a provisional fix. IDK how those turn up in the stats.
Very good point.
Here in Seattle, most of us don't have AC. The climate is very much like the UK & Ireland.
Most of Sweden has an average July high temperature below 22C/72F. That's April/October weather where I come from.
Stockholm hits 30C maybe once a year.
I've lived in the subtropical DC climate so long I don't even turn on the air-conditioning till it hits 34 *and* the humidity hits the oppressive level.