Yascha Mounk on European living standards; Allison Schrager on copying bad European economic ideas; Bruce D. Meyer and Angela Wyse on health insurance; Charles Fain Lehman on temptation goods
"Why do people not want to believe what the GDP data are telling them?"
Because they're not really talking about "GDP data". They're talking about "standard of living" or more basically satisfaction/happiness. And the big, big problem with happiness is that, to quote Lionel Page, "We are designed to long for it, not to get it."
Our hominin ancestors often didn't get enough to eat. So they evolved not to unnecessarily use energy. But that leads to laziness, and not doing what is necessary to avoid problems, which when you are living close to the edge can lead to death. So then how to get people to do what had to be done? The answer, says Page, is for our big-brained ancestors to notice when things could be made better. But, more than that, they had to feel bad--"unhappy"--in that situation. They had to believe that if they did what they could to make things better, they would feel "happy". And it worked! The did feel happy.
But that happiness couldn't last. They had to notice the next thing that could be better, feel bad about it, take steps to remove the unhappiness. And on and on, forever.
As we go through life, we notice what "could be better" and get on that hedonic treadmill. Americans, who have much more things and experiences they can buy have more "I would be happy if only I did X." But it doesn't lead to any more lasting happiness than Europeans' smaller menu of choices.
Page has a whole series of posts on happiness. The opener is:
Well, if you want to talk about health care at the same time you are talking about international comparisons of GDP you have a pretty good reason right there to be mistrustful of the latter. The European countries more or less have taxpayer-funded national health care systems that are pretty much the equivalent of a Veterans Health Administration-for-All operating in tandem with private health care insurance and systems so that there are opt out options. And they manage to do this for much less per capita than than the US wastes on its debt funded, hopelessly administratively byzantine farrago of health care programs (https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#Health%20expenditures%20per%20capita,%20U.S.%20dollars,%202023%20(current%20prices%20and%20PPP%20adjusted) ).
And since government spending is part of GDP, and US government spending is disproportionately debt funded in comparison to European countries.
Only 37.526% of US GDP is accounted for by government spending, but 7.629% of US GDP is government borrowing. Compare this to the GDP of:
the UK - 43.8% government spending with 4.25% of GDP as government borrowing
Germany – 48.169% and 2.003%
France-- 57.236% and -5.963%
or democratic Switzerland 31.554% but with a positive net lending, rather than net borrowing, of 0.596%.
Would I be willing to suffer from the GDP statistics being a few points lower if it meant that the US was also knocking off a few points of GDP due to decreased borrowing? Absolutely.
To his credit, Mounk also looks at median disposable income. He apparently uses OECD figures that adjust for “social transfers in kind (goods and services such as health care, education and housing, received either free of charge or at reduced prices).” Compare those figures and tell me whether a typical person in the US would be better off with the European style free higher education and health care but a lower disposable income or if they would be better with the somewhat higher disposable income but stuck in the US health and education squalor?
And even if Mounk is completely right and I am completely wrong, it doesn’t mean the typical US citizen should not expect better returns on government spending in the form of reduced suffering in the lower classes and generally better standards of living than we enjoy today. Why, I am so old I can almost remember back when there was talk of such a thing as “government capacity libertarianism.”
The health improvement among the young poor who obtain insurance may be a self-selected sample of poor youth, limited to those capable of navigating the bureaucratic system. The young poor, who are often unable to deal with bureaucrats, may also struggle with other life decisions. The health outcomes of the two groups may be apples and oranges. ie, Nonsense that makes the sponsors happy.
I think this pretty well known. It's known they build public transportation cheaper, have more time off work, and lower cost medical services, but that's not the same as overall prosperity.
“Libertarianism assumes a single, unified self. The conflict between a present self and a future self makes things complicated.” Yes. In lots of other fields or doctrines too. In many places on the political spectrum it is thought that it’s quite easy to ascertain what one wants or what is in one’s interest. But it’s not easy. It’s silly to say that when the alarm rings in the morning I now should be guided by my new preference (to remain in bed). Much of classical moral philosophy (e.g., Aristotle) was devoted to excellences or virtues that seem needed by everyone in order to live well. They included the wisdom to choose good ends and the dispositions to resist temptations. Even if many now exclude these questions from “morality”, they remain important and very difficult.
Allison Schrager may make some valid points, but she is lying by omission by saying nothing about the adverse effects of 'green energy' policies in Europe, especially in Germany, which is in the process of deindustrializing due to the combined effects of promoting green energy (especially wind), shutting down nuclear power plants, and decreased reliance on cheap Russian gas after Russia's invasion of Ukraine and the 'mysterious' explosion of the Nordstream 2 gas pipeline. Although I agree that the BBB is a horror show, according to the following piece from Wattsupwiththat, the one positive thing about the BBB is that it appears to appeal and rescind 'essentially all the green energy handouts' from the Inflation Reduction Act: https://wattsupwiththat.com/2025/05/25/the-big-beautiful-bill-climate-and-energy-provisions/. This is good news not only from a fiscal perspective, but also with respect to grid stability and the cost of energy. And unlike most European governments that are committing suicide by pursuing net-zero policies, the Trump Administration is trying to remove barriers to oil, gas and coal, and actually promote their use. I hope shills for renewables like Noah Smith are crying.
The buried lede on that Medicaid study is that outside of the coincident Medicaid expansion, the ACA itself did nothing to expand access to healthcare. I think Megan McArdle noted this shortly after the ACA implementation back when she was still relatively independent in thinking.
This does not seem quite right: "while I might want the cake today, I wish my future self would abstain." I think it would be the future self that wishes the present self would abstain . . . which is significantly more difficult to apply when the cake plate is being passed around.
"…prohibition gets a bad rap. Capital-P Prohibition probably worked for alcohol,"
Maybe I'm mistaken but it seemed to me that cigarette smoking saw a big reduction when it was removed from public spaces. What if we closed bars and curtailed or eliminated alcohol at restaurants too?
That's a bit of a silly strawman. Both smoking and alcohol have huge negative impacts on innocent bystanders. There is a very real tradeoff between Individual liberty and societal harm. Can't say that about asparagus even if it has some tiny cancer risk.
I thought the same. Also, is it $5.4 million or $179,000? The text does not make clear the difference between those very different numbers. I would think that "direct budgetary costs" would be the larger number.
”Why do people not want to believe what the GDP data are telling them?"
Last I looked, Ireland, Switzerland, and most of Scandinavia had higher income AND more social welfare for middle class. Many point specifically at Scandinavia. Maybe that's cherry picking but it's not ignoring GDP data.
Ireland, Switzerland, Norway, and Iceland are the only European "countries" listed with a higher per capita GDP than the U.S. At least 3 of those are mostly because of corporate tax policies specifically designed to benefit from the higher corporate tax rates in the rest of Europe- something the EU is attempting to end as I write this. Norway almost certainly is higher solely do gas and oil sales to Europe. However, the trend is that all 4 are going to fall behind the United States within the next decade even without the elimination of corporate tax advantages.
Finally, because of the effects of corporate tax policies, it is better to simply look at final household consumption measures since this better describes how the country's product is distributed. On this measure the U.S. is way ahead and running further away every single year.
All likely true except the trend comment. That one is almost as likely to reverse. I say that implying nothing good about Europe or bad about US, just that simple statistics suggests an eventual return towards the mean even if current conditions don't.
The trend is the trend, Stu. It could change for the worse in the U.S. before the next decade is done but, if it doesn't, the U.S. will pass all four countries in GDP/capita.
My issue with the Lehman perspective is the heterogeneity of temptation and people's management of it. I don't have problems with temptation from drugs, alcohol or gambling. Instead my problem is internet over-use. I don't appreciate people prohibiting me from using the temptations I can handle. I do appreciate being given voluntary tools to help handle the temptations that create trouble in my life.
re Europe vs US: I've invested in a company that is working on internationally commercializing a new medical tech. The organization is small enough that it has given me the opportunity to speak directly to some of the executives, lawyers, and engineers, all of whom have good experience in the field. They are unanimous and adamant that the US FDA combined with the risks of the legal system and other burdens imposed by various states is, in combination, so much in a league of awfulness and delay all its own that there are two or three whole missing leagues in the gap between the US league and that of Europe or Northeast Asia. All my acquaintances who work in China or Northeast Asia say the same things about their own industries, but I'll focus here on this one.
Even though everybody in the company is American and lives in America, there is only "setting the stage" for eventual FDA blessing, but the trials are all conducted overseas, and the main project is to get CE label and EMA approval. The pre-Trump expectation was that, if everything goes as well as can be hoped, then it will still be a fact for many years and perhaps half a decade that the only way an American will be able to benefit from tech designed and exported from America will be to travel to Europe and have a European doctor supervise it based on European standards and approvals. Because they are so much faster and friendly to this type of business. Think about that.
The latest I've been told, however, is that the post-Trump expectation in the industry given even the slights hints seen of at long last some shaking up of the FDA is now a much shorter gap, and that company strategy might even need to shift if it turns out it might just possible to launch US products in the US within a reasonable time after appearing overseas. If this is the "New Right wanting to make us more like Europe" too, then bring it on.
Not really. First of all, drugs are treated differently than devices and procedures, and for those the EMA now has the edge. Second, average difference in time of approval is only about 5 months, for novel active substances that will tend to stay top of their class for a generation. That's not nothing, but it's also not a huge deal. Third EMA NAS approval is unfortunately a bundle of "safe and effective" certification and, well, bulk discount bargaining. The first part is easier and faster than the US, the second is something the US doesn't have. That's why stuff that gets approved by FDA like super expensive new cancer drugs gets technically certified but then never added to the list of 'EMA approved' medications, because the companies can't or won't sell for prices EU countries socialized health systems are willing to pay.
"A lot of earlier research, including a famous RAND study, found no effect of health insurance on health. If newer findings are turning this around, that is something to which we need to pay attention."
I would be skeptical of any study on any issue where the result impacts government funding, directly or indirectly. My overwhelming experience is that the result is decided on beforehand and the data is found, excluded, and manipulated until you get the desired result, and healthcare is the field I'm most familiar with and I've seen and done my share of "studies."
"They want a bigger welfare state that covers the middle class. They want antitrust to take down big tech. And they want a smaller, slower-growing economy"
And you can tell they want all this because they just passed a bill that lowers taxes and defunds medicaid. And they let the head tech bro and his employee "big ballz" fire tens of thousands of government workers.
"Why do people not want to believe what the GDP data are telling them?"
I completely believe the GDP data and have a low opinion of Europe and think we are better then them.
But I've also seen a lot of GDP debates and I think people miss the point. Dave Green and and Nathan Cofnas recently had this debate. Cofnas says GDP is up and everyone is ignorant, Green says TVs are cheaper but he can't afford a house anywhere close to his job.
Yes, I can eat out more than a European. But I usually eat out when I've failed to have the time to cook a better healthier meal at home. It is in many ways an inferior good, even if it costs more money. The same is true of a lot of things, spending money is often how a problem is papered over, rather than an actual increase in good living.
Most people stress out about the stuff they NEED. Housing, healthcare, education, safety, etc. Europe doesn't always do that stuff better these days, but it's perceived as traditionally doing them better. And nobody thinks the USA is doing that stuff well.
If people work less and cook at home, this would reflect as a reduction in GDP, even though everyone could be eating the same.
"Why do people not want to believe what the GDP data are telling them?"
Because they're not really talking about "GDP data". They're talking about "standard of living" or more basically satisfaction/happiness. And the big, big problem with happiness is that, to quote Lionel Page, "We are designed to long for it, not to get it."
Our hominin ancestors often didn't get enough to eat. So they evolved not to unnecessarily use energy. But that leads to laziness, and not doing what is necessary to avoid problems, which when you are living close to the edge can lead to death. So then how to get people to do what had to be done? The answer, says Page, is for our big-brained ancestors to notice when things could be made better. But, more than that, they had to feel bad--"unhappy"--in that situation. They had to believe that if they did what they could to make things better, they would feel "happy". And it worked! The did feel happy.
But that happiness couldn't last. They had to notice the next thing that could be better, feel bad about it, take steps to remove the unhappiness. And on and on, forever.
As we go through life, we notice what "could be better" and get on that hedonic treadmill. Americans, who have much more things and experiences they can buy have more "I would be happy if only I did X." But it doesn't lead to any more lasting happiness than Europeans' smaller menu of choices.
Page has a whole series of posts on happiness. The opener is:
https://www.optimallyirrational.com/p/the-truth-about-happiness
Well, if you want to talk about health care at the same time you are talking about international comparisons of GDP you have a pretty good reason right there to be mistrustful of the latter. The European countries more or less have taxpayer-funded national health care systems that are pretty much the equivalent of a Veterans Health Administration-for-All operating in tandem with private health care insurance and systems so that there are opt out options. And they manage to do this for much less per capita than than the US wastes on its debt funded, hopelessly administratively byzantine farrago of health care programs (https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#Health%20expenditures%20per%20capita,%20U.S.%20dollars,%202023%20(current%20prices%20and%20PPP%20adjusted) ).
Would I trade a fall in GDP statistics due to improved efficacy and efficiency in health care delivery and administration? Absolutely. Especially since the Europeans enjoy much longer life spans (https://academic.oup.com/psychsocgerontology/article/77/Supplement_2/S117/6533432?login=false )
And since government spending is part of GDP, and US government spending is disproportionately debt funded in comparison to European countries.
Only 37.526% of US GDP is accounted for by government spending, but 7.629% of US GDP is government borrowing. Compare this to the GDP of:
the UK - 43.8% government spending with 4.25% of GDP as government borrowing
Germany – 48.169% and 2.003%
France-- 57.236% and -5.963%
or democratic Switzerland 31.554% but with a positive net lending, rather than net borrowing, of 0.596%.
Would I be willing to suffer from the GDP statistics being a few points lower if it meant that the US was also knocking off a few points of GDP due to decreased borrowing? Absolutely.
(https://en.wikipedia.org/wiki/List_of_countries_by_government_spending_as_percentage_of_GDP
To his credit, Mounk also looks at median disposable income. He apparently uses OECD figures that adjust for “social transfers in kind (goods and services such as health care, education and housing, received either free of charge or at reduced prices).” Compare those figures and tell me whether a typical person in the US would be better off with the European style free higher education and health care but a lower disposable income or if they would be better with the somewhat higher disposable income but stuck in the US health and education squalor?
And even if Mounk is completely right and I am completely wrong, it doesn’t mean the typical US citizen should not expect better returns on government spending in the form of reduced suffering in the lower classes and generally better standards of living than we enjoy today. Why, I am so old I can almost remember back when there was talk of such a thing as “government capacity libertarianism.”
The health improvement among the young poor who obtain insurance may be a self-selected sample of poor youth, limited to those capable of navigating the bureaucratic system. The young poor, who are often unable to deal with bureaucrats, may also struggle with other life decisions. The health outcomes of the two groups may be apples and oranges. ie, Nonsense that makes the sponsors happy.
"people usually pooh-pooh the GDP data."
I think this pretty well known. It's known they build public transportation cheaper, have more time off work, and lower cost medical services, but that's not the same as overall prosperity.
“Libertarianism assumes a single, unified self. The conflict between a present self and a future self makes things complicated.” Yes. In lots of other fields or doctrines too. In many places on the political spectrum it is thought that it’s quite easy to ascertain what one wants or what is in one’s interest. But it’s not easy. It’s silly to say that when the alarm rings in the morning I now should be guided by my new preference (to remain in bed). Much of classical moral philosophy (e.g., Aristotle) was devoted to excellences or virtues that seem needed by everyone in order to live well. They included the wisdom to choose good ends and the dispositions to resist temptations. Even if many now exclude these questions from “morality”, they remain important and very difficult.
Allison Schrager may make some valid points, but she is lying by omission by saying nothing about the adverse effects of 'green energy' policies in Europe, especially in Germany, which is in the process of deindustrializing due to the combined effects of promoting green energy (especially wind), shutting down nuclear power plants, and decreased reliance on cheap Russian gas after Russia's invasion of Ukraine and the 'mysterious' explosion of the Nordstream 2 gas pipeline. Although I agree that the BBB is a horror show, according to the following piece from Wattsupwiththat, the one positive thing about the BBB is that it appears to appeal and rescind 'essentially all the green energy handouts' from the Inflation Reduction Act: https://wattsupwiththat.com/2025/05/25/the-big-beautiful-bill-climate-and-energy-provisions/. This is good news not only from a fiscal perspective, but also with respect to grid stability and the cost of energy. And unlike most European governments that are committing suicide by pursuing net-zero policies, the Trump Administration is trying to remove barriers to oil, gas and coal, and actually promote their use. I hope shills for renewables like Noah Smith are crying.
The buried lede on that Medicaid study is that outside of the coincident Medicaid expansion, the ACA itself did nothing to expand access to healthcare. I think Megan McArdle noted this shortly after the ACA implementation back when she was still relatively independent in thinking.
This does not seem quite right: "while I might want the cake today, I wish my future self would abstain." I think it would be the future self that wishes the present self would abstain . . . which is significantly more difficult to apply when the cake plate is being passed around.
"…prohibition gets a bad rap. Capital-P Prohibition probably worked for alcohol,"
Maybe I'm mistaken but it seemed to me that cigarette smoking saw a big reduction when it was removed from public spaces. What if we closed bars and curtailed or eliminated alcohol at restaurants too?
That's a bit of a silly strawman. Both smoking and alcohol have huge negative impacts on innocent bystanders. There is a very real tradeoff between Individual liberty and societal harm. Can't say that about asparagus even if it has some tiny cancer risk.
Alcohol IS different from golf and TV.
"These expansions appear to be cost-effective, with direct budgetary costs of $5.4 million per life saved and $179,000 per life-year saved "
Cost-effective? Am I missing something?
If my math is correct and we did this for everyone, that would be $57 trillion per year - about double US GDP.
I thought the same. Also, is it $5.4 million or $179,000? The text does not make clear the difference between those very different numbers. I would think that "direct budgetary costs" would be the larger number.
Wow, that Allison Schrager sure can steel-man, can't she!
”Why do people not want to believe what the GDP data are telling them?"
Last I looked, Ireland, Switzerland, and most of Scandinavia had higher income AND more social welfare for middle class. Many point specifically at Scandinavia. Maybe that's cherry picking but it's not ignoring GDP data.
Ireland, Switzerland, Norway, and Iceland are the only European "countries" listed with a higher per capita GDP than the U.S. At least 3 of those are mostly because of corporate tax policies specifically designed to benefit from the higher corporate tax rates in the rest of Europe- something the EU is attempting to end as I write this. Norway almost certainly is higher solely do gas and oil sales to Europe. However, the trend is that all 4 are going to fall behind the United States within the next decade even without the elimination of corporate tax advantages.
Finally, because of the effects of corporate tax policies, it is better to simply look at final household consumption measures since this better describes how the country's product is distributed. On this measure the U.S. is way ahead and running further away every single year.
All likely true except the trend comment. That one is almost as likely to reverse. I say that implying nothing good about Europe or bad about US, just that simple statistics suggests an eventual return towards the mean even if current conditions don't.
The trend is the trend, Stu. It could change for the worse in the U.S. before the next decade is done but, if it doesn't, the U.S. will pass all four countries in GDP/capita.
My issue with the Lehman perspective is the heterogeneity of temptation and people's management of it. I don't have problems with temptation from drugs, alcohol or gambling. Instead my problem is internet over-use. I don't appreciate people prohibiting me from using the temptations I can handle. I do appreciate being given voluntary tools to help handle the temptations that create trouble in my life.
re Europe vs US: I've invested in a company that is working on internationally commercializing a new medical tech. The organization is small enough that it has given me the opportunity to speak directly to some of the executives, lawyers, and engineers, all of whom have good experience in the field. They are unanimous and adamant that the US FDA combined with the risks of the legal system and other burdens imposed by various states is, in combination, so much in a league of awfulness and delay all its own that there are two or three whole missing leagues in the gap between the US league and that of Europe or Northeast Asia. All my acquaintances who work in China or Northeast Asia say the same things about their own industries, but I'll focus here on this one.
Even though everybody in the company is American and lives in America, there is only "setting the stage" for eventual FDA blessing, but the trials are all conducted overseas, and the main project is to get CE label and EMA approval. The pre-Trump expectation was that, if everything goes as well as can be hoped, then it will still be a fact for many years and perhaps half a decade that the only way an American will be able to benefit from tech designed and exported from America will be to travel to Europe and have a European doctor supervise it based on European standards and approvals. Because they are so much faster and friendly to this type of business. Think about that.
The latest I've been told, however, is that the post-Trump expectation in the industry given even the slights hints seen of at long last some shaking up of the FDA is now a much shorter gap, and that company strategy might even need to shift if it turns out it might just possible to launch US products in the US within a reasonable time after appearing overseas. If this is the "New Right wanting to make us more like Europe" too, then bring it on.
And yet most drugs come to market in the US first because they get higher profits here.
Not really. First of all, drugs are treated differently than devices and procedures, and for those the EMA now has the edge. Second, average difference in time of approval is only about 5 months, for novel active substances that will tend to stay top of their class for a generation. That's not nothing, but it's also not a huge deal. Third EMA NAS approval is unfortunately a bundle of "safe and effective" certification and, well, bulk discount bargaining. The first part is easier and faster than the US, the second is something the US doesn't have. That's why stuff that gets approved by FDA like super expensive new cancer drugs gets technically certified but then never added to the list of 'EMA approved' medications, because the companies can't or won't sell for prices EU countries socialized health systems are willing to pay.
"A lot of earlier research, including a famous RAND study, found no effect of health insurance on health. If newer findings are turning this around, that is something to which we need to pay attention."
I would be skeptical of any study on any issue where the result impacts government funding, directly or indirectly. My overwhelming experience is that the result is decided on beforehand and the data is found, excluded, and manipulated until you get the desired result, and healthcare is the field I'm most familiar with and I've seen and done my share of "studies."
"They want a bigger welfare state that covers the middle class. They want antitrust to take down big tech. And they want a smaller, slower-growing economy"
And you can tell they want all this because they just passed a bill that lowers taxes and defunds medicaid. And they let the head tech bro and his employee "big ballz" fire tens of thousands of government workers.
"Why do people not want to believe what the GDP data are telling them?"
I completely believe the GDP data and have a low opinion of Europe and think we are better then them.
But I've also seen a lot of GDP debates and I think people miss the point. Dave Green and and Nathan Cofnas recently had this debate. Cofnas says GDP is up and everyone is ignorant, Green says TVs are cheaper but he can't afford a house anywhere close to his job.
Yes, I can eat out more than a European. But I usually eat out when I've failed to have the time to cook a better healthier meal at home. It is in many ways an inferior good, even if it costs more money. The same is true of a lot of things, spending money is often how a problem is papered over, rather than an actual increase in good living.
Most people stress out about the stuff they NEED. Housing, healthcare, education, safety, etc. Europe doesn't always do that stuff better these days, but it's perceived as traditionally doing them better. And nobody thinks the USA is doing that stuff well.