Monday, January 25, 2010

France: Trails behind Arkansas but just ahead of Mississippi

Per capita GDP:Something in this Paul Krugman piece doesn't sound right:
For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London? You should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it.
Regarding his first question, of course not. Visiting as a tourist, most places I've seen in Europe are inhabited by people with serious cash. All of the locals look fabulous and people dress in expensive clothes and eat out in expensive restaurants where the food is top-notch. But coming into town you pass through the suburbs, where most of the locals live and few tourists venture. You get a mere glimpse of these "suburban" high-rise dwellers, particularly in Paris. Tino puts Krugman in perspective.
If you stop and think about this for a second the problem becomes apparent. These are not representative cities, they are three of the absolutely richest areas of Europe!

According to Eurostat, which contains GDP per capita figures for European regions, each inhabitant of London produces 65.3% more than the UK average. The figure for inner city London, the area most American visiting would see, is an 279%. That is not a typo. Inner city London is the richest region in Europe. Paris has a per capita income 272% higher than the French average. Lastly Frankfurt, the financial hearth of continental Europe, has a per capita GDP 278% higher than Germany as a whole. (Stockholm earns 37% above the Swedish average, for those curious).

These figures overestimate the wealth disparity somewhat, since cities contain more jobs than people, especially important for financial centers (one reason why Luxembourg is so rich). But statistics are not fooling us, central Paris is rich, which our eyes would confirm. The suburbs and most of the rest of France is not. The correct comparison for Frankfurt would be Manhattan, not the US average.
Tino is absolutely correct. What Krugman did was like visiting Munich and Detroit and making economic assessments of the two countries solely based upon what you saw within the core of those two cities. That's not to say that quality of life is worse in Europe... it's just different, and Krugman doesn't lay it out truthfully.

Someone tell me why Krugman is feted when he clearly pulls a lot of stuff out of his ass for his columns.

8 comments:

Anonymous said...

Things would radically shift to America's favor if the U.S. decides to stop playing "world policeman"... and lets Europe foot the bill for their own defense.

Dan from Madison said...

Poor Krugman is a tool and will always be a tool. I have heard that he is actually a brilliant guy, but he always lets his politics get in the way of sanity.

I quit bagging on him long ago, too easy of a mark.

As for the column, of course it is ridiculous. I don't expect European tourists to hang out in a suburb of Chicago like Joliet or Alsip with the commoners, I would imagine that they would want to be on the Magnificent Mile checking out the fabulous shopping and sights to see in the downtown area. So what do you think their eyes will tell them?

Maybe Krugman has even less of a clue then he did when I quit reading his shit years ago. Sheesh.

Anonymous said...

This begs the question about what the folks outside the metro areas make if the combined is equal to rural in the USA? The metro areas have to have a large % of the total population which would tend to drag the averages up...so the apples to apples to rural areas must be significantly different between the EU and USA...am I missing something?

Michael Ryan said...

@Anon...good point. A quick Google search turns up (crappy Wikipedia) info to compare with.

Consider Haute Normandie (around Rouen & Le Havre). It had a 2006 population of 3.26M and a GDP that year of 46,853M Euros, for a per capita of about 14,400 Euros.

Being somewhat generous with the exchange rate for that time (1.30), that gives about $18,700 per capita.

NoVa Sideliner said...

I've lived in Europe, both in big, rich cities and in not-so-rich towns. Krugman is a blind-eyed fool.

The standard of living in material terms for my colleagues (uh, and me!) in Europe was far below the average US lifestyle, and I've lived in several places in the USA to use as comparison.

One thing I can tell you is that when you see those nice, pretty houses in the German towns, there are two, sometimes four families in them! Likewise for the English semi-detached. And two or three cars per family? Hardly.

I remember an English techie I worked with and still catch up with occasionally who told me (paraphrased) after working in America that "You can afford everything you want there. I got a great car, and a great stereo, huge TV, and even a great apartment. In Liverpool we were happy to get just any single one of those."

He lives in a nice, big house in Ohio now and drives a Jaguar and BMW bike, is lovin' live with his Irish immigrant wife who bailed for similar reasons, and they will never return to Europe, they say.

(And I'll add that I'm happy to have immigrants just like them come over here to work and live.)

w said...

Is there a link to that per-capita/GDP table?

Thanks Lou

Foobarista said...

I really can't stand Krugman, or his fellow-traveler Friedman anymore. They long ago quit being serious, and drifted into the land where they make pronouncements about the world based on what they see around them. The problem with that is if your bar-stool is in a high-end bar filled with the world elite, you'll have a rather skewed view of the world.

One would think that Nobel-level economists would know that the plural of "anecdote" is not "data".

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