January 15, 2010
Another Krugman Smackdown
Ahh, my favorite argument. The Europhiles versus the forces of liberty and reason.
We started with Mankiw vs. Krugman. Hopping over the pond to pick up his Nobel, Krugman looks around his five star hotel and says "Europe is doing great!" Mankiw lists the per capita GDP numbers and begs to disagree.
Megan McArdle goes toe-to-toe, anecdote-to-anecdote with Krugman and says something I've always seen and argued. People go to Europe for two weeks and fall in love with its aesthetics, charm, and history. And it's great. When you spend more time or look a little deeper, you see that they are poorer than us. Period, the end, QED.
I don't want to sound as if I'm saying Britain's a terrible place--it's lovely, and I miss it. But the amount that people are able to consume is much less than the amount Americans are able to consume, and many of the things they forego make real difference in things like personal comfort. (Based on my admittedly limited sample of British mattresses, they must be unimaginably hardy sleepers). Consumption isn't everything. But it is something, and that is what's being captured in the GDP differences.
They have these microscopic refrigerators. And all my friends, especially my progressive friends, say "isn't that cute -- we could learn a lot from them on how to live simply."
But my European friends were rich. And they had American-sized refrigerators. So my takeaway was that you had to be a millionaire in the UK or Ireland to live like a US plumber. Same for those adorable dinky-ass cars. Millionaires drive Mercedeses and Range Rovers.