About the ‘Europe vs US – who has it better?’ discussion that I started following in this post: now Paul Krugman has decided to weigh in (paywall, great deep dive, he’s also written followup articles):
But how accurate is this perception of European underperformance? While there are valid reasons to be concerned about Europe’s future, the trash talk reflects ignorance of the real issues. And even economically sophisticated, Draghi-type discussions are, I would argue, misleading. Europe is simply not poor the way Mississippi is poor. Moreover, by many measures — arguably the most important measures — Europe is, in fact, keeping up with the United States.
And Luis Garicano (is he related to Pieter ‘Europe should have a Tesla’ Garicano? Has to be, right?) responds:
Krugman’s “Don’t worry, be happy” message to Europe this weekend is damaging to Europe’s reform agenda. He uses current-price PPP to wave away the structural productivity gap that @a_bergeaud and others have carefully documented.
– So, yes, Luis Garicano is related to Pieter Garicano. Seems to be father-son, from the looks of it. They even wrote a reply together!
Paul Krugman wrote two posts this week arguing that Europe is broadly not falling behind the United States. He argues that the change measured by the Draghi report is mostly due to growth in the technology industry, which has distorted GDP numbers without actually leading to higher standards of living in the United States. We should believe our eyes when we walk around France and walk around Mississippi.
Unfortunately, Krugman is wrong. The measures he uses understate European stagnation.
I need some time to read all this stuff!