Rating a nation’s “Standard of Living” by GDP per capita only is misleading

GDP per capita is the value of all final goods & services produced within a nation divided by the average population.


But GDP per capita is not a measure of personal income & although it can be argued that it’s an important factor as an indicator to the standard of living of a country, it can also be easily demonstrated the fallacy of using only the GDP per capita by comparing our Country to say Germany.
Specifically:

An article in the NY Times a couple of years ago concluded that in the last 10 years the European model led to a higher standard of living versus our Country the USA.

My Reference: http://www.nytimes.com/2010/01/11/opinion/11krugman.html?_r=0
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By the same token:

In the UN’s National accounts database calc sheet for the same year has Germany lagging our country by a cool 13.5% in per capita GDP, specifically $40,149 bucks for Germany versus $46,457 for our country, the USA.

http://unstats.un.org/unsd/snaama/selbasicFast.asp
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However “Standard of Living” by definition of comfort in quality of life, education, health & consequent longevity by rankings gives us a different outlook in the Newsweek’s rankings for the same years as follows:

Germany

• Education #16
• Health #7
• Quality of Life #7
• Political Environment #12
• Economic Dynamism #16

Versus

USA

• Education #26
• Health #26
• Quality of Life #9
• Political Environment #14
• Economic Dynamism #2 (Only Singapore outranks us as #1)

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But a closer look at the Economic Dynamism ranking;

Germany outranks us by a 32% ratio in manufacturing as follows:

Manufacturing % of GDP Germany = 24.32% versus USA = 18.46%
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& we wallop Germany by a 11.5% ratio & where we get our edge in the far more dubious “SERVICES” GDP factor that some critics rage about the same buck that produces nothing being bounced around as follows:

Services % of GDP Germany = 68.97% versus USA = 76.86%
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My Reference on the Newsweek rankings: http://www.thedailybeast.com/newswe...infographic-of-the-worlds-best-countries.html


Best Regards

Lobato1

 

Are these subjective ratings valid?

 

Specifically & to the point:
With the exception of their “Economic Dynamism” rating, Germany outranks us on everything & most importantly & by far, on health that implicitly means longevity, Ergo: Quality of Life.

The World Health Organization (WHO) ranked our country 37th among third world countries.

My Reference: http://www.photius.com/rankings/healthranks.html
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But even in their “Economic Dynamism” rating & in spite of Germany outranking us on the all important manufacturing GDP part of their “Economic Dynamism” rating, Newsweek’s ratings managed to slap down Germany so as to have us come out ahead of Germany on their total ratings by a score of 85 to 84 in our favor.

Best Regards

Lobato1

 

That Germany has more manufacturing is not surprising.

Germany has a far less stringent regulatory environment for manufacturing than the US. They have nothing like either New Source Review or 40 CFR 70. In Germany it is very difficult to sue a manufacturer and get any appreciable amount of damages from them.

Germany does not tax manufacturing as heavily as the US does. In fact Germany subsidizes export manufacturing. This was a conscious decision made after reunification. Germany is heavily dependent on exports. But like China, they are so dependent on exports, that any downturn in exports will cause sever unemployment. This is why Germany is married to the euro. If they went back to the deutschmark, it would be so strong that their stuff would be priced out of current markets.

Germany has decided to allow their government to pick the winners and losers in the subsidy game. So far, they are going better than the Hussein Obama junta, but there is always the possibility of a huge mistake (the Enron scenario) or a long series of obscure mistake (the USSR mistake) eventually dragging them down. Their system militates too much for existing big players and discriminates against new competitors, so they have a degree of built-in unemployment and every existing job is almost irreplaceable.

Indeed the US could improve its manufacturing sector with reduced regulation, some sanity in litigation (why not use the same system the Germans use?), and just get government out of the way - kinda like it was in Coolidge's day. US manufacturing was indeed mighty in 1925.

"Quality of life" is subjective and subject to much debate.

 

Although we view this issue from different political views so here is my two cents:

By personal experience & having spent a couple of years in Germany of the over 44 years I was working in Western Europe as an expatriate, I can testify Germany owes a great deal to the now moribund Green Party.

Starting back in the 50s when West Germany went hog-wild to rebuild & lift herself from the WWII debris, driving through the Saar was an unforgettable experience of man’s disregard for the environment with huge open pit strip coal mining fields below, a gigantic Ferris wheel with giant scoopers reaching up to eyelevel on the road with each scoop filling an enormous giant truck & mountains of waste as far as the eye could see. The same could be said for those gaudy industrial cities going from Hamburg through the Ruhr & the Saar along the Rhine (although Bavaria did seem like a different world to me)

But then in the 80s the Greens partial victories allowed them to form alliances with government & they laid the hammer down on environment transgressions forcing those miners to set aside monies for landscaping to the extreme that Germany became a model for the rest of Western Europe to follow.

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Strip mining reclamation area in autumn, Saxony, Germany


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BTW:
The last time I was in Germany was back in 2008 when I went to celebrate my 50th wedding anniversary in Normandy, France then we went on a two week cruise of the Rhine river.

The Rhine Today


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Compare that to our Texas war on the EPA fanned by our secessionist Governor Rick Perry.

My Reference: http://search.yahoo.com/search?n=10...701&p=Texas+"war+on+the+epa"+"Rick+Perry"&vs=
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Here in Houston with our “Big OIL” culture we’ve had multiple plant explosions & the same people are allowed to keep operating such as the Multiple Incidents at the Phillips Petroleum Co. Houston Facility, 1989, 1999, 2000 — Houston, Texas

In 1989, multiple petrochemical explosions at the Phillips 66 Petroleum Co.'s facility killed more than 20 oil & gas workers & seriously injured more than 300. Ten years later, a pipe explosion in the facility's K-Resin plant killed two contractors & injured three other workers. & one year later, the same plant experienced another explosion, killing one worker & injuring more than 70.
My Reference: http://www.oilandgasinjurylawyers.com/Major-Pipeline-Explosions-Oil-Spills.shtml
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It would be logical that after the 1947 Texas City tragedy we would have learned but the BP that we defended tooth & nail just recently had a deadly accident with 15 killed & it keeps on going.

My Reference on BP at Texas City: http://search.yahoo.com/search?n=10...losion+killed+"+Texas+City"+"+March+2005"&vs=
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Then when we do have a tragedy such as the recent fertilizer plant in West, Texas that killed a couple of dozen people including a dozen 1st responders, we don’t go after the plant operators, instead our buffoon Sen. Ted Cruz that had previously voted against FEMA’s Hurricane Sandy relief for the east coast made a 180 & the clown starts raging against FEMA demanding the tax payer pick-up the tab.

My Reference on our Texas Buffoon Ted Cruz: http://search.yahoo.com/search?n=10...ed+Cruz"+FEMA+"West+Texas"+"Sandy+Relief"&vs=
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Germany’s Corporate tax (Körperschaftssteuer), is on a par with our country’s Corporate tax of 35% & last year it was dropped to 33.3%, down from the usual 38% German corporate tax rate of 15% plus 5.5% surtax plus 17.5% Regional tax. However the maximum individual tax rate is 42% in comparison to our 35% maximum individual tax rate.

My Reference & click on Country: http://www.taxrates.cc/html/us-tax-rates.html
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Our government has tried that with the recent GOP created “SCANDAL” of Solyndra that was started in 2006 with loan guarantees from the Bush Administration, but then when China undercut the solar panel market by heavily subsidizing their industry, GOPers refused to help our solar panel manufacturing industry & instead blamed the losses incured when Solyndra went under on the Obama administration.

My Reference on the Solyndra time line: http://thinkprogress.org/climate/20...-bush-administration-solyndra-loan-guarantee/
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Perhaps this last part is where I seriously disagree with your well thought essay because it is very clear to me that health is fundamental to a country’s “Quality of Life” & 37th place sucks.

Best Regards

Lobato1

 

I take no issue with looking at things from a different perspective, and agree that gdp/capita isn't the best way of measuring wellbeing. However, simply looking at standard of living and then using results on that alone to determine which country has a "better model" (as i put in bold in your post). There are multiple factors that are advantageous to Germany, to include relative ethnic homogeneity (that is to say, it is ethnically homogeneous relative to the United States, but not to Finland), urbanization (according to wikipedia, 583/sq mi. vs. 88.6/sq mi.), less military spending (releasing more money to give back to taxpayers or to spend otherwise, growing their economy), and more.

But even then, the flaw in looking at gdp/capita, where the American is 20% greater than the German, the answer is to look at the median gdp/household (using Wikipedia national statistics statistics), where the American is 25.5% greater than the German (using Wikipedia international median household income ).

There is some truth to the issue of manufacturing/services, and while I tend to favor manufacturing, critics of the services industry tend to be overzealous.

The different ranking systems used in the op are still largely subjective, and certainly aren't rated objectively. The average American college grad earns more in his first year than the average German college grad. The rankings almost certainly use the cost of education borne by the student in the rankings. We really do have the best education system in the world, and people from all over travel to go to our colleges which (though I think Oxford University is #1) feature the best in the world.

Now on the quality of life rating, even using Newsweek's rankings, I think it important to point out that the United States scored 88.58pts, while Germany scored 88.80pts. *shrug* I'd say it's about the same.