Income/Clothes Spend ratio?

[Babar]

Originally Posted by Spencer Young

I have a question about the European styling. In my visits, I've noticed that Europeans tend to dress both better and more expensively. If European countries have a lower GDP per capita, their citizens spend *more* on clothing, and presumably they have a higher savings rate than the US, what is being crowded out? I tried asking my friend who's been studying in Paris this question, but she said something like "well healthcare is free or cheap" (completely disregarding the whole taxation issue). It sounds like Europeans must be giving something up in order to afford their clothing, but what is it? Cars?
Simply because it costs nothing to go to university, and few have cars in the bigger cities, means that lots of people in their 20's do spend their money on clothing/travelling etc.

And yet, the American middle class is very rich compared to the European middle class. Few European middle class families have three cars, a boat, multiple computers and 3,000 sq. ft. house.

But then again, these things are much cheaper in the US than in most of Europe. You wouldn't even get two cars here in Norway for what you pay for three in the US. And even if the average home is smaller, most families have a second home, often abroad. And everyone takes much longer vacations. Comparing US vs European wealth like you're doing is a lot like comparing apples to oranges, and there are significant differences within Europe too.

While my personal well-being factors in presence or absence of A/C, I was not making any argument about "well-being," but material quality of living. A/C, like cars, house size, etc. is a quantitative measure of material quality of living. It is also something intended to demonstrate to other Americans that what we take for granted ("Surely everyone must have A/C in this day and age") is not something universally possessed in the world, even in developed Europe.

As a Norwegian, I can say that A/C would be an utterly pointless investment

It would be interesting, though, to see a comparison of how much Europeans spend on general furniture compared to Americans. Here, it is not uncommon for middle class families to have $5-10,000 beds for instance. My stereotypical impression is that most middle class homes in the US are rather cheaply furnished, A/C or not. Please correct me if I'm wrong.

 

[King Francis]

I may be on dangerous ground here, since this is my first post after lurking here for quite some time, and it may drive the discussion further away from matters sartorial, but I want to provide the link to a story I read almost two months ago on the web site of the International Herald Tribune -- certainly not an anti-Europe paper -- about the poor state of many French universities in particular and the French university system in general.

http://www.iht.com/articles/2006/05/11/news/france.php

I recommend reading the entire article, but here are some telling quotes:

Rather, it reflects the crisis of France's archaic state-owned university system: overcrowded, underfunded, disorganized and resistant to the changes demanded by the outside world.

"In the United States, your university system is one of the drivers of American prosperity," said Claude Allègre, a former minister of education who tried without success to reform French universities. "But here, we simply don't invest enough. Universities are poor. They're not a priority either for the state or the private sector. If we don't reverse this trend, we will kill the new generation."

At Nanterre, Alexandre Frydlender, a 19-year-old second year student in law and history complained about the lack of courses in English for students studying international law. Asked whether he would be willing to pay a higher fee for better services, however, he replied, "The university is a public service. The state must pay."

A poster that hangs throughout the campus halls echoed that sentiment: "To study is a right not a privilege."

I would wager that every poster here consciously or unconsciously lives by the dictum that quality is worth paying for. So not only do I struggle to fathom the highly developed attitude of entitlement evinced by many French students, I can't understand why anyone would wish to settle for a poor education that yields them a devalued bachelor's degree when they could obtain a better education in a privatized system as long as they paid for it. I'm not assuming that an individual French student could change the system in which she lives; but in a comparison of the French/European and American university systems, in my eyes the latter wins the match.

I understand this is just one article, but it's pretty thought-provoking, not least because of the source. Having the IHT publish this, even if it was written by an Old Gray Lady staffer (they share resources, if you didn't know), seems akin to the *** standing up and admitting that they're insensitive to black people.

More food for thought.

 

[Sartorially Challenged]

money is not an end unto itself.

No kidding. Who said otherwise? You must be having reading comprehension problems. I said "material quality of living." Let me repeat that for you. M-A-T-E-R-I-A-L. Not spiritual, not happiness, not anything except exactly what it says.

Let me guess, you just graduated with a degree in econ? Your argument gets the book answer exactly right.

Graduated from an Ivy League university with degrees in econ and international relations many eons ago. Went to grad school. Worked in the private sector. Did well. Semi-retired. Work in public policy now.

Your indicators are off. Few American families take month-or-longer vacations outside the country. European families, on average, do so every year.

Not because they lack the means, but because most Americans vacation within the U.S., which is as large as the EU 12 combined.

Examples like healthcare would put the lie to this - US pays more per capita for HC than almost any other country, and our clinical outcomes are not better than, and often worse than, those overseas. The market is great at allowing choice for elective and high-end surgical procedures (arguably 'superior') but is certainly not cheaper.

Two factors. First, due to the litigious climate, the cost of doing healthcare and pharma business is much higher in the U.S.

Second, pharma prices increasingly account for a good chunk of healthcare in the U.S. Pharma prices are regulated (price controlled) in Europe. In the U.S. they are not, so that pharma companies can recoup the research, production and marketing costs and have the incentive to do it all over again. The fact is that many pharma companies recoup their costs from the U.S. and then sell in Europe even at regulated prices for marginal profit. In other words, the U.S. subsidizes pharma costs of other countries.

Additionally, "elective" is not so "elective" sometimes. For example, I believe the Canadian "free" healthcare system considers hip replacement "elective" and thus (due to high demand) has a very long waitlist, much longer than in the U.S. Do you know what kind of quality of living that is, having to wait in pain for an "elective" surgery?

And, mind you, this is only "nominally" free. Due to high taxation, Canadians are actually paying a very high cost for this "free" care.

Now, in the U.S. people who buy insurance (or employer-sponsored insurance) can have such "elective" procedures right away without having to be in chronic pain. Ah, but in Canada or other kinds of "egalitarian" system, everyone is treated the same, right? No. Those with political patronage/connections often skip the waitlist.

Take your poison pill. You want the system to reward people based on political patronage or ability to compete economically?

If there aren't a ton of big houses in Siberia, my guess would be that is because: (i) there ain't much to do there - less demand for large housing; (ii) heating costs are high.

Nope. There is little economic activity. High economic activity, high income, low taxes (high disposable income) and ready availability of credit leads to larger, more expensive homes. All these factors are present in the U.S. while fewer in Europe.

Instead of me answering all these, why don't I take you to the horse's mouth and let the Swedish researchers speak for themselves:

http://www.timbro.com/euvsusa/

The link will give a brief summary and a link for the entire study in pdf format.

Also, Fareed Zakaria's summary of the OECD report on why Europe is failing to catch up economically:

http://www.washingtonpost.com/wp-dyn...021301569.html

Read first before arguing.

My own simple take on it is this: if you don't particularly want to work hard, yet enjoy a decent standard of living (be subsidized by someone who works harder), be a European. If you are willing to work harder and enjoy a superlative standard of living in return, be an American. Judging from the immigration rates, I'd say people have voted with their feet.

I certainly did.

 

[tiger02]

Originally Posted by Sartorially Challenged

No kidding. Who said otherwise? You must be having reading comprehension problems. I said "material quality of living." Let me repeat that for you. M-A-T-E-R-I-A-L. Not spiritual, not happiness, not anything except exactly what it says.
Damn, that's twice in a week. Time for me to look inward. In the meantime, I'll clarify since...well, reading comprehension is the insult of the moment, so I'll go with that one. That Europeans choose to spend their money differently than Americans do does not prove your argument. As Babar said, why bother with a/c?

Graduated from an Ivy League university with degrees in econ and international relations many eons ago. Went to grad school. Worked in the private sector. Did well. Semi-retired. Work in public policy now.

OK, so I guessed wrong. Interesting that your argument could have come word-for-word out of a recent grad's mouth, even with all that life experience. I guess our schools really are that good. BTW, no need for the "Ivy-League" signifier, it really isn't going to get you any extra love.

Not because they lack the means, but because most Americans vacation within the U.S., which is as large as the EU 12 combined.

IME (don't want to present anything as fact when I can't back it up) Americans gravitate towards vacations in places where they can stay with family, in order to cut costs. And rarely, beyond rarely, do they go *anywhere* for more than a week.

...low taxes (high disposable income) ...leads to larger, more expensive homes. All these factors are present in the U.S. while fewer in Europe.

This is just not accurate, even taken among the other factors you listed. The US has a tax rate in line with most Old European countries for the middle classes that you cited. New (Eastern) Europe and Canada both have lower income taxes. It is only among the wealthy that some European countries have higher rates. In other words, and again only within the framework of your argument, the middle classes in the US and the EU are similarly constrained by taxes. Thus my conclusion that Europeans and Americans (as well as their respective governments, different issue) simply choose to spend their money differently.

Tom

 

[AmInAm]

Originally Posted by Sartorially Challenged

And yet, the American middle class is very rich compared to the European middle class. Few European middle class families have three cars, a boat, multiple computers and 3,000 sq. ft. house.

This is purely anecdotal, I guess, but in my experience, few American middle class families have three cars, a boat, and a 3,000 sq. ft. house either. In fact, I know many more people here in Amsterdam who own boats than I ever did in the U.S., either growing up on the Jersey Shore or in university in Boston and Rochester, NY, or working in Silicon Valley.

Originally Posted by Sartorially Challenged

Americans can afford to buy large homes, because the U.S. credit system is exceptionally efficient (and less regulated) than in Europe or East Asia.

I thought Americans could afford to buy large homes because large homes were cheap in the U.S. Square footage just costs a whole lot more here in Amsterdam than it does in Rochester. Or maybe I'm misunderstanding your point (is it that somehow the availability of credit drives housing prices down?).

 

[pinchi22]

Europeans dedicate aprox. 7% of personal spending on clothing and footware.

I know this because one thing I do is finance European shopping centers. These are the retail statistics we get from consultants and government agencies.

If someone has comparable figures for the US market, we could analyze this in a bit more depth, rather than just rely on anecdotes.

Just the facts, m´aam.

Steve

 

[Babar]

Originally Posted by pinchi22

Europeans dedicate aprox. 7% of personal spending on clothing and footware.

There are huge variations within Europe, so an average number is a bit misleading.

Originally Posted by Freerider

I read survey from EU a couple of years ago on clothes spending. I remember that Italian men take the lead with 40 percent of their income on clothes. The barbarians are Danish men, who spend 5 percent of their income on clothes.

 

[pinchi22]

There are huge variations within Europe

I don´t know about all of Europe, but I know the ratios in France and Spain are 5.2% and 6.7%, respectively. Having visited Italy several times, I´m not surprised that the Italian male spends more of his disposible income on clothing, but 5 times the amount spent in other countries strikes me as unrealistic.

Steve

 

[PunctualAlex]

I spend 3-5% of my income on clothing, and 0% of my time arguing about economics on the internet.

(also I just noticed this top hat. how debonair)

 

[pinchi22]

If European countries have a lower GDP per capita, their citizens spend *more* on clothing, and presumably they have a higher savings rate than the US, what is being crowded out?

The data indicate that Europeans don´t really spend much more on clothing as of percentage of disposable income. The average American spends 5.0% on clothing and shoes, which is a whopping 0.2% less than the average in France.

A separate -and more subjective- issue is whether they spend their money on better looking clothing. My perception (having lived on both sides of the pond) is that the so-called great unwashed hardly dress much better than Americans, some buy cheap but decent looking gear at H&M, Massimo Dutti, or Zara; and a very select few sport the brands that Styleforumers would recognize.

You are right, however. There is a crowding out, but (at least in Southern Europe) it is due to what´s spent on food and beverage. In the Mediterrerean, it´s more than twice what Americans spend.

So, what gets crowed out? Health care, as you might imagine. An American spends an average of 15% there vs., for instance, only 2% in Spain (where is comes out of personal income tax).

Steve

 

[Sartorially Challenged]

That Europeans choose to spend their money differently than Americans do does not prove your argument. As Babar said, why bother with a/c?

If that were the argument, then you go by disposable income. Still doesn't change. Did you even bother to read the study "EU vs. US"?

BTW, no need for the "Ivy-League" signifier, it really isn't going to get you any extra love.

When you write snotty things like "Let me guess, you just graduated with a degree in econ?" that's the kind of response you get. As for "extra love," I have all the love I'll ever need, thank you very much.

IME (don't want to present anything as fact when I can't back it up) Americans gravitate towards vacations in places where they can stay with family, in order to cut costs. And rarely, beyond rarely, do they go *anywhere* for more than a week.

The first is a pure conjecture on your part with zero evidence. As for shorter vacations, a part of that may have to do with the fact that, indeed, Americans, on average, work more than Europeans do. That's a fact. But what's also a fact is that Americans are more efficient per man-hour than Europeans are.

This is just not accurate, even taken among the other factors you listed. The US has a tax rate in line with most Old European countries for the middle classes that you cited.

I love the way you select out only one of the several variables I listed. Let me repeat again for you: "High economic activity, high income, low taxes (high disposable income) and ready availability of credit."

New (Eastern) Europe and Canada both have lower income taxes. It is only among the wealthy that some European countries have higher rates.

First of all, I work with someone who was singularly responsible for "New" Europe enacting lower income taxes, including corporate (and which thus resulted in rise in FDI, especially from "Old" Europe (!) and rising economic activities, leading to cries of "We must harmonize taxes" from the likes of French government).

Secondly, you have to look at all the factors (the good indicators are rising in much of Eastern Europe, but they are still far behind the U.S.). Lastly, income tax alone is not a measure of total taxation.

In other words, and again only within the framework of your argument, the middle classes in the US and the EU are similarly constrained by taxes.

No.

I thought Americans could afford to buy large homes because large homes were cheap in the U.S. Square footage just costs a whole lot more here in Amsterdam than it does in Rochester.

Obviously you can't compare an urban area to a rural area (rural area will have bigger homes, holding other variables constant), but if you compare urban to urban of similar size and density, you will still find that Americans have bigger homes. It basically comes down to the fact that holding other variables constant, people with higher disposable income will have bigger, more expensive homes.

So, what gets crowed out?

And cars, boats, computers, A/C, mutual funds, housing, higher-level education, broadband internet service, server space to run something like Style Forum, ultra premium dog food, etc. etc.

Or simply put, whatever the heck else you wish to spend your money on.

I will also note that there is net migration into the U.S. from Europe. Again, people voting with their feet and all that.

Look, we can all decide for ourselves whether living in Europe or the U.S. is better. That is up to the individual based on many subjective preferences. But as far as economic indicators go, it is undisputable that, on average, Americans enjoy a superior MATERIAL quality of living due to some of the economic factors I mentioned. That's not some sort of a national chest-thumping. It's a fact.

 

[Sartorially Challenged]

A separate -and more subjective- issue is whether they spend their money on better looking clothing. My perception (having lived on both sides of the pond) is that the so-called great unwashed hardly dress much better than Americans, some buy cheap but decent looking gear at H&M, Massimo Dutti, or Zara; and a very select few sport the brands that Styleforumers would recognize.

I agree, also from personal experience, particularly among the young.

What I do notice is that Europeans tend to wear slimmer fitting clothes than we Americans do. Now, I learned on this forum that fit is foremost, so perhaps that accounts for the impression that Europeans dress more stylishly.

BTW, something I notice about many Europhile Americans (or even Europeans themselves) about the stereotype of stylish Europeans vs. slovenly, uncouth Americans is that they often compare one segment of European population (usually the rich, the elite, the fashionable) with the general "masses" in the U.S.

Some rich Americans will visit nice areas of Paris, for example, and mingle with rich Parisians, then compare them to our "man on the street" in the U.S. and conclude that the French are more sophisticated or cultured.

 

[globetrotter]

Originally Posted by Sartorially Challenged

Some rich Americans will visit nice areas of Paris, for example, and mingle with rich Parisians, then compare them to our "man on the street" in the U.S. and conclude that the French are more sophisticated or cultured.


I find that, too. many americans will find themselves spending time with a very elite slice of life in other countries, and will assume that that represents everyone.

 

[Britalian]

Porca miseria! just answer the question, gents.
yeah, we can guess the various factors affecting spending patterns.

maybe I ought to have started it in 'Current Events, Power and Money'

------
'The large print giveth and the small print taketh away.

 

[Margaret]

Originally Posted by Britalian

Porca miseria! just answer the question, gents.
yeah, we can guess the various factors affecting spending patterns.

maybe I ought to have started it in 'Current Events, Power and Money'

------
'The large print giveth and the small print taketh away.

What's with the rash of cheeky newbies? Do you guys need a tutorial in social skills?