I’m really curious about this point made by commenter jmo3 at Megan’s place.

Many countries do provide more generous benefits but they do it through substantially higher taxes on almost everyone.

As just one example Denmark provides quite generous benefits – they also have a 200% on cars such that a stripped Corolla starts at $54,000. They have a 25% VAT and someone making more than $26k pays 38% of their income in taxes vs 20% in the US – much higher taxes at a much lower threshold than in the US.

The benefits and security are popular with many people but it’s all paid for with substantially higher taxes on almost everyone with a job.

Do very many other countries really provide more generous benefits, on an absolute PPP-adjusted scale? I am skeptical. Given that U.S. incomes are are quite a bit higher than in nearly all other major industrialized countries, I suspect that U.S. benefits are actually more generous, at a given level of income.

For instance, it is claimed that France has half the poverty of the U.S., because 6% of French and 12% of Americans are below the poverty line.


But U.S. PPP GDP per capita is forty percent higher — $47K vs $34K, which means that they must be using different poverty lines (unless the French income distribution is incredibly flat by comparison). Since poverty lines presumably have some similarity to the point where many social “safety net” provisions would kick in, that makes me think persons at given income levels would often receive more benefits in the U.S. than in France.


I dug around briefly to try to find PPP-adjusted poverty lines by country but haven’t found a list yet. If anyone knows where this info is easily accessible, I’d be very interested.

One of my favorite statistics in economics is that the poverty line in 2011 America is right about where the average income was in the 1950s. Keep that in mind when you hear the claim that incomes are stagnant, a myth largely built around “household incomes” that ignores the correlation between achieving higher income and acquiring your own housing.