I think the measure of comparison is fair. GDP per capita in terms of PPP makes sense. How else would you suggest comparing?
Reminds me of a credit seeking friend of mine - telling me a story at the bar the other day, some kind of lame duck theory that unless I pay for everything on credit, I won't have any credit in the event the I need it. It's something only indebted people can conjure up to hide their foolish ways. US versus Europe reminds me of that.
you think people in Europe don't use credit? many people in the UK max out their credit cards to pay their rent, mortgage every mth
All well and true, but what is the point of comparing winning horses on different tracks? On either side of the pond (and I guess on either side of the channel included, LOL ), one has the posibility the live as rich or poor as one bloody well chooses! How about the poor bastards in the rest of the world? What can be learned from their successes and failures? BTW, I agree that in this particular article and many others, Krugman is being a selective myopic moron, trying to make a moot point!
Comparing GDP figures to determine standard of living is always tricky (even when using PPP). I remember reading an article about it in The Economist. One reason that GDP is higher in the US is that you work many more hours than we do in most countries in Europe, so you've really earned the extra $ (I on the other hand really like the 5 week vacations). But, if you work that kind of hours in Europe your career will probably benefit from it. If I remember correctly another problem when comparing GDP figures is that many countries in Europe have big public sectors which apparently tend to reduce the official GDP figures.
But you aren't obliged to spend all your income. For example if the US guy spends 50k per annum on living costs, and the Swiss spends 65k (30% premium for PPP parity), then the US guys saves 50k per year but the swiss saves 85k per year. The Swiss person can thus retire much quicker, or go abroad and live like a king for 70% more days per year. It's better to earn 1 million a year in a place where it costs 500k to live acceptably, than to make $10k a year in a place where it costs $1k to live acceptably. And don't forget the greater life expectancy and much lower violent crime rates in Europe - that's worth a lot of $$$.
That requires defining a common "standard of living". Hypothetically, would you swap 50% higher per-capita PPP GDP for 2 years less life expectancy? For 5 years less? 10? Before a meaningful comparison can be made, you need consensus on a meaningful measuring stick.
You guys forgot there is also a black economy in many european countries that doesn't get reflected in statistics. I doubt that is as much the case in US ...
There's a methodology that attempts to take this into account. I am referring to the Human Development Index (HDI) that, apart from the per capita GDP, also includes life expectancy and levels of education. Arguably, like GoC says, it offers a much better metric. Scandi countries lead in the latest HDI rankings, which, I suppose, isn't too surprising.