Yes, Living Standards Have Grown Slower in Northwest Europe than in the U.S.

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The point of working1 is to produce enough value for the rest of society to be able to consume as many goods and services as we want for at least as long as we are alive.2 “Progress” is when people can buy more/better goods and services for a given amount of work. Some might choose to work less than others if they have fewer material desires3, but even those who work extremely hard may have trouble earning enough to cover their expenses if nobody else values their output highly enough. So it can be a sensitive subject when one society seems to be enjoying far less progress than another that it considers to be a rough peer.This explains the months-long debate about the appropriate way to compare incomes in the U.S. vs. Europe. It began in February with an intriguing entry from Seth Ackerman and recently picked up again thanks to interventions by, among others, Paul Krugman, Luis Garicano, Philippe Aghion, Antonin Bergeaud, Brad Delong, Martin Sandbu, and Robert Inklaar.4It all comes down to this chart:One side argues, using standard methods (blue line above), that people in (most of) the rich European countries5 have been losing ground to Americans since the mid-1990s, but especially since the euro crisis and again since the pandemic. Aside from being supported by most of the public-sector data, it is also consistent with the relative performance of U.S. vs. European stock markets over the past few decades, as well as current valuation differentials.The other side points out that unconventional methods (red line above) imply that there has been little change in the relative …