Economics

Economics Realities of Living in Europe

The largest amount of my readers is from the United States. Similarly, they constitute the largest fraction of my clients. Occasionally, people ask me for my opinion on living in Europe. In particular, they wonder about economic realities. In short, if you are a high-earning professional living in the US, you are very unlikely to improve your financial situation by moving to Europe as salaries are compressed across the board.

What I’m going to describe applies to the richer European countries, such as France, England, Germany, Sweden, Austria, and others. In short, the fiscal reality is that whatever job you have in the wealthier parts of Europe, you will be fairly comfortably off. If your skills are in-demand, you’ll make a decent salary. Yet, an income of around 6,000 Euros/month (before taxes!) in Germany already puts you in the roughly top 10% of income earners. After taxes, you’ll have a little less than half left over. I’d say that’s a pretty shitty deal, but you’re not going to starve. In fact, you can comfortably raise a family on that kind of income, due to a feature — I consider it a bug — of much of Europe: exuberant welfare payments due to rampant socialism.

In short, if you’re a hard-working high-earning single man, you’ll get fucked. Yet, the welfare state has something to offer for you. For instance, you could marry for tax reasons, which leaves around 800 Euros more in the bank each month, based on the figure used above. You’ll likely get screwed over in divorce court, but that’s a different story, and it’s not as if that part is any better in the United States anyway. Furthermore, as soon as you have kids, you’ll have more money coming in. In some countries, like France, there are enormous tax credits for having children, which are tied to your income; the more you earn, the higher the tax credits you receive. In Germany, those tax credits are still quite substantial, but the amount is fixed, which means that high-income families get discriminated against, but that is “positive discrimination”, according to our socialist overlords, so it’s okay. Then there are of course child benefits, which are likewise fixed. If you earn a fair amount of money, child benefit payments amount to a modest increase of your discretionary spending power. Of course, if you’re part of the lower class or, worse, the underclass, then children are your golden ticket: have seven or eight kids, get an enormous apartment for free from the government, and enjoy the hard work of others.

You can probably tell where I stand on the issue of “distributive justice”. To me, it’s a complete abomination. In some European countries, a non-working underclass family of six has more money left over than the very few people that make a positive contribution to the country’s bottom line. Companies also get taxed out the wazoo, which might explain why there is not much of a startup scene. In the end, the entire system is designed to milk the few high earners and hand the spoils to public servants and the underclass. Thus, you end up with a society which is immensely attractive to “doctors and engineers” from Africa and the Middle East, but not so much to the genuinely best and brightest from other parts of the world.

If you play your cards right, you can get by quite decently in Europe. An obvious approach would be to live off welfare and partake in the shadow economy, which is very popular in the underclass. Another is to have a lot of children. This leads to the problem of the dismal quality of the public school system, but let’s consider this a separate topic. Even if you make a net-positive contribution to society, you can benefit. For instance, if you get a rent-controlled apartment, you’ll feel as if you’ve gotten a big promotion at work as this might slash your housing costs down to half if not less. In some jurisdictions it is the case that you can’t get kicked out of a rent-controlled apartment, so once you’re in, you’re in, even if your financial situation improves so much that you would no longer qualify for your own apartment if you applied today.

People often bring up free healthcare as a big benefit of living in Europe. My tax rate is over 50%, and I get approximately nothing in return, or at least nothing I view as positive. If I were able to keep all that money, I could comfortably pay for the best healthcare you can find. So, if your income is average to high, healthcare isn’t free. You’re paying for it with your taxes. If you’re a burden on society then, yes, you’ll get to enjoy “free” healthcare, but it’s of course paid for by others. Yup, socialism is great, as long as others pay for it.

What ticks me off most about Europe is that it’s like in the former GDR. There, people earned money, but they couldn’t buy anything for it. It’s quite similar in most of Europe. If you bring home a somewhat decent paycheck and live in a rent-controlled apartment, you can’t do so much with your left-over cash. Putting the money in the bank doesn’t earn any interest thanks to about a decade of “ZIRP” (zero interest rate policy), courtesy of the European Central Bank. You could put your money into the stock market, which is a bit riskier, but you also don’t have so much money left over, to begin with — the average income in my profession is about three times higher in the United States, which would leave me with plenty of FU money to speculate, particularly in a low-tax state like Texas or Nevada.

Back to reality in Europe! There are a few big-ticket items you could buy. One is a car. The problem with this is that disposable income isn’t all that high, so buying (as in owning) a car is has gotten quite rare as it’s out of reach for most people. Instead, they either lease, take out a loan, or drive a company car. The last-mentioned is seen as a very attractive perk. If you get head-hunted by a company that offers that kind of perk, it may get brought up very quickly. I briefly thought about getting a car. A decent used car, say a 3-series BMW that is one or two years old, is quite affordable here, but I’d be concerned that some leftist dipshit would just key it because he can’t afford the same car from the welfare payments he’s receiving partly due to my contribution in taxes and, hey, he’s just damaging an object anyway.

The other big ticket item you could get is an apartment or a house, which leads to the other big problem in Europe, which is related to ZIRP: real estate is incredibly expensive. The same is of course also true in your typical Asian or US metropolis, but you can find excellent value for money in the US, and with the high salaries for professionals there, a house is within easy reach. Here in Europe, that’s a thing of the past. In the 1970s, a bus driver made enough money to buy a house. Today, buying a house or a nice apartment means that you’ll pay off a mortgage for twenty years or so. I think this is only reasonable if you are sure you are going to live in that place for a very long time, if at all, due to another feature in many European countries: high transaction costs for real estate. Thus, “flipping” apartments and houses is a bad idea, no matter if you want to sell five houses a year, or the one you live in after twenty. The biggest issue with housing is that you have no control over what your typical dipshit leftard government will do. All it takes is a refugee shelter in your neighborhood to make the value of your property plummet. Have fun with that kind of investment.

So, what to do with the little money you make in Europe? There is nonsense like luxury goods or blowing cash on first-class seats on an airplane, but I’ll leave that to people who think they have money to burn. Well, resign yourself to the fact that you likely won’t ever own a house. You can do what I do in Europe: have one or two nice vacations a year, keep your head down and, if you’re so inclined, plot your exit. For my non-European readers, I’d say that if you’re in possession of marketable skills and want to move to Europe, you need to get your head checked.


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14 thoughts on “Economics Realities of Living in Europe

  1. Aaron, say you can pick right now on the spot a place to live, work and raise a familiy -which place would it be?
    (and let’s assume you are satisfied with all employment conditions such as salary, holidays, retirement and healthcare contributions).

    1. I’d say Singapore, if you’re married to a local, is an excellent option. Some companies provide Western-style working conditions. I spoke to people who worked 8 hours a day in my field, and their lunch break was included. Thus, those guys probably have a more relaxed life than I do. Then again, you’ll also easily find people who routinely put in 12-hour days.

      For a single guy, I’d say that some US states are, overall, the top choice, but once you have to take into account costs for child care, education, and healthcare, prospects don’t look so good anymore. You’d have to make a phenomenal amount of money to get on an even footing with a well-remunerated European employee.

      1. How’s the situation with the muslims in Singapore?
        My limited understanding is that there’s quite a high percentage of the population there being muslim and that there are radicalized groups as well.
        On the other hand, I heard that similar to Duterte in the Philippines, there’s quite a tough stance on this topic throughout southeast Asia.

      2. *_*

        @Neutralrandomthoughts:
        The Muslim population is ~15% of the resident population of 3.7 million. Terrorism and Islamic extremism are simply not tolerated here, and there’s no Western PC-style appeasement going on. All mosques even have a standardised Friday prayer sermon regulated by a government regulatory body for Islam, so that freewheeling imams cannot exercise creative interpretation. Extremist preachers have also been banned from entering the country. But (or as a result?) the form of Islam practiced in Singapore seems quite benign anyway, thankfully. There’s a healthy extent of integration and participation in the wider society.

        But well, the Malay Muslim population still sees in some light the one and only ruling party we’ve ever had since independence as a Chinese chauvinist party. I guess this says something too.

      3. @Sleazy’s Gal
        You mentioned the absence of PC-style appeasement. Say there’s a terrorist attack in Singapore, e.g. something similar to what happened in Paris or the truck attack in Germany. How would the reaction be in Singapore?

      4. To cover their backsides, our politicians have already forewarned that a terrorist attack is not a matter of “if” but “when”. And to get us prepared as much as one can prepare for such things, they’ve launched a movement called SG Secure (https://www.sgsecure.sg/). I think a lot of care will be taken to ensure that tensions don’t flare between the Muslims and others, not just by government mouthpieces but by ordinary citizens of all races.

      5. Singapore would clamp down pretty hard on the local community, I believe. The Little India Riot in 2013 was dealt with swiftly as well. In comparison, last year in Germany the leftists-terrorist Antifa could vandalize an entire city with only token opposition for days.

    1. I’m half Bulgarian and you don’t wanna go that far east. Czech Republic or Poland are interesting. Cz has stand your ground laws and very liberal gun carry laws. Poland looks on th rise but their pro-Nato and anti-Russia stance are frightening. Hungary maybe, but the language is a nightmare.
      Another more western option is Slovenia, a nice small country which seems to be doing well.

  2. I was a t the International Fund Forum in Berlin this week, where investment fund providers and other large Asset Managers meet. We sponsored this event, so I was there half working half hanging around and talking to our peers.
    There were also discussion panels. The two big themes were a) how fintech is going to disrupt the financial services distribution business and b) how China is the next big bet.
    Frankly I can’t hear none of the two topics anymore, because after a bit of immersion in the crypto space, I am sick and tired of old men trying to understand who’s going to be the next big Blackrock, when it’s not about the next big player, but about the playing field.
    Anyway, no need to discuss point a) in too much detail, other than saying that the fat days are over soon.
    Regarding the “long China” topic, I really wanna vomit, I can’t hear it no more. As my experiences with Chinese people has been all but positive and I tend to judge an economy by its most important asset, that is its people, I wanted to dig a bit into some more tangible information making a point against the China case. After all, my gut feeling and people-reading-skills might be not so good.
    So here’s what I’ve found:
    https://www.youtube.com/watch?v=_AvNT3vyzr0
    I enjoyed watching this more than 3 years old video, because some very important points were made on demographics and foreign affairs.

    On a side note, at the forum I (dressed up in a suit of course) got many long lasting looks from women, who, judging by their way of dressing, where looking for a retirement solution which seemed to be… well uhm…a bit different from what you’d have in mind when you speak about Asset Management^^. Apparently they considered me a solid investment. Too bad that they didn’t pass my due diligence in terms of age and looks. Besides, I don’t have any capacity anyway đŸ˜›

    1. @Neutralrandomthoughts re: China

      I haven’t seen this documentary yet, but your comment reminds me to watch it! It’s called the China Hustle; trailer here: https://www.youtube.com/watch?v=55892jT06aI

      When a Tinder knock-off called Tan Tan can sell itself for $750M, you know it’s just Venture Capital pumping and dumping… (I refer to: https://read.bi/2lbNgay

      (At least Tinder got some compensation out of it when it sued: https://www.socaltech.com/tinder_settles_with_chinese_dating_app_developer_tantan/s-0074778.html)

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