[pjc50]

> Yet productivity growth as conventionally measured has in fact been much faster in the US than in Europe. How can this be consistent with the fact that there has been virtually no change in the relative value of goods produced per hour? That’s the apparent US-Europe paradox. What explains it is the fact that the US and European economies produce different mixes of goods – a qualifier that is not picked up in the conventional measures of productivity. And that difference in mixes of goods affects the prices at which productivity measures should be calculated in order to make a meaningful comparison across countries

One of the most important things to recognize is that the vernacular meaning of "productivity", which would be something to do with how hard people work and how many widgets they turn out, is not the same as the technical economic term "productivity", which is roughly GDP divided by hours worked. This causes a lot of discourse with people talking past each other.

The examples relate to tech companies. If you think about, say, Youtube, that (a) contributes a lot to US GDP and (b) doesn't cost European consumers all that much. Indeed, a lot of stuff produced by Silicon Valley is ""free"" (ad-supported or free tier) at the point of use.

This is before we get into complicated cases like international attribution of revenue, such as Apple Ireland.

[comrade1234]

I understand your point but YouTube isn't a good example as it has its global development team headquartered here in Zürich.

Multinationals really confuse comparisons - when I bought a macbook here in Europe it got shipped to me directly from china. My money went to apple Switzerland. At no time in the process was the USA involved.

[pjc50]

> Multinationals really confuse comparisons

Well, yes, but in both cases of Youtube revenue and Apple, that money is eventually going to show up in the accounts of the US parent company and its share price, even if it's in a Swiss bank account.

It's very hard to say where internet economic productivity ""is""! That might cause it to be over- or under- counted.

[comrade1234]

Multinationals are disincentivized to send revenue back to the USA because they are taxed twice on it - they're taxed in the country it was earned in and they're taxed again in the USA as income because they are essentially completely different companies.

Trump had a tax holiday in his first term where companies were allowed to send revenue back to the USA without being taxed. If I remember correctly apple sentt back billions and used it for stock buybacks.

So money earned outside the USA rarely makes it back.

[b40d-48b2-979e]

Money usually stays in the community where it is paid. Even within the US, local businesses keep something like 80% of the money local in the community (spent at other local businesses or banks, city taxes, etc.), meanwhile buying from a chain store has most of the money shipped to some tax haven in Texas or Arkansas.