One Economy to Rule Them All

DELTA BLUES:

How Britain Became as Poor as Mississippi: A case study in self-sabotage (Idrees Kahloon, June 10, 2026, The Atlantic)

Taxation is at the highest level since World War II, yet public services have deteriorated. The National Health Service, the celebrated pillar of the British cradle-to-grave welfare state, has a backlog of 6 million patients—almost a tenth of the population—waiting for treatment. The health service now has to spend more money settling maternity-malpractice claims than it does on actually providing maternity care. Many Brits can neither obtain an appointment with a publicly funded dentist nor afford a private one; in a 2023 survey, one in 10 reported doing DIY dental work, in extreme cases extracting their own teeth or gluing broken crowns back together…

Incomes can be shockingly low: Junior doctors recently went on strike for the 15th time in three years over their salaries, which start at just £38,800; the median salary for British civil servants is £35,680…

Recent plans to transform the country[‘s transportation system] have rested in no small part on High Speed 2, a superfast rail line intended to connect London with Birmingham, Leeds, and Manchester. But since HS2 was proposed, in 2009, its costs have tripled, to more than £100 billion. It is the most expensive rail line in the world. (A special structure to protect a rare bat species near the rail line in Buckinghamshire required 8,000 permits and was built at a cost of £216 million.) The most important sections of the proposed route have been lopped off. The rump line—going from Birmingham, Britain’s second-largest city, to not-quite-central London—may be finished by 2040…

Building infrastructure, or much of anything else, has become all but impossible in the United Kingdom. In addition to having the world’s most expensive (not yet built) train line, Britain also hosts the world’s most expensive (not yet built) nuclear-power plant, Hinkley Point C. Its environmental-impact assessment ran 31,401 pages; the plant will feature a £700 million “fish disco,” which will pulse sounds underwater to deter animals from its intake pipes. The government spent 32 years and £179 million planning a tunnel beneath Stonehenge to relieve traffic, only to officially scrap the plan this year. Even basic tasks, such as obtaining power, can be nightmarish…

Britain suffers from a housing crisis significantly worse than America’s. The problem cannot even be blamed on zoning, because Britain does not have a zoning regime to speak of. Rather, every attempt to build is a painful, ad hoc negotiation with local government councils and NIMBY residents. As a result, housing costs per square foot are among the highest in Europe. In the words of one report, “Our housing stock offers the worst value for money of any advanced economy.” France has roughly the same population as the U.K., but almost 50 percent more homes. And yet, since the financial crisis, the U.K.’s rate of housing production has only fallen…In London, the typical house sold in 2024 cost 11 times median earnings.

SUBTRACTING LABOR AND ENERGY COSTS…:

What Economists Are Missing About AI (Benjamin Verschuere and Angus Cameron, July 15, 2026, ProMarket)

In a new working paper, Benjamin Verschuere and Angus Cameron argue that the wide dispersion in economists’ forecasts for the impact of artificial intelligence on the economy stems from two gaps. The first is that estimates for growth, jobs, and prices are each built in isolation, with no single framework to reconcile them. The second is that models fixate on AI’s current capabilities, rather than on how fast it spreads and how much of a given job it can eventually reach. The authors build a unified framework that predicts roughly $2 trillion in long-run output gains, the loss of about 20 million American jobs, and falling prices.

THE MIRACLE OF COMPOUND INTEREST:

In America, Almost Anyone Can Be a Millionaire: Critics of capitalism miss how hard work and savings can make any of us rich. (Daniel Di Martino, Jul 17, 2026, City Journal)

The Wall Street Journal recently profiled a Costco worker named Tony Barzar from Arizona. Barzar never went to college, only taking some community college classes without finishing. Nonetheless, working his entire life in grocery stores and Costco, he has amassed over $1 million in his 401(k) account. He also owns a home with a pool and has traveled to Europe twice in the last decade—all while making just shy of $33 per hour.

He got there not by some great feat, but by slow and steady saving. Costco has a conservative employer retirement savings match program, matching 50 percent of contributions up to $1,000. To amass $1 million over the last four decades, Barzar would have needed to put just over 5 percent of his paycheck plus the Costco match in a standard ETF tracking the S&P500.

This kind of growth is achievable for the vast majority of young people in America today. At age 20, Barzar had a starting annual salary of $35,000 in today’s dollars. Today’s median 20- to 24-year-old full time worker earns over $42,000—nearly 20 percent more.

THE NEXT PRESIDENT HAS IT EASY:

Why the US economy stays strong despite Trump’s shockwaves (Alan Shipman, July 16, 2026, Asia Times)

The US also channels a higher proportion of its GDP into business investment and research and development than the EU. Europe was spending 270 billion euros less than the US on innovation in 2021, with this spending concentrated on its century-old car industry rather than new technologies.

Since 2025, AI has been the focus of US investment. This has helped the US maintain its hold over global technology and digital platforms. Rapid uptake of AI across US industry has also widened the margin by which its labor productivity growth is outpacing Europe’s.

Output per hour in professional services has increased by over 18% since 2019 in the US compared to just 5% in the EU.

Economy-wide productivity gains have allowed US real wages (wages adjusted for inflation) to edge higher since 2019. This has sustained consumer demand while also enabling the strong profit growth that has lifted US share prices to record levels. In contrast, average real wages in the EU have barely grown over the past 20 years while corporate profits in Europe remain subdued.

The US technological lead could be dented by Donald Trump’s immigration clampdown, which extends to skilled scientists and students. Research suggests annual GDP growth rates in the US could currently be as much as 0.8 percentage points lower than if net unauthorised immigration had stayed on its pre-2025 trend.

SUMMERTIME AND THE LIVIN’ IS EASY:

The World Cup Is Putting American Abundance on Display: Four policy lessons we can take from our visitors’ viral moments. (Scott Lincicome, Jul 14, 2026, Human Progress)

Yet, as The Economist points out, both sides also seem to agree on a few things: First, Europe is growing more slowly than America, thanks in large part to the economic dynamism and tech-fueled productivity here. Second, even Krugman’s pro-Europe data (see chart above)—along with many other sources—show Americans to have higher average wages and more disposable income (yes, even after accounting for out-of-pocket healthcare costs) than the average European in most places (yes, there are exceptions), due to our superior labor productivity and their leisure choices. Third, and most importantly, both sides want to support their reading of the data with an “eye test”—i.e., visiting each place and just looking around—that the economists believe will confirm their own American/European wealth story.

Hilariously enough, thousands of European World Cup tourists—along with ones from Japan and other countries, too—have performed just that test, mere days after the economists proposed it. And the result is an absolute rout for Team America:

There are many reasons for the foreigners’ astonishment. (A big one, in my opinion, is that these folks are seeing parts of Real America, especially in the Sun Belt and Midwest, that foreign tourists rarely visit, yet—as we’ve discussed here repeatedly—allow not-rich Americans to live very comfortable lives.) And, to be sure, not all the astonishment is genuine.

But a lot of it obviously is, and at its root lies the Great American Prosperity Machine. Deal with it, haters.

THE lEFT IS THE rIGHT:

Have You Heard the Good News? (Clifford S. Asness and Michael R. Strain, 07.01.25, The Free Press)

Horseshoe theory is the idea that the far left and the far right converge toward each other, even if they’d both vigorously deny it. Populism, as practiced by both the left and right ends of the horseshoe, has never just been about telling people popular things, such as “ice cream is delicious.” Rather, it’s telling people: “Ice cream is delicious, and you aren’t getting your fair share of the ice cream because you are a helpless victim living in a rigged ice-cream system, and here are the people responsible that we will take to task for you, and by doing so restore your rightful ice cream.”

That was more or less the sales pitch of the populist of the moment: socialist Zohran Mamdani, who clinched the Democratic nomination in the New York City mayor’s race by arguing the city needed revolutionary change. And, with some names changed, it’s a huge part of the MAGA pitch, too.

Today, both the progressive left and the MAGA right seem to run on imaginary—or at best, horribly exaggerated—grievance.

Populism pits “the people” against “the elites.” It requires the finger-point and the class conflict. And it requires things to be very bad, or else there’s not much for the populist leader to fix.

It is also about zero-sum grievance. It’s about telling people they are getting the shaft and our side is the one to unshaft you, extracting vengeance for you along the way. It’s inherently anti-republican (small r), replacing constitutional, individual, and minority protections and rights with the will of the 51 percent (often fewer are needed) who you can convince about your “populist” revanchist policies that will undo all real or imagined past wrongs done to them.

Now, there is nothing wrong with a good grievance—that is, if the grievance is justified and the solution to the grievance reasonable. The left can justifiably point to Americans without health insurance. The right can justifiably point to a border that was consciously left open for many years. Examples abound.

But today, both the progressive left and the MAGA right seem to run on imaginary—or at best, horribly exaggerated—grievance. The uniting theme is that the average American has it terrible these days, and only their chosen end of the horseshoe can fix it. People will go to extremes only when they are convinced things are terrible—and there’s a cottage industry, again both press and politicians, working on selling that story. […]

Wages are the most important component of the flow of financial resources households can use for consumption and savings. But households receive resources from other sources as well, including government transfer payments, social insurance receipts, and businesses. Overall household income tells the same story as wages: Real household income has never been higher than it is today.

And not just for families at the very top. According to the Congressional Budget Office (CBO), families in the 51st to 90th percentiles of the wealth distribution had an average wealth of $1.3 million in 2022, the most recent year data are available. That’s up from around $500,000 in 1990, after adjusting for inflation.

Consumption is an even better indicator of prosperity than income or wealth. It’s how much we all actually get to enjoy life (economically speaking). Spending on personal consumption is at a record level. Now, it might be fair to argue that this consumption is a big part of the looming debt problem America must eventually reckon with, but that would be a howler of an argument from either end of the populist horseshoe, as both the progressive left and MAGA right seem to be big fans of ignoring this issue.

When assessing the best time to be alive, it’s important to give special attention to low-income Americans. The CBO’s income data show that inflation-adjusted post-tax-and-transfer income for the bottom 20 percent of households more than doubled from 1990 to 2021. Real income grew more for low-income households than for the median household. The inflation-adjusted wealth of families in the bottom 25 percent was also at an all-time high in 2022. These families saw their average real wealth triple from 1990 to 2022.

Misery requires ideology.