File this one under the list of “infrequently-asked questions.” This is an issue I’ve discussed extensively over at TGGP’s blog. Basically, here is the puzzle: Jews are among the most wealthy groups in America, with a median income close to $100,000 a year.
Naively, you might expect Israel to be about as wealthy. Isreal is, after all, a country filled with Jews. Yet Israel is far poorer than a hypothetical “Jewish-America,” and is also poorer than America in general. Israel’s wealth is a little difficult to parcel out due to the presence of a large Arab minority. Yet even if you assign an income of non-Jews of 0, you arrive at an Israeli per capita GDP of $36,000. By comparison, both Ireland and America are in excess of $45,000 per capita. Corrections for Purchase Price Parity correct for some, but not all, of this difference.
This is part of a general phenomenon. As Tino has calculated, virtually all hyphenated-Americans do better in America than their home country.
With respect to European countries, this makes sense. As has been argued elsewhere, America/Europe income differences are due in no small part to different taxation policies. Lower marginal tax rates do have long-term effects on standards of living, even if they don’t “pay for themselves.”
Figuring out what’s going on in Israel is a bit trickier. This country looks more free-market than European standards. There are two crucial issues here:
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