Labor costs are higher in Germany which is one thing that should make prices higher. Also, the cost of buying a house is HUGE in the Germany since you have 83 million people and very little land, yet renting is very cheap. In the US, buying is overally cheap in comparison yet renting still isn’t so great. Hmmm.

bc99: I got a DAAD scholarship too for a time as did a friend of mine. It was very generous. I really wonder how the cost of living in Germany is so low. Wages are different too. Some are higher than in the US but some are lower so its a mixed bag in that regard. I wonder if Grendel has any insight…

I remember living as a student in Heidelberg and receiving a great scholarship from DAAD that covered living and studying expenses. I even had play money for travelling to other countries during my time. Most foreign students in the U.S. might get a scholarship that would only cover their studies– not their groceries and rent.

Also people in the U.S. probably earn more money on average, so that might lead to higher everyday costs.

1. If portions are larger in the US then the prices per ml (or per ounce) should be smaller, because of the “bulk” effect, not higher.

2. Since Social(ist) Democracy is all the rage in Germany I wouldn’t be surprised that basic commodities would be subsidies and luxury items taxed heavily. (It’s obscene that some Americans can buy cheap DVDs while their others live in poverty—or at least that’s how that old communist arguments goes rehashed…)

3. You also need to take into consideration the average paycheck Germans get. If an average German earns only enough to afford the same lifestyle as an American does, in German prices, then you can’t really say that life is cheaper. (There are macro stats indexes for this. None of them have my confidence. The shopping basket one might be insightful.)

4. Higher sales taxes are only an aspect of the government’s total intervention in the economy. Also, the German gov. is spending less in some areas and more in others. It’s possible for them to use the redistributing nature of taxation for basic welfare. (Instead of ICBM Defense Shield projects, for example—don’t get me wrong, I’m all for anti-ICBM defense and anti-communism, but that’s how the example goes)

I don’t want to preach, but as a classical liberal I have to say that this entire issue is bad business. If governments were to repeal all taxes except a fixed income tax and free all markets of subsidies, punitive taxation, tariffs and the like you’d get the same prices everywhere on this global market (ignoring the variation in transportation and production costs)

Economically speaking, we’ve suffered enough misguided Keynesian present-oriented bad policies, Chicago School “wizardry”, or neo-communist anti-marginalist drivel! What we need is one market for one world and there are no economic reasons against this.