Why Is the Wealthiest Country in the World Failing? 

Former Luxemburg PM, Jean Claude Juncker said, "We all know what to do to solve our problems. But we don't know how to get re-elected after we have done it." I think this problem afflicts all democracies which have to win popularity from the voters. Often popular measures and polices are bad for the economy.

I don’t know how but you’ve managed to package an unbiased analysis that is more entertaining than the sensationalized segment of economic and financial news. Thank you for your efforts to be the signal and not the noise. I understand that the economy is currently in a downturn and that we must wait for things to get better

Luxembourg is undoubtedly very rich, but its GDP per capita is inflated due to the fact that 40% of its workforce lives in neighbouring countries (which means that these workers contribute to the country’s economic output, but they do not count for the population denominator when calculating GDP per capita), and also due to being a tax heaven. Switzerland, for example, has a lower GDP per capita than Luxembourg, but it has a higher average wage. Luxembourg is still one of the richest European countries, but not as rich as its GDP per capita may suggest.

My Dad is working in Germany and he got a proposal from luxemburg with 3times the salary hes paid here

As a junior engineer I can only thank Luxembourg for enabling me to have a normal life.. back in Portugal I was living miserably with only 600€ of net salary.. Luxembourg enabled me to finally be able to go out eat and have a drink with people. It's true.. rent is very high but what is 1500€ compared to a 4000€ net salary!? With 600€ in Portugal I could almost not even rent a room

I work there. And while the country is very rich indeed, I have doubts about the GDP/capita calculation: most of the workers, including the most qualified and highest positioned, are cross border workers leaving in Belgium, France or Germany. This represents several hundreds of thousands of people. If they are not included in the calculation, the GDP per capita is biaised by A LOT (and I mean at least by 30%).

Certain economists have put forth projections indicating the possibility of economic recessions affecting both the United States and certain regions of Europe in a certain period of 2023. It is noteworthy that a global recession, characterized by a decline in annual per capita income on a global scale, is relatively infrequent due to the typically accelerated growth rates observed in China and emerging markets in comparison to more established economies. The classification of a worldwide economic recession is contingent upon the instance when economic expansion lags behind population growth, indicating a broader economic contraction.

Honestly, I'm unsure if investing is a wise move right now. Take note of how frequently things fail. As I still have some time before I retire, I'm still looking for a better strategy to invest my money despite reading charts and predictions from well-known investors from the past and present. In order to generate passive income, I want to build a solid and reliable portfolio.

I live in Luxembourg (moved 2018) and it absolutely doesn’t feel like we’re failing here! Indexed salaries and super good terms. The job market remains on fire. All is good for individuals here, though the housing crisis is a real problem if you insist on walking to work instead of using our free public transport. I don’t doubt that the video has valid points, but we have a relatively competent government and I’m confident they’ll deal with it.

It's not that unemployment doesn't exist, it's that the unemployed aren't allowed to exist.

What a great video, I love everything he said, things like this always make me wonder what it would be like if we hadn't established financial systems all over Europe.

Luxembourg has a population that is less than most of the largest cities around the world. It has a very small land area and can be serviced by low income workers from the surrounding countries artificially rising the income from the highly paid people who live in the country. It is really no different from any large city where there are suburbs where the very well to do live and there are suburbs nearby where the poor reside servicing the rich.

I never knew how affordable a year long all inclusive vacation in the Caribbean was.

The main problem is the extraordinary high prices of housing. You pay so much money for it and then the money left in your pocket is not good for anything

I am a resident in a Luxembourg my husband is a finance lawyer. The great sucess of Luxembourg was on 70s and 80s banks would accept suitcases of money mostly German marks no questions asked… that is over 😂 We are leaving Lux in 3/4 year time and selling our townhouse for good Going to relocate to the north Portugal mountains

Ireland's high GDP figure is misleading, as many countries direct their revenue through Ireland to exploit its low corporation tax. This wealth is not disseminated to the Irish people nor is it created by them, but instead the GDP calculation includes redirected revenue as investment into the country. Indeed, Ireland's situation could lead to the GDP calculation being revised.

I had a discussion with a policy maker from Luxembourg recently, and one of the country's concerns is the fact that since a large percentage of its workforce lives in the neighbouring countries, those people are increasingly receiving state pensions from Luxembourg without spending them in the country's economy.

I am a Luxembourger. And while some points in this video are correct, i believe the creator of the video is also missreading the situation. (Also never read so many wrong infos in the comments btw) While it is true that the lux. banking sector is having problems, somehow our gdp continued to grow consistently. The banks arent the only companies making money nowadays. And our housing market is just a victim of the countries success. Eg. When we perform worse, the housing problem gets better, eg. We become more attractive again... In general: dont underestimate a country who managed to survive between all its bigger neigbors despite the ods. We are already inovating, and succeeding so far.

I grew up in Luxembourg and am working in the financial sector now. I think the main problem is the fact that Luxembourg needs a lot of highly skilled workforce for their mainly service-based industry. The social system that used to attract people from neighboring countries isn't as attractive as it used to be, also because of the high cost of living and difficulty of commuting from neighboring countries where living is cheaper. For a lot of people it just doesn't make a difference of earning a bit less in their home country, because their cost of living is lower as well. Housing prices in luxembourg have gone up considerably, so that even a lot of luxembourgers can't afford housing anymore, even with a good salary. Because of this, many luxembourgers with high qualifications move to different countries, or stay in the countries where they studied (because they tend to go to university abroad). Then there is the standardised salary indexation, indexed to inflation, which is a great social achievement, but many small/medium sized businesses can't keep up with the automatic raises they have to apply, which eats up their profit margins (the reverse effect is that a lot of people stay on minimum wage, which isn't enough to live well in this country). The cost of workforce is extremely high in Luxembourg due to the high salaries and many big companies decide to outsource a big part of their operations to countries with lower salaries. The result are companies that don't really produce anything and don't really contribute as much to the economy as they should. I could list a lot of other problems with the country, such as the difficulty for the country to diversify its economy (the financial sector makes up 25% of the GDP !). From my perspective, some of the problems listed in the video aren't as important or impactful as the problems I mentioned here. Regulations are mostly on par with what exists in countries like Germany or France, but I wouldn't call it excessive : companies of the financial sector actually praise the regulatory environment, because it's comparatively easy to set up a financial services company here. I've never heard about the insolvency system being a problem here (at least to the extent that it's impacting the economy in general). Research and development is logically low, because of the limited use cases and ressources compared to bigger countries (we can't invest billions in things like pharmaceuticals, military or automotive industry, because we simply don't have these industries).

What a shame. A smaller country should be so much easier to government effectively

You get to ride the public transportation for free in Luxembourg at least

You have all wrong on Luxembourg. The problem: you believe things you do not understand. Luxembourg is tiny and half of it's work force lives in the surrounding countries, enter Luxembourg to work, and then leave. Think again about that. PIB counts product made by a lot of people who do not count as population. Normal statistics do not work in that situation. To do things right you should have to divide PIB almost by two. Luxembourg has never been as rich as the standard statistics want to show. But this is not the only point you get wrong, most of your information is wrong too. You are trying to apply your american point of view to a little country of half a million people in the middle of Europe when reasons behind decissions are totally different of what you could imagine.

Thank you for an informative video. Growing economies must learn from this case study. 🙏🏾

housing prices are just completely nuts in luxembourg. barely anywhere (even the desolate north) can you find any kind of appartment for under 300k euros. a full fledged house will quickly run you 1 million euros. this makes the high wages almost pointless and also punishes everyone who doesn't get a good inheritance. I seriously don't know how all the immigrants here do it. i guess get a job for 4-5000 euros, rent for 1200 euros/month and save as much as you can, then marry and hopefully get approved for a mortgage to actually buy an appartment or a house. Of course there is the option of buying a house across the border in belgium, germany or france for a fraction of the cost of a house in luxembourg, but that comes with potential tax obligations such as inheritance tax and tax on capital gains etc.

Seems like many of these issues should be simple enough policy changes to make. Roll back on some of the regulations from the 2008 crisis, reduce the number for bankruptcy acceptance, etc. Of course, I'm sure it isn't that simple and requires policy makers to understand unintended consequences, but compared to other societal issues around the world; these ones doesn't seem as complicated given how they are presented here. Which makes me a bit suspicious, ngl.

I live in Luxembourg and work in the financial sector. I stopped listening to this video at 6 minutes and 21 seconds as there were too many errors and inaccuracies. Failure to understand statistics may be the presenter's issue. Compared to other European countries, it has weathered Covid, Ukraine and global economic issues very well unlike UK. Is this channel a 'whataboutery' to distract from brexit?

I was born in Luxembourg, and it pisses me off they say they’re struggling hiring specialists when all of them want people with 10+ years of experience and have a masters degree for a fucking back office job. Even a fucking salesman today needs a degree. If you want talent, hire accordingly. And I have the luxury to have a home in Luxembourg, but at this point I’m looking more to work in other countries like Belgium, Netherlands or Switzerland.

Luxembourg isn’t a micro-state?

Hahaha I clicked because I thought it was the flag of The Netherlands 😂

Theres never a shortage of "highly productive workers". Only a shortage of companies willing to pay them what they're worth. If companies really paid the bill, students would have pursued degrees and training to fill the role.

This video raises some thought-provoking questions about a complex issue. It's crucial to discuss why a wealthy country faces challenges, and this video provides valuable insights. Let's hope for positive changes and solutions in the future. Thanks for shedding light on this important topic!

As they say back In Luxembourg: Mir wëlle bleiwe wat mir sinn

fun fact Luxembourg as rich as it is, it's one of the largest beneficiary of EU funding.. weird..

We go there every year on holiday. It always strikes me how many Luxembourg registered cars are parked near houses just over the border in Germany. Makes sense though. Anyway, I can’t recommend Luxemburg high enough for a little holiday. Little Zwitserland, Diekirch, Vianden etc. The country has a strange mix of feeling sort of German with very strong French influences as well. About the economy, things are up and down everywhere these day. The Luxembourgers can cope with it I’m sure

Very effective reporting style 👍

We tried to set up an affiliate company two years ago. They made it impossible to us even demanding that we have a physical distribution centre in Luxemburg itself and controlled flow of goods to and from the country even if we bought from France and sold to Germany. We gave up in the end.

The problem is the idea that growth is needed

A year long all inclusive vacation in the Caribbean for $5,800.00? Really? What century was that?

Luxembourg also has a space sector. Some companies are investigating asteroid mining.

thanks

Luxembourg is powered by Portuguese people.

Thank you Luxembourg, I felt miserable in France earning 1.800€ Now I bought a house, have a nice car and even invest SP 500, and I still have money left. I’m really happy to pay my taxes in Luxembourg.

I worked in a bank in Luxembourg in the early 2000s. I was making about $30,000 a year straight out of university - good by the standards of neighbouring Belgium, but a far cry from what a Wall Street finance job could have generated. Marginal income tax rates reached 50% for the bachelor that I was, so there was little left of the tiny bonuses (no more than a 13th month, really) I received. At no point did I feel I was living in the richest country in Europe. I just felt I was wasting my youth there. Occasionally, I have a look at the finance type jobs available in Luxembourg. Virtually none of the roles are exciting : it's all back office stuff. You may stumble on a role that initially sounds exciting, e.g. an infrastructure investment role. After the surprise/excitement wears off, you realise this is just a fund administration/back office role. And it's like that for all roles in Luxembourg. When I was there, I was told that native Luxembourgers preferred to work in government jobs such as the railways, where they get paid more. No entrepreneurial ethos, attract companies for tax shenanigan reasons (though employees are highly taxed, as I discovered). How this country can have one of the highest GDP per capita in the world (most advertised salaries are certainly not that high) is beyond me.

Manual Labour is badly paid in Luxembourg and the education system is also complete dogshit,which explains the lack of highly qualified personnel. Schools are unnecessarily difficult and you have to pretty much do more than schools from neighbouring countries for the same level.

I wouldn't exactly call Spanish banking unimpressive--as the graph shows Spanish banks outearn in profitability those of Germany and the UK. I'm not Spanish, but I do know Spain has some of the largest multinational banks in the world like Santander and BBVA. They're spread around the globe. A more apt comparison for Luxembourg would perhaps be Switzerland given that both of these countries are known specifically for tax avoidance banking and corporate HQ. Switzerland had (until recently) 2 major international banks--UBS and Credit Suisse. Now it's just UBS. As to why Luxembourg hasn't been able to make inroads into this type of multinational banking, probably has to do with the fact they are relatively recent entrants compared to Switzerland or other countries.

How is Luxembourg not a microstate?

Have said it before . Scoring total gdp in your list at end of each video sucks cause it gives country’s with smaller populations big disadvantage

From what I can tell (according to three people, so it's not a statistical analysis ;) ), there are very many highly-skilled jobs on offer percentage wise, so salaries are high. But compared to other countries like Switzerland (where said percentage is lower) the salaries in those jobs seem to be lower and the cost of living is higher (apart from the great free public transport).

Luxembourg biggest problem is Housing market, even if salaries are high most of the earning goes to rent which is a huge issue by itself to find, I think that when you want to settle you can't do that even natives are unable to get a house or apartment so they end up leaving

Imagine just chillin', earning a high salary at a zombie company. It'd be the perfect life.

Can you make a similar video on Switzerland: analyse the Swiss Federal Government, Swiss neutrality, Swiss electrical grid, tech employment, insurance, etc.

New to channel.

Hello from Luxembourg

Language is a potential issue that wasn't addressed; to fit in in Luxembourg professionally, culturally and socially one would be expected to be fluent in German, French and Luxembourgish. How many skilled workers in Europe can do that? I would gladly work in Luxembourg but my monolingual upbringing means it would be a massive struggle for me to be successful there. Also, name me a good economic example of bureaucracy in the world! There isn't any

As someone who moved to the NL, that has similar issues as Luxemburg, the reason why companies can't hire employees is fully on the companies. With bad pay paired with high prices and sky-high taxes, immigration is a nightmare. You need a lot of money in your pocket to be able to start renting and get your identification numbers so you can start working in the country, and many companies just simply don't want to hire you if you are not Dutch, even though the language is English during the day because of the international teams that are employed remotely. I know very little about Luxemburg, but I would not be surprised if the reasons of their issues are similar

Can you please do a video on Belgium?

Pretty sure banking sector regulation or financial regulation in general tends, to a large extent, to be defined on EU rather than national level.

Luxembourg is far too small to call the richest country in Europe. So........huh?

Thank you for posting this video which is the first I’ve watched the new series and I have now subscribed. I have one major criticism and I’m sure there’s a reason. Explains why I find it to have many similar videos in other accounts. Why does the presenter speak so rapidly that one can barely follow what they’re saying? Is it to save bandwidth on the video or something? It drives me nuts I’ve never heard any lecturer or teacher - and I work in education - speak as fast as seems to be common in all videos of this kind. Maybe someone on here can enlighten me!

damn the low taxes part made me jealous as i have 50% taxes in the netherlands here

I guess one of the factors, and missing from video, is simply land. Same as Japan, L. does not have a lot land, being small. So obviously lack land hits badly both on property prices and new enterprises.

They failed because they are immoral, greedy and not honest and now it coming back to haunt them. KARMA.

Truly spoken as one who has never lived in Luxembourg.

Average monthly salary in the US is almost the same as Luxembourg. GDP Per Capita is pretty close as well, but Luxembourg has the advantage of being a very very small country

I live in Europe an I am witnessing every issue. Right now our politicians and economists are all just after greed and eco growth. Being the flagship and innovation hub (like in green living) and shining as ideal and inclusive to the outside seems to be the goal. But there are so many things going wrong. We are getting so many immigrants with no education or money, in other words productivity is falling. Also since our crazy housing prices, our youths (like me) have it really hard and often live abroad. Another issue is the rise in crime because many issues are getting denied. Also the intense care and help lower classes, refugees, parental care, free public transit, financing of greenwashing projects... all that free-paradise being created costs the state crazy much

The reason that the economy of Luxembourg or any other advanced economy is not easy to achieve higher economic growth any longer, is explained by the Slow & Scan Theory ,that explains why a very advanced economy can not have very high growth after a certain point and why some countries of the third World, relatively easy achieve match higher growth . Luxembourg simply reached the steady state where SY- δΚ =0 as many other very advanced economies in the world. So now, is very difficult to achieve high economic growth just advancing only technology, and human resources.

Subtitles at bottom of graphs make them difficult to interpret.

A little piece of advice: (1) Speak more slowly, less hectically, so that the listener can follow. (2) Displaying an ordered list, do not use the hyphen but the n or m dash, with a blank in front of it: 1 - text, not 1- text (technical mistake).

This video is unfortunately rife with inaccuracies. First of all, Luxembourg was not always a rich country and did not have 600,000 inhabitants at the time its steel industry was prominent as it is closer to the current population of around 650,000. Holding companies are subject to the same tax rates as any other commercial companies, the current combined rate is 24.94% in Luxembourg City. There are exemptions for capital gains tax and a few others, but this is not a unique feature among European economies. Luxembourg is not more regulated than its EU neighbours, although local regulators can be overzealous, it usually transposes EU directives in a more pragmatic way and doing business here is much easier than in many other European countries. The video is however right to point to the cost of living (especially housing) and paucity of talent as major hurdles for the future. The lack of qualified workers is however, again, not unique but is a general issue that most countries are faced with today due to the collapse in educational standards and work ethics. While I would not buy housing here (as too dependent on an undiversified economy), the country has got much going for it and for those of us who understand the tax environment, could continue to offer decent prospects to people with a financial and legal background especially compared to the paltry salaries paid on the other side of the border.

Why does an economy always have to increase(get higher"? and as fast as possible? this keeps leading to crashes over and over, if they can keep it steady and slowly progress towards going up that should be the goal, its not like they are going down and if they are protected from a future world crash that is amazing

Thanks. Can anyone explain health system and services in Luxemburg ? In US and Australia, you use significant portion of your earning to the health insurance companies.

Very informative video but in your comparison graphs, ireland was not included which in my mind is the most simlar in terms of economy types which would have for a more conclusive comparison. There is no point putting countries like south korea which has a completly differnt economy and population as they are in no way similar but i do understand the point you are making. In terms of regulation, other countries could learn from luxenburgs insolvancy laws and realise that copamies cannot just behave irresponsibly, funneling assets off to family members and bad debts to creditors then closing their doors and opening back up again, as a self employed businessman this kind of behavior is more detrimental to an economy. VisualEconomik keep up the good work

Here's my two cents on this video, from someone living in Luxembourg: 0:30 what? Last time I checked, LU's unemployment rate is at 5%, which is HIGHER than the USA's, which is at 3.5%. 2:27 While it is true that ArcellorMittal(then just Arcelor, and before then Arbed in Luxembourg) was and still is one of the world's leading steel producers, it is an exageration to say they were one of the riches countries in the same way they are today. In 1960, Luxembourg's GDP per capita was 2242$, as opposed to USA's 3007$ (though, 2k was already pretty high compared to other European countries, the UK's and France's were only at 1.4k$). 4:10 This is mostly true yes, after the steel and oil crash in the 70s, Luxembourg had to reorient its economy, as almost 20% of its workers were employed in steel production before the crash. 9:30 Oh no, the companies are having to pay more to ensure their employees don't get accidentally crushed by a machine or fired for no reason, whatever will we do.... Overall, I rate this video 5 burgers out of a Luxembourger.

It all depends on what you think wealth is, and if you're talking financials you're lost already.

@6:00 where do you read the Netherlands?

Well, 0:23 it's actually Kamianets-Podilskyi in Ukraine 😅

Zombie companies sound like a huge ticking time bomb similar to Nauru's bad investments.

Loss of bank secrecy might have a thing or 2 to do with it either

Could you take Poland and its business development prospects under your magnifying glass? I've been planning to leave the country for several years and now there's that new wave of reports claiming that Poland's already becoming the new hub for IT sector, so there's a lot of opportunity costs to calculate...

I love to live here! And our country is going well. 😃

Well, but the average salary over all professions in Switzerland is 7300 USD per month, putting it way ahead of Luxemburg.

8:23 - what part of Luxembourg is it? or when was this video made?

When a country is about as big as a province there isn't much to manage

i mean... it must be pretty hard to grow beyond $140k..

The issues we are actually dealing with in Luxembourg are very different from those addressed in the video and a lot of them are actually a byproduct of the exponential growth of earlier years, rather than the lack of growth. High housing costs, transportation and the democratic deficit (nearly 50% of the population are ineligible to vote in national elections), to just name a few, are much more burning issues than stagnation at a wealth level that most European countries can only dream of.

12:44 There are 27 countries in the EU now. Sadly. Thanks for the vid and explanations. I had no idea Lux was in such a fix.

do a vid the netherlands thank you

Well i‘m from luxembourg and i moved too Switzerland because i cannot afford anymore my living there , in the south where i‘m from is too much noise and concrete so i’m far more happy in Switzerland than in luxembourg.Also because of extrem immigration i cannot speak anymore my mother language (luxembourgish) with someone and we lost alot of our culture! Was it worth too have the highest BIP in the world i don’t think so.P.S. We have alot off poverty too but nobody speaks about it!!!

Luxembourg actually cheats on this statistic since many years, but the EU loves to claim this crown, which is why this cheat is NEVER corrected: Luxembourg has a huge influx of foreign commuters flooding into the country every day. It is a very large portion of the Luxembourg workforce - approx. 250'000 out of a total workforce of around 400'000! Guess where the per capita GDP these foreign workers create every single day is counted? Yup, in Luxembourg. So they actually artificially almost double their per capita GDP, with foreign commuters, which leave the country every day to go to their home country for the night! Just one of many ways the EU loves to frame its "successes".

Very based proper deinterlacing of old video footage!

Luxembourg has a stagnation problem. 😮

One thing seriously negatively affecting this area is there more strict language requirements. Many businesses are less open to English only speakers. Few are willing to learn with out first having an income, especially the well trained.

In light of the ongoing global economic crisis, it is crucial for everyone to prioritize investing in diverse sources of income that are not reliant on the government. This includes exploring opportunities in stocks, gold, silver, and digital currencies. Despite the challenging economic situation, it remains a favorable time to consider these investments.

Magic Of Luxembourg is most people actually dont live in Luxembourg they just work there.... So gdp by them in Luxembourg is counted but because they dont live there then denominator of population is very less as it do not count non residents.

i remember even for most matching jobs they never shortlisted my resume. i use to prefer LU because they speak english, but they just don't hire outsider, i never understand why?

As someone building her own business and currently residing in Luxembourg, these are all exactly the considerations I am not registering my company here. Especially the government overreach in terms of labor and other regulations. Can’t imagine anyone volunteeringly starting a company here.

All of Europe is failing - not just the rich and prosperous nations. Apparently the people in charge of Euro countries fail to understand how important it is to do two things - 1) keep the masses fed, clothed, and warm and 2) try not to make it too obvious they are in total control and will use force on say Dutch farmers who want to keep that country fed or homemakers in the UK with "so dangerous" kitchen knives. I remember reading about the Roman Emperors who "went too far" and were taken out in a splashy manner by either the mob, assassins, or their own bodyguards when the time came - most of Europe is there already. Wonder what government will be taken out first by its own people? I say the UK, but France and Germany are possible.

I'm Dutch and the thumbnail confused me for a second lol

Irelands GDP doesn't have enough consumption, meaning that living standards have not caught up. There's a lot of money moving around only from tech companies pulling in from the global markets, but it doesn't get invested in irish productivity or land in the hands of irish people for consumption

Luxembourg isn't very luxurious now. You can't even buy a Luxus there