Scandinavia not as rich as we thought?

TomF

I hate to post something else from the New York Times, but there is so much interesting writing being put on its site that I have to give-in and do it. This article, while I think a little out-of-touch with the economic boom that has happened here, is a real suprise. Although, from personal experience of a month in Norway in 1974, a "long neck bottle" of lager in an ordinary Oslo diner cost ten kroner then, and that would be equivalent to about €5.90 in today's money if I did the conversions and inflations right.

New York Times
April 17, 2005
PERSPECTIVE
We're Rich, You're Not. End of Story.
By BRUCE BAWER

OSLO — THE received wisdom about economic life in the Nordic countries is easily summed up: people here are incomparably affluent, with all their needs met by an efficient welfare state. They believe it themselves. Yet the reality - as this Oslo-dwelling American can attest, and as some recent studies confirm - is not quite what it appears.

Even as the Scandinavian establishment peddles this dubious line, it serves up a picture of the United States as a nation divided, inequitably, among robber barons and wage slaves, not to mention armies of the homeless and unemployed. It does this to keep people believing that their social welfare system, financed by lofty income taxes, provides far more in the way of economic protections and amenities than the American system. Protections, yes -but some Norwegians might question the part about amenities.

In Oslo, library collections are woefully outdated, and public swimming pools are in desperate need of maintenance. News reports describe serious shortages of police officers and school supplies. When my mother-in-law went to an emergency room recently, the hospital was out of cough medicine. Drug addicts crowd downtown Oslo streets, as The Los Angeles Times recently reported, but applicants for methadone programs are put on a months-long waiting list.

In Norway, the standard line is that there must be some mistake, that such things simply should not happen in "the world's richest country." Why do Norwegians have such a wealthy self-image? Partly because, compared with their grandparents (who lived before the discovery of North Sea oil), they are rich. Few, however, question whether it really is the world's richest country.

After I moved here six years ago, I quickly noticed that Norwegians live more frugally than Americans do. They hang on to old appliances and furniture that we would throw out. And they drive around in wrecks. In 2003, when my partner and I took his teenage brother to New York - his first trip outside of Europe - he stared boggle-eyed at the cars in the Newark Airport parking lot, as mesmerized as Robin Williams in a New York grocery store in "Moscow on the Hudson."

One image in particular sticks in my mind. In a Norwegian language class, my teacher illustrated the meaning of the word matpakke - "packed lunch" - by reaching into her backpack and pulling out a hero sandwich wrapped in wax paper. It was her lunch. She held it up for all to see.

Yes, teachers are underpaid everywhere. But in Norway the matpakke is ubiquitous, from classroom to boardroom. In New York, an office worker might pop out at lunchtime to a deli; in Paris, she might enjoy quiche and a glass of wine at a brasserie. In Norway, she will sit at her desk with a sandwich from home.

It is not simply a matter of tradition, or a preference for a basic, nonmaterialistic life. Dining out is just too pricey in a country where teachers, for example, make about $50,000 a year before taxes. Even the humblest of meals - a large pizza delivered from Oslo's most popular pizza joint - will run from $34 to $48, including delivery fee and a 25 percent value added tax.

Not that groceries are cheap, either. Every weekend, armies of Norwegians drive to Sweden to stock up at supermarkets that are a bargain only by Norwegian standards. And this isn't a great solution, either, since gasoline (in this oil-exporting nation) costs more than $6 a gallon.

All this was illuminated last year in a study by a Swedish research organization, Timbro, which compared the gross domestic products of the 15 European Union members (before the 2004 expansion) with those of the 50 American states and the District of Columbia. (Norway, not being a member of the union, was not included.)

After adjusting the figures for the different purchasing powers of the dollar and euro, the only European country whose economic output per person was greater than the United States average was the tiny tax haven of Luxembourg, which ranked third, just behind Delaware and slightly ahead of Connecticut.

The next European country on the list was Ireland, down at 41st place out of 66; Sweden was 14th from the bottom (after Alabama), followed by Oklahoma, and then Britain, France, Finland, Germany and Italy. The bottom three spots on the list went to Spain, Portugal and Greece.

Alternatively, the study found, if the E.U. was treated as a single American state, it would rank fifth from the bottom, topping only Arkansas, Montana, West Virginia and Mississippi. In short, while Scandinavians are constantly told how much better they have it than Americans, Timbro's statistics suggest otherwise. So did a paper by a Swedish economics writer, Johan Norberg.

Contrasting "the American dream" with "the European daydream," Mr. Norberg described the difference: "Economic growth in the last 25 years has been 3 percent per annum in the U.S., compared to 2.2 percent in the E.U. That means that the American economy has almost doubled, whereas the E.U. economy has grown by slightly more than half. The purchasing power in the U.S. is $36,100 per capita, and in the E.U. $26,000 - and the gap is constantly widening."

The one detail in Timbro's study that didn't feel right to me was the placement of Scandinavian countries near the top of the list and Spain near the bottom. My own sense of things is that Spaniards live far better than Scandinavians. In Norwegian pubs, for example, anyone rich or insane enough to order, say, a gin and tonic is charged about $15 for a few teaspoons of gin at the bottom of a glass of tonic; in Spain, the drinks are dirt-cheap and the bartender will pour the gin up to the rim unless you say "stop."

In late March, another study, this one from KPMG, the international accounting and consulting firm, cast light on this paradox. It indicated that when disposable income was adjusted for cost of living, Scandinavians were the poorest people in Western Europe. Danes had the lowest adjusted income, Norwegians the second lowest, Swedes the third. Spain and Portugal, with two of Europe's least regulated economies, led the list.

Most recently, the Danish Ministry of Finance released a study comparing the income available for private consumption in 30 countries. Norway did somewhat better here than in the KPMG study, lagging behind most of Western Europe but at least beating out Ireland and Portugal.

The thrust, however, was to confirm Timbro's and Mr. Norberg's picture of American and European wealth. While the private-consumption figure for the United States was $32,900 per person, the countries of Western Europe (again excepting Luxembourg, at $29,450) ranged between $13,850 and $23,500, with Norway at $18,350.

Meanwhile, the references to Norway as "the world's richest country" keep on coming. An April 2 article in Dagsavisen, a major Oslo daily, asked: How is it that "in the world's richest country we're tearing down social services that were built up when Norway was much poorer?"

Obviously, this is one misconception that won't be put to rest by a measly think-tank study or two.

Bruce Bawer,a freelance writer based in Oslo, reports frequently on social and cultural issues.

Sponge Bob

ya but if you ran a survey in 2001 IIRC a US$ was 50% lower or so .

DadaKopf

I dunno. Here's some interesting figures:

• Norway is ranked #1 in the UN's Human Development Index, followed by Sweden at #2, Finland at #13, and Denmark at #17. In Norway, GDP per capita (adjusted for purchasing power parity) is $36,000 compared with the US at $35,750. According to these figures, it's Sweden and Denmark that fare much worse - Sweden's GDP per capita is $26,050. That's a measure of spending power measured by the UN using World Bank figures.
  
• George Monbiot compared Sweden's situation with the UK's: "In 2002 its GDP per capita was $27,310, and the UK’s was $26,240. This is no blip. In only seven years between 1960 and 2001 did Sweden’s per capita GDP fall behind the United Kingdom’s. [...] More surprisingly still, Sweden has a current account surplus of $10bn and the UK a deficit of $26bn. Even by the neoliberals’ favourite measures, Sweden wins: it has a lower inflation rate than ours, higher “global competitiveness” and a higher ranking for “business creativity and research”. [...] n Sweden 6.3% of the population lives below the absolute poverty line for developed nations ($11 a day).(8) In the United Kingdom the figure is 15.7%. Seven and a half per cent of Swedish adults are functionally illiterate – just over one third of the UK’s figure of 21.8%.

simu

TomF wrote:

One image in particular sticks in my mind. In a Norwegian language class, my teacher illustrated the meaning of the word matpakke - "packed lunch" - by reaching into her backpack and pulling out a hero sandwich wrapped in wax paper. It was her lunch. She held it up for all to see.

The horror! Such abuse of human rights and dignity!

Memnoch

tomf isn't it about time you started to face a little something we call on planet earth as "reality" ?

Meh

when disposable income was adjusted for cost of living, Scandinavians were the poorest people in Western Europe. Danes had the lowest adjusted income, Norwegians the second lowest, Swedes the third.

Interesting article, but it's not really fair to compare raw "disposable income" when the Scandinavians don't have to pay health, education, childcare etc. costs out of their disposable income like the rest of us do.

uberwolf

Memnoch wrote:

tomf isn't it about time you started to face a little something we call on planet earth as "reality" ?

avoid the personal insults. Next one earns you a ban.

the_syco

Meh wrote:

Interesting article, but it's not really fair to compare raw "disposable income" when the Scandinavians don't have to pay health, education, childcare etc. costs out of their disposable income like the rest of us do.

Nor does it say how much tax they have to pay. Nothing is free.

gom

the_syco wrote:

Nor does it say how much tax they have to pay. Nothing is free.

Not as much as the common myth would have you believe

Meh

the_syco wrote:

Nor does it say how much tax they have to pay.

"Disposable income" would be after tax, so yes it does.

gom

Meh wrote:

"Disposable income" would be after tax, so yes it does.

Case 1- USA: TA US citizen's Disposible Income has to pay for everything!!!

Case 2-Sweden: Disposible Income does not have to pay childcare, healthcare(including GP visits and birth control), most educational expenses, pensions, public transport(heavily subsidesed unlike US)... Indeed, somethinigs which we Irish don't even consider as Public Services are paid for by tax deductions in Sweden. All this and they still have relativly low Cororation tax for a EU country.


It isn't fair to come pair raw National Income data such as GDP or Disposible Income to quantify how weathy a society is or is not. The differences in social provision are vast between Sweden and the USA. While at the same time the companies in Sweden have a far better environment to operate in as teh high taxes are levied on workers in swedena and not companies.

Sparks

One image in particular sticks in my mind. In a Norwegian language class, my teacher illustrated the meaning of the word matpakke - "packed lunch" - by reaching into her backpack and pulling out a hero sandwich wrapped in wax paper. It was her lunch. She held it up for all to see.

Yes, teachers are underpaid everywhere. But in Norway the matpakke is ubiquitous, from classroom to boardroom. In New York, an office worker might pop out at lunchtime to a deli; in Paris, she might enjoy quiche and a glass of wine at a brasserie. In Norway, she will sit at her desk with a sandwich from home.

*confused look*
What's wrong with that?

ionapaul

Yes, not sure why the writer has a problem with that. If you ever read 'The Millionaires Among Us', which is a very interesting study of American millionaires, the authors conclude that frugality is probably the most apparent commonality linking American millionaires. Most millionaires wouldn't head out each lunch to O'Brien's Sandwiches and spend €6.00 on something you can make in two minutes at home for €0.50!

One of the things that most struck me while living in the States is how many Europeans identified a lack of entrepenurial spirit or 'culture' in their home countries as a reason for moving to the States to start their businesses. It is amazing to read a list of Silicon Valley's leading business men and women and notice all of the non-Americans.

Captain Trips

Sparks wrote:

*confused look*
What's wrong with that?

Because the author believes it's more important to have anecdotal evidence than base your article in reality. The fact that americans are happy to pay $4 for a 20c coffee and that on TV he has seen a nice Paris scene (perhaps from the beginning of Team America) sort of makes his point even worse: he doesn't get that you don't need to constantly spend money on excessively processed food.

The cars? Well, it's a fricking airport. Right near Dublin Airport is Ballymun/Santry Cross. There aren't a lot of MB and BMWs around, but take them to the Airport carpark, where lots of business travellers *park* in *one area* called a *car park* then yeah it would look impressive.

It's not some perfect state, but Norway has very low crime. Plus, the high taxes mean that whatever you do have is *really* disposable. Getting a fat paycheck but laying out $10,000/year for VHI-equivalent healthcare in NY or CT is not comparable.

It's odd that such supposed enlightened journalism tries to show how the Spanish, eg., have a better life c/t to the Norwegians for simple things like say tequila. Each of the european countries is so vastly different in culture and history that such comparison amounts IMHO to idiocy. There is so much more homogenity in the US states by virtue of unified governemtn structure from a century ago than the collection of ex-empires that are the EU.

So if Norway wants a welfare/social safety net, let them. If Spain doesn't but wants cheap tequila, let them. I prefer that then being raped in the ass for healthcare, education or basically anything no matter where you go the US.

NordicDiver

TomF wrote:

Scandinavia not as rich as we thought?

We are 3 countries , every day norway can put 65625000 EUR in the oilfond and have enough in the oilfond to buy Swedens 1.136 billion NOK state debt.

TomF wrote:

In Oslo, library collections are woefully outdated, and public swimming pools are in desperate need of maintenance.

Wrong, at the library here we can borrow anything from latest om DVD to the new books.

We had one public swimming pool here last year that had the outdoor section closed. This was one popular place so it was in the newspaper a few times one of 11 public swimming pools in Oslo.

TomF wrote:

And they drive around in wrecks

The cars here are expensive!mondeo 00 model for sale in norway mondeo 00 model for sale in Ireland same car 10 000 EUR more in Norway.

TomF wrote:

In a Norwegian language class, my teacher illustrated the meaning of the word matpakke - "packed lunch" - by reaching into her backpack and pulling out a hero sandwich

In Sweden they eat hot lunch in Norway we eat cold lunsh, normally brown bread prepared home. is a culture thing.

TomF wrote:

a large pizza delivered from Oslo's most popular pizza joint - will run from $34 to $48, including delivery fee and a 25 percent value added tax.

Xross the street where i work we can order large pizza for 12-15 EUR including delivery fee and that place is not the only one , belive me i know all the pizza places in Oslo, offcourse when the boss pays the pizza we can order it at pizzahut or something and it will be 30 EUR for it..or more if u add more toppings.

TomF wrote:

Every weekend, armies of Norwegians drive to Sweden to stock up

..and the Swedish drive to Denmark and the Danish drive to Germany, always have been this way for the people living close to the border.

Jusy wanted to comment a few things

Jan

DadaKopf

One other thing: Inequality.

The Human Development Index is a pretty good commonly used measure of development. However, probably for political reasons, equality is left out of the mix but equality is coming to be seen as a very important determinant of development, quality of life if you will. Here's how the US and the Nordic inequality shapes up on the Gini Index (100 = perfect inequality, 0 = perfect equality, closest to 0 is best):

• Denmark: 24.7
• Sweden: 25.0
• Norway: 25.8
• Finland: 26.9
• Ireland: 35.9
• UK: 36.0
• USA: 40.8

So these countries are still the fairest countries to live in, Sweden's also more productive than the UK and more equal.

I don't think the figures support Bawer's inferences - namely that American culture is somehow superior to Scandinavian or European culture. It's different, sure, but maybe Bawer is placing too much significance on 'ladies what lunch' as an indicator of civilizational prowess.

In my experience in Norway, Sweden, Denmark and Finland, people are happy to make a distinction between necessities and luxuries - food in supermarkets isn't that much more expensive than here if at all. Services are, cigarettes, alcohol and other toxins are more expensive. And Norwegians travelling to Sweden to buy cheaper groceries? How inhumane, is this Stalinist Russia or something! Hey, maybe that's just a simple function of market economics - American corporations do it all the time!

DadaKopf

Nordic diver, thanks for the comments. I sat in a café in the poshest part of Bergen, or Oslo, can't remember, right near the main Opera house and had a good feed and a coffee for about €7.00. Anecdotal I know.

You're also right about the border thing - some many Swedes living around Malmö travel to Denmark to get cheap booze. Big deal. Americans living in the states bordering New Hampshire travel there because there's no tax on booze and food, and maybe guns.

sovtek

DadaKopf wrote:

Nordic diver, thanks for the comments. I sat in a café in the poshest part of Bergen, or Oslo, can't remember, right near the main Opera house and had a good feed and a coffee for about €7.00. Anecdotal I know.

You're also right about the border thing - some many Swedes living around Malmö travel to Denmark to get cheap booze. Big deal. Americans living in the states bordering New Hampshire travel there because there's no tax on booze and food, and maybe guns.

And "we" go to Canada to buy our drugs, Mexico for booze (if your under 21 especially) and drugs. This is more anti-Europian propoganda.
I've noticed more and more of this popping up over the last few years in America.
Obviously part of it comes from the reluctance to get involved in Iraq, but I have another theory as well.
People in America are getting fed up with ever growing inequality in wealth and quality of life and starting to look enviably toward places where it's maybe a bit better.
Now we can't have that happening...because...you know...some people might like a little socialism mixed in with their capitalism...which is evil and must be stopped!

ionapaul

DadKopf, is using the word 'fairest' not a little subjective, when comparing Gini coefficients? Unless I misuderstand, when 0 = perfect equality, perfect equality is taken to mean everyone has the same income, which may be completely different to our ideas of fairness.

DadaKopf

It's a lot fairer than one person owning all the wealth. It's an indicator of economic inequality, you can add detail to it by looking at the distribution of national income in quintiles and deciles of the population (how much of a percentage of the national income is owned by the top 10% etc.). Of course you're right that it's not a figure that encapsulates all forms and concepts of fairness, for example the political theorist John Rawls's 'Justice as fairness' is a more developed political concept. However, income is an exchange entitlement, which means that the more money one has the freer one is, so people earning €1 million a year is much freer than people on minimum wage. Income inequality can then be offset by things such as income redistribution and access to public services.

But things get interesting when you look at sub-Saharan African countries where populations are equally poor. But as we're looking at advanced industrialised countries, I think it's another good indicator to throw into the mix.

daveirl

This post has been deleted.

TomF

Something that is probably helpful to keep in mind is the makeup of the societies in Norway and the United States. Norway is Norwegian; the United States is English, Irish, French, German, Italian, Jewish, African (although many of the "Africans" have roots in the U.S. much deeper than other groups), Mexican, Canadian, Spanish, etc., etc., etc.. The U.S. is going to naturally have divides along racial and ethnic lines that would be unimaginable in a place like Norway that is...Norwegian.

DadaKopf

daveirl wrote:

This post has been deleted.

The Gini co-efficient measures GDP per capita income inequality against population. How can raw data like this be "entirely subjective"? It can be inaccurate, sure, but these figures are more or less reliable, especially for developed countries. And, yes, measures like this do reflect value judgements embedded in measurement practises. But the Gini co-efficient is just one economic measure of income distribution which is used to indicate social opportunities in among societies.

The measure can be modified to account for money that actually stays in a country. It should also be said that GDP/GNP per capita isn't a fair assessment of a country's productive capacity because it doesn't include domestic labour and other things that don't show up on VAT returns, I guess.

But income inequality has been shown to be related to social mobility, i.e. social fairness. Poorer people have a much fewer opportunities like where they live, where they go to school, whether they can go to college or whether they can move to a place close to somewhere with good job opportunities. By contrast, richer people enjoy all of the advantages of being rich. Failing to improve lower income groups' social mobility isn't fair to begin with, but it also has negative consequences for the economy overall. This is the sort of thinking that underlies the relative poverty measure.

So, to me, subjectively speaking, 'fairness' is the manner in which a society treats its most vulnerable citizens.

DadaKopf

TomF wrote:

Something that is probably helpful to keep in mind is the makeup of the societies in Norway and the United States. Norway is Norwegian; the United States is English, Irish, French, German, Italian, Jewish, African (although many of the "Africans" have roots in the U.S. much deeper than other groups), Mexican, Canadian, Spanish, etc., etc., etc.. The U.S. is going to naturally have divides along racial and ethnic lines that would be unimaginable in a place like Norway that is...Norwegian.

What's that got to do with anything?

Sand

I've noticed more and more of this popping up over the last few years in America.
Obviously part of it comes from the reluctance to get involved in Iraq, but I have another theory as well.

Id put it more down to a little "payback" for the anti-american stuff going on that paints the US as fat assed, uneducated, gun totting, white sheet wearing Christian fundamentalist redneck country with small havens of somewhat European influence, like New York, or Hollywood. Whose economy and political community are on the verge of utter annialation. Who are uniquely evil and cynical and most likely the root cause of all evil in the world. Where the medical system is on par with bangladesh, where people are wage slaves, and so on and so forth.

Theres a big audiences for the "Americans have it so bad, we have it so good" in Europe. Its Irelands "shure arent we a great little island all the same" mentality supersized. Hardly surprising theres a market over there for the exact reverse.

I dont know if Norway is richer than the US per person, but Id imagine the impact of North Sea oil revenue has more to do with their wealth than socialism. Or to put it better, it makes socialism affordable. Small gulf states have a similar arrangement whereby the state pays for everything and the people accept limitations on their freedoms.

A Dub in Glasgo

Sand wrote:

but Id imagine the impact of North Sea oil revenue has more to do with their wealth than socialism. Or to put it better, it makes socialism affordable. .

Which is one of the reasons why the US allegdly were involved in the overthrow of Chavez in Venezuela. They do not like someone with oil turning socialist.

dictator with oil - yes
socialist with oil - no

Lemming

TomF wrote:

Something that is probably helpful to keep in mind is the makeup of the societies in Norway and the United States. Norway is Norwegian; the United States is English, Irish, French, German, Italian, Jewish, African (although many of the "Africans" have roots in the U.S. much deeper than other groups), Mexican, Canadian, Spanish, etc., etc., etc.. The U.S. is going to naturally have divides along racial and ethnic lines that would be unimaginable in a place like Norway that is...Norwegian.

Let me poke a very large hypocritical hole on your own argument TomF

TomF wrote:

Alternatively, the study found, if the E.U. was treated as a single American state, it would rank fifth from the bottom, topping only Arkansas, Montana, West Virginia and Mississippi. In short, while Scandinavians are constantly told how much better they have it than Americans, Timbro's statistics suggest otherwise. So did a paper by a Swedish economics writer, Johan Norberg.

So ..... do as we say and not as we do eh?

to quote Dadakopf

"What's that got to do with anything?"


I also seem to recall myself and others poking a lot of holes in an 'economic' paper written by a nordic source and attributed perhaps to yourself a while back TomF. Could this be that same paper perhaps?

DadaKopf

Probably something by Johann Norberg. He's a Møron.

TomF

My saying the U.S. was a melting-pot compared to Norway was probably a reaction to a perception I was getting from comments that the U.S. had a much wider range of personal economic conditions than Norway (ranging from impoverished to wealthy), and I was trying to point-out that it is probably hugely more difficult to get a consensus on how to handle problems in a tremendously diverse population like the U.S. than in a monoculture like Norway.

Moving right along, I went to the original study on the Internet (posted in pdf, never an easy thing for me to download) and downloaded it and am putting its preface here for your reading enjoyment. I think the original report is more up-to-date in its appreciation of Ireland's recent booming development that was the columnist in the New York Times, who seemed dismissive of Ireland.

EU VERSUS USA
Fredrik Bergström & Robert Gidehag

Timbro, June 2004
ISBN 91-7566-564-6
TIMBRO BOX 5234 SE-102 45 Stockholm
FAX +46-(0)8-587 898 55
TEL +46-(0)8-587 898 00
info@timbro.se
www.timbro.com

PREFACE

If the EU were a part of the United States of America, would it belong to the richest or the poorest group of states?

At the beginning of the 1990s, there was no need to ask. Europe'’s economic future was a subject of growing optimism. Productivity growth had for some decades been higher than in other countries of similar standing, and that growth was now going to be hugely accelerated by the elimination of trade barriers and the closer economic integration resulting from the Single Market. The EU as an institution was – and was undoubtedly seen as – a vehicle for growth and economic liberalisation. In other words, the EU was able to do what politicians in several member countries had wished for but had failed to achieve: to increase economic openness, to strengthen the process of competition, and harness the political process behind a liberal reform agenda.

Today, the perspectives on the EU, and the outlook on its future, are radically different. Economic growth during the 1990s never became what many had wished for. Some countries performed reasonably well, most notably Ireland, but on the whole the EU was lagging far behind other countries during the whole decade. Productivity growth decreased and by mid-decade the EU was running behind the US in this respect. The process of convergence in productivity, a much talked-about process since the 1970s, had once again become a process of divergence.

The role, and status, of the EU in the economic reform process has also changed. Instead of a clear focus on economic reforms and growth, the EU (the Commission as well as the Council) has concentrated its ambitions on other political objectives. Hence, the EU no longer is – or is seen as – the great economic liberator of Europe. It is generally not performing as a vehicle for reforms, nor as leverage for policies that are needed but impossible to accomplish in the national political arenas.

Is it possible to break the spell of economic stagnation in Europe? Yes, undoubtedly. But, alas, it seems highly improbable. The member countries have agreed on a relatively far-reaching reform agenda in the Lisbon accord (yes, in the modern European context it is far-reaching). But the agenda lacks impetus. Not to say a true awareness of the need of reforms. Worse still, many European politicians and opinion-formers seem totally unaware of the lagging performance of the EU economies and that a few percentage units lower growth will affect their welfare in comparison with other economies.

Such is the background to this study on the differences in growth and welfare between Europe and the US. Too many politicians, policy-makers, and voters are continuing their long vacation from reality. On the one hand, they accept, or in some cases even prefer, a substantially lower growth than in the US. On the other hand, they still want us to enjoy the same luxuries and be able to afford the same welfare as Americans can. Needless to say, that is not possible. But the real political problem is that lower welfare standards – as with inequality in general – are a relative measure for most people. They are always viewed by comparison with others, and rarely in absolute terms. People would rather weep in the backseat of a new Mercedes than in the backseat of a second-hand Volkswagen.

This study is based on a widely acclaimed and thought-provoking book – Sweden versus the US– that was published earlier this year in Swedish by the same authors – Dr. Fredrik Bergström, President of The Swedish Research Institute of Trade, and Mr. Robert Gidehag, formerly the Chief Economist of the same institute, and now President of the Swedish Taxpayers’ Association. The study presents important perspectives on European growth and welfare. Its highlight is the benchmark of EU member states and regions to US states. The disturbing result of that benchmark should put it at the top of the agenda for Europe’s future.

Fredrik Erixon
Chief Economist, Timbro

TomF

DadaKopf wrote:

Probably something by Johann Norberg. He's a Møron.

I had never heard of Johann Norberg so did a Google and found an interesting debate between him and Robert Kuttner. There are even photographs of the two men, and judging strictly from appearances, I think Kuttner might get fewer votes in the "Which one would you choose to be stranded on a desert island with?" poll.

http://www.cato.org/special/symposium/debate.html

sovtek

Sand wrote:

Theres a big audiences for the "Americans have it so bad, we have it so good" in Europe. Its Irelands "shure arent we a great little island all the same" mentality supersized. Hardly surprising theres a market over there for the exact reverse.

I distinctly remember that market opening up in America about the time the French told Reagan to piss off when he wanted to bomb the baby's room in Libya.
That was a few years after "Kick their ass and take their gas" was a popular bumper sticker in my little home town in Texas.
Here...have some Freedom Fries.
Now if the average American had any clue what was going on in Europe or much less what the Europeans were watching on TV..then you might have a point.
But then the anti-European market seems to open up around the time that Europeans say "boo" to another killing spree by the American military.

sovtek

TomF wrote:

The role, and status, of the EU in the economic reform process has also changed. Instead of a clear focus on economic reforms and growth, the EU (the Commission as well as the Council) has concentrated its ambitions on other political objectives. Hence, the EU no longer is – or is seen as – the great economic liberator of Europe. It is generally not performing as a vehicle for reforms, nor as leverage for policies that are needed but impossible to accomplish in the national political arenas.

I wonder what "reforms" are being refered to here. Might they be the "neo-liberal" reforms that are increasingly unpopular because they dont work so well. That's after being preached like a religion in the early 90's (well they still are actually)...and that many people besides Europeans are seeing them for what they really are.
Maybe that makes them "impossible to accomplish in the national political arenas" because people don't want them...but then screw democracy...we must have "free markets" or else.

PH01

I really wonder how accurate the data can be that comes out of these surveys? Like what is the accuracy provision given? And since there is so much factors at play here are they accurately comparing the US and the EU like for like?
I doubt it.
Sure we can say the US is richer than the EU. That's a given. And Norway and the other Scandinavian countries are never going to be richer than US.

They should be talking more about quality of life rather then purchasing power. That would be a far better comparable and it would tell you more.

The Saint

I fond it interesting that the division of wealth is completely ignored in this report. The US might well be richer but where does the money lie. It is most certainly not distributed amongst all peoples in the country. As the list below shows, 1% of the population has 38% of the wealth of the country where the bottom 40% has just 0.2%. I don't care if the US is the richest country in the world. I would not want to live in a place that such a vast difference between the richest and the poorest.


% of US Population % of Wealth Owned
==========================================================
Top 1% 38.1%
Top 96-99% 21.3%
Top 90-95% 11.5%
Top 80-89% 12.5%
Top 60-79% 11.9%
General 40-59% 4.5%
Bottom 40% 0.2%

http://answers.google.com/answers/threadview?id=2050


Per capita GDP in 2003 was $37,700, $100 less than the United States and up from $27,700. Norway has a superb balance of trade and no foreign debt. (The U.S. foreign debt is $1.4 trillion).

Norway's hourly productivity rate is 10 percent higher than that of the United States. Norway's unemployment rate for 2003 has been estimated at 4.6 percent.

Most Norwegians have five weeks of vacation time each year, and there are eleven paid holidays.

The top 10 percent in household income in 1995 did 21.8 percent of the spending, and the lowest 10 percent of households did 4.1 percent. In France these figures for 1995 were 25.1 and 2.8. These figure for the United States in 1997 were 30.5 percent and 1.8 percent. The relatively poor of Norway spend about twice as much as do the relatively poor in the United States.

Norway is highly advanced in technological and medical equipment. Infant mortality is 3.73 deaths per 1,000 live births, compared to 6.63 in the United States.

In 2003, Norway spent $308 per capita on foreign aid, compared to $23.76 for the United States.

In total crimes reported, Norway ranks close to Germany -- less than the United States and more than Japan. Norway had 39 reported assaults in 2002, 3.3 per 1,000 in 2003, well below 7.7 per 1,000 in the U.S., well above 1.8 for France and 1.4 for Germany.

Norway leads the world in the average number of years spent in education: 16.9. US being 15.2.
http://www.fsmitha.com/world/norway.html

Murders per capita
Norway 0.01 per 1000 people
United States 0.04 per 1000 people

http://www.nationmaster.com/red/graph-T/cri_mur_cap&int=-1


I know which country I'd like to live in.

shotamoose

The Saint wrote:

I fond it interesting that the division of wealth is completely ignored in this report.

Exactly. People at the bottom of the ladder in Scandinavia seem to be better off than their equivalents in the US. My favourite illustration is this graph of child poverty (not relative poverty, but measured according to the US poverty line). Around 14% of children in the US live in poverty according to its own poverty line; compare that to 3% in Norway, 5% in Denmark and Sweden and 7% in Finland (again, according to the same measure of poverty).



I'd echo what Saint said about the the importance of leisure time and debt when measuring economic progress, and what Meh said about factoring in free services and benefits in kind. Also, according to The Economist US GDP figures are artificially boosted by different accounting practices:

American statisticians count firms' spending on software as investment, but in much of Europe it counts as a business expense, and so is excluded from final output. Thus the surge in software spending since the mid-1990s inflated America's GDP growth relative to elsewhere.

Oh and if you use Gross National Income instead of GDP then Norway is apparently richer than the US.

Lastly, these kind of basic international comparisons ignore very different demographics between countries. Sweden didn't suffer significant losses of working-age people from the two World Wars so it's growth in the few decades after was boosted compared to that of other rich countries. But subsequently it ended up with a big elderly population before anyone else, which partly explains its poorer performance in the 1980s and 1990s. That bastion of leftist propaganda the IMF has produced a nifty chart comparing trends in Swedish GDP per working-age person with a group of five OECD countries with "relatively smaller tax-transfer systems" (Australia, Canada, New Zealand, the United Kingdom, and the United States):



So, not only did Sweden not perform worse than countries with smaller welfare states over the last four decades, it actually overtook them when you adjust your measure for demographic trends!

TomF wrote:

I had never heard of Johann Norberg so did a Google and found an interesting debate between him and Robert Kuttner. There are even photographs of the two men, and judging strictly from appearances, I think Kuttner might get fewer votes in the "Which one would you choose to be stranded on a desert island with?" poll.

Well, Norberg may be a dish but he's not a particularly reliable source. He and Timbro have made it their life's mission to convince everyone of the horrors of Sweden's social democratic system whether it's true or not. Obviously this stuff is lapped up by Republicans in the US desperate to detract attention from the remarkably poor performance of the economy under George Bush.

TomF

shotamoose wrote:

My favourite illustration is this graph of child poverty (not relative poverty, but measured according to the US poverty line).


Well, Norberg may be a dish but he's not a particularly reliable source.

Well, it was far from statistics I was reared, but I'd say graphs of child poverty comparing countries like the U.S. where there is more than a replacement rate of births to European countries that are quickly unbreeding themselves out of existence might be a little on the suspect side.

And, suggesting Norberg being a dish was not my intent in an earlier posting, rather that I'd hate to be marooned with the other guy who has a mad look in his eyes. You'd wonder if he ever stops talking.

Sand

I distinctly remember that market opening up in America about the time the French told Reagan to piss off when he wanted to bomb the baby's room in Libya.

Well seeing as you mention the French, maybe it opened up when De Gaulle found himself in the unacceptable position of finding out that Frances time as a world power was over, and with it the Empire, and the desperately anglo-saxon Americans were actually the world power? The French certainly had no problem with ignoring the UN security council to carry out invasions in the Balkans.

Now if the average American had any clue what was going on in Europe or much less what the Europeans were watching on TV..then you might have a point.

They seemed to wakeup to that freedom fries messing - to the point where Chirac and Schroeder have been trying to kiss and make up ever since....Anyway, this is offtopic. I bow to your superiour knowledge of why the US is the evil empire.

I fond it interesting that the division of wealth is completely ignored in this report.

Equality of income distributions is of dubious merit - one way to look at it would be to say the US rewards successful and motivated people far more than the Norwegian system, which does not provide the same incentives. By definition there has to be inequality to reward the successful over the unsuccessful. Perfect income equality is not desirable, or at least it would complete remove incentive to succeed, which is not desirable.

Obviously this stuff is lapped up by Republicans in the US desperate to detract attention from the remarkably poor performance of the economy under George Bush.

Agreed, much as Europeans lap up predictions of impending US economic implosion rather than recognise their own incoming disasters that are state penions, aging populations, and politically active pensioners who will fight tooth and nail against reforms.

Victor

Ironic on one hand your talk about Norway and then expand your argument to EU-v-USA, when Norway isn't part of either.

And while Norway has it's pension liabilities largely prefunded, a lot of other countries don't (in fact the USA is in a hole of about $20,000,000,000,000). So who really is richer? What does it matter that one country has a greater GNP if it wastes that GNP on war, gas-guzzling and uneaten hamburgers?

Sand wrote:

Perfect income equality is not desirable, or at least it would complete remove incentive to succeed, which is not desirable.

Which presumes the only incentive to succeed is money. Which when you look at things is far from correct. Many of the people who have improved either themselves or their societies have done so out of a desire of improvement, whether drawn from personal pride, policital desire, medical compassion or simply the mad-cap idea of making a better widget. The American problem is it can't seem to count anything unless it can be converted to money.

bonkey

TomF wrote:

Well, it was far from statistics I was reared, but I'd say graphs of child poverty comparing countries like the U.S. where there is more than a replacement rate of births to European countries that are quickly unbreeding themselves out of existence might be a little on the suspect side.

It is, indeed, a little on the suspect side. No less so (and probably far moreso) then, say, the various statistics that your "excellent" article used....

I guess seeing as it was far from statistics you were raised that its only coincidence that you can spot the subtle potential flaws only in the statistics that argue against your position, rather than in both sets.

jc

Sand

Ironic on one hand your talk about Norway and then expand your argument to EU-v-USA, when Norway isn't part of either.

If youre talking about my posts, which I assume you are I already highlighted the pointlessness of comparing the US and Norway. For the comparison to be true, the US would need oil reserves roughly the size of the fricking moon that they could tax and spend without the need for creating a bussiness friendly enviroment. Norways wealth comes from its oil, not its economic or social system, which when tried in places without Norways vast natural resource of oil, is surprisingly unsuccessful. Norway is the worlds 3rd biggest exporter. It is as much an oil economy as the Middle East. Look at the Gulf States - is undemocratic monarchy the way to go economically and politically?

From my link:

The country has a small industrial base apart from its oil and gas, shipping, and fishing industries, and its mainland (i.e. excluding oil and natural gas) economy grew by just 0.5% in the first quarter of 2001, year on year. Manufacturing activity fell 3% in 2000. Norway, therefore, is concerned about its economic welfare once its oil runs out, as is predicted for the first half of the 21st century. Norway makes annual contributions to its Petroleum Fund, a financial safety net for the time when oil revenues decline

The above highlights that its an oil economy. Their oil apart, and it isnt infinite, theyre another failing socialist system. Not everyone has oil, so whilst the oil makes socialism affordable it doesnt make socialism a system to emulate.

Which presumes the only incentive to succeed is money. Which when you look at things is far from correct. Many of the people who have improved either themselves or their societies have done so out of a desire of improvement, whether drawn from personal pride, policital desire, medical compassion or simply the mad-cap idea of making a better widget. The American problem is it can't seem to count anything unless it can be converted to money.

Right, well Im sure thats nice - hands around the world and all. But when I went to university it was to get a degree to get more money. When I went for an interview the primary thing I was interested in was how much money I was getting. When I worked hard at my job it was because I wanted a promotion so I could get more money. When I left my job and went to another company it was because they were paying me more money. In fact, its fair to say I wouldnt show up at my job unless I was getting paid money. I probably wouldnt have bothered sitting exams if I didnt see money at the end of them. I've an interest in history, but theres no money in it, so I treat that as a hobby only. HR can witter on about teamwork, and the company caring about its employees and this crap but all I want from them is money - so I can take that money and spend it on things I *do* like. And lets face it, the majority of people do not love their jobs and only show up because they want money.

And unfortunately, whilst youre "job=hobby=vocation in life" mantra might actually make sense in terms of say, working with AIDS victims in sub saharan africa, or planting trees in the rainforests, or other morally superiour jobs its probably hard for a binman to get as worked up over waste disposal unless hes getting paid, thats right...money. If socialism worked the boat people would be heading *to* Cuba, not away from it.

shotamoose

Sand wrote:

Norways wealth comes from its oil, not its economic or social system

Where does Sweden's wealth come from? Or Denmark's? Or Finland's? If you're going to describe Norway as 'socialist' (it isn't, it's a mixed economy with a strong private sector and a hefty welfare state), then they are too. And none of them is 'failing' by any stretch of the imagination.

Sand

Where does Sweden's wealth come from?

Foreign banks pretty much. Oh sure, youve got to hand a lot of credit to Swedens historical and political stability meaning its a strong draw for investment and once infrastructure went in it wasnt torn up by two world wars but lets face it, Swedens national debt hit a high point of 75% of Swedish GDP back in 1994. Since making reforms of their (failing) system theyve managed to get that down to 52% of GDP in 2005.

As a comparison Irelands national debt is about 31%. The US has an even higher national debt (60%). The US is accused of living the high life on its credit card and told it must reform or face economic annialation; Sweden is as bad (if not worse as the US has real GDP growth of 3.1% whereas Sweden is 1.7% so it has a better chance of reducing debt in the future, especially as its not burdened by a welfare state and a greying population) and Sweden is credited with having discovered the third way?!?!

Though it seems to be reforming itself via admirable fiscal stability after the heady days of 1980s when it ran that old Weimar trick of paying budget deficits by printing money, leading to inflation of over 10%. It seems for some reason theyve been cutting taxes in Sweden to encourage work.....

As for wealth - I dont know, I guess. GDP per capita is $26,800 2003. Sounds great, its certainly over the EU average of 25000 or so. But the only people making less than the Swedes in the EU are places like Italy, Greece, Spain, Portugal and so on - hardly renowned for their high wages. Hardly surprising as Swedish tax hits some ridiculous levels after $25,000 dollars afaik so why bother looking for more money after you hit 20K+, youre just donating your time to the government at that stage. The US incidentially is $37,800 per capita. And I heard, but cant find stats to prove, that the Swedish cars are on average the oldest in Western Europe.

There unemployment figure is about 5.6% or so, but that doesnt reveal the fact that government make work and training schemes "employ" about the same so the actual figure could be twice that.

shotamoose

Sand wrote:

Swedens national debt hit a high point of 75% of Swedish GDP back in 1994. Since making reforms of their (failing) system theyve managed to get that down to 52% of GDP in 2005. ... The US has an even higher national debt (60%).

So Sweden is failing because of its national debt, but America, where the national debt is higher and rising, is not? Right, glad we've got that one sorted out.

And as I said, growth in GDP per working-age person in Sweden has outstripped that of the less 'socialist' group of OECD countries - funny kind of failure.

Sand

Swedens national debt hit a high point of 75% of Swedish GDP back in 1994. Since making reforms of their (failing) system theyve managed to get that down to 52% of GDP in 2005.

As a comparison Irelands national debt is about 31%. The US has an even higher national debt (60%). The US is accused of living the high life on its credit card and told it must reform or face economic annialation; Sweden is as bad (if not worse as the US has real GDP growth of 3.1% whereas Sweden is 1.7% so it has a better chance of reducing debt in the future, especially as its not burdened by a welfare state and a greying population) and Sweden is credited with having discovered the third way?!?!

So Sweden is failing because of its national debt, but America, where the national debt is higher and rising, is not? Right, glad we've got that one sorted out.

When youre finished with my argument can I have it back please? As I recall it was myself who was questioning why Sweden is to be emulated for running up its debt, whereas the US is doomed?

The US is running a 60% GDP debt alright and weve had anyone and everyone predicting economic doom because of it. However, whilst that is a peak in recent history it is not a historical high for the US - their debt in the late 40s was 121% of GDP due to the cost of the war (Youll have to head down about 70% of the page, theres a chart). Swedens GDP debt might be falling over the past 11 years, but its still comparable to the US debt.

Whose got a better chance of staying ahead of the debt collectors? The Swedish GDP growth performace compared to the US is garbage - 1.8% compared to 3.1%? And its even worse than that because all other things being equal Sweden should be growing even faster than the US if it is going to converge to its GDP per capita... and its not. The US is pulling even farther ahead year on year.

I see you praise their admirable productivity per worker - Im glad they are so productive because theyre going to need caffeine junkies for a workforce inside 25 years as their population ages - increasing the dependancy ratio for each Swedish worker, and the demands of Swedens welfare state and ferociously defended by lobby groups....mean while the US population is predicted to get younger, reducing the dependancy ratio and either way the US hasnt got the same obligations as the welfare state imposes on the Swedish government. The one thing that could save the welfare states in Europe, massive immigration, is heavily resisted by those same states. Ironic.

The US economy has a far better chance of delivering high standards of living to its people over the next few decades than the Swedish one does - barring an economic/demographic miracle for Sweden that will either jump its growth rate to a multiple of its current rate - or they best start getting extremely frisky.

shotamoose

Sand wrote:

I see you praise their admirable productivity per worker - Im glad they are so productive because theyre going to need caffeine junkies for a workforce inside 25 years as their population ages - increasing the dependancy ratio for each Swedish worker, and the demands of Swedens welfare state and ferociously defended by lobby groups....mean while the US population is predicted to get younger, reducing the dependancy ratio

Er, what? No it isn't. The old-age dependency ratio (population aged 65+ as % of whole) in the US is going to rise from about 20% at present to almost 40% in the next twenty years.

By contrast, Sweden's old-age dependency ratio is already very high, around 30%, and will grow more slowly than that of the US. This is why Sweden's economic performance in recent decades is overall quite impressive, a point you seem to be consistently missing. It's also why the welfare-state challenges facing the US are actually relatively bigger, rather than smaller as you think.

Both countries will have to support a larger elderly population in future, but it's Sweden that is actually preparing for it by cutting its debt and running big budget surpluses (and also recording big current account surpluses) (Norway, Denmark and Finland are also running budget and current account surpluses), while the US debt and its budget and current account deficits are huge and apparently growing. This means that at the very time when it should be preparing for the impending crunch, the US is living way beyond its means and is basically at the mercy of the central banks of a few Asian countries, who have chosen to far to fund the deficit by buying dollar reserves in order to boost their exports, but who will not do so forever. And of course, a budget deficit of this size will tend to reduce growth, which just compounds the trauma. The picture painted by the US public debt is bad, but when you add in the twin deficits the outlook is truly awful.

So in summary, by any reasonable measure Sweden is better placed to handle the impact of an ageing population than the US, and your prophecies of doom sound like wishful thinking.

AngelofFire

Sand wrote:

Well seeing as you mention the French, maybe it opened up when De Gaulle found himself in the unacceptable position of finding out that Frances time as a world power was over, and with it the Empire, and the desperately anglo-saxon Americans were actually the world power? The French certainly had no problem with ignoring the UN security council to carry out invasions in the Balkans.



They seemed to wakeup to that freedom fries messing - to the point where Chirac and Schroeder have been trying to kiss and make up ever since....Anyway, this is offtopic. I bow to your superiour knowledge of why the US is the evil empire.



Equality of income distributions is of dubious merit - one way to look at it would be to say the US rewards successful and motivated people far more than the Norwegian system, which does not provide the same incentives. By definition there has to be inequality to reward the successful over the unsuccessful. Perfect income equality is not desirable, or at least it would complete remove incentive to succeed, which is not desirable.



Agreed, much as Europeans lap up predictions of impending US economic implosion rather than recognise their own incoming disasters that are state penions, aging populations, and politically active pensioners who will fight tooth and nail against reforms.

First of all sand i see no corrolation between an application of an apparatus of economic justice and ruination of the economy. Sweeden and outpost of distributionism has little or no access to north sea oil and it has one of the most stable economies and lowest unemployment in europe see www.monbiot.com. Just because someone is richer doesn`t necessarily mean they are more successful or have worked harder believe it or not, there are many other factors to take into account like inherited advantages from the day they were born. Buzzwords like ''rewarding incentive'' are just narrow justifications for economic unfairness. Upward Social mobility in Sweeden is over 5 times higher than it is in the US ie the number of people who move to a differnt class then the class that they were born into. Why? because there are little social supports in the US, this inhibits people who may be born with talent but are hindered by inherited disadvantages. If you`re born into a lower income background in Europe you`re much more likely to be able to get to third level education than if you`re born in America because there are much more social supports like 3rd level grants and child benefit and paid leave for your parents, so much for the welfare state discouraging merit.

Victor

Sand wrote:

The US is running a 60% GDP debt alright

65%, but that would appear to be only one view of debt in the USA. It would appear the Federal Government owes $32 Trillion to the Social Security, Medicare etc. funds.

http://mwhodges.home.att.net/debt.htm - although I "like" the way it says "Link to the full FEDERAL GOVERNMENT DEBT REPORT with pictures".

"With pictures" would appear to point to a certain lowest common denominator. The guy seems a little out of whack, but has reason to be.

pickarooney

The points on cars and packed lunches are bogus. Simply because Northern Europeans place little or no importance on gastronomy and flashy automobiles is no indicator of their wealth or lack of it. The CEO of the company I work for is immensely rich (well, compared to me at least!) and eats plain brown bread with a banana most days for lunch and drives a 7 year old Peugeot.

DadaKopf

Savages.