STILL MORE ON SWEDEN: A Swedish reader informs me that the position of Sweden vis a vis the United States has occupied not only the Blogosphere, but the Swedish press. He sends a precis of the debate:
Congratulations to your interesting weblog community.
Today, with four days to go until the Swedish parliamentary elections on September 15, I’d like to contribute to the recent debate about the Swedish Economy versus the American one. I will do this, not by stating my own layman opinion, but rather referring you to three Swedish articles written about this in the biggest Swedish daily newspaper Dagens Nyheter.
The 1st article, which initiated this debate, and was written by two critical researchers at a Swedish Trade Research Institute, is called “Swedes are Poorer than Blacks in the US”. A 2nd article wished to debunk the first one with a couple of counter-arguments: “Impossible Comparison Sweden-USA” and the third one takes a position between the two: “When Differences Become Apparent”.
Arguments, methods and conclusions of the study in the 1st article:
– It is the gross median income (money income before taxes), excluding capital income in the two countries that have been compared in order to avoid comparison of differences in government and welfare services. It does however include gross welfare payments from the government.
– Median income US: approx $40,000; Sw: $27,000. GDP/capita US: $31,000; Sw: $22,000
– Private consumption US: $20,000; Sw:$11,000 (explained by the fact that school/medicare payed privately in the US)
– Average Retail Sales is twice as big in the US than in Sweden, meaning an American can buy two pair of pants when a Swede can buy one pair.
– A low economic growth rate has caused Sweden to lose wealth when compared to the US
– The median (not average) American household, has a yearly income before taxes which is 50% higher than the Swedish one. The median Black household in the US is better off than the median Swedish one
– If Sweden had been an American state, we would have been the poorest one, together with Hispanics and Blacks, and there would have been a debate about the “Swedish Problem”
– In the US, the biggest income is earned by ‘Asians’ and second by ‘Whites and non-Hispanics’. The poorest are the ‘Blacks’. The Swedish median income is lower than that of all those groups.
– Between 1993-1999, income increased for all US groups by 15%, but mostly for Blacks (25%). In Sweden, the median income has remained almost unchanged during that period.
– While the income of the richest 20% segment of the US population have risen the most (30%) and widened the income differences between rich and poor, the most humble segment of Americans has seen its income increased as well. The poorest households in Sweden increased their income by merely 6% during those years, which is 12 percentage points less than for the poorest in the US. Swedish middle and high income households had an increase of between 12 and 20%.
– Low growth rate has a devastating effect on all segments of the population. If Swedish income had developed at the same rate as American income, Swedes would have an additional $1,500 gross income on a yearly basis.
– Politicians need to focus on growth stimulation, which would in turn authorize a positive income development for the Swedish population from all income segments.
The second article tries to debunk these findings using American studies and statistics:
– Yes, the median income in the US is bigger than the Swedish one, but so is the cost of life in America, as well as the differences of income between large segments of the population
– Median income says nothing about working conditions, living conditions or the quality of the Medicare system, and nothing about the economic development of the country.
– The “differences in government and welfare services” are precisely the factors which the above studies failed to take into account. If you live in a country earning $100,000, but paying $99,000 in rent and health insurance, are you really better off than in Sweden?
Cost of life in America is way higher than in Sweden. The smallest apartment costs $500-600/month.
– In order to live decently in the US for a family of one adult and two children, an income of $30,000/year is needed, to be able to pay for medicare and health insurance. Most Americans work in service or restauration industries, where salaries are $22,900 on average. 47 million households in America earn less than $35,000. Percentage of poor: 26,1% of Blacks, 25,6% of Hispanics and 10,5% of Whites.
– Median income fails to explain the quality of the living conditions. 5,4 million Americans live in squalor conditions. Government subsidized apartments are scarce (36 available for every 100 needed). Average working time was 40 hours/week, 52 week/year! (In Sweden, you are intitled to 5 weeks of vacation).
Minimum wages in the US are $1,000/month and many poor need two jobs to survive.
– 31 million Americans, including 12 million children don’t have access to sufficient or healthy food. 8 out of 1000 children die preliminary deaths excluding the child birth death rate). Among Blacks, the percentage is 15.8 out of a 1000. In Sweden, only 1 child out of 1000 die under those circumstances.
– 40% of American families say they would only be able to sustain for 3 days in case they suddenly lost their job or got sick for a long (and expensive) time, before their money runs out.
– In 1999, a sixth of the population (43 million) did not have health insurance, which is up from 32 million ten years earlier.
– Net Capital Wealth (money on bank + stock + retirement pension + apartment / house minus debts) compensated for inflation decreased in the US from $54,600 in 1989 to $49,900 in 1997.
– Net Capital Wealth per Race in 1998 in the US: Whites $81,700, Blacks $10,000, Hispanics $3,000. If you exclude capital in real estate house/apartment) you get: Whites $37,600; Blacks $1,200; Hispanics $0.
– Conclusion: 40% of the population earns just 1% of what the remaining 60% is earning! No wonder the median income is high. This is why, the author argues, it’s not correct to say that the poorest segments in Sweden have lost out compared to their American counterparts.
– It is true to say that the American income has increased, but a huge portion of the population in the US is living under conditions which couldn’t possible serve as an ideal for most Swedes. And the Americans are paying for it with their health and spare time.
The third article (editorial) argues:
– A shortage of growth can be catastrophical to the Swedish economy.
– The normal Swedish family earns less than the normal American family in the traditionally ethnically Swedish parts of America, which should be food for thought
– Sweden is a rich country (GDP/capita higher than the UK or France), but Sweden should radically lower taxes, reform and liberalize the labour market and promote growth.
– Sweden doesn’t have to become like America but we should try to promote and emulate the kind of dynamic that exists there, which allows people to change “classes” rapidly, through hard work, and which allows regions to attract investment.
– There ARE reasons to why the American dream motivates people around the world alot more than does the Swedish or European models. It’s only our own myths and misconceptions that prevent us from taking impression of our neighbour across the pond.
I personally tend to agree with the third article. I hope these summaries could share some light to this debate of some interest to both Swedes and Americans, and if you like, you may post it on your excellent weblog. The links (in Swedish) are merely given as reference for any Swedish-speaking readers you might have.
Best regards,
“The Viking” /
Swedish national living elsewhere in Europe (but not because of any problems with the Swedish tax authorities…)
Thanks very much. Whether the Blogosphere will (or will even care to) go beyond the degree of debate that’s going on in Sweden is unclear. But this certainly makes clear that that, far from being mere anti-Swedish carping, the issues that have been raised about Sweden’s economy in the Blogosphere are genuine, since they’re obviously of vital interest to the Swedish electorate.
UPDATE: Reader Kevin Hurst writes:
I am sceptical of the notion that the cost-of-living is higher in US as a whole than Sweden. I rather think that it is the opposite. If I am reading the attached OECD figures correctly (it is late and I am in a hurry), they list the Swedish price level as HIGHER than US (by a ratio of 105 to 100). That fits what I would expect. Most of the arguments of the “pro-Sweden” article point back to the dubious fact that it costs more to live in US. Most of the rest of the points you list are either false or misleading. For instance, very few poor head-of-households earn the minimum wage. Even McDonalds gives people raises after you’ve been there for 6-months. Very few people in the US who work full-time are poor! Also, they significantly overestimate US outlays for rent and health insurance. I would like to know what figures they are using.
I don’t open attachments, so I wasn’t able to read Kevin’s figures. I’ll see if I can get a link. But from what I know about comparative cost-of-living in Sweden vs. the United States (back when I practiced law, my Swedish clients regarded D.C. as cheaper than Stockholm) I would expect to find Sweden somewhat more expensive than America.
UPDATE: Here’s the link. Thanks, Kevin.