The wealth gap - 92% of Americans surveyed prefer Sweden over the US

[Ivan Seeking]

Take the test
http://www.pbs.org/newshour/rundown/2011/08/wealth-how-does-the-us-slice-the-pie.html

PAUL SOLMAN: But as Dan Ariely found in part two of his study, and as our own informal survey confirmed, when people didn't know which countries the pie charts represented, they overwhelmingly chose the one representing a much more equal and yet still prosperous country, Sweden, as the place they'd prefer to live. A function of their politics, we wondered?

DAN ARIELY: We had 7,000 people distributed around the U.S., different levels of income, education, wealth, political opinions -- 92 percent of the Americans picked Sweden over the U.S. When we broke it by Democrats and Republicans, Democrat, it was 93 percent, Republican, it was 90.5 percent.

So there's a difference, but the difference is tiny...

Video and text
http://www.pbs.org/newshour/bb/business/july-dec11/makingsense_08-16.html

Hopefully my point is obvious. When faced with the facts in terms easy to understand, most Americans believe the distribution of wealth in the US is unfair and unbalanced. As Warren Buffet said, we need to quit coddling billionaires.

 

[russ_watters]

Hopefully my point is obvious. When faced with the facts in terms easy to understand, most Americans believe the distribution of wealth in the US is unfair and unbalanced.

I agree that most Americans believe the wealth distribution in the US is unfair and when they know nothing else but wealth distribution, they will pick a more equal one. So where does this take us? What's the point? From this information (particularly given the man-on-the-street interviews!) , *I* would conclude that this poll shows that Americans don't understand the concept and implications of wealth inequality. And I would not be at all surprised by that. What do you think it means?

As Warren Buffet said, we need to quit coddling billionaires.

What does the previous sentence have to do with this one? Why does that poll have anything to do with Buffet's quote and what exactly is meant by "coddling billionaires"? What specific course of action are you recommending based on the poll?

 

[apeiron]

Do you have anything more recent?

What? More recent than something published in July?

Or most recent raw figures? You can see these for example...

http://www.photius.com/rankings/economy/distribution_of_family_income_gini_index_2011_0.html

http://stats.oecd.org/Index.aspx?QueryId=26068

 

[Tosh5457]

Good find.

Argh Portugal is in 2nd, but we're coming for you USA!

Seriously, are policies to make social inequality very low moral? If I work a lot to get education and money, and my neighboor just sits on his couch watching TV all day, should we have the same income? What's the incentive to make an effort if I knoww that in the end I'll just end up equal to everybody else? What's best for the country in general is not always the best thing to do. Putting alfandegary taxes on many products may be good for the country, but would you like to not be able to buy the things you want from the internet, just because they come from other country?

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today. And in the end those people would still complain they don't have enough opportunities, like it happens today.

But taxing more the riches (and not the median class) would be a good policy. Republicans would never allow it to go very far though.

 

[apeiron]

*I* would conclude that this poll shows that Americans don't understand the concept and implications of wealth inequality.

Now ain't that the truth.

But instead of derailing the thread by asking about remedies - how we should change things to create greater equality - first we have to be able to identify what is actually optimal.

As ever in a rational world, you start with the right target and work backwards from it. If you start worrying about the pain of making change, then you just will never change.

 

[apeiron]

If I work a lot to get education and money, and my neighboor just sits on his couch watching TV all day, should we have the same income?

Strawman arguments are not going to cut it. Let's have a grown-up conversation for a change.

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today. And in the end those people would still complain they don't have enough opportunities, like it happens today.

If you read the research, the causation is the other way round.

 

[Tosh5457]

Strawman arguments are not going to cut it. Let's have a grown-up conversation for a change.

Ok, I can reformulate that for you. Shouldn't effort (which pays off in money) be rewarded? With a very low social inequality it certainly isn't, and the system is prone to abuses.

 

[daveb]

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today. And in the end those people would still complain they don't have enough opportunities, like it happens today.

So the U.S. is full of immoral people...somehow, i can't formulate an valid argument against that.

 

[Tosh5457]

So the U.S. is full of immoral people...somehow, i can't formulate an valid argument against that.

That's a logical fallacy. I said responsability and morality can make a low inequality society work, and you're saying since in the USA there's a high inequality, americans aren't moral and responsible people. You can refute that conclusion you just said, but it has nothing to do with my reasoning...

 

[daveb]

Ah, I see you do not understand the power of sarcasm. My bad.

 

[Greg Bernhardt]

I hate when people compare us to Norway or Sweden. Impossible, because both have very small homogeneous populations. Scale them up 30x, inject them with diversity and let's see how smoothly it all runs.

Also when we talk about equality, are we talking about equal opportunity or equal results? I think some are talking about equal results, and that my friend is Communism.

 

[Tosh5457]

Ah, I see you do not understand the power of sarcasm. My bad.

Not when that sarcasm is poorly phrased and doesn't make sense in the context. My arguments don't have any logical fallacy, so your sarcasm doesn't make sense...

/offtopic

 

[Ivan Seeking]

Also when we talk about equality, are we talking about equal opportunity or equal results? I think some are talking about equal results, and that my friend is Communism.

You are assuming that the results are the product of equal opportunity. Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

Consider the irony that our system should produce the same wealth distribution as China! How does that make Capitalism any better than Communism?

 

[Greg Bernhardt]

How does that make Capitalism any better than Communism?

The Chinese government may still be communist, but there is little doubt that it's the capitalistic reforms which drives it's economy.

Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

What do you mean we are on par with China? Their GDP is 1/3 ours. Are you claiming a poor Chinese peasant has the same inherent opportunity as a poor inner city kid in the US?

A poor inner city kid has the same opportunity as a rich kid. The results more times than not will be different and you can debate the reasons why, but the opportunity is the same. Places like China or India (castes) this is not the case.

 

[ModusPwnd]

If wealth grows exponentially, one would expect that as everybody gets wealthier that the gap grows. But this is not indicative of anybody's standard of living going down.

 

[Mech_Engineer]

Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

Do really expect us to take you at your word that in the US:

1. 50% of the population is "impoverished peasants."
2. US "peasants" are on-par with China's.

I lived in China for 5 years and know for a fact this is far from the truth. You'd better start providing proof of your claims.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

You'd better provide proof of that too since it's probably bunk. Specifically, prove that wealth inequality leads to civil war and/or a government coup. What caused the last US civil war? Was it wealth inequality?

Consider the irony that our system should produce the same wealth distribution as China! How does that make Capitalism any better than Communism?

Consider the irony that you (as a moderator of a scientific forum which specifically prohibits making wild claims without proof) would even claim this without trying to provide some minimum level of data to back it up!

Please note the Per Capita GDP Comparison: http://www.wolframalpha.com/input/?i=USA+china

CIA World Factbook (China): https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html

 

[WhoWee]

You are assuming that the results are the product of equal opportunity. Given that we are on par with China where half the nation is impoverished peasants, perhaps the results suggest that opportunity is not so equal.

What I do know is that inequality of such proportions often leads to civil war, or a coup.

Consider the irony that our system should produce the same wealth distribution as China! How does that make Capitalism any better than Communism?

Who are the "impoverished peasants" in the US? From the White House web site.
http://www.whitehouse.gov/sites/default/files/101210-tax-relief-african-americans.pdf

[/I]"• An estimated 2.2 million African American families will benefit from the expansion
in the EITC and CTC that are extended in this agreement. These credits help roughly
4.7 million African American children or almost half (44%) of all African American
children.
• The extension of Unemployment Insurance will benefit 1.1 million African
Americans. That is why the National Congress of Black Women praised the President
for giving the unemployed a “new lease on life” and a “survival line” through the next 13
months.
Illustrative Example: Working African American mother with three children making $20,000.
This family will:
• Receive a tax cut of more than $2,100 from extending recent expansions in the EITC and
Child Tax Credit as part of this agreement.
• Receive a $400 tax cut from the new payroll tax cut.
• Compared to the Republican alternative, this family will receive a total tax benefit of
$2,500 next year. "[/I]

****
Next item:

"• 2.7 African American children will benefit from a larger CTC.
• For many families, extending the minimum threshold in the CTC will result in thousands
of dollars in additional tax benefits that would have otherwise been lost. For example:
o A married couple with three children making $23,000 will receive $3,000 in child
tax credits compared to about $1,540 if only the 2001/2003 tax cuts were
extended – an increase of about $1,460. o A single mother with two children making $17,000 will receive $2,000 in child
tax credits compared to about $640 if only the 2001/2003 tax cuts were extended
– an increase of about $1,360."

*****
Next item

"The American Opportunity Tax Credit in the Recovery Act:
• The Recovery Act expanded the AOTC so that it now provides up to three times more
relief than was previously available under the Hope Credit and Lifetime Learning Credit
and is refundable for low-income students for the first time.
• The AOTC gives working families and students a $2,500 per year partially refundable tax
credit to help students and their families cover the cost of college tuition. "

*****
Next item

"The agreement secures an extension of unemployment insurance for an additional 13 months.
Without this extension, 330,600 African Americans looking for work would have lost their
benefits this month alone, and through the end of next year over 1.1 million unemployed African
Americans would have lost their benefits.
• Extending unemployment benefits provides crucial economic security to American
families. A recent report by the Council of Economic Advisers found that while 14
million people received federally supported unemployment insurance benefits through October 2010, an additional 26 million people living in their households benefitted
indirectly."

*****

Are we really on par with China Ivan - with regards to helping the "impoverished peasants" in the US?

 

[SamRoss]

Northern-european countries, not just Sweden, have a very low social inequality. But they have that because they're very responsible and moral people, or else there would be many people living off on the expenses of others and the system wouldn't take long to change. Needless to say, this would never work in USA. There would be too many people taking advantage of it, while others would be working for them to get benefits, like it happens today.

But taxing more the riches (and not the median class) would be a good policy. Republicans would never allow it to go very far though.

What is it, 99% of everyone's DNA is identical? People are basically the same wherever you go. Systems, on the other hand, are different. I don't see any reason to believe that whatever they're doing in Sweden wouldn't work in the US. Yes, let's tax the rich and let the Republicans go off in the corner and sulk.

 

[SamRoss]

I actually saw this before. It's not surprising. When you look at all the polls, people in this country really are more liberal than you would think. I just can't understand why they keep voting Republican.

 

[RudedawgCDN]

Ok, I can reformulate that for you. Shouldn't effort (which pays off in money) be rewarded? With a very low social inequality it certainly isn't, and the system is prone to abuses.

lol I have to chuckle whenever I see someone say "system is prone to abuses..."

Your whole tax system/code is "prone to abuses"

Your whole political system / government lobbying is "prone to abuses"

Your Wall Street and banking system is "prone to abuses"

The whole reason your economy is in the tank right now is because the American way of doing things...

It's just seems that when rich people, bankers and wall street snake oil salesmen abuse the system it's "business as usual" and they get a slap on the wrist - but when poor people try to "abuse the system" well... their leeches and their "ruining the country".

Somehow I think Wall Street Brokers did a lot more to cause this last recession than some guy in Las Vegas living on unemployment.

 

[mege]

Maybe this is a bit too sophist, but why is perfect wealth equality good? Other than jealousy, why would you want someone else to live a lesser life than they do?

You could probably use the 'US distribution' graph to show where wealth is located in the world, with the US being the big yellow slice. Maybe that means that the US should impoversh itself to be more equal with the developing countries of the world?

And I agree with RudedawgCDN on his last point. I wonder though, where did all that Wall Street money go politically? Let us not forget that it was the social policy driven public-private housing loan mashups that likely caused the recession and made some of these Wall Street folks rich.

 

[apeiron]

Maybe this is a bit too sophist, but why is perfect wealth equality good? Other than jealousy, why would you want someone else to live a lesser life than they do?

Who is saying it's good, or ideal? The OP clearly didn't. It just stated that a Swedish level of inequality looked better than the US.

To suggest that this is people arguing for exact equality, as several have now done, is plain misdirection.

Again, it seems trivial to start with the assumption that some level of wealth inequality is going to be optimal. There has to be some competitive basis, some motivational basis, to a society. And even if not, people are still born different and it is implausible that their fates would then be made identical. The interesting question then is what level should a society target? What is the model?

And if Sweden/the Scandinavian model has top scores for national happiness, health and other desirable outcomes, then why not examine what they do?

It could be just luck or something nothing to do with socio-economics. Or it could be that some socio-economic structures deliver better outcomes.

Can't see why this is such a touchy subject for PF.

 

[CAC1001]

Any free society is always going to have wealth inequality, and probably a high amount of it. the kind of wealth inequality that leads to civil wars or rebellions I'd say is what happened with Russia, where you had a rich class of people literally living off of the labor and lives of everyone else.

Wealth inequality in a modern market capitalist-based society is a little different. We do not have a fixed class of wealthy people in this country, and what wealthy we do have do not live off of the labor of everyone else. Everyone's level of wealth increases over time as well, even if there is a high level of wealth inequality.

A person in 2011 is one heck of a lot wealthier than a person in 1911, for example. One-hundred years from now, there will still be massive wealth inequality, probably by then trillionaires, but even if so, a "poor" welfare recipient one-hundred years from now will probably enjoy goodies that even a wealthy person today could only dream about.

 

[ThomasT]

Hopefully my point is obvious. When faced with the facts in terms easy to understand, most Americans believe the distribution of wealth in the US is unfair and unbalanced. As Warren Buffet said, we need to quit coddling billionaires.

Hmmm, well there's always going to be an imbalance of wealth as long as there's an imbalance of abilities among people. I don't have any particular problem with this, and considering that the 'poor' in the US live quite comfortably compared to the 'poor' in much of the rest of the world, then I don't think that we (I'm a US citizen and resident) are going to have worry, in the foreseeable future, about coups or revolutions in the US based on economic inequality.

Life and living isn't a matter of 'fairness' and I should think that most contemplative people realize this and so aren't unduly concerned about the distribution of wealth.

Of course it seems like a good thing to aim toward equality of justice and opportunity for all people. At least as far as egalitarians are concerned. But, whether this is a reasonable goal is an arguable point, and it certainly doesn't seem like a realistic one.

And so our world has a rather small percentage of wealthy people and a rather large percentage of people who live in poverty and suffering and who will die early because of that poverty, and a much larger percentage, the predominant percentage, who are somewhere in the midde of those extremes. The human 'herd' is sort of naturally culled in this way depending upon abilities and accidents of birth regardless of political or economic systems.

The US 'system' (due to an abundant wealth of natural resources, the fostering and rewarding of innovation, strong central/federal governmental control, the building and maintenance of necessary infrastructure and a more or less homogeneous national culture) has been particularly effective in that it has lulled at least half of the electorate into complacency or apathy via a rather high average standard of living (ie., we are, most of us, pretty comfortable).

But the US is changing. It's regressing. And I predict that by, say, 2100 it will be more like the 'third world', 'developing' countries of today than the US of, say, the 1970's.

And so, I believe, the US is on track to become progressively less egalitarian.

But I'll be dead long before then, and I would much rather live in Florida in the US of today than in Sweden. It gets really cold in Sweden, doesn't it?

 

[TheStatutoryApe]

I am wondering how much of the lack of wealth disparity in Sweden may be a sort of geographic slight of hand. They import quite a bit from outside their country. How many major corporations sell products in Sweden? How many of those products are made in Sweden? and How many of the CEO's and big money makers in those corporations actually live in Sweden?

I only found some rather general import/export statistics. Since they have the least economic disparity most any country they trade with will have greater economic disparity. A list of their principle trade partners lists all first world countries, including the US, but one might wonder just how much of the products imported via trade with these countries are actually produced in said country. Are such statistics usually corrected for this? or based only on product which comes directly from the particular country to begin with?

Looking for specific examples I found that there is a Coca Cola bottling plant in Sweden but that it is owned by a corporation, "Coca Cola Enterprises", located in the US. So Sweden gets its product and some blue collar jobs but the higher earners of the corporation we would assume live and work in the US with much lower personal income tax burdens. Even if the bottling company in Sweden is subject to taxes the corporate tax rate there is actually lower than the US. Coca Cola Enterprises is also sole distributor for several European countries and the product produced in Sweden is likely exported to some of those countries producing yet more profit for an American corporation off of Swedish labour.

 

[Jimmy Snyder]

One reason that the lowest 20% have so little wealth is that the govt requires that you can't have more than $2000 (that's an old number, I don't know the current amount) in assets and still receive welfare. In my opinion, the next 20% own so little because if they had $1 they would use it as collateral to borrow $2. They don't have assets because they won't have assets.

 

[russ_watters]

I actually saw this before. It's not surprising. When you look at all the polls, people in this country really are more liberal than you would think. I just can't understand why they keep voting Republican.

Since clearly those polled didnt understand the concept they were being asked about, perhaps it is telling us that people are only liberal about things they don't understand?

 

[russ_watters]

One reason that the lowest 20% have so little wealth is that the govt requires that you can't have more than $2000 (that's an old number, I don't know the current amount) in assets and still receive welfare. In my opinion, the next 20% own so little because if they had $1 they would use it as collateral to borrow $2. They don't have assets because they won't have assets.

Good point: I have a pretty high income, but I'm (sorta) young so I am heavily leveraged, with little net worth. So am I rich or poor?

"Wealth" is a pretty flawed measure of wealth.

(Edit: it seems the two are being mixed together in this thread...)

 

[daveb]

Since clearly those polled didnt understand the concept they were being asked about, perhaps it is telling us that people are only liberal about things they don't understand?

Well, since he didn't provide any source, I take what he said with a grain of salt. However, even if he is correct, how can you justify that those polled "didn't understand the concept"? Correct me if I'm wrong, but it seems you're saying that only conservatives understand the concepts.

 

[daveb]

"Wealth" is a pretty flawed measure of wealth.

Agreed...by wealth standards, I'm dirt poor since I have a mortgage with negative equity (yeah, I'm one of those responsible idiots that won't walk away from a house that's worth less than what I owe). However, I wouldn't consider myself poor since I can afford the things I want.

 

[russ_watters]

It was a half tongue in cheek response to a flippant remark, dave.

But Ivan's link mentions a guy who picks the US as having an even wealth distribution. That guy just plain didn't understand the math behind the question.

 

[mheslep]

http://en.wikipedia.org/wiki/Demographics_of_Sweden#Sweden_census_2005" are commonly cited in gini/equality/poverty discussions about Scandinavia.* Find me a place as homogeneous in the US, or even just a bunch of Swedes in the US** and then let's talk.

Here are a few of Sweden's more recent socio-economic policies that I like, which I mention here because I doubt many Americans taking that survey would have associated them with Sweden, especially since the election of the center-right Reinfeldt government in 2006 which was re-elected in 2010.

• Universal grade school vouchers, established since 1992, allowing children to attend any school: public, private for profit, even religious.
• Partially privatized pension system
• Privatization of business. In process of selling off/privatizing state owned companies and assets, bringing in revenue in the process
• Taxes. Though the top income tax rate is still 57% to the US's 35%, taxes in Sweden are on the way down. Sweden has been sharply cutting income and business taxes, completely eliminating gift and inheritance taxes. Furthermore Swedish taxes are considerably flatter than the US system. Obviously the VAT tax is not progressive, but neither are the income taxes compared to the US. That is, there's less attempt at wealth transfer, instead people largely get back the same money they pay in (less govt overhead).
• Deregulated airlines, telecom, electricity.
• Cut public spending.
• Voted to stay out of the Eurozone monster.

*Edit: I note those Wiki demographics are a bit old, and that very recently 14% of the Swedish population is foreign born. We'll have to see how that effects the welfare state and equality.

 

[apeiron]

Since clearly those polled didnt understand the concept they were being asked about, perhaps it is telling us that people are only liberal about things they don't understand?

It would be more reasonable to say that they were being allowed to understand the long term consequences of short term choices - and didn't like what they saw.

 

[mheslep]

I hate when people compare us to Norway or Sweden. Impossible, because both have very small homogeneous populations. Scale them up 30x, inject them with diversity and let's see how smoothly it all runs.

That could roughly be called Europe. :tongue: I doubt the wealth quintiles spread out quite so evenly between Luxemburg and Albania

 

[mheslep]

Lady Thatcher on the GAP, 1990.

https://www.youtube.com/watch?v=okHGCz6xxiw

They'd rawtha the gap were that. Down here. That. Not that. But that.