Anyone who has visited both Sweden and Mississippi will doubt that the latter is in any meaningful sense richer. [snip] The whole controversy has been, I submit, silly from its inception. Only the desperate need of some conservatives and libertarians to believe that Sweden, which pursues policies they condemn, must therefore be in terrible shape, explains it. After all, it would have been equally true to say, "After a decade of Thatcherite rule, Britain was poorer than Mississippi," or "The disastrous policies of the Berlusconi regime have made Italy poorer than Mississippi," or "The Austrian flirtation with a neo-Nazi government has left it poorer than Mississippi," since Sweden is richer, on a GDP per capita basis, than Britain, Italy, or Austria. But of course saying any of those things would have been foolish.

Life expectancy, infant mortality, literacy, leisure, income at the bottom end of the distribution (and, Krugman didn't add, homicide rates and prison populations) -- all measurable and countable, and Sweden is way ahead on every one of them. Not ahead of Mississippi, but ahead of the United States of America, the richest, freest, greatest country in the world.

But the main point is that though Sweden may have lower average income than the United States, that's mainly because our rich are so much richer. The median Swedish family has a standard of living roughly comparable with that of the median U.S. family: wages are if anything higher in Sweden, and a higher tax burden is offset by public provision of health care and generally better public services. And as you move further down the income distribution, Swedish living standards are way ahead of those in the U.S. Swedish families with children that are at the 10th percentile -- poorer than 90 percent of the population -- have incomes 60 percent higher than their U.S. counterparts. And very few people in Sweden experience the deep poverty that is all too common in the United States. One measure: in 1994 only 6 percent of Swedes lived on less than $11 per day, compared with 14 percent in the U.S.

It is, incidentally, not all all clear that this think tanks metrics are so useful. It's highly unclear, to take one example, that it is better on a low income to own a car by necessity to commute to work (gasoline and mandatory insurance are expensive) simply because Sweden's subsidized mass transit isn't available in Los Angeles. Affordable DVDs or affordable health care—you make the call!

By sheer coincidence, I did an analysis of the exact same thing a week ago. I used data provided by nationmaster.com. I first listed the nations whose per-capita GDP, in 1970, was close to ours. This included Canada, Sweden, Norway, Denmark, France, the Netherlands, and so forth. The usual suspects.

Note that in 1970, we were significantly ahead of the pack - our per-capita GDP was about $16,600, the others averaged about $12,900.

Then, I compared the 1970 GDP to the current GDP to get the amount of growth over that 35-year period. Although there were outliers, almost all of the data points were very close to 2.14-fold growth. Here are some random samples:

Netherlands - GDP increased by factor of 2.12
Canada - GDP increased by factor of 2.13
Denmark - GDP increased by a factor of 2.15
US - GDP increased by factor of 2.17

It's interesting that the difference is in the second decimal place. In short, we were ahead of the pack in 1970. The US moved forward at almost exactly the same speed as every other nation, when measured as a factor. The result is that we're still ahead of the pack, by almost exactly the same factor.

I am surprised that the Swedish report asserted that we were growing faster. They didn't use the same data I did: they used "Per Capita GDP Growth Index, PPP Adjusted." I have to admit, I don't even know what PPP stands for. For all I know, my data is crap.

Of the fifteen nations I tested, there were four ahead of the pack: Belgium, Japan, Austria, and Spain grew by a factor of 2.50. Not coincidentally, of the nations I tested, those were the four that had lowest GDP in 1970. In other words, I think the big growth was because they were trading with richer nations.

Of the fifteen nations I tested, only two were significantly behind the pack: Germany grew by a factor of 1.99 and Sweden by a factor of 1.93. I think Germany is an anomaly: they reabsorbed East Germany. Sweden was the highest-taxed nation: $47 out of every $100.

The lesson, if my data is correct, is that our economies are absolutely locked together. There is no other way to explain the fact that the growth rates were so close to exactly the same.

It does seem to suggest that the impact of taxes is overstated - the only measurable effect occurred when taxes exceeded 40%. An alternate explanation is that when we lower our taxes, it does improve our fortunes, and we drag everyone else "up" with us, socialist or not.

And, one last time - I have no idea if any of this data is any good.

I should mention that nationmaster is free, so you should be able to reproduce my result quickly. Don't bother trying to use their correlation function, it doesn't work well. Just copy the data into your spreadsheet and analyze yourself.

Ah, one more thing. I compared per-capita GDP, not absolute GDP.

Ppp -adjusted stands for adjusted for purchasing power.Our Australian dollar, for instance, has, in US-dollar terms, only an exchange value of around seventy US-dollarcents but I suspect that what we can buy for it here (preciously little of course) is a bit more than you can buy for seventy cents in the US. I think it is the journal "The Economist" that lists yearly the price of the MacDonald BigMac in various countries to get a tangible idea of the difference between ppp (purchasing power parity) and exchange rates. To stick to my one Australian dollar: at MacDonald's here you can buy two-and-a-half soft serve icecreams for it (price forty Australian dollar cents).

Krugman has a perfectly valid point of course when he argues that per capita GDP is hardly a reliable indicator of the overall prosperity of a nation and that one should have data on income distribution as well to get a meaningful picture.

I suspect, for instance, that most West European countries (and Australia) have, in terms of general availability of medical aid, a better health system than the USA. Yet the USA has a higher pro capita GDP. This is only one example.

Arie Brand

It is true that our rich are much richer than those of many other countries. And it is also true that on a purchasing power parity basis, the gap is not nearly so dramatic, at least on the surface. However - be very careful with PPP adjusted GDP measures - the results you get can be very strongly skewed by what items you decide are in the shopping basket you compare across countries.

These issues, in any case, don't address the Swedish researchers' central point. GDP measures the total amount of goods and services produced in a country; per capita then divides that by the number of people. The result is a measure of how much the country produces per person.

Socialized medicine and other services must be paid for somehow. So too must state pensions and other social welfare programs. To pay for them, you must do one of two things: either your country must generate sufficient output each year or you must borrow from the future by heavily taxing the work of existing companies to pay for obligations like pensions that were incurred in the past.

The EU-15 have chosen a taxation and regulatory approach that hinges on the latter. And it is a house of cards, because with the very low birth rates in their countries, there are fewer workers to tax.

Moreover, even if the EU's embrace of immigration were to replace the missing births with well-educated, productive workers (a process that is by no means guaranteed to happen smoothly or quickly), the US economy will STILL grow at a faster rate than the EU-15. That is because heavy taxation and regulation create disincentives for people to work at the things they are potentially most specialized for (their jobs).

If the researchers are correct in saying many Europeans work significant hours outside of the job either because they lack household conveniences that save effort or because they moonlight at other things that are less productive, the growth potential for the EU economy will continue to be far less than Europeans hope for. And that has significant implications:

- it means the EU cannot AFFORD to field a self-sufficient defense capability: their only hope of being influential is to constrain others like the US who can

- it means the level of future social benefits and pensions will be lower than expected, possibly leading to greater social discontent

- it means that new immigrants will find conditions less amenable to integration into prosperity and social status, because the pie will not expand as quickly as the population

I submit these are potentially very significant concerns. In particular, there are strong implications for international efforts that have any military or aid component. 'Coalitions of the willing' may in fact be the only practical approach to situations like Afghanistan and the Sudan.

Moreover, I expect other countries to try hard to turn the UN into a government with taxation powers - and to have those tax powers used on precisely the areas where the US is very productive.

Interesting. Ever been to Mississippi and Sweden?

I have.

What a joke.

ASDF, what exactly do you mean? I haven't been to either and only have my own preconceived notions of both.

Well, Mississippi is a dump.

Sweden is beautful, clean, and everything works.

Well, the moral of the story, I guess, is: you can't buy taste.

But if you have to choose between money and taste, my advice is to take the money :-)

I had a look at the report. I can't speak for other countries but most of the figures for the UK in table 2:2 are simply wrong.
For instance 48% of the UK has microwaves.
A look at http://www.statistics.gov.uk/lib/viewerChart346.html suggests the figure for 99 should be around 82%.
The figure for PC's seems to be around a decade out of date, whilst the figure for dishwashers appears to be around 15 years out of date.

I'll be kind and assume that claiming the UK has 3 cars for 100 people is a typo, the actual figure is around 42.

Which doesn't exactly inspire confidence in the rest of the report.

The point about average living space is pretty daft as well. After all the UK has a population density 8 times that of the US and a far higher percentage of its population living in large cities. (which also feeds into the car ownership stats).

I've never been to Sweden. But I visited Oslo on a business trip a few years ago.

• Our hotel was one of those old buildings that has been preserved from an earlier age... it was well-kept, but I would have preferred something more modern. The water pressure in the hotel shower was awful. The concierge was grouchy.

• The hotel was in walking distance of the royal palace. Surrounding the palace was a park, you could walk right up to the palace. Many people were cutting through the park just to get to the other side. No idea what was in the palace: inhabited? Just a museum? Not sure. The fact that they let anyone just walk up to the place and sit on the steps gives the impression of very little concern about crime.

• On the other side of the palace was a shopping and bar district. We had to buy some clothes because our luggage was delayed. The prices were really high. I have no idea why.

• We were there on business. The software company we were visiting was in a typical business park in a suburb. It could have been the suburb of any American city, except that public transit was more available. The building was generic office-space like any standard American office complex.

• The work we did during the day was a lot like the work I do at home. At one point, I became aware of an employee conflict: there was an employee who was being a real pain in the ass. I asked why they didn't just lose the guy, and they said it was expensive to fire people in Norway, the unemployment benefits are significant.

• One thing that was funny is that there are a large number of people in Oslo who like "snuff" (basically, chewing tobacco). Our contact person was heavily addicted.

• We ate well when we were there. There were lots of nice restaurants, and we visited a lot of them. One was a French restaurant of remarkable quality, being run by a portuguese chef. The whole thing seemed incongruous. But it was very nice, and my friend, who is a wine expert, said the wine was very good. I would have no idea.

• We stopped into a convenience store and I bought some Norwegian candy. They have a taste for candy made of sugar plus ammonium salts. I can't describe how incredibly awful this stuff is.

• We became friends with the employees of the software company, and one of them took us to her place. Her place was smaller than I would have expected for a professional marketing agent. However, it was also very modern and had nice hardwood floors. It reminded me of the Manhattan apartment of a programmer-friend of mine: small, but nice.

• Some of the cars on the road are half-width: only one seat across. I wanted to ride in one, but I never got the chance.

• On several occasions our hosts and I ended up in a discussion of politics. The employees of this software company came mostly from Norway, with a few from Germany and Sweden. They were all extremely knowledgeable about politics.

• We went out to a bar at one point. It was just like the bars I used to go to in my college clubbing days: throbbing music, people smoking like chimneys (actually, twice as much so), inaudible speech drowed out by the music. A line outside.

• I noticed that the entire city gave a palpable impression of being extremely safe. Young women were walking around late at night without a concern. My libertarian business partner noticed that there were no bums anywhere.

• We went out for sushi a lot. Apparently, sushi is cheap when you live by the north sea. Norway is one of the last places where you can eat whale. Whale, as a foodstuff, is not particularly compelling.

Overall, my impression was that of a very normal, modern lifestyle. The big difference between Oslo and any small US city is that Oslo just seemed healthier. I didn't see blight anywhere, I didn't see any evidence of crime, basically, there was a pervasive absence of dysfunction. Everyone just seemed to be living a decent life.

The point about heavy taxation being a disincentive for enterprise and hard work is, of course, a conservative chestnut.Moreover here too the question is which strata of the population are comparatively lightly taxed. To ease the tax burden on the extremely rich hardly stimulates the energies of the rest of the population while the extremely rich would have hoarded and augmented their capital also without these tax cuts (I suspect that their relative position on Forbes' list of the extremely rich is a far greater incentive).

I am originally from Holland (where most of my folks are still living) and I also lived for long years in the UK and I must say that the idea that many Europeans must moonlight on other jobs since otherwise they couldn't afford time saving household equipment strikes me as a bit bizarre.

It is true that some West European nations have, in the post war boom years, undertaken social programs that have turned out to be a bit too ambitious in the long run but it is for me a question whether this has led to a higher level of national indebtedness than that now suffered by the USA. Krugman has had a lot to say on that point as well.

arie brand

Stop pretending that discussions of Europe versus America are about economic policy; obviously they are about race.

The crime rate for Africans in America is about six times the crime rate for Americans. The crime rate for Latinos about three times. On average Africans with the same education as Whites on paper are about four years behind in skills and knowledge.

Our political leaders have chosen to convert the USA into a "Latin" country for better or worse. Over the next fifty years the White population of the United States is going to rise five percent while the African population rises seventy-five percent and the Latino population by considerably more. Demographics is destiny.

No matter how they twist the stats, the fact remains that in general the European life-style is a more pleasant and more desirable one than that of the average American.

The U.S. may be a great place to [i] "make one's fortune"[/i] but it is not such a great place to live one's life or raise a family.

We can learn a great deal from the Euros. Money is not everything—quality of life is!

"The U.S. may be a great place to [i] "make one's fortune"[/i] but it is not such a great place to live one's life or raise a family."

Evidence? Or just opinion?

The US is a great place to raise a family. It is possible to come from very humble beginnings and still be very successful, like President Ronald Reagan. An immigrant like Arnold became the govenor of California.

Look, after a certain level, poverty is obviously a relative concept and has strong effects beyong merely the lack of material goods. The self-perception of poverty is a killer (both literally and figuratively).

To the first point: the middle class of the 1950's would be considered poor by most modern measures (in terms of material wealth), yet obviously they did not consider themselves poor.

To the second point: areas considered poverty-stricken almost always have higher crime, lower health, and a variety of other social ills, not to mention general unhappiness, regardless of its actual material wealth. It's why it is bad news to be poor, even if you have all the material goods you want or need.

What's missing in Europe is a wide-spread self-perception that they are poor. Until this perception becomes common, it is vastly better to be materially less well off in Europe than materially better-off, but considered poor in America.

In the end, absolute material wealth is irrelevant. None of us consider ourselves rich because we have 10 times the wealth of our ancestors, nor do we consider ourselves poor because we have 1/10th the wealth of our descendants. Being poor (and it's heavy burden on health, etc.) is when you feel poor. And I'll wager there's less of that in Europe, if simply because the tax structure reduces wealth differential (and thus the perception of poverty), even if it reduces total wealth.

Tom,

Do you think Europeans will recognize their actual state of wealth when the bill for Socialism becomes due?

BTW small effects in the 3rd decimal place can have large effects if coumpounded over time. Especially if you consider the brain drain and other second order effects.

Any one can jump from a tall building and live. The question is not how well but how long.

I've read that Europeans save much more money than Americans do. If Europeans saved at the same rate as Americans, how much more money would they have to spend on material goods? Would it be comparative?

Actually, the thing that surprised me during my analysis is that there are essentially no prosperous nations with taxation below 15%.

Exceptions: Hong Kong, Aruba. However, even though they have sovereignty, these are more like cities than full-size nations. They have such unusual business models that they really couldn't be reproduced at a national scale.

Seeing how many nations went through a low-tax and low-regulation period during their early history, it's sort of surprising that none of the successful ones have retained their free market origins.

Can M.Simon explain what he means by the 'bill for socialism'? In Western Europe (and Australia) social democratic and conservative governments have alternated and they all have, roughly, left the fundamentals of the social welfare program in place (their main differences have been about industrial relations). In Germany it is in fact the social democratic/green federal government that is now proposing to make cuts in social welfare (Germany is still struggling with the financial consequences of reunification).

Somewhere in this correspondence the comparison between Mississippi and Sweden was brought up. It is, in this context, interesting to note that the new Governor of Mississippi, Haley Barbour, together with the Republican Senate there, have brought down eligibility for Medicaid from people with an income of $ 12,569 or lower to those with $ 6,768 or lower (see Bob Herbert's column in NYT of 11th June). No West European government, conservative or otherwise, would have the heart to screw the poor to such an extent.

Here in Australia eligibility for Medicare is universal (though we have had a conservative federal government for the last eight years)and those who are on government assistance also enjoy cheap medicine (the fear is that the pending free trade agreement with the USA might mess up this pharmaceutical benefits scheme). Unemployment relief is also far more generous than that provided in the USA. The USA might be a good place to be rich in but when you are poor you are better off in almost any West European country or Australia.

In spite of Australia's social welfare program (or perhaps because of it)the country is in excellent economic shape with economic growth rivalling or outperforming that of the USA (on average 3.5% over the decade 1993 - 2003) and a far lower level of public debt compared to the USA (4.5 of GDP as compared to 62.43 of GDP in 2003).

It is generally accepted that the foundations for this economic performance were laid by the reforms undertaken by the previous Labour-government.

Arie Brand

Arie - I had forgotten you were in Australia. Can you help me with some data?

I need the per capita GDP of Australia, and the per capita government expenditures. Something about the nationmaster data makes me suspicious that it's not correct.

Josh Yelon:

I may have missed it in your analysis but a factor that may have been left out of your calculation is that the population of the United States continues to grow.

So not only does the per capita GDP in the U. S. rise (slightly) faster than in Europe, the population is rising here also. And the total size of the economy is important, too. Not just per capita GDP. This is true for many reasons including economies of scale, significance and influence in the world and a host of other reasons.

Europeans are reproducing at sub-replacement level. And it's being made up by immigration particularly from the Middle East. For the U. S. high levels of immigration have been a fact of life since its birth. It's new for the Europeans. And for countries whose entire identity is tied up in things like ethnicity and language it's hard to imagine the consequences of this kind of change. The earthquake shock in Europe is just starting.

Josh:

According to the CIA World Fact Book the per capita GDP in Australia (ppp adjusted) was in 2002: $26,900.

It is much harder to find data on per capita commonwealth government expenditure.There is more information on per capita local govt.expenditure for each indidividual state (for what it is worth: for the state I live in, New South Wales,$A 825.24 over 2001 - 2002).

If I find more I will let you know.

Arie Brand

> for countries whose entire identity is tied up in things like ethnicity and language

Hm. I have to say, when I was in Oslo, it struck me how similar to America it was. Yes, there were differences, but they seemed superficial: funny-flavored candy, smoking like chimneys, ate lots of sushi, less litter, that kind of thing. But big lifestyle differences? Not many. If you were to drop me back in Oslo with a wallet full of money, and say "this is your new home, find a job," I'd know where to begin: cheap motel for the night, chinese takeout for dinner, find some nice person in a coffee shop to help me translate the classified ads, retail job until I find something better. There would be very little culture shock. By way of contrast, If you were to drop me in mainland China, I'd be scared silly. I wouldn't know where to begin.

So what I'm saying is, "entire identity tied up in ethnicity" sounds like an overstatement to me. They seem to have bought wholeheartedly into life as westerners, flavored stylistically by their local ethnicity.

nationmaster.com is supposed to be an authority? They claim that North Korea is the country with the most economic freedom, above Hong Kong, the U.S., and everyone else. If I wanted propaganda, I'd read the Guardian.

The other factor that has not been mentioned so far is working hours. Output per hour worked in the US is about the same as in leading EU countries.

The difference is partly due to longer hours of work per person in the US and partly due to a higher employment/population ratio.

> They claim that North Korea is the country with the most economic freedom, above Hong Kong, the U.S., and everyone else. If I wanted propaganda...

It's not systematic bias, it's just a random piece of garbage data. I have seen other examples of random mistakes in their data, and there's no pattern to it. I get the impression that they hired some minimum-wage worker to type in numbers from the CIA factbook or something.

You guys cry "bias" at the drop of a hat.

Josh Yelon:

I've never been to Scandinavia. But I have been to France, Germany, Belgium, the Netherlands, and the U. K. I lived in Germany for a while. Your dismissal of ethnicity and language as significant social forces in Europe certainly doesn't jibe with my experience there. Would anyone else like to address this?

What you're describing is a kind of Disneyfied Europe where the languages, costumes, and menus change but everything else is exactly the same. I think that's premature to say the least.

My own experience is that ‘ethnicity’ seems to be most closely bound up with language. This is habitually underestimated, especially by Europeans who learn English at school and believe that operating in an English-language country will therefore not pose many difficulties. This might be true at levels where language plays a fairly unimportant role, for instance when one has to cooperate in manual labour. But there where language becomes an important tool, in politics, in academe, at the higher levels of business, non-native speakers of English will soon discover that they remain foreigners.

And this even holds for native speakers of English who come from different nations. Think of George Bernard Shaw’s famous quip about the Americans and the English: two nations divided by a common language.

Of course, native speakers of English who have to deal with a totally foreign language are altogether at sea.

However when it comes to basic things, human emotions, basic notions of fairness and justice, ethnicity is, I believe, fairly unimportant. Anthropology has probably overemphasized the importance of cultural differences. One of the main culprits here was Margaret Mead whose reputation is now a bit tarnished after the Australian anthropologist Derek Freeman (who had a far more thorough knowledge of Samoa than she ever had) published a book in which he argued that her informants about Samoan culture had been pulling her leg and that she had been the victim of a hoax.

Arie Brand

Josh:

Here are some figures that might be somewhat to your purpose:

In a table listing total government outlay as a percentage of GDP in Western type industrialised countries over 1990 - 1999 Sweden ranks at the top with 63.2 and Australia, the USA and Japan are at the bottom with, respectively, 36.6, 36.2 and 35.1 . The mean for all listed countries is 47 %. Source: Rodney Tiffin and Ross Gittins, How Australia Compares, Cambridge University Press, 2004 p.88.

Arie Brand