If Sweden was a U.S. state, how rich would it be? (HINT: Not Very)

The Claremont Institute ^ | December 7, 2004 | Joey Tartakovsky

[Stoat]

If Sweden was a U.S. state, how rich would it be?

 

Two Swedish economists recently published a study that asks how European countries would fare if suddenly admitted into the American union. The results? If the UK, France, or Italy became U.S. states, they would rank as the fifth poorest of the fifty, ahead only of Arkansas, Montana, West Virginia, and Mississippi. The richest EU country—Ireland—would be the 13th poorest. Sweden would be the 6th poorest. In fact, the study found that 40% of all Swedish households would classify as low-income in the U.S.

 

This means that poorer U.S. states enjoy affluence comparable to that of richer European states—Denmark is equivalent to Kentucky—whether measured in terms of home ownership, or number of microwaves and cars possessed. “Material prosperity,” the authors write of the U.S., “is high and not associated with the material standard of living which many people in Europe probably associate with poverty. Good economic development, in other words, results in even poor people being relatively well off.”

 

By the 1880s, the U.S. had become the world’s richest nation (measured in per capita GDP). In the 1990s, U.S. growth was twice that of Europe’s, and three times that of Japan’s. The U.S. per capita income is now 55% higher than the EU-15 average, and 50% higher than Japan’s.

 

Here’s the not-so-secret recipe for achieving European-style stagnation and decline. First, combine high unemployment and aging populations to ensure that welfare costs far exceed worker contributions. Then, stuff with generous entitlements, massive tax burdens, rigid labor markets, and regulation-mad bureaucracies. For flavor, add dashes of socialism and right-wing paternalism. Bake. (For additional recipe ideas, consult Joy of Administrating by Ted Kennedy, or English departments everywhere.)

Joey Tartakovsky is assistant editor of the Claremont Review of Books.

(Here's the study's preface - the entire document is 49 pages)

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

 

[RAY]

Swedish authorities in the southern city of Malmö have been busy with a sudden influx of Muslim immigrants - 90 percent of whom are unemployed and many who are angry and taking it out on the country that took them in. .....one quarter of Malmö's 250,000 population is now Muslim, changing the face and the idea of what it means to be Swedish. Asylum seekers may bring spouses, brothers and grandparents with them. Civil servants say the city is swamped.

Man, this is an old thread! Some of the more objective Swedes have also reported to me the above. However, the same ones think we are not socialistic enough!

Man, this is an old thread!

[Red6]

They're all the same. "We have no poor people in XYZ", "The social conditions are soooo bad in the US", "33 million under poverty line, 35 million uninsured" These are the things you hear. You hear them over and over and over in their state run media.

However, the standard of living in MOST of Europe is noticeably LOWER than MOST of the US. Comparisons are hard to conduct though. What really defines standard of living? Per capita purchasing power after tax? Security provided by the state? Crime? Average life expectancy? What about environment, or even social norms? Individual freedoms? It’s hard to put your finger on it.

It’s arrogant to a European of course if you say the US is good at anything. But the bottom line is that we have to give out green cards by lottery because we have so many more applicants than cards available. You see few Americans emigrating to Europe as a whole. Movement is one way. Per capita incomes are higher but the tax load is significantly lower in the US which makes for the American to have a per capita disposable income WAY higher compared to most Europeans. Personal choice is much greater since people are not forced into a socialized process/system in education, health care, retirement etc.

Having personally seen both systems. Having lived in both places and many years ago working for a short time in Germany under German conditions I personally can not consciously say that I’d prefer their system. You live in a box. A small state owned and controlled box. It’s like Soyent Green or TI1138, only since they have been treated like cattle from childhood and only know this super structured life they don’t feel in a stray jacket living there. In fact many of them can’t understand how the US can succeed as a such decentralized and disorganized ( their perception) nation. They feel insecure in the US because you are responsible for yourself. Something that they are not use to. From birth until death, the state provides in most of Europe.

The danger is that MOST of the people we have coming to America today want the JOBS and the MONEY but still believe in socialism. They don’t like it as much where they’re from but want to make the US more like that place. Makes sense, right? The original immigrants we had were people who wanted less state, less rules. They saw the paradox in BIG state and long term freedom. Today, many Americans do not share the view of the founding fathers and that of the original immigrants to our nation. Culture makes wealth, not wealth culture. I hope the European socialist thought does not rub off on us.

Red6

[Sam Cree]

I don't know that KY is particularly poor these days.

[tomjohn77]

well okay it lives a lot of people in Florida so if you go the right places you find what you want. It is not comparable to my hometown that has around 45000. You must look at per cent.

[tomjohn77]

Agree with you. You see the complexity. Very good post.

[americanbychoice2]

have you ever been to the US?

[tomjohn77]

I have been many places in the US. Lived there for 4 years. I have been to many peoples homes and traveled around.

[tomjohn77]

I have seen good things and bad things. Seen wealthy areas and poor areas. The core problem in this discussion is that most upper middle class people live in separated places from the poor areas and thats why they think everything is perfect in the US. They shut their eyes. But agree upper middle class people live very good

[americanbychoice2]

Like I said before, I have lived in Europe for a total of 34 years, still go there 4 times per year.
I am now retired, I live very well in the US, couldn't live that well anywhere in Europe.
That's from experience, living and working in both places my entire life.

[tomjohn77]

As a good Christian as me. How do you think heaven is going to look. Will there be some people living in palaces and some people living in slums. Do you think Jesus wanted some people to be very rich and some poor. My point is no system is perfect, but socialism is not right either compare to what the bible preaches.

[americanbychoice2]

I am an agnostic, meaning that there has to be a supreme being to create the Universe , it didn't just happen.
I don't accept each religion's focus on their individual belief. ( An old bearded man, a prophet who must be obeyed, etc.
Religion is in our own hearts and minds and very private.

[tomjohn77]

Well I am religous and trying my best to not look down on anybody. Not warship anybody, but God. Seems like to many people warship the people that are billionars. Its a side track from Christianity. Its like the Jews that started to warship the Golden calf in the middle of the desert when they fleed from the pharao. In the end wealth in this life will not matter. When we are all equal in Heaven

[americanbychoice2]

with the exception of those who go the other way?

[Nataku X]

How do you think heaven is going to look.

Actually, the Bible is quite clear that there will be degrees of rewards in Heaven. Everyone will be happy, but by no means will everyone be rewarded equally.

[tomjohn77]

are you a mormon.

[Age of Reason]

Wealth should be measured in the economic price of freedom and the price of the best things in life:

Freedom
Manly men
Beautiful, chaste, and submissive Women
An abundance of cheap prime real estate (low population density and a hospitable climate)
Financial Security and Safety
Plenty of healthy and affordable food
Health
A low degree of paperwork.

The rest is worthless.

[tomjohn77]

I agree.

[Nataku X]

No, a Christian. Here's one of the many passages showing that heaven isn't equal for everyone.

1 Corinthians 3:10-15

By the grace God has given me, I laid a foundation as an expert builder, and someone else is building on it. But each one should be careful how he builds. For no one can lay any foundation other than the one already laid, which is Jesus Christ. If any man builds on this foundation using gold, silver, costly stones, wood, hay or straw, his work will be shown for what it is, because the Day will bring it to light. It will be revealed with fire, and the fire will test the quality of each man's work. If what he has built survives, he will receive his reward. If it is burned up, he will suffer loss; he himself will be saved, but only as one escaping through the flames.

[Nataku X]

Also see Matthew 5:19

Anyone who breaks one of the least of these commandments and teaches others to do the same will be called least in the kingdom of heaven, but whoever practices and teaches these commands will be called great in the kingdom of heaven.