Tim Worstall over at TSC Daily posted a very interesting article today dealing with prosperity — namely, how our American prosperity stacks up to that of other European countries. Since this article deals with economics, and since I know some of you break out in hives at the mere mention of economics, I have a cute Easter Ferret for your viewing pleasure. Feel free to skip the rest of this post.
Worstall’s article is titled, “America: More Like Sweden Than You Thought,” and it is an interesting read for an economic article. He begins by discussing a, uh, “fun” economic paper which he recently read that extols the virtues of Europe, especially the Scandinavian countries. He writes:
I will admit that I do find it odd the way that only certain parts of the, say, Swedish, “miracle” are held up as ideas for us to copy. Wouldn’t it be interesting if we were urged to adopt some other Swedish policies? Abolish inheritance tax (Sweden doesn’t have one), have a pure voucher scheme to pay for the education system (as Sweden does), do not have a national minimum wage (as Sweden does not) and most certainly do not run the health system as a national monolith (as Sweden again does not). But then those policies don’t accord with the liberal and progressive ideas in the USA so perhaps their being glossed over is understandable, eh?
As part of their propagandizing, they produce the above cited reports each year. And this time it’s being released chapter by chapter in the lead up to Labor Day. I can tell you that policy wonks are breathless with anticipation waiting for each part as it comes out (I myself was most excited to get chapter 8 linked above). For there is the great joy of seeing that what they think they’re telling us isn’t, in fact, quite what they are telling us.
People with an agenda? Say it ain’t so! While there is some very good news pointed out in the article that Worstall analyzes, there is also a very telling graph.
This graph is based off the Purchasing Power Parity, a means of calculating the diverse prices and salaries of all these nations in a way that makes them roughly comparable. What the writers of the article want you to notice first is that seemingly huge gap between the rich and poor in the United States. But my wife didn’t see that when I showed her the graph. Instead she noticed right away that the top 10% of wage earners in Finland and Sweden only make 111% and 113% of the median income, respectively. She noticed this because her Great-Uncle Kurt, who lives in Sweden and worked for an international insurance company for many years, had 90% of his income taxed away to support other able-bodied Swedes who simply chose not to work. And this is something we should emulate? I don’t think so! Worstall wraps up his column by analyzing the left side of the graph.
In the USA the poor get 39% of the US median income and in Finland (and Sweden) the poor get 38% of the US median income. It’s not worth quibbling over 1% so let’s take it as read that the poor in America have exactly the same standard of living as the poor in Finland (and Sweden). Which is really a rather revealing number don’t you think? All those punitive tax rates, all that redistribution, that blessed egalitarianism, the flatter distribution of income, leads to a change in the living standards of the poor of precisely … nothing.
Such may lead us to a conclusion that the EPI probably wouldn’t like:
If we accept (as I do) that we do, indeed, need to have a social safety net, and that we have a duty to provide for those incapable or unlucky enough to be unable to do so for themselves, we need to set some level at which such help is offered. The standard of living of the poor in a redistributionist paradise like Finland (or Sweden) seems a fair enough number to use and the USA provides exactly that. Good, the problem’s solved. We’ve provided — both through the structure of the economy and the various forms of taxation and benefits precisely what we should be — an acceptable baseline income for the poor. No further redistribution is necessary and we can carry on with the current tax rates and policies which seem, as this report shows, to be increasing US incomes faster than those in other countries and boosting productivity faster as well.
As I said above I’m sure this isn’t quite what the EPI actually wanted to tell us. But there it is, from their own report. Which is why I rather enjoy my working life — sad case that I am — because I get to read all those reports that really don’t tell us what the authors think they are telling us.
Go read the whole thing. And the next time someone tells you we should be more like Europe, you can point out to them that we care for our poor and downtrodden masses just as effectively as they do, and we don’t have to tax ourselves into an economic slump to do it. No nation has ever taxed itself into prosperity. If they can’t accept that truth, it’s probably a lost cause. Just have them check out the cute Easter Ferret instead.