Day 265 –Fundamental difference between the U.S and Sweden

Far be it for me to turn over the keeping of this blog to someone else but I saw this article today and it relates to one of the things I wanted to communicate here, namely what makes America different from Sweden, or vice versa. This article from Mother Jones magazine reports on an interesting study undertaken by a Harvard professor and an economist about why Americans tend to vote against their own better interests.

It also points out what I felt a couple summers ago here in Sweden while talking to a lifeguard at our local swimming area. It was an unbelievably beautiful summer morning and I was chatting with the twenty-something lifeguard about nothing more significant than the weather when it dawned on me that 99% of all Americans would trade what their government provides them for what the Swedish government provides for its citizens. Today I find out that my assessment was correct and that 92% of those participating in the study chose a wealth/income distribution model that exists in Sweden.

Here is the article complete with charts (sorry that you have to slide the bar across the bottom to read the full width of the text):

You’ll see this question posed on talk shows and in blog post comments: why do Americans vote in a way that is contrary to economic self-interest? Why do Americans support policies that shift capital to the richest one percent of the population?

Some think it’s the myth of American individualism: that anyone can be a billionaire – just work hard and riches will be yours. Malcolm Gladwell shut the door on that myth with his book, Outliers, but most Americans don’t read.

Wealth InequalityAmericans Wear Blinders: Comparison Of Actual V Perceived Distribution Of Wealth In The United States
Source Mother Jones

Mother Jones (March-April 2011 issue) has pulled together “eight charts that explain everything that’s wrong with America.”

Seeing this chart — the difference between perception, preference and actual wealth distribution — was like having my head slammed up against a car door. The chart is derived from research conducted (pdf) by Michael L. Norton (Harvard Business School) and Dan Ariely (Duke University) for Perspectives on Psychological Science. The authors note that most scholars peg wealth inequality in the U.S. at historic highs, greater than the roaring 20s; the estimate was that the top 1% hold almost 50% of the nation’s wealth.

Their nationally representative sample of 5,522 (December 2005) began with a recap of what wealth means:

Wealth, also known as net worth, is defined as the total value of everything someone owns minus any debt that he or she owes. A person’s net worth includes his or her bank account savings plus the value of other things such as property, stocks, bonds, art, collections, etc., minus the value of things like loans and mortgages.

wealth inequalityRespondents Preferred Sweden – How About You?

And then the researchers asked what they considered a “just” distribution of wealth. When faced with three unlabled pie charts, one “perfectly equal”, one representing wealth distribution in the the US and one the distribution in Sweden, 92% of the respondents preferred Sweden. This preference crossed party lines and gender. Look at the three charts and you will understand why.

Next task: draw the perfect distribution and the one that you think represents the U.S. today. The respondents understood that America was not Sweden, they simply had no idea that the top quintile (20%) of Americans control the vast majority of the nation’s wealth:

[R]espondents vastly underestimated the actual level of wealth inequality in the United States, believing that the wealthiest quintile held about 59% of the wealth when the actual number is closer to 84%.

I’d like to know how they thought wealth was distributed inside the top quintile. The top 5% holds more than half the nation’s wealth.

In picturing the ideal wealth distribution, party affiliation did play a role: “women, Kerry voters, and the poor desired relatively more equal distributions than their counterparts.” However, the researchers note that the more “striking” finding was the level of consensus:

All groups – even the wealthiest respondents – desired a more equal distribution of wealth than what they estimated the current United States level to be, while all groups also desired some inequality – even the poorest respondents. In addition, all groups agreed that such redistribution should take the form of moving wealth from the top quintile to the bottom three quintiles.

These charts and the others featured at Mother Jones reveal basic economic inequality, inequality that helps explain why the United States ranks in the bottom third on the world’s list of countries by income inequality, based upon the Genie coefficient (excluding countries with no Genie coefficient). [Yes, I know that wealth inequality and income inequality are not the same thing. But the former rests soundly upon the latter.]

What is the Genie coefficient? Based on mathematical analysis from the early 20th century, it is a measure of the inequality of a distribution — any distribution. It has been criticized because it measures income, not returns on investment or food stamps. For most advanced economies, the Gini coefficient for income is pretty low: Sweden, for example, is 0.23; the European Union is 0.307. The United States is 0.45 (2007 data).

And income inequality is real, too. Here are some numbers from the Institute for Policy Studies:

  • Percentage of U.S. total income in 1976 that went to the top 1% of    American households: 8.9.
  • Percentage in 2007: 23.5
  • Only other year since 1913 that the top 1 percent’s share was that high: 1928
  • Combined net worth of the Forbes 400 wealthiest Americans in 2007: $1.5 trillion
  • Combined net worth of the poorest 50% of American households: $1.6 trillion

If you can’t see the inequality, if the picture you hold in your mind is so vastly different from reality, then it should be no surprise when you vote against your own economic self-interest.

–end of article–

I have done a lot of blog posts pointing out differences between the two countries such as the Swedish penchant for sing alongs or the ubiquity of soccer on television, but this article here gets to the heart of a much more fundamental difference. Now, WHY that difference exists, I don’t yet have a hold on. I notice, however, that as this is Day 265, I am 100 days (101 actually since it is a Leap Year) away from finishing this little project and I really hope I can understand it by that time. I would hate to end the blog with a big “I dunno.”

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4 thoughts on “Day 265 –Fundamental difference between the U.S and Sweden

  1. Well Dan, I think you are sort of narrowing the target. This was very informative but Mother Jones does not venture a guess at HOW the american public are so easily bam-boozeled by the top of the heap. Maybe it’s the planning of the “BANKSTERS” prior to setting up and implementing the Great Depression. I have no idea. The one thing I do know is when I talk to people about the differences between Sweden and the US the primary response is a sort of “my mind’s made-up don’t try to confuse me with the facts”
    attitude and frequently I hear “So, why are you still here, get the hell to and go to Sweden.” There’s a solid fixed Idea at play. For me, I see a huge difference in the attitudes of the Swedes, I met when there and most the folk’s I know here, as to their dynamic as a nation. Here, the majority seem to be so fixated on what scraps can I get from the government, that they can’t see the rivers of funds flowing to the top 20%.

    • Pete, Good point. I think America has set the bar for IQ (Ignorance Quotient) and smarter people can get away with anything with they are dealing with ignorant folks. Not that there are not such people everywhere but the more powerful the country, the greater the responsibility not to be ignorant about the power at one’s control.

      • I think it was Thomas Jefferson who said something about how important it is for the people that make up the country to be educated in-order to preserve the basis of the Preamble and the Articles of the Constitution and not be taken advantage of by the governing body. He also advocated that the people must have the right to arm themselves, so as to able to revolt every few years to protect themselves from the government

        Just based on that one point of truth of education, education became the target and the current product of the US education world is a functionally illiterate society that can’t correctly think. And currently the stock of Smith and Weston Holding Company has been steadily climbing since Obama got into office…

        I actual fact I think it would take the most disciplined evaluator with access to any resources they need/want to figure the scene out with a correct why.

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