This is What Equality Looks Like
Not that this will come as shocking news to anyone, but income in Finland is distributed much more equally than in the United States:
The difference is especially pronounced at the very top and at the bottom. The richest ten percent of Americans take a much larger share of income than do the richest ten percent of Finns. Meanwhile, the bottom twenty percent of Finns get a much larger share of income than do the bottom twenty percent of Americans. But of course everyone knows that the rich need money more than the poor, so the American system is fairer. Plus our way is worse for the middle sixty percent, too, but pointing that out would be class warfare and your populism would be sneered at by media celebrities whose incomes are all in the top twenty.
Meanwhile, note that an egalitarian social and economic environment actually hits the rich coming and going. Not only are Finland’s rich poorer than their American compatriots, but the relatively non-desperate state of the Finnish poor means that prices are higher than in the US for the sort of labor-intensive personal services that are primarily consumed by the prosperous. A tourist will note that restaurants are relatively expensive, but the same principle would carry over to maids and nannies and so forth.
47 Responses to “This is What Equality Looks Like”
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December 14th, 2008 at 8:28 am
I hope Obama sees this and isn’t scare doff by the whole plumber flap. This is the direction the U.S. needs to go..
http://www.sunstateactivist.org/ssablog/
December 14th, 2008 at 8:39 am
I’m surprised the margins are so small. Yes, I know they’re significant, but the graphic isn’t striking at all.
December 14th, 2008 at 8:47 am
And if the US had Finland’s immigration profile, the US would look more like Finland.
“prices are higher than in the US for the sort of labor-intensive personal services that are primarily consumed by the prosperous. A tourist will note that restaurants are relatively expensive, but the same principle would carry over to maids and nannies and so forth.”
And the best way to drive up wage rates for maids and nannies and so forth is to reduce . . . what? And enforce . . . what?
December 14th, 2008 at 9:08 am
Interesting – I would have expected the difference to be more pronounced.
What’s also interesting is in absolute terms, the bottom 10% in the US take home more than the bottom 10% in Finland (see, for instance, graph 8D here). When you say ‘our way is worse for the middle sixty percent,’ you might want to make it clear that you’re speaking in relative terms – it’s absolutely not obvious to me that I’d prefer to be in a situation where I earn less income absolutely but earn more relative to the top 10%.
December 14th, 2008 at 9:16 am
I wish this graphic had also shown the top 1% and the top 0.1% of the US and Finnish income distributions — I suspect that this is where the differences might have *really* become apparent.
December 14th, 2008 at 9:20 am
Wow. Besides the meaningless populism reference this post could easily be written to justify US income inequality. You could say while our middle 60% are slightly less relatively wealthy (relative to the rich) they are much wealthier than Finland’s middle 60%.
Don’t believe me do the math. US GDP per person is 30% higher. The Finland’s middle sixty have only at most 10% more relative income. Is it still better to engage in populism and class warfare?
And you last paragraph just shows how disingenuous Matt really is. Consumer prices (disproportionately consumed by the middle) have been falling in the US for years. Actually when you include different marginal propensities to consume and inflation rates by different types of goods it eliminates most of this inequality.
Of course it isn’t really about how well-off anyone is it is about what is morally fair. And income inequality isn’t morally fair (or something like that).
December 14th, 2008 at 9:31 am
I forgot to mention:
Assuming US middle 60% earns 47.5% of GDP and Finlan’s earn 52.5%
Income for this group adjusted for PPP is
36,500 versus 30,500.
Of course Finland’s total GDP includes much more useless government spending that distorts their true welfare.
December 14th, 2008 at 9:47 am
While we are blessed with a government which uses each cent wisely.
December 14th, 2008 at 9:48 am
While we are blessed with a government which uses every cent wisely.
December 14th, 2008 at 9:50 am
(curses wordpress under his breath)
December 14th, 2008 at 10:19 am
Don’t believe me do the math. US GDP per person is 30% higher. The Finland’s middle sixty have only at most 10% more relative income. Is it still better to engage in populism and class warfare?
Yes, yes, Finland is only as rich as the UK but if it stopped providing useless government services and allowed its inequality to boom to U.S. levels then it would be as rich as Norway and Ireland who don’t go in for all that socialist nonsense [/libertarian claptrap]
December 14th, 2008 at 10:22 am
I agree with Rich. I am surprised that the margin of difference between the US and Finland is as narrow as it is. I was expecting a straight line across Finland (well, sort of).
Obviously there are a lot of governmental initiatives that you could point to try explain the difference, but one factor that easily stands out is population size. Finland has roughly 5 million people whereas the US has 300 million. The US is also much less homogeneous than Finland, where roughly 98% are either Finnish (93%) or Swedish (5%)… We may have less relative wage distribution amongst our population simply because we are a more complicated, “economies of scale” society.
For Finland, the social welfare state may have been one necessary factor in the bargain to accept international capital markets (and as a consequence capitalism generally) in the first place (see Peter J. Katzenstein’s Small States in World Markets (1985) who explains the development of democratic corporatism as arising out of the European interwar years.).
December 14th, 2008 at 10:24 am
When the rich can hire cheap servants, income translates as power. It’s not just having nice things, you have people obeying you and doing things for you.
It can be argued is that’s what wealth always is, of course, the ability to have people do things for you. But in a master-servant relationship, even though hiring is through the market, the relationship is pretty explicit.
For example, a lot of nannies, nursemaids, and babysitters also have kids of their own to take care of.
December 14th, 2008 at 10:34 am
You also have to remember that the differences are less striking because Americans work more hours. We work more than just about any other nation on earth, meanwhile the French have a higher labor productivity per hour than us. Add in the fact that the Finnish middle class gets to take advantage of greater social services than the American middle class and the picture becomes more interesting.
December 14th, 2008 at 10:56 am
The changing demographics of the U.S. will increase the differences between the U.S. and Finland. AS the bottom half of the U.S. becomes virtually all non-white, it will be much harder to change positions. Also, as the U.S. becomes more non-white, the per capita GDP differences will probably also shrink between Finland and the U.S.
December 14th, 2008 at 11:07 am
US GDP per person is 30% higher.
And since 30% of our GDP consists of defense and “financial services”, I think this metric might not be as impressive as you think it is.
December 14th, 2008 at 11:25 am
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December 14th, 2008 at 12:02 pm
Let’s send some of the illegal immigrants who come to the U.S. every year (and bring little education, assets. or skills with them) to Finland and update the graphic 10 years down the road.
December 14th, 2008 at 12:22 pm
I forgot to mention the most obvious thing- this isn’t what equality looks like, because it’s not equality. It’s what less-unequal looks like.
December 14th, 2008 at 2:17 pm
And if the US had Finland’s immigration profile, the US would look more like Finland.
Oh, Finland would look very different. We today have official job discrimination in favour of immigrants (discrimination that conveniently attacks the poor and the working class but has no effect on professors of Finnish literature and other elite liberal professions), official discrimination in favour of immigrants in public health care (discrimination that conveniently attacks the poor and the working class but has no effect on those wealthy enough to use private health care) and official discrimination in favour of immigrants in public housing (discrimination that conveniently attacks the poor… you know the drill).
The result? There are thousands of homeless Finns in Helsinki alone. Not one immigrant or refugee among them. As a monument to the monumental failure of the welfare state, thousands of Finns line up at churches for bread just to survive. Not one immigrant or refugee among them. This is despite our policy of importing illiterates who have no chance of ever getting a job in Finland. Not one of them is in danger of ever going hungry or homeless in Finland.
All this while the economy stands on the verge of an abyss.
Are we going to hear about this national scandal, about the hottest political topic in the country right now? Of course not. In some years, you will all get to read from the New York Times that another European country has elected a new Hitler, but sure, until then all we’ll hear from American liberals is glowing reviews of the awesome welfare state.
December 14th, 2008 at 2:54 pm
What jumps out at me from this bar graph is that in both countries we have a skewed distribution, not a bell curve: a large hump in the middle (which one would expect) but then a smaller hump at the rich end.
What accounts for this apparent bottleneck at the 4th quintile?
December 14th, 2008 at 3:46 pm
JonF,
Well, you’ve got to remember that the middle bar actually represents six deciles. I don’t know who designed the graph, but it’s seriously misleading as it doesn’t divide the spectrum into evenly sized quantiles. If you did that, then it would look nothing like a bell curve at all, but more like an exponential distribution: the richest people have the biggest share relative to their size (by definition) and so on.
December 14th, 2008 at 4:07 pm
I like how Matt bases an entire post of very trivial differences in shares of income. It looks like the top 10% in the US earn 30% of the national income, while in Finland, it’s 20%. It’s hard to tell. The next 10% is at par, and the middle 60% are within a few percentage points of each other too. And as others have pointed out, the bottom 10% in the US are basically illegal immigrants. To Matt and liberals generally, this is a measure of shocking degrees of inequality in the US for which we need to drastically reorder our system of social welfare. Oh, and tax more. Always tax more.
December 14th, 2008 at 4:43 pm
Income differences have grown rapidly in Finland in the aftermath of the deep recession in the early 1990s. For example, in 1995 the top one percent earned about 3.5 percent of the total income of all Finns, whereas in 2005 it earned 7 percent of the total. In America, the figure is about 20.
December 14th, 2008 at 6:08 pm
So, Matt, I look forward to your calls for a crackdown on immigration so America can become more like Finland in terms of equality.
December 14th, 2008 at 7:42 pm
The richest ten percent of Americans take a much larger share of income than do the richest ten percent of Finns
This is our main problem. The richest in the country are insatiably greedy and have a overblown sense of entitlement bordering of the pathological. Until their wealth and power is reduced substantially our society will not be able to move forward as we need to.
December 15th, 2008 at 2:20 pm
what is obscured by the graph is that the real inequality in the United States is the top 1% or even 0.1%. if these categories had been used, the disparities would have been much greater.
December 15th, 2008 at 4:06 pm
sdel
December 16th, 2008 at 8:23 pm
In this time of high unemployment and overpopulation, it is crucial to start shutting down immigration. Both legal and illegal immigration should be eliminated.
December 21st, 2008 at 4:25 pm
Ok, those who want to explain some of the differences as due to low immigration in Finland… how do you explain Sweden, the poster boy for mass immigration and social democratic equality?
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