An article in Canada’s leading conservative rag about the purported failure of the Swedish model led me, once again, to comparing data from Sweden to data from the US. First, just to get this out of the way, Sweden has a higher workforce participation rate than the US.
More importantly, the staggering income inequality in the US compared with Sweden’s relative equality means that the American poor are far, far worse off than the Swedish poor, and have been so for decades. The USA’s GDP per capita is just more than a third higher than this of Sweden, $43,500 versus $31,600. But in the US, the bottom quintile’s share of aggregate income was 3.6% in 1999 and is trending down, compared with 3.9% for the Swedish bottom decile in 2004 and an additional 6% for the second decile.
In other words, assuming that aggregate income has the same share of GDP in the US and Sweden, an assumption that probably works in the USA’s favor, the Swedish bottom quintile has twice as much income as the American one. And that doesn’t count the fact the Swedish poor get free health care.
What’s more, the US has always been like that, despite populist claims that it was better in the 1960s and 70s. The share of the American bottom quintile peaked at 4.4% in the mid-70s; the share of the Swedish bottom quintile bottomed at 9.4% in 2000, a year of high capital gains.