Economic laissez faire apologists seethe whenever Paul Krugman engages them with facts. He must be on to something, because the conservative blogosphere feels the need to counter his every utterance. His latest piece in the New York Times Magazine, about income inequality, has a long but interesting take on the differences in wealth distribution between the US and Sweden:
A few months ago the conservative cyberpundit Glenn Reynolds made a splash when he pointed out that Sweden’s G.D.P. per capita is roughly comparable with that of Mississippi — see, those foolish believers in the welfare state have impoverished themselves! Presumably he assumed that this means that the typical Swede is as poor as the typical resident of Mississippi, and therefore much worse off than the typical American.
But life expectancy in Sweden is about three years higher than that of the U.S. Infant mortality is half the U.S. level, and less than a third the rate in Mississippi. Functional illiteracy is much less common than in the U.S.
How is this possible? One answer is that G.D.P. per capita is in some ways a misleading measure. Swedes take longer vacations than Americans, so they work fewer hours per year. That’s a choice, not a failure of economic performance. Real G.D.P. per hour worked is 16 percent lower than in the United States, which makes Swedish productivity about the same as Canada’s.
But the main point is that though Sweden may have lower average income than the United States, that’s mainly because our rich are so much richer. The median Swedish family has a standard of living roughly comparable with that of the median U.S. family: wages are if anything higher in Sweden, and a higher tax burden is offset by public provision of health care and generally better public services. And as you move further down the income distribution, Swedish living standards are way ahead of those in the U.S. Swedish families with children that are at the 10th percentile — poorer than 90 percent of the population — have incomes 60 percent higher than their U.S. counterparts. And very few people in Sweden experience the deep poverty that is all too common in the United States. One measure: in 1994 only 6 percent of Swedes lived on less than $11 per day, compared with 14 percent in the U.S.
The moral of this comparison is that even if you think that America’s high levels of inequality are the price of our high level of national income, it’s not at all clear that this price is worth paying. The reason conservatives engage in bouts of Sweden-bashing is that they want to convince us that there is no tradeoff between economic efficiency and equity — that if you try to take from the rich and give to the poor, you actually make everyone worse off.
And yet, I have already heard here in Sweden about one person’s 38-year old roommate, a “teacher”, who hasn’t had a real job his entire life because he hasn’t found exactly what he is looking for, career-wise. Meanwhile, he gets unemployment benefits. It is clear to me that what this guy needs is a good dose of New York style ‘work-fare’, where he gets a uniform and a brush and a street to sweep in return for his check. My guess is he’d be teaching by next week.
So Krugman’s last paragraph puzzles me. Surely, liberals can concede that a society with higher income redistribution does suffer from a less efficient engine for economic growth. Such a society will also have a more equitable distribution of wealth, however. What liberals and conservatives can disagree on is the value of this equity to society. Both extremes are discredited: In a society that values equity above all else, everybody will be equally dirt poor–witness communism. And a society with unbridled capitalism is in danger of succumbing to crime and unrest–witness post-communism. Anybody who’s ever played Civilization knows this in their bones.
So the ideal society lies somewhere in the middle. And it clear to me that different societies can legitimately differ as to where that middle is, depending on how much they value equity. So perhaps the Swedish model and the American model are both uniquely adapted to their respective national dispostions.
[Sat, Oct 19 2002 – 18:21] Matthew (email) i hate to spoil the fun, but many people, including many economists who haven’t ruined their reputations by becoming bad pundits, have been having a go at krugman because he’s been getting a lot of stuff badly wrong. basic factual errors and misrepresentations: the least of which was citing as fact a damning email supposedly written by an ex-enron bush government official which has been widely discredited.
[Sat, Oct 19 2002 – 18:22] Matthew (email) that’s to say, it’s not just the conservative blogosphere.
[Sun, Oct 20 2002 – 18:58] Matthew and, now i’ve actually read it, i’m even more astounded you’d link to this pile of poo. please see my more detailed comments at wwww.krugmanisamoron.com
[Mon, Oct 21 2002 – 08:09] eurof (email) Bad Krugman, naughty Krugman (whoever he is). Hooray for the not just conservative blogosphere for unmasking Krugman’s hypocrisy and confusion.
But just because someone stupid wrote something doesn’t mean it’s necessarily wrong. When one of an infinite number of typewriting chimpanzees knocks out shakespeare’s sonnets, it doesn’t mean the sonnets aren’t beautiful just because they was written by a chimpanzee. Similarly I have not laughed at many of the articles you used to write for the WSJ.
Lazy Matthew, you have to say why you think the article is wrong. It sounded OK to me, sort of febrile, but arguable. You just don’t WANT it to be right, for some reason other than to do with the argumentation. Ask yourself why not.
[Mon, Oct 21 2002 – 09:54] eurof (email) it’s obviously because you have opinions. they make you thick.
[Mon, Oct 21 2002 – 10:18] Stefan (email) Has any of you actually read past the first graph? I actually take issue with some of Krugman’s arguments.
[Mon, Oct 21 2002 – 11:49] eurof (email) Be quiet stefan. The world doesn’t revolve around you, you know!
[Mon, Oct 21 2002 – 12:17] Charles Kenny (www) (email) But what if it did. Then Stefan would be a big blob of molten iron. And Stefan, just like his ideal society, would be somewhere in the middle.
And talking of which, Stefan, if your last lines are not meant to be parody, you should have watched Spitting Image in the 1980s, where the line ‘neither left, nor right, but somewhere in between’ was the catch-phrase for the Liberal puppet. Which is what you are –a wussy mishy mashy liberal puppet of the evil capitalist WSJ types.
(Obviously the WSJ types who contribute regulalry to this page and their spouses are excepted, apart from the capitalist and possibly the evil (in a road to hell is paved with good intentions kind of way) part.)
Inequality like there is in the ‘States is not acceptable. Policies that lower inequality have not been shown to lead to lower growth in any way that’s half way acceptable (don’t believe me? Perhaps you’ll believe the IMF: Tanzi, V. and H. Zee, (1996), Fiscal Policy and Long-Run Growth, IMF Working Paper, 96/119), and existing inequality, if anything is itself *bad* for growth (oh, and for crime rates and health outcomes and even, dare I say, self-reported happiness). So stop being a wussy apologist, celebrate your newfound sweedishness, and embrace the welfare state.
[Mon, Oct 21 2002 – 12:21] Charles Kenny (www) (email) Oh, and PS, Matthew’s right, Krugman’s chock full o’ shite.
[Mon, Oct 21 2002 – 12:21] Charles Kenny (www) (email) Oh, and PS, Matthew’s right, Krugman’s chock full o’ shite.
[Tue, Oct 22 2002 – 19:30] Felix (www) (email) Stefan says, without any supporting documentation, that “Surely, liberals can concede that a society with higher income redistribution does suffer from a less efficient engine for economic growth.” (Oh, he has a supporting anecdote about a teacher who isn’t teaching.) Charles Kenny gives some supporting documentation for his assertion that in fact there’s really no correlation at all. I can certainly see how redistribution could take lazy money from the uber-wealthy and give it to more ambitious people lower down the economic ladder who will make more productive use of it.
[Tue, Oct 22 2002 – 20:11] Matthew (email) didn’t need supporting evidence. was so annoyed that the times gave over so much space to so much crapola that i was spluttering as i was typing, which didn’t really come across too well, but kind of obviated the need to provide supporting evidence for my outrage.
opinions don’t make you thick; they make you strong
[Tue, Oct 22 2002 – 21:10] Felix (www) (email) I’m sorry, I’m rather busy at the moment, and unable (or maybe just unwilling) to scour the conservative blogosphere. Can someone point me to a right-wing (or, indeed, any other) rebuttal of the Krugman article?
[Wed, Oct 23 2002 – 08:27] eurof (email) let me summarise. ceteris paribus, a society where there is less envy sounds like it would be a happier one, because there would be less crime and stuff (thinks krugman). however, i also understand that people need to be incentivised to invent mobile phones and stuff, so you want to be able to reward people for being clever and doing clever things (thinks the not just conservative blog-o-sphere). So: a) over time, the less envious but innovative society will become more unequal, which is potentially bad, but b) redistributive policies would upset the structures of rewards for innovation, which could be bad too, so we don’t know what to do, really. so c) we should do nothing, but that might be bad too, goto a), oh dear.
but please, carry on jerking off and having your circular little conversations. can someone please tell about this danii thing? are we talking about danii minogue here?
[Wed, Oct 23 2002 – 23:52] Felix (www) (email) Thanks Eurof, but I was looking more for any attempt to show that Krugman’s got his sums wrong, that in fact the US isn’t vastly more inequal now than it was 20 or 40 years ago. After all, Krugman says in his article that whenever he or anybody else says such things, they immediately get “debunked” by right-wingers. I was looking for a “Krugman’s wrong” response, rather than a “Krugman’s right about the inequality and a bloody good thing it is too” response.
[Thu, Oct 24 2002 – 10:37] eurof (email) oh no, felix, i wasn’t trying to help, but rather point out the uselessness of worrying about the whole thing; that both of the approaches to the issue of inequality, coming from right and left, are deeply problematic, that we are unlikely to be able to do anything about it but isn’t it a shame, and to ask about a porn site.
[Thu, Oct 24 2002 – 14:11] Felix (www) (email) Well, thanks for not helping, then. You’re right in the sense that most major secular trends (increasing inequality, global warming, decreasing amounts of hair atop Stefan’s head) we can do nothing about and therefore to a certain extent aren’t worth worrying about. I just wondered whether anybody took issue with Krugman’s diagnosis “ that we are indeed living in an unequal society the likes of which has not been seen since the 1920s, and which is only going to get worse.
[Thu, Oct 24 2002 – 23:17] Matthew (email) instapundit.com; kausfiles.com (now on slate) and andrewsullivan.com have provided a lot of rebuttal. no particular links, but you’ll be able to search for it prettty easily.
warning to welshmen paralysed by an inability to process information: these sites contain OPINIONS.
[Thu, Oct 24 2002 – 23:28] Matthew (email) here’s one: http://arnoldkling.com/gqe/arch31.html#306
[Fri, Oct 25 2002 – 10:21] Felix (www) (email) Which doesn’t seem to refute Krugman at all. For one thing, it goes back to the old “quintiles” — which are far too rough-grained to really pick up the new plutocracy. For another thing, it puts to one side questions of inequality in favour of questions about whether the poor are getting richer. One can disagree about whether the poor are getting richer, but that’s kinda beside the point of the Krugman article, which is whether there’s vastly more inequality in the US now than there was a generation ago. And where does Krugman claim that we are losing the middle class?