Friday, November 02, 2007

Comment of the Day; No, Comment of the Month!

From the Hispanic Pundit, in response to this CD post "Our Poor Are the Envy of the World's Poor:"

At the risk of over-generalizing, there are two views to poverty alleviation: there is the approach of the "left," which tends to champion direct government involvement (welfare, etc.), and there is the approach of the "right," which tends to champion economic growth.

The problem is, the two approaches tend to be mutually exclusive. To get more government involvement, you need higher taxes and an increase in the size of government....two things that greatly harm economic growth. So in effect you have a trade off and a disagreement over which poverty solution is better - direct immediate alleviation, though one that may dramatically change incentives and behavioral patterns along with decreased economic growth, or you have the long term solution that increases economic growth and significantly increases the standard of living over time.

Comparing the standard of living from an earlier era shows in stark contrast the very real gains that economic growth produces, and how overwhelmingly larger they are than any immediate government program can possibly achieve. The same is true when you compare the standard of living in the United States (arguably the most capitalist country in the world) with the standard of living of other less capitalist countries.

Comparisons that show the significant gains from economic growth explain why the left avoids making such comparisons.


At 11/02/2007 8:14 AM, Anonymous Anonymous said...

"compare the standard of living in the United States (arguably the most capitalist country in the world) with the standard of living of other less capitalist countries."

You mean, like Sweden?

At 11/02/2007 8:59 AM, Anonymous Anonymous said...

"Our Poor Are the Envy of the World's Poor:"

I feel better already.

At 11/02/2007 1:42 PM, Anonymous Anonymous said...

"To get more government involvement, you need higher taxes and an increase in the size of government....two things that greatly harm economic growth."

Like defense spending.

At 11/02/2007 1:57 PM, Blogger HispanicPundit said...

Thanks for the vote CD!


Sweden has an unemployment rate close to 15% and when you compare that to the near 4% of the United States I say the United States wins hands down. Especially from my perspective, being a minority, the unemployment rate falls most heavily on us (which, btw, Sweden helps hide by having low levels of immigration, another strike against them IMO).

At 11/02/2007 2:24 PM, Anonymous Anonymous said...

Well Sweden is poorer than the US. And also your cherry picking the less capitalist countries to select Sweden. There are lots of poorer countries than Sweden in that "less capitalist" group.


Also see this information -

"Two Swedish economists recently published a study that asks how European countries would fare if suddenly admitted into the American union. The results? If the UK, France, or Italy became U.S. states, they would rank as the fifth poorest of the fifty, ahead only of Arkansas, Montana, West Virginia, and Mississippi. The richest EU country—Ireland—would be the 13th poorest. Sweden would be the 6th poorest. In fact, the study found that 40% of all Swedish households would classify as low-income in the U.S..."


At 11/02/2007 2:48 PM, Anonymous Anonymous said...

hispanicpundit and Tim -

Of the OECD countries, the U.S. has the highest inequality of disposable income (Atkinson et al, OECD, 1995)

Sweden's intergenerational income mobility is vastly greater than ours (Bjorklund and Jantti, AER 1997).

Overall quality of life is higher there as well: Swedebm ranked 5th in worldwide QOL index; United States 13th (despite being ranked second in PPP-adjusted per person GDP, at over $10,000 more per person than Sweden).

So, if I have to be born poor, I'd rather be a poor Swede than a poor American.

At 11/02/2007 2:48 PM, Anonymous Anonymous said...

BTW -- source for the QOL rankings is from the Economist magazine:

At 11/02/2007 9:32 PM, Blogger HispanicPundit said...

Why should anybody care about income inequality? Why is that important? To exaggerate my point, communist countries probably had very low levels of income inequality, but I wouldn't consider them a preferred destination. In addition, the United States has an overwhelmingly larger amount of rich people, and that alone could account for much of the income inequality (again, assuming inequality matters - an assumption I don't hold).

More importantly though, as I said in my previous post, Sweden lets in far fewer immigrants - especially poor immigrants - than the United States does. This alone could account for much of the difference in inequality, mobility, and other factors touted by the Sweden apologists.

That is not to say that immigration is a bad thing, it certainly isn't. But adding a significantly higher amount of uneducated poor people to one country would surely distort the comparisons, and when you factor in Sweden's much larger unemployment rate - a rate that falls disproportionately on minorities - that makes the United States the clear winner of poor people worldwide - atleast for poor minorities, if not for the poor at large.

At 11/02/2007 11:35 PM, Anonymous Anonymous said...

HispanicPundit said...

Sweden has an unemployment rate close to 15% and when you compare that to the near 4% of the United States I say the United States wins hands down.

The U.S. Department of State says Sweden has a 4.3% unemployment rate as of 2006.

Any number of statistics can be used and abused to support any conclusion including the 15% figure that the Financial Times posted here:

In fact some people claim that the U.S. has an actual unemployment rate closer to 23% here:

So who are we to believe the U.S. Department of State, the Financial Times or some unknown entity with a web site?

I think I'll go with the U.S. Department of State figures.

At 11/03/2007 1:45 AM, Blogger HispanicPundit said...

Fine - my immigration criticism is still valid though.

At 11/03/2007 1:56 AM, Blogger HispanicPundit said...

One more thing - here is the US Department of Labor Bureau of Labor Statistics data on the Sweden unemployment rate:

It is clearly, and always tends to be, significantly higher than that of the United states. Your link is either talking about unemployment itself (cyclical, maybe?) but certainly not the unemployment rate.

At 11/03/2007 8:17 AM, Anonymous Anonymous said...

Hispanicpundit --

I care about inequality (Sweden = best of the OECD; US = worst). I also care about quality of life (which you tellingly ignore). You also ignore that intergenerational economic mobility (the ability to get ahead in life) is far worse in the U.S. than Sweden. All you seem to care about is quoting inaccurate statistics about the unemployment rate (which is a largely bogus indicator of economic well-being -- the topic of the original post). That and immigration -- which is frankly irrelevant to the topic of discussion (well-being of the "poor" in various countries).

At 11/03/2007 11:28 AM, Blogger HispanicPundit said...


Of course you care about inequality...I never said you didn't. I simply asked why you care about it. In other words, what information does inequality convey that is important to you?

The unemployment rate may be "a largely bogus indicator of economic well-being" to you, but when that unemployment rate falls most heavily on the least skilled (poor) and minority (me), it becomes a very important indicator - especially for those who are poor (the topic of the original post) and/or minority.

Also, you can bring up various indicators (inequality, mobility, relatively wealth, etc) that may slightly move happiness levels up and down, but as any happiness researcher will tell you, the unemployment rate is the 600 lb gorilla. In other words, if you are unemployed it makes you so unhappy that it dwarfs any of the other indicators relative power of making you happy. So as long as Sweden has a higher, indeed significantly higher, unemployment rate than the United States then those who are poor (and minority) will tend to be much happier in the United States than in Sweden.

Lastly, I brought up different levels of immigration to show that the comparisons between inequality, intergenerational economic mobility, and other indicators, were not valid comparisons - you are not comparing apples to apples (which you tellingly ignore). One would have to control for immigration (poor immigration, in particular) to do a proper comparison between the two countries. And as my unemployment rate figure shows, my hunch is that when you do that, the United States is still far ahead - especially for the poor and minority.

At 11/03/2007 7:40 PM, Anonymous Anonymous said...

1) Inequality matters in the sense that if I were to make a value neutral judgment on which country I would like to born in if I did not know whay my position in the household income distribution would be (veil of ignorance), I would choose Sweden any time. It's better to be a poor Swede than a poor American.

2) You still ignore the intergenerational income mobility argument. If I am born poor in Sweden, I have a better chance of becoming wealthier than in the United States.

3) Unemployment doesn't matter because it does not include discouraged workers who have left the labor force. Your "you don't understand anything because you're not a poor minority" argument is completely irrelevant to the point I'm making.

Mr. Perry's latest post notes the difference between unemployment rates is about 2% points between Sweden and U.S., and he doesn't tell us what Sweden's definition of unemployment is (does it exclude discouraged workers or not). So, you *ignore* the Economist quality of life study because it isn't your "600 lb gorilla" - unemployment.

On immigration -- so I have to account for the fact that the U.S. is (willfully) incompetent at enforcing its own immigration policy? Yet another way we screw the poor -- allow employers to get off scott free by hiring undocumented workers. Are they "doing jobs Americans won't do?" Yeah -- doing what Americans won't do for the $5.25 an hour that an undocumented worker would do it.

At 11/03/2007 9:44 PM, Blogger HispanicPundit said...

Responses below:

1. Why would you care what your "position in the household income distribution would be"? I still don't see why that is important. I know you think its important, and I know what part of it you value, I just don't understand why you value it. Personally, I can careless what "position in the household income distribution" I am in...important metrics to me are standard of living, mobility, and overall quality of life....and none of that is inherent in inequality measurements (and I would argue that most people don't inequality measurements either, certainly not poor people, else immigration would tend to be from rich countries to poor countries, not the reverse - like we overwhelmingly see it today).

2. I did not ignore mobility, I just qualified it with the fact that the United States takes in a significantly higher number of poor immigrants - a fact that is likely to significantly skew the data in favor of Sweden.

3. That is true, unemployment does not include discouraged workers who have left the labor force but that is true in both cases, the United States and Sweden. And since Sweden already has a higher unemployment rate, indeed a significantly higher one (its important to look at averages rather than specific points in time), it is safe to assume that Sweden likely has a higher amount of discouraged workers who have left the labor force than the United States. My point about minority and the poor feeling the brunt of the unemployment rate and the disastrous affect that has on happiness levels is still very relevant regardless of how much you wish to ignore it.


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