The Swedish One Percent – Krugman is wrong!

10 Mar, 2012 at 18:41 | Posted in Economics, Politics & Society | Comments Off on The Swedish One Percent – Krugman is wrong!

Paul Krugman today has a post on Sweden and the rising inequality:

[Y]you have no business talking about international income distribution if you don’t know about the invaluable World Top Incomes Database. What does this database tell us about Sweden versus America?

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Hey, it looks just the same — or, actually, not.

Yes, the top one percent has risen a bit in Sweden. But how anyone could look at this and see the story as similar boggles the mind.

It is not often that yours truly disagree with Krugman, but here I think he is wrong. It is indeed possible to see the story as similar.

Why? Look at the graphs below (all posted earlier here on the blog): 

 

The average annual percentage growth rate 1981-2007 was 2.1% in Sweden (in UK  and in the US: 2.9%). To me that is an indication that Sweden is also experiencing growing inequality to a notable extent.

Also look at this plot (based on data  from The Top Incomes Database):

During the last sixty years the top income shares in Sweden, the United-Kingdom and the United States have developed like this:

            Source: The Top Incomes Database

And look at the figure below,  which shows how the distribution of mean income and wealth (expressed in year 2009 prices) for the top 0.1% and the bottom 90% has changed in Sweden for the last 30 years: 

 
                  Source: The World Top Incomes Database

I would say the development in Sweden is also deeply problematic and going in the wrong direction. The main difference compared to UK and US is really that the increasing inequality in Sweden (going on continuously for 30 years now) started from a lower starting point.
The rising inequality has probably to do with income and wealth increasingly being concentrated in the hands of a very small and privileged elite – in Sweden as well as in the UK and the US.

Update (13/3): Jeser Roine, one of the researchers behind The World Top Incomes Database has an  interesting comment (in Swedish) on the debate here.

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