Why is Sweden ‘too equal’?

rich and poor

An interesting analysis of income inequality from the NY Times Magazine:

“Countries like Sweden are more equal, but to some economists, they are probably too equal. There is a rough trade-off between equality and growth: if you try too hard to make everyone equal, you get fewer entrepreneurs, fewer Silicon Valleys and a lower standard of living. Freeman, who is generally pro-union, says Sweden’s converging pay scales led to unemployment and deficits in the early ’90s, when it belatedly moved to create more incentives. Similarly, Gary Becker, a Nobel-winning economist, recalls visiting factories in Communist China in 1981: the workers were all lazing around. Now China has billionaires and the country is growing like Topsy. “

…and the response from BeyondChron:

“Lowenstein knows exactly how the Bush Administration has given hundreds of billions of tax breaks to the super-rich, made record profits for oil companies, keeps the domestic sugar industry “protected” from the market, and otherwise assisted the growth of income inequality. He also knows that Bill Clinton’s passage of NAFTA and the Telecommunications Act of 1996 had a similar result.

But raising these issues would lead the wealthy Times Magazine readers to conclude that maybe not all of their wealth was fairly earned. That much of it came at the expense of others, and could be considered “ill-gotten” gains.”

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