Income Equality in Nordic Countries: Myths, Facts, and Lessons
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Delving into the intricacies of Nordic income equality, a recent paper sparks a lively debate about the role of unions in shaping salary structures. While some commenters, like lysace, argue that unions keep elite salaries in check, others, such as drakonka, counter with personal anecdotes suggesting collective agreements don't restrict individual salary negotiations. The discussion reveals a nuanced landscape, with factors like labor scarcity, as noted by dariosalvi78, and cultural solidarity, highlighted by shadowgovt's story about Norwegian restaurant workers, contributing to the region's relative equality. As the conversation unfolds, it becomes clear that the US and Nordic countries have distinct approaches to labor laws and union activities, with the Taft-Hartley Act of 1947 being a significant differentiator, as pointed out by lotsofpulp and shadowgovt.
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There is a scale factor here that is way, way different than many other countries: there are significantly fewer people.
In Norway, if a restaurant abuses its staff, it's not just the staff that will strike or sympathetic customers who will organize a boycott. It's the plumbers who won't show up to fix the sink that breaks, the carpenters who won't show up to patch up a dented door jam or install a new shelf, and the shippers who won't drive ingredients out to the restaurant anymore.
In the US, that kind of coordinated cross-discipline striking is explicitly illegal (I'd have to go look up my history to confirm, but I believe that was related to the federal intervention to stop the rail strikes because it disrupted mail delivery).
No, it’s just a straight up federal law that bans striking in the railroad and airline industries:
https://railroads.dot.gov/sites/fra.dot.gov/files/fra_net/16...
https://en.wikipedia.org/wiki/Railway_Labor_Act
The US’s people (by proxy of its democratically elected leaders) believe some workers deserve fewer rights than others.
It isn’t so different than an informal caste system, except it is far more flexible and allows a few to break through, especially if they can prove their economic mettle. The US makes a lot more sense once you realize much (the majority, I would say) accept that some people deserve more than others.
What is most important is trying to not be at the bottom, and staying ahead of those below you. Another easy example is the superior unions for cops and firefighters, who are typically used to maintain the status quo (similar to a king’s guards). These union members will readily support leaders who want to weaken other unions.
What exactly counts as "abuse"?
Here's what I've seen first-hand in a "labour-friendly" country. An employee doesn't show up at his workplace a few days a week, for several months, without doctor's notes or any real reason. Employer finally fires them. Employee goes to court and after a year gets a $20k compensation for "unlawful termination", even though his absence on the workplace was documented (but not properly processed, apparently).
“Unlawful termination” is only a thing when it is either in breach of contract, or discrimination. Typical contracts in Scandinavia mandate a 1 month notice in advance of termination. I don’t know why you would think that’s unreasonably long. (And yes, the social security net is the reason it can be so short.)
Nordic countries are higher-trust than America is, and so sometimes concepts like this do not need to be formally defined: "you know it when you see it" is a valid concept when people have sufficient dignity and respect for self and others as to not claim abuse when it's not actually present.
This breaks down in a system with different game-theoretical Schelling points - different "default strategies". If the default mode of behaviour for a large constituency of participants is to exploit all available weaknesses in the system, then the system has to become more formalized, more defensive, and eventually has to put firewalls around anything that could be exploited.
This is among the reasons why socialized medicine / welfare / etc work better in some countries than others. If it comes coupled with a high sense of dignity that makes one not want to fling oneself upon the commons unless it's strictly necessary, then it can do well; but if everyone wants to take everything that isn't nailed down, you simply cannot afford to offer as much, ever.
And with the different kinds of abuse, which "side" do you think causes the most genuine harm to the other though their actions?
edit: for the people who missed it, I was making a joke about the username of the person I was replying to. Not actually a conspiracy theorist
1) It makes me wonder where the surplus goes. Invested back into the corporations, so that the people who run them have a large amount of power? That would be dystopian. Unless I'm making an incorrect assumption, like...
2) Is it only downward compression, or does it perhaps act both upwardly AND downward? So there's little profit unspoken for, and anyone participating in the labor market is receiving a roughly equal piece of the economic output (or, at least, within a relatively narrow band).
3) That would suggest something rather radical to the (neo)liberal mindset of there being no ceiling on what spoils of productivity one can claw to oneself: instead, an acknowledgment that we're all roughly equal humans giving up a roughly equal portion of life, time, energy, and freedom to labor, regardless of the prerequisites to be competent at that labor (or of the opportunities to exploit one's position).
4) As for implications for other countries, I wonder if there are any for those in which social, racial, and class hierarchies are deeply embedded. Can the kind of robust wage bargaining described emerge even without all of that rectified? Maybe it's what catalyzes that rectification?
Having said that, it's no socialist Heaven either, wealth inequality is among the highest in developed countries and unemployment is very high especially among the young people with immigrant background. Racism, or a certain suspicion of strangers, is latent and affects access to jobs. Inflation is high, housing market is as crazy as elsewhere, and living costs are not low.
It’s the hottest destination. Who would not swap six weeks paid vacation and universal healthcare for a $100,000 out-of-network ER bill and five days off a year?
Over the last 5 years Canada has taken in hundreds of thousands of new immigrants. The govt has a plan to boost the population to 100 Million.
As a result Canada now has the highest housing costs in the world. The Universal Health care system has a massive backlog. Emergency rooms have very long waiting periods and you cant get a family doctor.
At present the population has rebelled so the elite have reduced the inflow somewhat temporarily.
It is also not binary, and likely more a selection bias, as the people who are actually driven already left these job markets (... To earn more elsewhere).
However, when they boot you, and you are not up to date with you skills and knowledge - the lazyness has been worse for you, than for the company.
Not sure where you got that they're lazy, some of the most hardworking and skilled people I've met are here.
They also understand that a mind that does not let go does not grow, like a bodybuilder overtraining: rest is an important part of growth. Do you mean that?
Seen plenty of Americans that got comfy in the nordics (also efficient but 40 hours max).
Also seen other countries politicians change rules that directly affected how hard people work. It’s not rocket science and programming is one of the most fun jobs to be doing so plenty would jump at the opportunity.
Instead I see people go home and try to code something at home to increase their salaries.
But mostly it’s the idea of people deserving a decent life and high base life quality anyway. Most of my colleagues instead come here from other countries.
But then again, it also ensures that pricing and governance in the broader system is in check.
So it is either this or an oligarchy where people feed their egos
That said, the global economy is about the money, so I have a strong suspicion that this fact will hit Europe hard in the next few decades.
Remember, the deal includes universal health care, tuition-free university, government-backed sick pay, five or six weeks of paid vacation, and more.
I'm from Sweden, which has a similar system. I could not have afforded to attend university in the US system. Here, I could -- with my (government low-interest) student loans being spent only on my living expenses, not tuition. As a result, Sweden has an extra engineer we otherwise wouldn't have, with a good salary contributing to the tax base.
That seems like the opposite of dystopian to me.
Taxes are progressive which means if you earn below average you’re taxed a lot less than if you’re over average. If you have an average salary you’ll get taxed around 25%. If you have a salary twice the average you’ll close in on twice the tax, before any deductions.
Paid holiday, free kindergarten, free medical support and pensions savings are included in the tax you and your employers pay. The employer pays 14% tax on your salary.
> A key finding is that a more equal predistribution of earnings, rather than income redistribution, is the main reason for the lower income inequality in the Nordic countries compared to the U.S. and the U.K. While the direct effects of taxes and transfers contribute to the relatively low income inequality in the Nordic countries, the key factor is that the distribution of pre-tax market income, particularly labor earnings, is much more equal in the Nordics than in the U.S. and the U.K.
Yes and this can be good or bad if you work hard and your colleagues do not. I have worked in Norway since 2017. I like it, but I do think that there are other options. Americans like to complain about everything but, at least as far as it goes on hacker news, they have way more options for high salaries than the same workers in Norway do. Of course there are exceptions but having easier access to salaries that are above 100k USD and can grow substantially from 100k USD really changes things. But on the academic side, American PhD students are treated like shit and make shit, whereas Norwegian PhD students get 50-60k salary (totally liveable in Oslo), pension, free healthcare, and likely no teaching requirements, and a lot of academic freedom.
In Norway there also is a strong emphasis on generational wealth being transferred forward. This has made the housing market in Oslo somewhat impenetrable if you didn't have a parent helping you out on your first flat when you are 20.
I'm not saying Norway is bad, I think it's a great place to live if you can accept the winter and that you will never be Norwegian. Also, you should accept that you live in a different culture and should try to figure out how best you can emulate and integrate. This is true for any immigrant situation in my opinion though. It was your choice to move to this country, why show up and think you know better?
I like having a ski mountain right next to the city and I like the university culture as it is more flat like American-style than hierarchical like European-style (I am a research scientist). That being said I lived the last two years in The Netherlands and I think it is better overall in terms of cultural acceptance of outsiders and I think I feel like I understand and, importantly, agree with the ideas of what makes the Dutch the Dutch. Who knows. I don't have all the answers, just my two cents.
Regardless - impenetrable housing markets are not a consequence of equality, so you are kind of self contradicting.
Do you believe people who work harder or do things that others are unwilling/unable to do are not entitled to more than others?
If you really stood behind this, then you would believe that the cleaning personnel who wakes up at ungodly hours take make sure areas are clean should be amongst the highest earners.
Academics in particular are not really aligned with what it means to work.
Edit: academic work is high risk, high reward. But procrastinating for weeks upon weeks to write a paper last minute is IMHO not hard work - though it can be valuable work.
https://www.helsinkitimes.fi/finland/finland-news/domestic/2...
Inequality is practical for those at the top/those that embody the reality of being entitled to more than others. More people to profit from like e.g. renting out apartments, more unemployed people means higher competition from jobs which can suppress wages, and so on.
We can all make quips.
You can’t really compare dollar to krone the difference of a US salary to a Norwegian salary.
I’m not sure how to explain it for those who haven’t lived in the nordics, but you don't need a high paying income to live a good life.
I'd like to point out that any country providing universal healthcare is going to be a big improvement in standard of living for many of my friends. The sometimes hellish nature of the USA's for-profit healthcare system is very real.
Then there's crippling student debt following you nearly to the grave, gun violence, etc.
We grew up being told we had more freedom than anybody else, only to learn as adults that not only does freedom carry a heavy price, but so does every flu and broken bone.
I mean, if you value other things, that fine, but to claim something doesn't exist when it clearly does is rather narrow in vision.
It doesn't take much googling to find examples of speech laws in Europe (for one example) that would have Americans gasping.
Birmingham, St. Louis & Memphis have the highest levels of gun violence, though? Not sure if those are the most "progressive" places.
Also Mississippi (more than 10x worse than e.g. Massachusetts), Louisiana, Alabama are the top 3 states by gun homicide rate.
If Mississippi was a country it would be in the top 10 (between Mexico and Columbia) by gun related murder rate which is quite an achievement..
Massachusetts
As for the specific cities you mentioned, policies enacted by local governments over decades generally fall into the progressive category. State and federal governments certainly share some blame for the problem but because the causes are mostly local any solutions will also have to be local.
We can all agree that taking away peoples' guns would lead to less gun violence. (This is the part where you say "but that's impossible anyway" or "but the 2nd amendment" which doesn't really refute my point)
Yeah schools are pretty local.
Not sure what is progressive about the fact that one can easily obtain a gun. Pool with many legal guns makes it easier to obtain it illegal one as well.
There would be even less violence in Mexico if they were not bordering USA.
Hard to serve in the best interest of the people what that was never the goal to begin with.
1) https://en.m.wikipedia.org/wiki/2021_Boulder_shooting
I think it comes down to mindset. For example You have what you need to live, but the things you want are expensive.
Housing is a problem, but it seems that is a problem almost everywhere. That said, it is not always “easy” to obtain what you want, but I think that is good for society. For example the second hand market is strong.
I’m not sure if that answers your question.
Varnish Software had a job posting in Norway and I asked them if they would consider a US candidate. At that time I was living in the US and was looking for opportunities to immigrate to Norway (or Finland).
After I accepted the position they helped with the “skilled workers visa” process.
Moving abroad has a lot of logistics. Depending on your situation in the US, I suggest to sell, rent, or store your belongings in the US and only bring what you can as luggage on the Airplane. In my case, we had an estate sale, asked family to hang on to sentimental items, and gave away everything else. When we left the US to fly to Norway, we had 5 suitcases of what we needed/wanted.
My partner (at that time) and I had a 6mo old child.
We started with an Airbnb in the Sagene area of Oslo. After landing we rented a car and drove to the Airbnb.
That turned into a 6mo rental (outside of Airbnb) as we explored the area for either an apartment to rent or buy. Again, it helped to have minimal possessions as we moved around to find the area that suited us and our family. Eventually we settled in an area called Torshov.
June or July is a great time move, the city is calm and almost everyone is on summer holiday.
It can take several months before you are in the banking system to receive your salary, so in advance you will need to have a buffer of savings and to keep a bank account in the US.
Forward all your mail in the US to family, friend, lawyer, or service to keep you informed. Forwarding mail to Norway is possible, but it will be delayed by at least one month, which can be a problem for any bills that are due.
https://en.wikipedia.org/wiki/List_of_sovereign_states_by_we...
Meanwhile Southern Europe has reasonably high income inequality, but not much wealth inequality. Just kind of an underdiscussed piece, especially as many people like to issue catastrophic warnings about how wealth inequality destroys a society- then quickly change the subject when you note that the Nordics are more unequal than America
If the Lego family uses business jets to go on vacation, then they need to 1) pay market rate for using the jets and 2) pay full income taxes, VAT etc.
Anyhow, when you are rich enough this tripling in cost does not really matter - but it does reflect in the income equality statistics.
Nordic countries have high VAT but that's hardly going to hurt you.. On the other hand Sweden has less property tax than the US.
I guess if you consume services then that will be more expensive in the Nordics, since tax on salaries is high.
If you have a 1.5M balance sheet, you can pay yourself 120k euros in dividends annually at an effective tax rate of only 7.5%.
Let’s just say that small businesses and professionals have very good lobbyists. An employee making 120k / year pays over 40% tax.
This creates a tremendous incentive for professionals to incorporate and use every trick in the books to build up a larger balance sheet on paper.
Perhaps not coincidentally, Finnish companies are also an outlier in paying extremely high dividends.
https://www.skatteverket.se/servicelankar/otherlanguages/eng...
"A few millions in the bank" for hundreds of thousands or million of people would already make a nordic country the king of lesser inequality - unless (as the parent says, don't know it's true) it's tied up in company assets (and perhaps they use them as company perks even in one-person companies, to avoid the tax, thus masking better equality at the individual level).
A missing piece of the puzzle may be regulatory capture and a strong political/legal structure that resists the worst ambitions of cruel people whether they be wealthy or poor.
You can think of wealth like the potential energy of a spring under tension. If used properly it is capable of powering the most amazing and intricate social mechanisms but if poorly regulated it destroys social fabric and the well being of every day people.
Things like Citizens United and lobbyists representing cruel wealthy interests running unchecked over American democracy are examples of the socially destructive potential energy of wealth.
I'm also curious if there's a selection pressure in play where the more cruel wealthy people in the Nordic countries move to the US because they see more opportunity to make money and be cruel in that environment while wealthy people who have some affinity with their nation and the people of it choose to remain and don't or can't lobby for terribly antisocial policies.
For Americans the big ones are: a health problem can destroy your life and your life’s savings, housing costs are too high, and college is too expensive and leaves people in debt.
Housing, health care, and tuition.
Two out of three of those are better in Europe, mostly: health care and college costs. They are better even if things are on paper more unequal.
High housing costs are a disease across the entire developed world.
No, people need to start understanding the root causes of their problems.
History is replete with examples of rapacious elites trying to take peasant pitchforks and redirecting them.
>For Americans the big ones are: a health problem can destroy your life
Which is a problem because that destruction of your life is immensely profitable.
Which is a problem that wont be fixed while American government is plutocratically run.
Which is a problem that wont be fixed until wealth inequality is.
Once you control the media you can just keep throwing mud at the few progressives that remain.
If progressives could wrest back control of party machinery and control a significant portion of the media then they would become "electable" again.
Smaller state and local elections are better, but that's not where the power or money goes.
Then “he who pays the piper calls the tune” and here we are...
The top poster was highlighting the fact that there are societies that are just as unequal (or worse) but better on many of these fronts. That doesn’t mean inequality is good. It means that it’s not a single underlying cause, and it’s not that simple.
Refusing to get specific leads to hand wavey populist demagoguery. In this case it leads to a broad unfocused crusade against “elites” and “the rich” that history shows often morphs into fascism (lots of Bernie voters went MAGA) or results in policies that land broadly on the middle and upper middle class and often spare the truly rich. Usually the result is a lot of sound and fury signifying nothing, since it’s easy to be a demagogue and pound the table about vague “underlying causes” without doing anything but virtue signaling and dog whistling to the base. No specifics means no KPIs for politicians, nothing to hold them accountable.
If you elect someone on a platform of making housing, health care, and tuition affordable and those things don’t become affordable, it’s hard to weasel out of that with posturing and bullshit.
This is FUD that is very specifically DNC coded. The extremely plutocratic DNC-linked propaganda outlets that fed this absolute nonsense peddled all sorts of other nonsense conspiracy theories too (e.g. Russiagate, not that that one did them any good...).
Every single one of the DNC supporters implicitly backed fascism and Nazi-style genocide in Gaza by lending their support to the same DNC that backed it (even if they did not agree with it).
Again, plutocracy at work.
They paved the way for the equally depraved MAGA fascism that supplanted them. Trying to pin it instead on a bunch of powerless progressives, some of whom voted for "not more of the same shit" plumbs the very deepest wells of moral depravity. It is deeply shameful.
That's why we don't get legislation to fix the issues you cite year after year.
Wealth hording leads to the government working more for the wealthy instead of the working class.
There will always be wealthy and powerful people, but as Spock would say (sorry) "the needs of the many outweigh the needs of the few or the one."
Actually it is. Inequality has been correlated with high crime, lower life expectancy and lower health (even for the rich subsection of the population, compared to a more equal country). In your example, high housing cost entrenches inequality and gives generational wealth a leg up.
Trying to make a country good but inequal is like trying to push water uphill.
That's an interesting thought! It would make sense that the people who care less about others and more about themselves would find it easier and more beneficial to leave. I wonder if anyone has ever done a study on the wealth, personality traits and political views of the people who leave.
I live in Denmark. I am Danish. Too many people nurse fantasies of the Nordics as some kind of socialist utopia.
The fact is Denmark grows more corrupt by the day. They keep pushing the retirement age so I will be working until I'm 72. Healthcare quality has been dropping for more than 40 years now. The wealthy own the majority of land. We are currently home to a government that is leading the EU in its push for a surveillance mandate that is frankly terrifying in its scope. That same government pushed through the most garbage mega-project I have personally ever witnessed—that we the taxpayers are supposed to fund—despite voter outcry. Digital tenders get sold in backroom deals to a single company that is so ethically bankrupt they've been called out numerous times for workplace violations by our unions.
We're all fucked in the global slide toward authoritarianism and the wealthy's capture of the world economy. And while they get fat supping on our labor we're at each other's throats for who can be crowned the greatest victim.
This is extremely little money compare to the alternative.
What makes it important for Ireland, Portugal, Spain, Italy or Liechtenstein?
https://www.theportugalnews.com/news/2023-11-28/lisbon-shoul...
If Russia.cobquers Ukraine they will use the people of Ukraine against the rest of Europe.
Contrary to hysteric media narrative, decision makers in Kremlin are not mad, crazy or whatever, and believing this brings more harm than good. Russia isn't strong enough to seriously threaten Western Europe, and they are aware of it. Moreover, they have not much to gain by trying to conquer Lisbon versus monstrous costs they would need to bear, even if we ignore the fact they wouldn't be able to not only reach Lisbon, but Berlin as well. Europe is no longer a center of the world, regardless if we like it or not.
That doesn't mean Russia cannot harm interests of countries of Western Europe, carry out sabotage acts, sow and fuel internal strife etc. They can, and they do. But it is not an existential threat.
Where do the Baltics and Poland stand in such a scenario? And in 5-20 years when they've encroached there, what of Germany? Do we let them just slowly digest Eastern Europe all over again?
Eh, I always forget it is kinda pointless to discuss politics here.
Never stated that they should just take Ukraine, or they are not "as bad". And please spare me lectures about lingering doom of the Easter Europe - I live in Poland, 20 km from the Ukrainian border. I am aware of stakes, especially considering idiocy of my government.
What I objected to is a proposition that "Europe" is some political monolith, and all countries here are equally threatened by Russia. Some European countries are under serious threat (mine among them), others are less threatened, and some are not threatened in any serious manner.
Lack of understanding this causes people to be constantly surprised that things look as they look.
The other commenter from Ireland had a good point about rule based world order. And Ukraine has received a lot of help in particular from Canada but also from Australia.
There is an answer, but probably only an actual Ukrainian “nationalist” can tell you. And it was only a couple of years.
https://en.m.wikipedia.org/wiki/Pensions_crisis
If you mean "young people" in general, the fertility rate ensures they'll be less and less, and thus a heavier and heavier burdern to chip in for older people.
If you mean young people that are family, an increased (over 30%) number of old people won't have children or will have estranged children, and no help.
As for "AI and robots" don't bet on those either. It takes people to maintain an economy and an infrastructure that makes and deploys robots at any significant scale, and those will be scarce, and the demographic hit will make both productivity and consumption contract too. Societies increasingly can't even fix potholes and basic public services.
The plan was to have fully funded pensions, bootstrapping them after the start. You cannot have infinite growth any case, as eventually we run out of space and resources. It must come to end at some decade.
However funding pensions full was never executed. It was too easy for politicians not to pass taxes, social benefit costs and such to do this, because boomers would have complained decades ago when they were still in the fullest earning potential.
And between payroll taxes and the fact that stocks, 401ks, etc depend on economic growth, things will turn real shitty...
You don't have to extrapolate that much improvement for them to start having an impact and I imagine factories in China will churn them out like they do most other tech.
We also have immigration against that. Lots of people in their late 10s or early 20s ready to start contributing to the economy. But most western countries have to much right wing populism going on to realize that that's a solution and work on proper integration efforts. Easier to pull the criminal foreigners card and collect votes at the next election.
Which project was that?
Curiously there's no English wiki page for it, but machine translation is good these days:
https://da.wikipedia.org/wiki/Lynetteholmen
Yes pretty much, and hello form Norway.
Everyone here needs to make money and save everything they can right now. If you're not saving 50%+ of your income you AGMI
FIRE -> Financial Independency, Retire Early.
AGMI -> Are Gonna Make It?
But you just have to assume based on context here that he intends to say "Aren't Gonna Make It"
It doesn't come up often, but I have seen a decent amount of 70+ people doing what they can, as cashiers, kiosks, hospitals, doctor offices, bus drivers,...or in general any job where youth isn't into applying for learning on the job, or even so where demand isn't getting fulfilled.
What's more likely going forward is that they'll downscale their operations in a contracting economy, than hire 70 years olds or needing robots for the same jobs. And if it needs be, they'll get immigrants for most jobs.
No, they will do what they have done in the last 20 years which is import people from the middle-east or northern Africa to do the jobs and pay them the lowest wage possible.
My wife works in healthcare in Sweden and more than 50% of the people who work on the hospital wards/in age care these days are either newly arrived migrants or descendants of recent migrants.
Unfortunately most of these people are under-qualified, barely speak Swedish but they are cheap.
That puts a lot of pressure to keep the wages of everyone down because they keep bringing more and more people from abroad. This isn't even a fix because as soon as they get their permanent residencies or citizenship (for the ones who do not have it), these people move on to something else because the jobs are just awful with long hours on your feet and being treated like a servant by the patients/residents.
https://data.worldhappiness.report/table?_gl=1*13j5g4a*_gcl_...
Ask someone from the Nordics about housing prices. Do you think they’ll change the subject?
https://www.nber.org/papers/w33444
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