ECONOMIC AND SOCIAL DATA INDICES- SWEDEN AND THE USA.
The way in which data are selected and interpreted can throw very different perspectives on the “success” of a society. Conventional indices tend to focus on financial and numerate factors, such as Gross Domestic Product and growth. So using these measures, a nation with the highest Gross Domestic Product and high economic growth will be described as the most successful.
More recently, performance indicators have tended to become more nuanced and to build in social and psychological factors that are often easier to describe than measure by precise numbers. There is still considerable suspicion on the part of conventional economists about anything that cannot be numerically measured or fed into mathematical models. But mainstream practitioners in economics are in danger of being exposed as limited in their approaches in a world where human capital and psychological factors are being recognised as crucial to economic and social health. It is becoming understood that human factors create performance and financial numbers are outputs – the creations of human actions. Industry is moving away from an era where physical and financial capital were the key factor into one in which human knowledge and skill are key.
The United States and Sweden have been chosen for comparison because they are fairly close to being typical of free market and social market societies. Neither are “pure” examples, but represent two Points on a scale. Britain can be described as “hybrid” because it has moved over 50 years from considerable state control of economic and social affairs to a much more free market position – and is still changing.
The data describing Sweden and America start with some conventional measures such as GDP and move to more descriptive ways of comparing different societies.
Social Market Societies
Archetypal social market countries are to be found in Northern Europe and Scandinavia. Striking features of these societies are a culture that supports collaboration between different stakeholders and institutions in the formulation of national policy - and devolution of policy implementation. Government is accepted as a prominent player together with trade unions, industry and local government in the formulation and enactment of national economic and social policy. Social Market cultures seek to enhance trust and lessen strife between different interests. There tends to be national consensus on such issues as social security and the role of the state in providing public services and regulating finance and industry. The business culture is very open to international trade. Whilst personal tax is relatively high, business taxes are quite low.
Free Market Societies
A Free Market society can be recognised by its attitudes to the roles of government and to what is described as freedom - the ability of individuals and institutions to act with the least interference from the State. Regulation of finance and industry is generally light, attempts to strengthen the role of the state are vigorously resisted on ideological grounds. Many aspects of social security and health are given to private industry in the belief that this fosters individual choice and works more effectively in practice. Competition rather than collaboration is encouraged as a means of enhancing efficiency – the profit motive is reckoned to be a key driving force in a healthy society.
Personal and corporate taxes are low by comparison with social market examples - but despite this, many corporations and rich individuals seek to shelter their income from taxation, a stratagem not freely available to the less well-off.
THE DATA
GDP: Gross Domestic Product
GDP per head average, US$
USA $38,000
Sweden $25,500
This OECD statistic indicates that the US Gross Domestic Product per head is considerably higher than that of Sweden. Both are rich by comparison with most OECD countries.
Index of Equality - GINI.
This shows how average GDP per head is distributed amongst the population. A GINI score of 100 would indicate that one person owned all the wealth – 0 would indicate prefect equality.
US GINI score 47.
Sweden GINI score 26.
Wealth and especially income are evenly spread relative to OECD countries in Sweden, whilst there are great contrasts between wealth and poverty in the US.
The US is very unequal compared to the vast majority of OECD countries
Wealth and Poverty in the USA
Wealth Distribution
In the United States, wealth is highly concentrated in a relatively few hands. As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned 89%, leaving 11% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.1%. Inequality appears to have grown greater since 2010.
The Relationship between Wealth and Power
Wealth can be seen as a "resource" that is very useful in exercising power. That's obvious when we think of donations to political parties, payments to lobbyists, and grants to experts who are employed to think up new policies beneficial to the wealthy, for example, tax avoidance schemes.
Wealthy individuals support a large number of university faculties and institutes promoting “freedom”, which is defined as the right of individuals to amass and keep their wealth, and the state to limit its roles to maintaining law and order and defence.
Wealth also can be useful in shaping the general social environment to the benefit of the wealthy, whether through hiring public relations firms or donating money for universities, museums, music halls, and art galleries.
Second, certain kinds of wealth, such as stock ownership, can be used to control corporations, which of course have a major impact on how the society functions.
BROADER MEASURES
US index of Social Health
In recent years, it has become increasingly understood that gross wealth is not an effective predictor of social wellbeing or even individual life satisfaction. What follows is a range of indicators that compare different facets of the health of societies. These indicators can be used to compare societies against each other and also to indicate trends over time.
The first example is the American Index of Social Health. It is useful to review what has changed over time. In this case, the comparisons cover a period of considerable economic growth, culminating in the collapse of the global financial system in 2007.
The Index
The Index of Social Health monitors the social well-being of American society. It has been released annually by the Institute (formerly the Fordham Institute for Innovation in Social Policy) since 1987. Like the Index of Leading Economic Indicators or Gross Domestic Product, it is a composite measure that combines multiple indicators to produce a single number for each year.
The Index of Social Health is based on sixteen social indicators. These are: infant mortality, child abuse, child poverty, teenage suicide, teenage drug abuse, high school dropouts, unemployment, weekly wages, health insurance coverage, poverty among the elderly, out-of-pocket health-care costs among the elderly, homicides, alcohol-related traffic fatalities, food insecurity, affordable housing, and income inequality.
Most Recent Findings
In 2011 (the last year for which complete data are available), the Index of Social Health stood at 50.2 out of a possible 100—up 1.7 points from the previous year, but still five points below the most recent peak in 2007. This score is the second lowest in the past fifteen years, the only lower score being last year’s 48.5. Overall, between 1970 and 2011, the Index declined from 64.0 to 50.2, a drop of 21.6 percent.
The performance indicators since 1970 shows the following pattern:
| Progress | Lack of Progress |
|---|---|
Seven indicators have improved since 1970:
|
Nine indicators have worsened since 1970:
|
OECD BETTER LIFE INDEX
This comprehensive review of a number of key indicators of economic and social health is carried out on a regular basis by the Organisation for Cooperation and Development, a respected international independent agency.
The factors surveyed speak for themselves:
| SWEDEN | USA | |
|---|---|---|
| Gross income | $26, 240 | $38,000 |
| % of ages 15 – 24 employed | 74% | 67% |
| Annual hours of work, (Work/ life balance) | 1600 | 1787 |
| Life expectancy (Years) | 82 | 78.5 |
| % voting in national elections | 84% | 70% |
| PISA education scores | 496 | 496 |
| Life satisfaction | 85% | 83% |
OTHER INDICES
Health (OECD Data)
Sweden and America have different public health models. The United States has a predominantly free market health system, with a safety blanket for poorer parts of the population. Sweden has a publicly underpinned public health system, with some requirement for those who can afford it to contribute. Healthcare facilities are relatively uniformly provided, with only a small private sector.
In summary, only Sweden has a public health system – and the outcomes are clear:
Life expectancy
- Sweden
- 83.8 years
- US
- 81.1 years
Obesity
- Sweden
- 10 % of population
- US
- 36% of population
Diabetes
- Sweden
- 6% of population
- US
- 13% of population
Infant Mortality (deaths/ 1000 live births)
- Sweden
- 2 deaths
- US
- 6 deaths
Death from heart disease (per 100 thousand)
- Sweden
- 90
- USA
- 125
Death from cancer (Per 100,000)
- Sweden
- 170
- US
- 195
Health expenditure per head (%GDP)
- Sweden
- 9%
- US
- 16%
Health expenditure per capita (1000$)
- Sweden
- $3800
- US
- $8500
Crime
Homicide (Cases /100,000 population)
- Sweden
- 0.8
- US
- 4.6
Prison Incarceration (Per 100,000 population)
- Sweden
- 67
- US
- 716
Social Trust
% Trust government
- Sweden
- 56
- US
- 30%
% Trust others generally
- Sweden
- 62%
- US
- 45%
HAPPY PLANET INDEX
The New Economics Foundation have constructed an innovative index based on the premise that high income and unrestricted economic growth are not, of themselves, desirable or beneficial to human wellbeing.
The Happy Planet Index combines indices for life expectancy, quality of life as measured by reported wellbeing, and the quantum of the world’s natural resources consumed to produce long, happy lives for a society’s members.
This index has turned conventional measures of performance and success on their heads. As a generalisation, wealthy developed societies tend to consume more resources to generate wellbeing than some ostensibly poorer countries.
Whilst the index may be controversial, it does show that sheer wealth and economic growth are crude measures of the effectiveness of societies in producing quality of life and wellbeing for their citizens.
The Index
The US and Sweden score broadly the same on the measure of reported wellbeing
America scores lower on life expectancy
The United States scores very badly on the measure of Ecological Footprint, the quantum of resources used to produce wellbeing.
Country-specific overall rankings (out of 150 countries)
Sweden: 45th
United States 104th
End note
“A ‘Good’ society is one that furthers the wellbeing of all its members”
It is apparent that simple measures of economic wealth and growth do not give a comprehensive view of the “success” of a society.
This is especially so if a “Good” society is rated by the degree to which it acts in the interests of all its citizens, and not privileged minorities.
Comparisons between free market and social market societies are of course subjective. But it seems probable that that countries which foster collaboration between stakeholders, ensure a good measure of equality of wealth and opportunity - whilst supporting the less able and fortunate to participate fully in economic life – are suffering less social and economic stress.
These societies may be more socially resilient and economically successful in the longer run.
