Global Poverty

Darn Socialists! How Rich are Poor Norwegians?

Todd A. WatkinsTodd A. Watkins

From thousandaire Bernie, millionaires Hillary and Jeb!, billionaire Donald and the yammering rest, the growing gap between the rich and poor in the US is getting lots of attention. In the US, average income is nearly $55,000 per person per year, yet tens of millions of Americans lived below the poverty line ($11,770 for individuals or $24,250 for families of 4). Millions on the upper end earn well in excess of 10 or 20 times that (though still not even eking out rounding error for Donald).

I wondered how that gap would look when compared visually to other countries. So I went to the  World Bank development indicators database, did a few calculations, and made this chart. The chart shows the differences in the income of top and bottom income quintiles, i.e. the richest 20 percent and poorest 20 percent in different countries, with dots at right and left for each country. The plus-signs in between show middle income folks. The graph uses per capita income translated into in purchasing power dollar terms, to adjust for exchange rates and cost of living differences.

Income disparities in select countries, 2012

Screen Shot 2016-01-01 at 6.54.45 PM.pngData source: Authors’ calculations from data from World Bank, World Development Indicators, http://data.worldbank.org/indicator.

It wasn’t really a surprise that compared to most of the world the spread of income in the United States is wide. What was a bit surprising is how very, indeed uncomfortably, wide the U.S. looks in comparison to most societies. The richest quintile, more than 60 million Americans, live on nearly 10 times the average income each compared to the poorest 60 million. America’s top group are better off than anyone else on the chart.

Yet, American’s poorest 60 million are worse off on average than the poor in Canada, Germany, Denmark, or even the poor in Slovenia. (Wow. Slovenia!?). Poverty can unquestionably be relative: that poorest fifth of Americans have average incomes similar to the richest 20 percent in India.

Most strikingly, poor Americans are far worse off–with less than half the income–than those who qualify among the poorest fifth in Norway. That’s before even counting Norwegians’ free college and universal healthcare.

Darn those socialists. Well, not Socialists in the capital S sense, of course. Norway is basically a free market economy. But they lean, a bit, that way, maintaining a strong social welfare system. Whatever their system is called, Norway is still richer per person than the US, but has a significantly narrower income spread.

The U.S. is not entirely alone in the international hall of fame for wide income gaps. Brazil had income per person of about $15,000 ($PPP) in 2013, which puts it among what the World Bank calls upper middle-income countries. But like the US, Brazil also has notable income disparities. In fact, the poorest 20 percent of Brazilians get only 3.4 percent of the country’s income, and 7.4 million Brazilians are living on $1.25 a day or less.[i] Meanwhile, the richest one-fifth account for three-fifths of Brazil’s income. In fact, as we see in the chart, those richest 20 percent of Brazilians have average incomes slightly above the average middle class American.

By contrast, Malawi is among the poorest nations on earth, and even the richest there have very little. Honduras is the poorest nation in Central America, but has a much wider income spread than Malawi between the poorest fifth and richest. Namibia, like Brazil, is particularly striking for its wide income gap. The poorest quintile there are worse off than average Hondurans, but the top 20 percent in Namibia live as well as the average Briton too.

What about the title question? Just how rich are poor Norwegians? The poorest quintile Norwegians live nearly as well as the average Briton, in the United Kingdom, one of the world’s wealthier countries.

I wonder: do the one million Norwegians in the highest income quintile  resent their socialist taxes propping up all their one million lowest income neighbors? After all, from the looks of the two bottom lines on the chart, helping the poor apparently limits the upside for Norwegians to a few thousand dollars below the equivalent top Americans. As the American tea party wing might say, taxes are such a drag. Heaven forbid that our taxes might help lift the poor in the U.S. to levels like those darn (sort of, leaning in that direction, a bit) socialists.

 

[i] http://povertydata.worldbank.org/poverty/country/BRA

Photo at top Copyright 2013, Baard Skaaden, Bergen Norway. Used under Creative Commons 2.0.

 

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