While US Inequality Grows, Denmark's Citizens Are Increasingly Happy
August 1, 2017 Sam Pizzigati / Nation of Change & Joshua Holland / The Nation
Two years ago, in 2015, just about all the nations in the world agreed to make reducing inequality -- the gap between rich and poor -- a prime United Nations "sustainable development goal." The US -- the world's wealthiest nation -- continues to lead the world in income inequality, with taxes on workers nearly triple the taxes paid by corporations. The hunger and privation that exists in the US are unknown in Denmark. Though Danes pay a lot more in taxes and fees, they get a much more back in social services.
US Leads World in Inequality,
And it Is Getting Worse
Sam Pizzigati / Nation of Change
"Inequality is not inevitable." Yet the United States continues to widen the inequality gap.
(July 28, 2017) -- Two years ago, in 2015, just about all the nations in the world came together and agreed to make reducing inequality -- the gap between rich and poor -- a prime United Nations "sustainable development goal."
A noble gesture. But UN groups make noble gestures all the time. These gestures do sometimes translate into real progress. They more typically amount to blowing smoke -- and obscuring how little progress governments may actually be making.
How can we tell which nations are just blowing that smoke? People worldwide clearly need global measures -- comparative yardsticks -- that can help average citizens hold their governments accountable to all their noble rhetoric. On inequality, we now have one such yardstick.
Oxfam, the activist global charity, has just teamed with the Development Finance International consulting group to unveil the first-ever Commitment to Reducing Inequality Index, "a new global ranking of governments based on what they are doing to tackle the gap between rich and poor."
We already know, researchers at Oxfam and DFI point out, what governments should be doing to reduce the gap between rich and poor. We have "widespread evidence" that "strong positive progressive actions by governments" in three particular spheres can narrow that gap.
The three spheres? Progress against inequality starts with significant social spending on education, health, and other public services. To fund these services -- and keep power from concentrating -- nations serious about reducing inequality also seriously tax their rich and the corporations they run.
Reducing inequality demands an equally significant commitment to ensuring that working people have enough bargaining power, in both the workplace and the political process, to demand and win decent wages and economic security.
The new Commitment to Reducing Inequality Index measures progress in these three spheres for the 152 nations of the world that have adequate data available. Those nations that have collected little relevant data, Oxfam and Development Finance International note, haven't demonstrated much of a commitment to reducing inequality.
Neither have some of the nations that do have data available. Nigeria, for instance, ranks dead last on the first Commitment to Reducing Inequality Index. The nation has about the same per capita annual income as Bolivia. Yet 10 percent of Nigerian children die before age five. The child death rate in Bolivia: less than half that, only 4 percent.
Also lagging in the struggle against inequality: India and Pakistan. Along with Nigeria, these middle-income nations, observe Oxfam and DFI, "could be spending far more on health, education, and social protection than they are." With a combined population of 1.6 billion, the three "could make an enormous impact on reducing global poverty and inequality if they chose to."
US Has the Highest Inequality
The laggard among the world's rich nations? No contest there: the United States. The "wealthiest country in the history of the world" -- the Oxfam and DFI label -- has the highest level of inequality among the world's major industrial nations. And the US government is letting that inequality get worse -- on every major front.
The actual tax rate on US corporate income, for instance, runs just 14 percent, well below the statutory rate of 35 percent. US workers, meanwhile, need $10.60 an hour to keep a family of four above the poverty line. The federal minimum wage guarantees just $7.25 an hour. And labor rights in the United States remain minimal, by developed world standards. Trade union representation has dropped by half, down to just over 10 percent, since 1983.
Realities like these help explain why the United States ranks 21st among developed nations on the Commitment to Reducing Inequality Index, behind Sweden, Belgium, Denmark, Norway, Germany, Austria, Finland. France, Netherlands, Luxembourg, Japan, Iceland, Ireland, Australia, Canada, Italy, the UK, Switzerland, Portugal, and Slovenia.
But Oxfam and Development Finance International go to great pains not to pick on the United States. They're emphasizing that "no country is doing particularly well" in the struggle against inequality. Even the Scandinavian nations that rank at the top of the new index "have room for improvement."
Many of the nations that currently rank among the world's most equal, Oxfam and DFI go on to note, are "trading on past glories." Denmark, to give one example, scores well on progressive taxation, social spending, and worker protection. Recent Danish governments have "focused on reversing all three."
The rich and their enterprises -- "in rich as well as poor countries" -- could be paying "much more tax," the new Oxfam and DFI ranking study adds, supplying revenues that could be "used to invest in measures that are proven to reduce inequality.
"Overall," the new ranking study notes, "two-thirds of the 152 countries in the Index are collecting less than one-quarter of the tax they could potentially collect."
How much more equal could and should the world be? The Oxfam and Development Finance International researchers use the easy-to-understand Palma ratio to measure national inequality levels. The Palma ratio compares the share of national income that goes to a nation's top 10 percent to the share that goes to its bottom 40 percent.
A Palma ratio of 5.0 would mean that a nation's top 10 percent is pulling down five times that nation's bottom 40 percent income. South Africa currently has a 7.1 ratio. All nations, Oxfam and DFI maintain, "should aim for a Palma ratio of no more than 1."
Less than a handful of nations currently meet that standard. All nations could. Their governments merely need to make different policy choices.
In other words, as Oxfam's Max Lawson puts it, "Inequality is not inevitable."
When governments provide benefits and services that allow its citizens to thrive, everyone wins.
(July 17, 2017) -- Last week, in Denmark, Malthe and Lærke Knudson had a baby girl they named Emma. That same day, the Robinsons -- Dale and Beth -- had a little baby in the United States. They called her Rachel.
Right now, they're just two little babies keeping their parents awake at night. But Emma and Rachel were born in countries that have very different priorities, and that's going to lead to pretty different futures.
It all boils down to this: Though Danes pay a lot more than Americans in taxes and government fees, they get a whole lot more back in social services.
As a result, Americans end up spending twice as much out-of-pocket for those social goods and services. Let's see how that plays out over their two lives.
EARLY CHILDHOOD EDUCATION
In six months, Emma will probably enroll in preschool. By law, every 6-month-old Danish baby is guaranteed high-quality preschool, and parents can't be charged more than a quarter of the cost of those services. Parents who can't afford it? They don't have to pay.
In the United States, kids from low-income families are often eligible for full-time Head Start programs. Even then, the program only has enough funding for a half-million slots nationwide. But the Robinsons make too much to qualify, so they'll either have to park little Rachel with Dale's mom, or one of them will have to get a second job to help cover the cost of daycare. That little luxury could set the Robinsons back as much as $22,000 a year.
It costs a lot to raise kids these days no matter where you live, but the Knudsons will enjoy a child benefit which starts at $225 a month. When Emma hits age seven, they'll get $140 a month until she's 17. That's not a benefit just for poor people; everyone gets it!
Rachel, on the other hand, will have to start learning some cool tricks ASAP in order to get into a decent elementary school and prepare herself for a high school that will help her get into a good college.
Some American schools are world class, but others, often serving students from low-income families, can rank down there with those in developing countries.
That means the Robinsons may soon be shopping for a house in another school district -- a notion that would never even occur to the Knudsons, because all of the public schools in Denmark are really good.
Emma and Rachel are both good students, and they'll both go to college when they get older. In Denmark, almost every college student attends public colleges and universities, which don't charge tuition.
Rachel will navigate a very different educational system. She'll probably end up with a good deal of debt -- in the US, 71 percent of the class of 2015 graduated with student-loan debt averaging around $35,000.
Fresh out of school, the young women enter the workforce. And again, they'll have very different experiences.
If Rachel is lucky, she'll get two weeks a year of paid vacation, but maybe not -- the US is the only industrialized nation that does not require any amount of paid vacation. Emma, like most full-time workers in Denmark, is guaranteed five weeks of paid vacation time a year.
That doesn't include the nine public holidays, which most employees get. And many Danes enjoy a sixth week of paid vacation during the holidays. And that's how you relax like a Viking!
Danes and Americans have similar incomes, but Americans work a whopping 24 percent more hours per year. That means that Danes get to spend about an hour and a half more each day on leisure activities than Americans.
When Rachel loses her job she'll qualify for unemployment benefits that cover about half of her income, usually up to half a year.
Emma will face a similar situation -- hey, it happens to the best of us -- but she'll get up to 90 percent of what she was making, and she can collect that for up to two years and sometimes more!
Now, some people say those generous benefits create a culture of dependency and discourage people from looking for a job, but 73 percent of working-age Danes have a paid job, compared with 60 percent of Americans.
And Emma will always have access to an excellent public health-care system. In Denmark, everyone's covered. Americans, on the other hand, spend two and a half times as much per person on health care as the Danes, but around one in eight are still uninsured.
PARENTAL LEAVE AND GENDER PAY DISPARITY
Some day, Emma and Rachel will meet the right partner and have babies themselves. Emma won't pay anything for delivering her baby, but Rachel will pay around $5,000 out-of-pocket for a normal delivery.
Rachel also lives in the only advanced economy that doesn't mandate paid family leave. She can take some unpaid time, but for most women, there's no guarantee that her job will be waiting for her.
One in four American women quit or are laid off when they have a baby, so they lose seniority and end up with an uneven work history. According to one study, each child lowers an American woman's earnings by 6-8 percent.
Emma and her partner, on the other hand, will be able to divide a full year of paid parental leave between them. Many Danes work under union contracts that give them up to 100 percent of their salaries during that time, but if they don't, the government will give them $630 per week while they're on leave.
This is one reason why the gender pay gap is around three times bigger in the United States than it is in Denmark.
Emma and Rachel will watch their kids grow up, and then they'll look to enjoy their golden years.
As an average American, Rachel will work two years longer than Emma. Emma's pension will cover two-thirds of her pre-retirement income, while Rachel's Social Security benefits will cover less than half of what she had earned.
Emma will have lived her life under the crushing burden of democratic socialism. That combination of state-funded education, health care, parental leave, and plenty of other benefits has made the citizens of Denmark the second happiest in the world. And Americans? Number 15.
Text by Joshua Holland. Graphics and animation by Rob Pybus. This work was supported by the Economic Hardship Reporting Project and its Puffin Story Innovation Fund.
Posted in accordance with Title 17, Section 107, US Code, for noncommercial, educational purposes.