Famous for its obsession with economic and social equality - it prohibited the word "apprentice" a number of years ago as harmful to the self-esteem of unskilled workers - Sweden earned a reputation as the most leftward of the Western world's affluent democracies. Yet most of Sweden's progress toward equality took place long before Swedish governments turned leftward. Who, then, gets to claim the credit for it?
In a comprehensive analysis of economic equality in 13 industrialized democracies, published earlier this year, U.S. economists Kenneth Scheve (Yale University) and David Stasavage (New York University) compare equality statistics from the entire 20th century. Among the surprising findings is that Swedish equality trends closely tracked U.S. equality trends in the first half of the century - and through the 1950s and the 1960s as well.
In the years preceding the First World War, the top 1 per cent of income earners in the U.S. and Sweden got roughly the same share of each country's total incomes: 18 per cent. By the end of the First World War, these top income earners got roughly 12 per cent. By the end of the Second World War, the top U.S. income earners got roughly 9 per cent, the top Swedish income earners roughly 6 per cent.
This trend toward income equality continued through the 1950s and 1960s - when the share of income received by the top 1 per cent fell below 5 per cent. Only in the 1980s did the U.S. and Swedish trend lines diverge significantly - with the U.S. top earners' income share returning to 1914 levels (18 per cent) and Swedish top-earners income share rising less than half as much.
These parallel trajectories contradict the common assumption that the U.S. and Sweden have always been at opposite ends of the equality continuum. In fact, for most of the 20th century, the affluent democracies followed comparable trend lines with occasional eccentric deviations from the downward trend. (Canada consistently ran in the middle of the pack.) "While it is important to seek explanations for the current differences in inequality between the United States and Sweden," Prof. Scheve and Prof. Stasavage say, "political scientists should also attempt to explain why, in the 1950s and the 1960s, these countries appeared much less different in terms of inequality than they do today."
Whatever the reason for the divergence since the 1980s, the two economists say it wasn't the left-wing bias of Swedish governments. To compare 13 countries over such a long period of time, they devised a precise scoring formula that measured many different historical influences - from political parties to centralized bargaining in trade union negotiations; from union membership to female participation in the labour force.
The results are decidedly contrarian. The study showed strong evidence of a correlation between union membership and income inequality, and between female participation in the labour force and greater income equality, and that richer countries have greater inequality than poorer countries. But these findings were not conclusive.
The economists' judgment on the influence of partisan politics, however, was unequivocal. In the 20th century, they found, left-wing governments in the rich, democratic countries were no more apt than right-wing governments to alter the pre-existing trend lines in the distribution of wealth: "Political factors have had little influence on the evolution of income inequality over the long run," Prof. Scheve and Prof. Stasavage observe. "Income differences have been driven by exogenous [external] economic forces."
If this assessment is correct, it implies that much partisan fussing by governments of both the left and the right is essentially theatrical.
This much is certain: The 20th century's redistribution of wealth began long before either the U.S. or Sweden set about to accomplish it. As in all of the democracies, Sweden's biggest advance toward equality took place between 1914 and 1945 - when the share of national income that went to the top 10 per cent fell from 35 per cent to 22 per cent. It was only in 1954 that Sweden adopted the radical principle of equal pay for work of equal value and set about to achieve income equality by legislative decree.
The decline in inequality, which had started four decades earlier, continued for another 20 years - but without acceleration. By 1990, Swedish income inequality was rising again - as it was in all of the affluent democracies. In this cycle, Sweden has slashed tax rates four times, most recently on Monday of this week when Finance Minister Anders Borg proclaimed that the country confronted a "historic crisis." More exogenous forces are apparently at work.
The OECD confirmed last year, by the way, that the U.S. is now the most "progressive" country in the world. No other nation gets 70 per cent of its revenues from the richest 10 per cent of its citizens - not even egalitarian Sweden.
