Tuesday, April 19, 2005

It's better to be poor in Norway than in the US

It's better to be poor in Norway than in the US | csmonitor.com
Read the entire story at: http://www.csmonitor.com/2005/0414/p17s02-cogn.html

Except for the citizens of a few tiny oil kingdoms and Luxembourg, Americans on average live better than anybody else.

Americans' standard of living is 30 percent higher.

But if the United States is so rich, critics ask, how come its poor are poorer than almost anywhere else in the developed world?

Its median per capita gross domestic product (GDP), that is, the output of goods and services for the typical Canadian, is 19 percent below the median in the US.

Nevertheless, the poorest 18 percent of Canadians remain better off, on average, than the poorest 18 percent of Americans.

The contrast is even starker in oil-rich Norway, where the poorest 38 percent of the people fare better, on average, than the poorest 38 percent of Americans, despite a lower median per capita GDP.

The US House of Representatives is poised this week to stretch that inequality still further by repealing completely after 2010 the already diminished estate tax.

By 2011, heirs to the richest 600 or so estates would no longer owe any inheritance taxes either.

Caught between liberals who decry the obvious inequality and conservatives who could, correctly, point out that the top 62 percent of Americans are considerably better off than the top 62 percent of Norwegians, the US Senate may resist such a sweeping change in estate taxation.

But beyond the political debate, raw numbers tell the story.

The US has the worst distribution of income of any well-to-do country.

In a list of 30 prosperous nations, including smaller economies such as Taiwan and Israel, only Russia and Mexico have a greater maldistribution of income than the US.

"We choose to let the market determine most everything," says Timothy Smeeding, a public policy professor at the Maxwell School of Syracuse University, who compiled these inequality numbers.

"We do far less on the social side.

We have not as good a safety net.

Under Prime Minister Tony Blair, for example, Britain has made a costly and concerted effort to help its poorest families have a more equal chance for the education and other benefits that money can provide.

Now, 5 percent of Britain's poor are better off than America's poor.

In the US, both Republicans and Democrats voted several years ago to reform the welfare system - a change that Professor Smeeding generally approves.

As a result, the number of those on welfare, often women with children, declined from 5 million in 1994 to 2.2 million in 2000.

But that reform "transformed the welfare poor into the working poor," he adds.

They earn minimum wage, or just a bit better, and receive insufficient support from the government in the way of child care, earned income tax credits, cheap housing, and other assistance to rise out of poverty.

That lack of government support makes them poorer than those in countries with stronger safety nets.

At the request of the Monitor, two of Smeeding's colleagues, Lee Rainwater and Markus Jantti, calculated the point at which residents of several other wealthy nations are better off in purchasing power than those similarly placed on the US income ladder.

Besides the Canadian and Norwegian examples above, 12 percent of the poorest Finns, Swedes, and Dutch do better on average than the poorest 12 percent in the US; 15 percent of the German poor outdo 15 percent of the American poor; and 20 percent of Belgian poor beat the US poor.

Smeeding also compared the poverty of American children (using the income of their families) with that of children in the world's 19 richest nations.

Whatever one thinks about income inequality, if the US doesn't do a better job in supporting the children of low-income families, says Smeeding, the nation faces "a rough future.

Summarized by Copernic Summarizer


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