A Comparison of the Socio-Economic Status in America and Scandinavia

The American economic system is designed to keep people in poverty rather than lift them out of it. In contrast, the Nordic system of social democracy will help sustain those who cannot support themselves as well as offer opportunities to help the working poor get back on their feet. David K. Shipler, in his book The Working Poor: Invisible in America, states that the working poor are “buffeted, bruised, and defeated” and involved in a “cycle of failure.” Shipler states, “When an exception breaks this cycle of failure, it is called the fulfillment of the American Dream” (Shipler 5).

The United States used to be the land of opportunity when the income gap was much smaller. Now, it is little more than a land for the rich to get richer and the poor to maintain a low level of income. In the United States and other capitalist-leaning countries, wealth is used as a form of insurance, meaning the more wealth one has, the more likely one is to survive the twist and turns experienced in life.

In contrast, in Nordic/Scandinavian countries, all citizens have a right to survive the harshness of life. Health care is a free, taxpayer-supported system that guarantees every citizen is provided for.

Higher education is considered a right, so everyone has the same opportunity to attend college in Nordic countries. Childcare is often a government-provided service, and maternity leave is guaranteed. In the United States, the poor are given a minimum allowance from the government to cover these expenses, but it often is not enough.

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This leads to debt, which imprisons the working poor in the United States and often makes it impossible for them to catch up to those who had wealth to begin with. This leads to a large gap between the rich and the poor.

Both the United States and all of Scandinavia are considered mixed economies. This means that the United States is not a pure capitalist country and the Scandinavian countries are not pure socialist countries. While the United States leans capitalist, it still has a small social welfare system and government programs, which offer some help to the working poor. The United States, therefore, is a capitalist-leaning mixed economy, which favors corporations over people. While Scandinavia has many government controlled agencies, including total control over the liquor business, Scandinavian countries are not purely socialist. Rather, they are a socialist leaning mixed economy called a social democracy, which allows for free trade, but advocates high taxation to provide for a vast social welfare system. This system favors citizens over business.

Before an attempt to illustrate how the United States can improve the status of the working poor, one must illustrate and establish the failings of the American economic and welfare system. The American economic system imprisons the working poor through offering pitiful minimum wages, small allowances for food and sustenance, and allowing higher education only to those that can afford it, which leads to the poor accumulating mountains of debt, forever enslaving them to the American market economy. Borrowing and consumerism are encouraged at an early age. In 1998, the toy company Mattel released “Cool Shoppin’ Barbie,” the first toy doll with a credit card. The toy was released in a partnership with MasterCard, in which the Barbie came with two credit cards: one for the Barbie and one for the child. With no credit limit, the toy would proclaim, “credit approved” when the card is swiped through the toy scanner (Los Angeles Times). This early-age branding allows the credit companies to set children up for a lifetime of debt.

The working poor or other Americans who may be on the welfare system may be encouraged to borrow money. While funds may be given to families to cover the most basic necessities, it does not give enough money to cover small luxuries. For anything above food, shelter, and transportation, the working poor would use credit cards to pay for these luxuries. Some banks cater to the working poor or individuals with poor credit. In fact, some credit cards, such as the First Premier Credit Card, charge a $49 annual fee, a $6.50 monthly fee, and an APR of 49% just to carry a balance on their credit card (Los Angeles Times). These are traps used to fulfill the individual’s need to spend money into the American consumerist economy, while trapping the buyer into mountains of debt that will keep them from accumulating any wealth. Education in America is not free. Many Americans choose to take out student loans, putting them in debt at the moment of graduation. This is yet another way Americans are “kept in their place” and not allowed to migrate between classes. The poor usually stay poor, the middle class will stay middle class, and the rich will stay rich. Those who are born into rich families often get to attend prestigious private college prep schools, while those born into poor families have to struggle through underfunded public schools. The rich have an advantage from the start, while the poor would have to be extraordinarily gifted in order to attain the same information a rich student would.

Even the American legal system is biased against the working poor. Flat-rate ticketing punishes the poor while being a minor inconvenience to the rich. Ticketing is based on a flat rate in the United States rather than as a proportion of income. If the purpose of speeding tickets is to discourage one from speeding, then the rate should affect the poor and the rich the same. While a $300 ticket could cripple the monthly budget of a low-income American, it would barely affect a rich American due to it being a small proportion of their gross income. This, in turn, punishes poor Americans over wealthy Americans.

Kevin Lincoln, an author for Business Insider, lists the 39 most unequal nations on the planet regarding wealth distribution. The United States is the 39th most unequal nation on the planet. The author states, “The U.S. has more income inequality than Russia (#51) and China (#52). It ranks far worse than Portugal (#71), which is the worst in Western Europe.” Most of the nations on this list, with the exceptions of the United States, Hong Kong, and Singapore, are developing third-world nations. The American system allows for the rich to amass enormous amounts of wealth while allowing the poor to sleep on the streets at night. According to the US Census Bureau, 1 in 3 Americans are considered “working poor.”

Kevin Lincoln also lists the most equal nations in terms of wealth distribution. Sweden ranks as the most equal nation in the world, followed by Hungary, Norway, and the Czech Republic. For the rest of this paper, I will attempt to describe how Nordic countries came to be the most equal nations in the world and I will advocate for the United States to reform their economic systems to a model that resembles Scandinavian countries. However, even though the American system fails the working poor, without the minimal welfare system that the United States does have, poverty rates would skyrocket. Without Social Security, the poverty rate for the elderly would jump an extra 40% (Kasperkevic, The Guardian). This shows a correlation between welfare systems and poverty rates. If the welfare system were expanded, poverty rates would decrease.

Scandinavian social democracy encourages progression as opposed to wealth accumulation. In Scandinavia, education is considered a right. It is a taxpayer-funded service available to all citizens in most Nordic countries, such as Sweden, Norway, and Finland. This means that all citizens are on the same playing field and that their opportunities are not limited by the amount of wealth they were born into. However, this only guarantees that tuition will be paid for. Matt Phillips, a writer for The Atlantic, states, “College in Sweden is free. But rent isn’t. And food isn’t… Costs of living in Sweden are high, especially in cities such as Stockholm, which regularly ranks among the world’s most expensive places to live. But again, this stuff isn’t free for students in other European countries either. So why do Swedish students end up with more debt? It’s pretty simple, actually. In Sweden, young people are expected to pay for things themselves instead of sponging off their parents.” While the costs of living are high in Sweden, allowing equal access to quality education will ensure that the playing field is kept equal amongst all citizens.

Anu Parten, a writer for The Atlantic, illustrates the success of Finnish schools. “Finland’s schools owe their newfound fame primarily to one study: the PISA Survey, conducted every three years by the Organization for Economic Co-operation and Development (OECD). The survey compares 15-year-olds in different countries in reading, math, and science. Finland has ranked at or near the top in all three competencies on every survey since 2000, neck and neck with superachievers such as South Korea and Singapore. In the most recent survey in 2009 Finland slipped slightly, with students in Shanghai, China, taking the best scores, but the Finns are still near the very top. Throughout the same period, the PISA performance of the United States has been middling, at best (What Americans Keep Ignoring About Finland’s School Success, The Atlantic).”

The Swedish government offers more services to its citizens that would mitigate the burden placed upon the working poor. Childcare is offered as a free, taxpayer-funded service. Employers are required to grant maternity and paternity leave. Two months of paid vacation is also a requirement for employers (Work in Sweden). This is unheard of in the United States, and is seen by many as unfeasible. However, Sweden’s high tax rate funds these social programs which covers the cost of many services that would incorporate a large portion of the budget of families in the United States.

Wealth is used as a form of insurance in the Untied States: the more wealth one has, the more able one is to survive the harshness of everyday life. The wealthy can afford the better medical treatments, better schools, and better childcare. In Scandinavia, however, these services are already offered to citizens, taking a huge financial burden off of the working poor. If these services, which would have been a huge portion of a poor American’s budget, were offered for free, then the poor can work to apply their funds to other products and services, or they can invest the money in order to move up the class structure. Felix Salmon, an author for the Reuters news agency, points out to the reader that in the United States, the richest 20% of the population controlled 84% of the wealth of the entire nation. In Sweden, the richest 20% only controlled 36% of the nation’s wealth. This shows that the income gap is much larger in the United States than it is in Sweden. Salmon states, “In countries like Sweden, indeed, the social safety net is strong enough that you don’t need to build wealth in the same way you do if you’re Chinese, say. Wealth is a form of insurance, and when insurance is nationalized, you need less wealth.” While this would put a higher tax burden on the upper class, this would increase equality amongst all citizens. This system is not meant to create the best economy, nor is it meant to reward the rich. The system of social democracy is intended to create equality and close the income gap between rich and poor. The United States would be much better for those wanting to start a business. This paper is not arguing that social democracy is the best economic system; rather, it argues that social democracy is the fairest economic system.

Another aspect of the fairness of Scandinavian society is the idea of speeding tickets being a proportion of one’s income. Joe Pinsker, an author for The Atlantic, describes how speeding tickets work in Finland. “Finland’s system for calculating fines is relatively simple: It starts with an estimate of the amount of spending money a Finn has for one day, and then divides that by two-the resulting number is considered a reasonable amount of spending money to deprive the offender of. Then, based on the severity of the crime, the system has rules for how many days the offender must go without that money. Going about 15 mph over the speed limit gets you a multiplier of 12 days, and going 25 mph over carries a 22-day multiplier.”

The idea of flat-rate ticketing being biased against the working poor in the United States usually will not cross one’s mind, because it has been an aspect of American culture that many experience in their first few years of driving. However, many European countries are adopting a fairer system of ticketing to ensure that the rich are held to the same standard as the poor. Wealth inequality is one of the biggest issues facing the working poor in the United States. The American economic system does its best to make sure the poor are kept poor and the rich are kept rich, while a social democracy would promote equality while allowing for reasonable economic freedom. The United States should use Scandinavia as a model for a fair economic system that would make sure all citizens are taken care of while allowing for free trade and the restoration of the American dream.

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A Comparison of the Socio-Economic Status in America and Scandinavia. (2021, Dec 21). Retrieved from https://paperap.com/a-comparison-of-the-socio-economic-status-in-america-and-scandinavia/

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