5 ms·

Folks love to talk about these marginal 'perks' in Social Democracies, and the benefits experienced by the least fortunate, but you never hear about the costs o

• nmfisher 6y ago
  And interestingly, no apparent difference in fertility rate compared with the USA.
• bwb 6y ago
  Taxes in the usa are not accurate above, you need to add in healthcare and social security type payments too. Our tax rate is as high with those things included.
  • TMWNN 6y ago
    >Taxes in the usa are not accurate above, you need to add in healthcare and social security type payments too. The OECD definition of disposable income is after healthcare and social security costs (http://stats.oecd.org/glossary/detail.asp?ID=46 http://stats.oecd.org/glossary/detail.asp?ID=46).
• tchalla 6y ago
  > Folks love to talk about these marginal 'perks' in Social Democracies, and the benefits experienced by the least fortunate, but you never hear about the costs of these programs or their impact on the finances of the average household. What process would you use to come up with a set of quantitative criteria that would measure costs and benefits?
• jononor 6y ago
  Surprisingly large differences in household debt! What are the major contributors to these differences? USA seems to be in the middle. Right next to Germany, which one might think more similar to the Nordic countries compared to US. Where as Canada is higher than Finland.
  • pi-rat 6y ago
    I don't know about the other countries, but "most" Norwegians are house owners (and therefore have pretty large debts, up to 6x their yearly income). The government offers heavy incentives that promote owning a house/apartment, making renting long term a pretty bad economic option. If you plan to live somewhere for more than 2-3 years it's cheaper to own than to rent.
  • IkmoIkmo 6y ago
    In short: interest rates & tax benefits. Mortgage rates are typically far lower. My rate is about 1.5%. In Denmark it's -0.5%, yes you get paid to borrow. If you look at mortgages, you have two negative cashflows: the principal you pay back, and the interest you pay on the loan. Of these two, the interest is actually the only cost. (taxes/insurance is separate because they're typically paid regardless of whether you have a mortgage, you'd still pay this even if you bought the home in cash without a mortgage.) Paying back principal is not costing you anything. As in, suppose you had a $100 loan and you paid it back, you now have $100 less cash but also $100 less of a loan. You're not any richer or poorer. Similarly, if you do the opposite: borrow $100, sure you have $100 in cash, but you're not richer, because you still owe $100. In that sense, if you borrow $250k for a home and over the years, earn $250k and use it to pay off the house, you've not 'lost' $250k. You still own it, it's just locked up in the home. If you sell the home, you get the $250k back, assuming the price hasn't changed. But the interest, that's gone forever. That's where the real cost is in carrying a mortgage. As such, the borrowing capacity and housing costs that someone can bear, is substantially influenced by mortgage rates. In the US these are 2-3% or so, in Denkmark it's negative 0.5% or so. These interest rates essentially dictate how favourable it is to buy, and how much more prices can rise, while still being affordable. Just compare the monthly fees of a 3% interest mortgage to one with a 1% interest mortgage. Or more informative even: compare how much you can borrow with say $1k a month in mortgage fees (principal+interest, or just interest whatever you want), when the interest rate is 1% or 3%. For example, a $200k loan at 3% is $300k in total fees. A $280k loan with 0.5% interest is also $300k in total fees. And that's including principal. If you take out the principal, the difference is far greater. On top of that there's significant tax benefits to home ownership in much of Europe, like deducting interest payments from your taxable income to a very large extent. The combined effect is that a lot of households have tons of debt which is actually very affordable and not problematic. (until interest rates will rise, which will get ugly... but most economists expect low rates to be the 'new normal'... we'll have to see. And a lot of the rates get fixed for 10-30 years so the impact if it happens, is not very direct).
• sveme 6y ago
  Does it matter if people are so much happier and feel so much more secure in nordic countries compared to the US?
  • read_if_gay_ 6y ago
    Correlation is not causation. Happiness might be affected by a lot of things other than the respective social systems. By the way, asking out of legitimate interest, do you have any statistics on that?
    • sveme 6y ago
      There you go: https://worldhappiness.report/ed/2020/the-nordic-exceptionalism-what-explains-why-the-nordic-countries-are-constantly-among-the-happiest-in-the-world/ https://worldhappiness.report/ed/2020/the-nordic-exceptional...
• joelbluminator 6y ago
  The U.S is still the world hegemon. It means they can basically print away as much money as they want and sell their debt to other countries that use USD because the USD is the reserve currency of the world. So the U.S can keep piling on debt and show magnificent gdp growth yet not have it's currency devalued. Europe doesn't operate like that both out of cultural reasons and because it isn't a hegemon (The Euro is less important than the Dollar). If (once?) the U.S loses it's special reserve currency status, you will see a massive USD devaluation and salaries would look a lot more similar to Europe. The U.S current success is much more due to historical reasons than any policy/taxation reason.
• IkmoIkmo 6y ago
  I know it's quite attractive to compare one-dimensional statistics internationally, and I won't say it has no uses. But it can also be misleading and we have to be careful about understanding the appropriate context. For example, there is no word on comparing household income on a purchasing power parity basis. You'd want to reflect prices, which may be higher/lower. There is no word on the fact household sizes in the region in and around Scandinavia are typically very low, quite a bit lower than the US. (fewer dependents, lower required income for the same standard of living). There is no word on average vs median statistics, the former favouring less equal countries like the US in the statistics, but the latter painting a more accurate picture of the typical household. There is no word on expense requirements. Yes, direct social transfers (e.g. rental assistance) would be part of the disposable income statistics. But indirect subsidies (e.g. social housing rents, substantially below market rate, or universal healthcare insurance premiums far below market rates, or universal tertiary education costs far below market rates) are not part of these statistics. For example, the fact university is free in Denmark, is absolutely not part of the household income. The fact public healthcare is free in Denmark, is not part of household income statistics. Yet the quality of both is very good. There is also no word on the differential interest rates. For example, Denmark currently has negative mortgage rates. Obviously that increases household debt. But any additional household mortgage debt for example is actually creating a net income for these very same households. You can debate whether these interest rates signal economic issues, that's a fair discussion, but the point still stands that 'not all household debt is equal'. You cannot say 'high debt is worse', when many EU countries have interest rates from -0.5% to - 1.5% and the US has interest rates of 2 - 3%, and compare them. Same with net worth, it all ties in to every other aspect of the welfare state. In the US you have a minimal welfare state and thus must accumulate net worth for retirement, kids' education, medical copayments etc etc. In many North/west EU countries education, healthcare, housing is all free or strongly subsidised and publicly funded, requiring much lower accumulations of private net worth to attain the same quality of life. In short, the data you cite is not incorrect, but your conclusions are shortsighted and need far more interpretation and context to approximate the truth of the matter.