As I wrote, I agree it is healthy for societies to study what works for other societies as inspiration for ideas that could work for us.
Sweden is more collective in their social approach in comparison to the more individualistic USA. The size and homogeneity of Sweden matters because collective societies inherently rely on higher levels of trust to function effectively. This trust is built through shared cultural practices, mutual aid, and consistent social interactions, which reinforce communal bonds and the sense of shared destiny.
The population differences between the USA and Sweden matter because smaller, more homogenous communities exhibit higher levels of trust compared to larger, less homogenous ones. Smaller communities have a stronger sense of common identity, mutual understanding, a higher level of predictability in interactions. In contrast, larger and more diverse communities don't establish this level of cohesion and mutual understanding as a wider variety of backgrounds, beliefs, and experiences make it harder to develop trust and understanding.
There are no examples I can think of for collective approaches in smaller communities scaling up to work as effectively in larger communities.
Your assertion that citizens of Sweden are more satisfied with their country than in the US is hotly debated. The annual World Happiness Report attempts to rank countries, and for 2023 they rank Sweden 6th with a score of 2.276 vs. the USA 34th with a score of 2.935. We can't interpret these scores to indicate Swedes are 30% happier than Americans. There is a big statistical spread in these ranking, the 95% confidence interval for ranking of Sweden 4th to 13th and for the USA is 18th to 43rd. The authors pick a particular weighting of GDP per Capita, perceived social support, life expectancy, generosity, perceptions of corruption, etc. Pick a different weighting and you get a different result. The fact that Afghanistan is not ranked as the happiest country in the world leads me to question their methodology. Consistent with the impact of size, it is worth noting that by this ranking the USA is the happiest nation over 100 million population.
Measuring happiness by country is a complex task, fraught with difficulties. Happiness is subjective by nature and varies greatly among individuals based on cultural, social, and personal factors. Different cultures have varying interpretations of what constitutes happiness. Standardizing survey methods across diverse populations has proven impractical due to language nuances and differing societal norms leading to varied interpretations of questions and responses. This issue is compounded by the difficulty in capturing all aspects that contribute to happiness, such as emotional well-being, life satisfaction, and fulfillment, in a single metric. All these factors contribute to the complexity and potential inaccuracies in measuring and comparing happiness across countries.
We agree that Sweden has a higher tax rate on a broader spread of their nation than the US and uses those taxes to deliver more health, childcare, and education services to their citizens. This is consistent with their relatively higher collectivist history. My observation has been that US citizens consistently prioritize a more individualistic approach which has led to extraordinary income, growth, and innovation.
Sharing a response that a friend posted to LinkedIn:
Interesting read Ben, well written.
Some of your comparisons may not support your supposition that “...social models of Sweden are tailored to its unique characteristics, and may not be replicable ... for America.”
Why would the population difference matter? Sweden is ~3% of the US, let’s look at a metro 3% of Chicago: Waco. Would one expect few similarities? Chicago and Waco are the county seat for their respective counties. The form of government is similar: each has a mayor elected to a four-year term, Waco has six council members elected from districts, Chicago has 50 aldermen. Data suggests that governments with an order of magnitude differences in population can still function with a similar form of governance.
Sweden has a higher tax rate than the US. Sweden delivers more services (healthcare, childcare, education, etc.). Citizens of Sweden are more satisfied with their country than in the US. Tax rates don’t tell the story, what you get for the taxes is what matters.
In governmental policy, the sciences, medicine, etc., the engine of capitalism is adapting proven techniques to new problems. Learn what others are doing that is successful for them, understand how we could apply it, and adapt it to make it work for us.
Perhaps it is better to separate size from homogeneity in a society as the basis for evaluating how effective governmental policies may be. Both Sweden and Japan have high homogeneity. Both have “trust [which] is built through shared cultural practices, mutual aid, and consistent social interactions, which reinforce communal bonds and the sense of shared destiny.” Sweden has a population of 10M, Japan is at 125M.
That’s why I would focus on homogeneity and much less on size, but …
To the point of whether collective approaches can scale up, I would submit that Japan with its large population still has a very common view of their identity and throughout the country there is a “mutual understanding, [and] a higher level of predictability in interactions.” Both Sweden and Japan have comprehensive social services and strong economies.
So maybe homogeneity doesn’t predict as much as thought.
Consider that population growth is a better predictor. But looking at Real GDP growth versus population growth for these, the US lags Sweden and Japan in GDP growth as a percentage of population growth. (Numbers are from https://www.worldometers.info/gdp/gdp-by-country/ using data from the World Bank.)
Country Real GDP Growth Population Growth 1993-2020
Japan 24% -1%
US 54% 31%
Sweden 69% 21%
Let me note here that the US has a much higher GDP and a vibrant economy. Never bet against the US economy.
Yet the data doesn’t show a clear link between some of these macro variables and GDP growth. It also doesn’t explain the differences in happiness or satisfaction in these countries.
Your reply challenges the accuracy and utility of happiness indices, partly challenging the methodology and the ease with which the results can change with different weightings. My view is that whenever reviewing subjective human nature, assumptions must be made, and it is up to the reader to determine how useful the modeling is. To me, they are useful and representative on a relative basis.
(I fear I either misunderstood your comment about Afghanistan, or there is a typo. The report you reference shows that Afghanistan is ranked #1 on the scale of “Happiness gaps between the top and bottom halves of each country's population.” It shouldn’t surprise that Afghans on the lower and higher end of the social scale agree (more than in any other country) on their ranking, the lowest: #137 of 137 on the happiness index.)
In your original note, you contrasted collective versus individualistic societies. This is pejorative; more successful people believe their success was a function of their individual performance, less successful people are more likely to blame the system. Americans and your academic and professional audience, are optimistic and achievement-oriented people, so these are loaded words that taint an analysis of the different societies.
In the US the most successful areas, measured by local GDP, are ones with like-minded individuals focused on competing with each other in common business areas. Think Silicon Valley for technology or Manhattan for finance. Silicon Valley has experienced an increase from 2002 to 2021 in GDP of 357% to $410,419 (FRED Economic Data from the St Louis FED.: https://fred.stlouisfed.org/series/NGMP41940). Apple and Alphabet are much more similar to each other than they are to other non-tech industrials of similar size, and this is also true of the dozens of smaller companies in the MSA. Those working in the tech industry there have a common view of their identity and throughout the region there is a mutual understanding, and a high level of predictability in interactions.
These are some of the characteristics that you state for a “collective” society; when seen through the lens of USA economic engines such as Silicon Valley and Manhattan, combined with an individualistic spirit, have delivered profound economic output. I used collective in quotes because Silicon Valley has a diverse population, but a common view of their industry and professional mores.
So perhaps when a friend or family member asks, “What about Sweden?”, the response should be “They are a highly successful country with great similarities to the growth engines of the United States. Let’s look into the policy that you brought up.”
And now Ben, a salutation that maybe only you might understand: May the XPS be with you.
Data is from Wikipedia, or Ben’s article references, unless noted otherwise.
Sweden has a GDP per capita (2022) of $56k while Japan’s is $34k. US GDP is $75k.
You raise quite a few interesting points, here are some thoughts...
You mention that "collective" could be viewed as a pejorative. Perhaps some see it that way, but I don't. In my usage, "collective" is a term drawn from social science, referring to a group of individuals who share common interests, values, or objectives, and often act as a single entity in certain respects. Common interests and values, such as those in Silicon Valley, are necessary but not sufficient for collectivism; there may also be a component of acting as a single entity. Culturally, Sweden and Japan have more collectivist tendencies than the US. Russia is also more collectivist, but that hasn't worked out as well for them.
Regarding the World Happiness report, I mistakenly referred to the wrong table. Afghanistan should have been a clue. However, the correct table, where Sweden is #6 and the US is #15, doesn't alter my initial argument: in their analysis, the US has the highest happiness of any country with a population over 100 million, and there is a high degree of subjectivity in the factors considered and how they are weighted. More on this in another blog. https://worldhappiness.report/ed/2023/world-happiness-trust-and-social-connections-in-times-of-crisis/#ranking-of-happiness-2020-2022
It's unclear whether you're arguing that America would be happier with higher taxes and more redistribution. Identifying causation is challenging when Sweden and the US differ on so many variables.
The question is: Has Sweden been successful because of collectivist policies, or simply because they are Swedes? When a Swedish economist told Milton Friedman that there was no poverty in Sweden, Friedman famously replied: “That’s interesting, because among Scandinavians in America we also have no poverty.” https://betonit.substack.com/p/how-socialist-is-sweden
"The million or so Americans with Swedish origins are considerably richer than average Americans, as are other immigrant groups from Scandinavia. If Americans with Swedish ancestry formed their own country, their per capita GDP would be $56,900, over $10,000 more than the average American and far above Sweden's GDP per capita of $36,600. Swedes living in the US are thus approximately 53% wealthier than Swedes (excluding immigrants) in their native country." https://twitter.com/RichardHanania/status/1725558454595854645/
Sweden’s top personal income tax rate is 52.3%, compared to 37% in the US. However, Sweden’s top rate of 52.3% applies to income starting at roughly US$62,000, at which Americans pay only a 22% rate. Additionally, Sweden has a national sales tax rate of 25%. Average Swedish families pay the top tax rate, whereas Americans typically don't. It may be counterintuitive to consider that Sweden actually has one of the least progressive tax systems among rich countries. I assume you aren't advocating that US taxes become more regressive.
We should indeed study practices of many countries for ideas, but need to consider policies holistically and remain cautious before drawing conclusions about causality. What must not cherry pick specific policies without considering the interrelationship between policies, history, and culture.
And my reply to the LinkedIn comment:
As I wrote, I agree it is healthy for societies to study what works for other societies as inspiration for ideas that could work for us.
Sweden is more collective in their social approach in comparison to the more individualistic USA. The size and homogeneity of Sweden matters because collective societies inherently rely on higher levels of trust to function effectively. This trust is built through shared cultural practices, mutual aid, and consistent social interactions, which reinforce communal bonds and the sense of shared destiny.
https://www.jstor.org/stable/3086035
The population differences between the USA and Sweden matter because smaller, more homogenous communities exhibit higher levels of trust compared to larger, less homogenous ones. Smaller communities have a stronger sense of common identity, mutual understanding, a higher level of predictability in interactions. In contrast, larger and more diverse communities don't establish this level of cohesion and mutual understanding as a wider variety of backgrounds, beliefs, and experiences make it harder to develop trust and understanding.
https://scholar.harvard.edu/files/laibson/files/measuring_trust.pdf
There are no examples I can think of for collective approaches in smaller communities scaling up to work as effectively in larger communities.
Your assertion that citizens of Sweden are more satisfied with their country than in the US is hotly debated. The annual World Happiness Report attempts to rank countries, and for 2023 they rank Sweden 6th with a score of 2.276 vs. the USA 34th with a score of 2.935. We can't interpret these scores to indicate Swedes are 30% happier than Americans. There is a big statistical spread in these ranking, the 95% confidence interval for ranking of Sweden 4th to 13th and for the USA is 18th to 43rd. The authors pick a particular weighting of GDP per Capita, perceived social support, life expectancy, generosity, perceptions of corruption, etc. Pick a different weighting and you get a different result. The fact that Afghanistan is not ranked as the happiest country in the world leads me to question their methodology. Consistent with the impact of size, it is worth noting that by this ranking the USA is the happiest nation over 100 million population.
https://worldhappiness.report/ed/2023/world-happiness-trust-and-social-connections-in-times-of-crisis/#ranking-of-happiness-2020-2022
Measuring happiness by country is a complex task, fraught with difficulties. Happiness is subjective by nature and varies greatly among individuals based on cultural, social, and personal factors. Different cultures have varying interpretations of what constitutes happiness. Standardizing survey methods across diverse populations has proven impractical due to language nuances and differing societal norms leading to varied interpretations of questions and responses. This issue is compounded by the difficulty in capturing all aspects that contribute to happiness, such as emotional well-being, life satisfaction, and fulfillment, in a single metric. All these factors contribute to the complexity and potential inaccuracies in measuring and comparing happiness across countries.
https://anderson-review.ucla.edu/the-unhappy-quest-for-a-happiness-index/
We agree that Sweden has a higher tax rate on a broader spread of their nation than the US and uses those taxes to deliver more health, childcare, and education services to their citizens. This is consistent with their relatively higher collectivist history. My observation has been that US citizens consistently prioritize a more individualistic approach which has led to extraordinary income, growth, and innovation.
Sharing a response that a friend posted to LinkedIn:
Interesting read Ben, well written.
Some of your comparisons may not support your supposition that “...social models of Sweden are tailored to its unique characteristics, and may not be replicable ... for America.”
Why would the population difference matter? Sweden is ~3% of the US, let’s look at a metro 3% of Chicago: Waco. Would one expect few similarities? Chicago and Waco are the county seat for their respective counties. The form of government is similar: each has a mayor elected to a four-year term, Waco has six council members elected from districts, Chicago has 50 aldermen. Data suggests that governments with an order of magnitude differences in population can still function with a similar form of governance.
Sweden has a higher tax rate than the US. Sweden delivers more services (healthcare, childcare, education, etc.). Citizens of Sweden are more satisfied with their country than in the US. Tax rates don’t tell the story, what you get for the taxes is what matters.
In governmental policy, the sciences, medicine, etc., the engine of capitalism is adapting proven techniques to new problems. Learn what others are doing that is successful for them, understand how we could apply it, and adapt it to make it work for us.
Perhaps it is better to separate size from homogeneity in a society as the basis for evaluating how effective governmental policies may be. Both Sweden and Japan have high homogeneity. Both have “trust [which] is built through shared cultural practices, mutual aid, and consistent social interactions, which reinforce communal bonds and the sense of shared destiny.” Sweden has a population of 10M, Japan is at 125M.
That’s why I would focus on homogeneity and much less on size, but …
To the point of whether collective approaches can scale up, I would submit that Japan with its large population still has a very common view of their identity and throughout the country there is a “mutual understanding, [and] a higher level of predictability in interactions.” Both Sweden and Japan have comprehensive social services and strong economies.
So maybe homogeneity doesn’t predict as much as thought.
Consider that population growth is a better predictor. But looking at Real GDP growth versus population growth for these, the US lags Sweden and Japan in GDP growth as a percentage of population growth. (Numbers are from https://www.worldometers.info/gdp/gdp-by-country/ using data from the World Bank.)
Country Real GDP Growth Population Growth 1993-2020
Japan 24% -1%
US 54% 31%
Sweden 69% 21%
Let me note here that the US has a much higher GDP and a vibrant economy. Never bet against the US economy.
Yet the data doesn’t show a clear link between some of these macro variables and GDP growth. It also doesn’t explain the differences in happiness or satisfaction in these countries.
Your reply challenges the accuracy and utility of happiness indices, partly challenging the methodology and the ease with which the results can change with different weightings. My view is that whenever reviewing subjective human nature, assumptions must be made, and it is up to the reader to determine how useful the modeling is. To me, they are useful and representative on a relative basis.
(I fear I either misunderstood your comment about Afghanistan, or there is a typo. The report you reference shows that Afghanistan is ranked #1 on the scale of “Happiness gaps between the top and bottom halves of each country's population.” It shouldn’t surprise that Afghans on the lower and higher end of the social scale agree (more than in any other country) on their ranking, the lowest: #137 of 137 on the happiness index.)
In your original note, you contrasted collective versus individualistic societies. This is pejorative; more successful people believe their success was a function of their individual performance, less successful people are more likely to blame the system. Americans and your academic and professional audience, are optimistic and achievement-oriented people, so these are loaded words that taint an analysis of the different societies.
In the US the most successful areas, measured by local GDP, are ones with like-minded individuals focused on competing with each other in common business areas. Think Silicon Valley for technology or Manhattan for finance. Silicon Valley has experienced an increase from 2002 to 2021 in GDP of 357% to $410,419 (FRED Economic Data from the St Louis FED.: https://fred.stlouisfed.org/series/NGMP41940). Apple and Alphabet are much more similar to each other than they are to other non-tech industrials of similar size, and this is also true of the dozens of smaller companies in the MSA. Those working in the tech industry there have a common view of their identity and throughout the region there is a mutual understanding, and a high level of predictability in interactions.
These are some of the characteristics that you state for a “collective” society; when seen through the lens of USA economic engines such as Silicon Valley and Manhattan, combined with an individualistic spirit, have delivered profound economic output. I used collective in quotes because Silicon Valley has a diverse population, but a common view of their industry and professional mores.
So perhaps when a friend or family member asks, “What about Sweden?”, the response should be “They are a highly successful country with great similarities to the growth engines of the United States. Let’s look into the policy that you brought up.”
And now Ben, a salutation that maybe only you might understand: May the XPS be with you.
Data is from Wikipedia, or Ben’s article references, unless noted otherwise.
Sweden has a GDP per capita (2022) of $56k while Japan’s is $34k. US GDP is $75k.
Bob,
You raise quite a few interesting points, here are some thoughts...
You mention that "collective" could be viewed as a pejorative. Perhaps some see it that way, but I don't. In my usage, "collective" is a term drawn from social science, referring to a group of individuals who share common interests, values, or objectives, and often act as a single entity in certain respects. Common interests and values, such as those in Silicon Valley, are necessary but not sufficient for collectivism; there may also be a component of acting as a single entity. Culturally, Sweden and Japan have more collectivist tendencies than the US. Russia is also more collectivist, but that hasn't worked out as well for them.
While Japan's economy has rebounded from the pandemic, overall, as you point out, their economy has underperformed over the past three decades. Plagued by low growth, deflationary pressures, a rapidly ageing population, shrinking workforce, low immigration, and stagnant real wage growth, their long-term outlook remains uncertain. The term 'Japanification' has become a warning to other advanced economies to avoid the same fate. https://www.gsam.com/content/gsam/global/en/market-insights/gsam-insights/perspectives/2023/japans-economic-revival-the-road-ahead.html#section-none
Regarding the World Happiness report, I mistakenly referred to the wrong table. Afghanistan should have been a clue. However, the correct table, where Sweden is #6 and the US is #15, doesn't alter my initial argument: in their analysis, the US has the highest happiness of any country with a population over 100 million, and there is a high degree of subjectivity in the factors considered and how they are weighted. More on this in another blog. https://worldhappiness.report/ed/2023/world-happiness-trust-and-social-connections-in-times-of-crisis/#ranking-of-happiness-2020-2022
It's unclear whether you're arguing that America would be happier with higher taxes and more redistribution. Identifying causation is challenging when Sweden and the US differ on so many variables.
The question is: Has Sweden been successful because of collectivist policies, or simply because they are Swedes? When a Swedish economist told Milton Friedman that there was no poverty in Sweden, Friedman famously replied: “That’s interesting, because among Scandinavians in America we also have no poverty.” https://betonit.substack.com/p/how-socialist-is-sweden
"The million or so Americans with Swedish origins are considerably richer than average Americans, as are other immigrant groups from Scandinavia. If Americans with Swedish ancestry formed their own country, their per capita GDP would be $56,900, over $10,000 more than the average American and far above Sweden's GDP per capita of $36,600. Swedes living in the US are thus approximately 53% wealthier than Swedes (excluding immigrants) in their native country." https://twitter.com/RichardHanania/status/1725558454595854645/
Sweden’s top personal income tax rate is 52.3%, compared to 37% in the US. However, Sweden’s top rate of 52.3% applies to income starting at roughly US$62,000, at which Americans pay only a 22% rate. Additionally, Sweden has a national sales tax rate of 25%. Average Swedish families pay the top tax rate, whereas Americans typically don't. It may be counterintuitive to consider that Sweden actually has one of the least progressive tax systems among rich countries. I assume you aren't advocating that US taxes become more regressive.
We should indeed study practices of many countries for ideas, but need to consider policies holistically and remain cautious before drawing conclusions about causality. What must not cherry pick specific policies without considering the interrelationship between policies, history, and culture.
May the XPS also be with you.
Curious, does your US tax burden include state and local taxes?
Sources is the Tax Policy Center. Their materials state their analysis includes all federal, state, and local taxes.
https://www.taxpolicycenter.org/briefing-book/how-do-us-taxes-compare-internationally