Re: Inequality and the concept of income

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

Per,
     Capital gains have "grown beyond all imagination"
in most countries and income has become more unequally
distributed in most countries.  I fully agree that Sweden is
not what it used to be, and some of the other Scandinavian
countries have probably done better jobs of maintaining
income and wealth equality.  But, Sweden still looks pretty
good on the global scale.
Barkley Rosser
-----Original Message-----
From: Per Gunnar Berglund <BergP867@xxxxxxxxxxxxx>
To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
Date: Tuesday, April 11, 2000 11:35 AM
Subject: Inequality and the concept of income


>Barkley,
>
>My initial point was this: Income, when measured (1) in nominal terms
>and (2) exclusive of capital gains on wealth, still appears rather
>evenly distributed in Sweden. But that might not give the full picture,
>because:
>
>(1) Prices on the categories of consumer goods that low-income groups
>depend upon (rent, food, etc) are likely disproportionately high
>compared to other countries, which a comprehensive statistical study
>based on PPPs might reveal. In other words, a disaggregated approach in
>which differently weighted price indices are used for each income
>decile, according to the composition of their spending, might yield
>quite different GINI coefficients than the ordinary, nominal (or
>"one-CPI-fits-all") approach.
>
>(2) Capital gains in Sweden are beyond all imagination. In 1999, the
>comprehensively defined General Index for the Stockholm bourse climbed
>some 65 percent. The index, which is continuously re-weighted to reflect
>the changing composition of the components (i.e. their value relative to
>the total bourse value), takes 1979 as its base year, so that 1979=100.
>Today's reading is well over 6,300 (it peaked at some 6,800 before the
>Microsoft verdict). In other words, the bourse has increased 63-fold in
>20 years! Nominal GDP increased less than fourfold. In 1999, the capital
>gains in bourse equity alone amounted to some 75% of GDP -- and this
>does not even account for the gains in other property!
>
>The concept of income was defined by Haig-Simons and Lindahl as 'the
>maximum amount of consumption that will leave the wealth intact', which
>concept would include capital gains, at any rate 'real' ones, in
>relation to the consumer prices. In Sweden there has been no inflation
>since 1993, so this adjustment need not be done. The capital gains on
>the bourse would count as 'income' in the Haig-Simons-Lindahl sense, and
>considering the extremely concentrated ownership of equity, that income
>accrues to a very small fraction of the population. An inclusion of
>capital gains, therefore, would certainly yield much bigger GINI
>inequality coefficients than we are accustomed to. Indeed, I suspect an
>inclusion of capital gains would put Sweden in the same league as e.g.
>Brazil as far as inequality is concerned.
>
>On a general level, I find it most remarkable that the 'pussycat' view
>of Sweden lingers on with American liberals in spite of 25 years of
>accelerating and mismanagement of the economy, a process which has now
>reached grotesque proportions by any standards.
>
>The truth is that few (if any) of the characteristic features of the
>'good old' Sweden remain today. Robert Heilbroner, being aware of the
>tendency to depict the country in rather too rosy terms, would talk
>about the 'Slightly Imaginary Sweden' that we all know and love. While
>this was no doubt accurate, say 15 years ago, I fear the discrepancy
>between the Imaginary and the Real Sweden has grown too big to be called
>'slight' anymore.
>
>Best,
>Per
>
>____________________________________________
>Per Gunnar Berglund
>CEPA    80 Fifth Avenue, 5th floor    New York, NY 10011
>Tel: (212)229-5923    Fax: (212)229-5903
>
>
>
>>>> "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx> 04/09 3:22 PM >>>
>Geoffrey,
>      Sweden's wealth remains rather unevenly distributed,
>the Wallenbergs still holding most of their holdings.  But,
>income is among the most evenly distributed of any in
>Europe, although not as much so as prior to ten years ago,
>even taking account of high prices for certain necessity items.
>Barkley Rosser
>
>