March 15, 2016
Actually that is not quite what Pearlstein said. The billionaire-owned Post, which has largely turned itself in recent weeks into a Bernie Sanders attack organ, apparently wanted yet another hit piece. Pearlstein in fact told readers that if the country elected Senator Sanders, and he was able to implement his policies to make the United States more like Scandinavia, then we would have to get used to a higher unemployment rate (twice).
While the unemployment rates in these countries are somewhat higher than in the United States, the employment rates are also higher. According to the OECD, the percentage of people between the ages of 15 and 64 who are working is 75.5 percent in Sweden, 74.4 percent in Norway, and 73.2 percent in Denmark compared to 68.9 percent in the United States. If the United States had the same share of its population working as Denmark employed, 10 million more people would have jobs. If we had the same employment rates as Sweden, 15 million more people would be working.
The reason that these countries can have both a higher employment rate and unemployment rate is that more people in these countries are in the labor market. This is in part because they have more family friendly policies, such as long periods of paid parental leave and good publicly supported child care. (The employment gap is much larger for women than men.) It is also because they have better education systems that ensure even people at the bottom have decent educations. And, they don’t incarcerate almost one percent of their population like the United States.
Pearlstein also cites a paper by Daron Acemoglu, Thierry Verdier, and James Robinson which argues that countries with strong welfare states like the Scandanavian countries don’t produce the same sort of innovation as countries like the United States. This paper relies far more on hand-waving than data to make its case. These countries have high rates of new business formation and innovation by most measures.
Pearlstein also cites an analysis by the Tax Policy Center which argues that a financial transactions tax can only raise $50 billion a year rather than the $75 billion a year assumed by Sanders campaign. (He proposes this tax to pay for free college for all.) It is worth noting that this difference is due to the fact that the Tax Policy Center assumes that trading of stocks and other assets is highly responsive to the tax. Under the Tax Policy Center’s assumptions, the decline in trading expenses would actually be larger than the revenue raised through the tax. This means that the entire burden of the tax would be borne from Wall Street in the form of less revenue from trading. (This assumes that less trading — falling back to 1990s levels — does not reduce the ability of firms to raise capital.)
It would be very impressive if a tax could raise $50 billion a year by eliminating wasteful trading on Wall Street. It would have been useful if Pearlstein had pointed out this implication of the Tax Policy Center’s analysis.
Anyhow, it is clear that the billionaire owned Post is prepared to do its part to undermine a candidate who wants to reduce the wealth and power of billionaires. It is also not surprising that it very much objects to a candidate who thinks billionaires should pay taxes.
Addendum:
For a fuller set of comparisons between the United States and the larger group of Nordic countries, see CEPR’s chartbook.
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