He\’s going to get shot for saying this, isn\’t he?
In a speech to the Labour organisation Progress, he will say: "Aspiration and ambition were natural human emotions – not the perverted side effect of primitive capitalism.
"Rather than questioning whether huge salaries are morally justified, we should celebrate the fact that people can be enormously successful in this country. Rather than placing a cap on that success, we should be questioning why it is not available to more people. Our overarching goal that no one should get left behind must not become translated into a stultifying sense that no one should be allowed to get ahead.
"I believe a key challenge for New Labour over the coming years is to recognise that, far from strengthening social justice, a version of equality that only gives you the opportunity to climb so far, actually subverts the values we should be representing.
"Instead, any progressive party worth its name must enthusiastically advocate empowering people to climb without limits, free from any barrier holding them back."
Which brings us to this excellent image.
So, we have adjusted everything so that we can compare like with like. Instead of using market exchange rates, we use PPP, as we should do when comparing internationally. We\’re measuring the standard of living that is.
Further, this is after all of the tax and benefits: so it\’s the actual standard of living that people have. In the paper itself, Smeeding discusses things like health care and food prices (more expensive in the US for the former, in the EU for the latter) and so on. He calls those differences pretty much a wash.
Finally, we\’re comparing these living standards to one simple standard: median US income. So, the way to read this chart is that the poorest 10% in Sweden enjoy 38% of the US median income. The richest 10% of Swedes have 113% of the US median income. Finland it\’s 38% and 111%.
Now, look at the US system. 39% of US median income. So, the living standard of the poorest in the US is actually higher than the living standard of the poorest in either Sweden or Finland. All that horribly oppressive taxation, that huge redistribution of resources, leads to an improvement in the lives of the poor of precisely….umm,… nothing.
But look at the richest 10% in the US: 210% of median income. Climbing without limits, eh, free from barriers.
Clearly the US system, the provision of a minimal welfare state, a safety net, in Bill Clinton\’s phrase, a hand up not a hand out, creates greater freedom and liberty for said climbing that the Nordic system of insisting upon confiscating the majority of the economic product of the successful. And it does so while giving the poor exactly the same standard of living as that crushing of freedom.
So, anyone who believes in said freedom should be looking to move from the Nordic style confiscatory tax regime to the US lighter touch, yes? After all, the poor do just as well, while the others do better: it\’s a Pareto improvement, making some better off while making no one worse off.
This is otherwise known as a free lunch, something that we are always at pains to insist does not exist within economics….until we meet politicians that is, for their actions can indeed be so counter-productive as to leave us with said free lunch if we can only get them to stop committing the lunacies that they currently are.