Whose economy? Scotland in
Northern Europe: balancing
dynamic economies with greater
social equality
Whose Economy?
Poverty and Inequality
Whose Economy?
Oxfam/UWS seminar series
• Why persistent poverty exists alongside high
economic prosperity, leading to significant
inequalities in income and wealth, and in life chances
and lifestyles, between individuals and communities.
Why, despite decades of economic growth,
regeneration and anti-poverty policies, many Scots
face a life characterised by high mortality, economic
inactivity, mental and physical ill-health, poor
educational attainment, and increasing exclusion.
• Conclusion: Our Economy, A Whose Economy
Seminar Paper, June 2011,
• Why do we have less poverty than the United States,
but much more than Norway, Sweden and
Denmark? The reasons lie very much more in the
distribution systems of the respective countries than
in the personal behaviour of people in poverty. Why
some affluent Western democracies maintain
substantial poverty and others are more egalitarian
and accomplish low levels of poverty is mainly due to
“the generosity of the welfare state”.
•
Adrian Sinfield, Whose welfare state now?, in Whose Economy?, http://policypractice.oxfam.org.uk/publications/download?Id=436761&dl=http://oxfamilibrary.
openrepository.com/oxfam/bitstream/10546/188809/5/dp-whose-economypapers-complete-series-010911-en.pdf
Recent quote
• The prime minister said: “there are countries in
Europe, small countries that make it on their own, but
... we are better off, we are stronger together, we're
fairer together, we're richer together”.
• So must be able to measure strength, fairness, richness
and so compare. And, given what we’ve heard here
already this morning, can we identify an even better
way?
• Are there countries that are more resilient, robust,
competitive [stronger], more equal with less poverty,
greater gender equality and a progressive tax/welfare
system [fairer] and more prosperous [richer]?
Richer?
International Monetary Fund (2011 estimate)
Rank
1
3
4
7
8
13
14
21
22
Country
Luxembourg
Norway
Switzerland
Denmark
Sweden
Finland
Ireland
Iceland
United Kingdom
US$
122,272
96,591
84,983
63,003
61,098
50,090
48,517
43,226
39,604
International Monetary Fund (2011 estimate)
Rank
Country
Intl. $
1
Qatar
102,891
4
13
Norway
Sweden
53,376
40,613
15
16
19
Ireland
Iceland
Denmark
39,507
38,079
37,741
21
22
Finland
United Kingdom
36,723
35,974
World Bank (2010)
Rank
Country
Intl. $
1
Luxembourg
89,769
4
Norway
56,894
10
Ireland
39,727
12
Denmark
39,558
14
Sweden
38,947
19
Finland
36,660
20
United Kingdom
35,860
21
Iceland
34,949
CIA World Factbook (2010)
Rank
Country
Intl. $
1
Qatar
179,000
5
Norway
54,600
17
Sweden
39,100
18
Iceland
38,300
20
Ireland
37,300
21
Denmark
36,600
26
Finland
35,400
27
United Kingdom
34,800
Source: OECD, ONS
Switzerland
Scotland
Italy
Germany
Belgium
Denmark
Sweden
New Zealand
France
Austria
Greece
United Kingdom
Netherlands
Japan
Finland
Spain
Portugal
Canada
United States
Norway
Mexico
Australia
Iceland
Turkey
Luxembourg
Ireland
Korea
Thirty year annual average GDP growth rate (1977-2007), %
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Scotland's long-term GDP growth performance
(1975-2005)
Source: Eurostat, OECD, Scottish Government
Indicator
GDP growth - 30 year annual
average
Scotland Denmark
Finland
Iceland
Ireland
Norway
Sweden
4
4
2
1
1
2
3
3
2
2
2
1
1
2
2
1
2
1
3
1
1
2
2
2
3
1
1
2
3
3
2
1
1
1
4
3
2
1
1
3
3
1
4
2
1
3
2
3
1
2
1
3
1
2
1
2
4
3
3
1
1
2
3
Net migration as a % of the
population
2
4
3
1
1
2
3
Export sales growth -3 yr annual
ave
4
3
3
2
3
4
2
GDP per head
Employment rate (15-64 yr olds)
Productivity
Entrepreneurial activity
Total R&D as % GDP
Business R&D as % total R&D
Graduates as % of the
population (aged 25-64)
Population growth (1999-2006)
Fairer?
Income inequality in selected OECD countries
Source: OECD (2008), Growing Unequal? Income Distribution and Poverty in OECD Countries.
Gini coefficients of income inequality in OECD countries, mid-2000s
0.50
0.45
0.40
0.35
0.30
0.25
0.20
Note: Countries are ranked, from left to right, in increasing order in the Gini coefficient. The
income concept used is that of disposable household income in cash, adjusted for household
size with an elasticity of 0.5.
Source: OECD income distribution questionnaire.
At risk of poverty or social exclusion, 2010
% of the total population
% of total population
EU27*
Denmark
Ireland
Finland
Sweden
United
Kingdom
16.4
13.3
:
13.1
12.9
17.1
8.1
2.7
:
2.8
1.3
4.8
Persons
aged 0-59
living in
household
s with
very low
work
intensity
9.9
10.3
:
9.1
5.9
13.1
Iceland
Norway
9.8
11.2
1.8
2.0
5.6
7.3
Persons atPersons
risk-ofseverely
poverty
materially
after social
deprived
transfers
Persons falling under at least one
of the three criteria (at risk of
poverty or social exclusion)
2009
2010
23.1
17.6
25.7
16.9
15.9
22.0
23.4
18.3
:
16.9
15.0
23.1
11.6
15.2
14.3
14.9
SEASONALLY ADJUSTED UNEMPLOYMENT RATES (%) Nov 11
Youth (under 25s)
Males
Females
EA17
21.7
10.1
10.7
EU27
22.3
9.7
10.0
Denmark
14.9
7.6
7.9
Ireland
29.3
17.3
11.4
Finland
19.6
8.2
6.7
Sweden
23.2
7.6
7.4
UK (Sept 11)
22.0
9.0
7.5
Norway
8.6
3.3
3.4
Net Replacement Rates for six family types: initial phase of unemployment
2009, different earnings levels
67% of AW
No children
100% of AW
2 children
married
couple
Single
person
No children
married
couple
One- Twoearner earner
2 children
married
couple
Single
perso
n
Lone
parent
One- Twoearner earner
150% of AW
No children
married
couple
One- Twoearner earner
married
couple
Single
perso
n
Lone
parent
2 children
One- Twoearner earner
married
couple
Lone
parent
One- Twoearner earner
One- Twoearner earner
Denmark
83
85
91
89
88
93
60
63
74
75
72
77
46
48
61
64
59
64
Finland
64
75
78
85
83
83
52
60
72
74
72
76
44
47
63
60
57
67
Iceland
77
72
89
84
77
91
77
80
86
83
83
88
56
61
71
65
67
74
Ireland
46
72
73
69
76
77
33
52
61
60
63
65
25
39
50
48
49
55
Norway
67
69
84
88
89
86
65
67
80
87
71
82
47
49
65
65
52
67
Sweden
69
69
85
83
80
86
48
48
69
65
58
71
36
36
58
51
44
60
United
Kingdom
55
66
59
72
77
69
38
46
49
64
71
58
26
32
39
46
51
47
TU Membership Density (2008)
over 90% in Finland;
80%–89% in Belgium and Sweden;
70%–79% in Denmark and Norway;
60%–69% in Italy;
50%–59% in Cyprus, Luxembourg and Malta;
40%–49% in Romania;
30%–39% in Austria, Ireland and Slovenia;
20%–29% in Bulgaria, the Czech Republic, Germany, Greece, Hungary,
the Netherlands, Portugal and the UK;
10%–19% in Latvia, Poland, Slovakia and Spain;
below 10% in Estonia and Lithuania.
Higher among women than among men in half of the 20 countries
examined – Denmark, Estonia, Finland, Hungary, Latvia, Lithuania,
Norway, Poland, Slovenia and Sweden
Gender equality
•
•
•
•
•
Proportion in Parliament
Proportion on Company Boards
CEOs
Childcare
Etc.
The Global Gender Gap Index 2010 rankings:
Comparisons with 2009, 2008, 2007 and 2006
2010
Country
rank
score
2009
rank
score
2008
rank
score
2007
rank
score
2006
rank
score
Iceland
1
0.8496
1
0.8276
4
0.7999
4
0.7836
4
0.7813
Norway
2
0.8404
3
0.8227
1
0.8239
2
0.8059
2
0.7994
Finland
3
0.8260
2
0.8252
2
0.8195
3
0.8044
3
0.7958
Sweden
4
0.8024
4
0.8139
3
0.8139
1
0.8146
1
0.8133
Ireland
6
0.7773
8
0.7597
8
0.7518
9
0.7457
10
0.7335
Denmark
7
0.7719
7
0.7628
7
0.7538
8
0.7519
8
0.7462
United
Kingdom
15
0.7460
15
0.7402
13
0.7366
11
0.7441
9
0.7365
Detailed rankings, 2010
Overall
Country
Rank
Score
Economic
Participation
and
Opportunity
Rank
Score
Educational
Attainment
Rank
Score
Health and
Survival
Rank
Score
Political
Empowerment
Rank
Score
Iceland
1 0.8496
18 0.7540
1 1.0000
96 0.9696
1 0.6748
Norway
2 0.8404
3 0.8306
1 1.0000
91 0.9697
3 0.5614
Finland
3 0.8260
16 0.7566
28 0.9993
1 0.9796
2 0.5686
Sweden
4 0.8024
11 0.7695
41 0.9964
80 0.9729
4 0.4706
Ireland
6 0.7773
25 0.7409
1 1.0000
89 0.9700
7 0.3985
Denmark
7 0.7719
23 0.7438
1 1.0000
68 0.9743
10 0.3695
United
Kingdom
15 0.7460
34 0.7210
1 1.0000
90 0.9698
22 0.2933
Press Freedom Index 2011/2012, Reporters
without Borders
Rank
Country
Score
1=
Finland
-10,00
1=
Norway
-10,00
6
Iceland
-7,00
10=
Denmark
-5,67
12
Sweden
-5,50
15
Ireland
-4,00
28
United Kingdom
2,00
http://en.rsf.org/spip.php?page=classement&id_rubrique=1043
Stronger?
The Global Competitiveness Index 2011–2012
rankings and 2010–2011 comparisons
Country/Economy Rank/142
Score
GCI 2011–
2012 rank
among 2010
countries
Switzerland
Singapore
Sweden
Finland
Denmark
UnitedKingdom
Norway
Ireland
Iceland
5.74
5.63
5.61
5.47
5.40
5.39
5.18
4.77
4.75
1
2
3
4
8
10
16
29
30
1
2
3
4
8
10
16
29
30
GCI 2010–
2011 rank
1
3
2
7
9
12
14
29
31
World Economic Forum (2011) The Global Competitiveness Report 2011-2012,
http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf
Entrepreneurial activity rates -Scotland, UK, Arc of
Prosperity countries, 2000 to 2007
TEA index 2007 Average annual Scotland as %
TEA rate of average TEA
rate
Scotland
United Kingdom
4.6
5.5
4.8
5.9
81%
6.9
5.4
6.5
8.2
12.5
4.2
5.7
5.8
8.0
8.8
11.8
4.4
85%
83%
60%
55%
41%
110%
Arc of Prosperity countries
Finland
Denmark
Norway
Ireland
Iceland
Sweden
R&D investments by ICT Scoreboard firms per
country of registered headquarters in the
EU, in millions of € (2005-2008)
ICT priority patent applications by EU Member
State, 2000 and 2007
ICT patent Applications
ICT Patent Applications
/milllion inhab.
ICT Patent
Applications/GDP (billion
euro)
2007
2007
2007
DE
FR
UK
Finland
Sweden
NL
AT
IT
ES
BE
7971
3030
1809
723
571
497
430
350
318
Finland
DE
Sweden
AT
FR
IE
NL
UK
Denmark
236 BE
136
97
62
52
49
36
30
30
29
Finland
DE
Sweden
FR
AT
BG
SI
CZ
EE
22 UK
4.03
3.28
1.69
1.60
1.58
1.35
1.06
0.91
0.89
0.88
Number of ICT and non-ICT patent applications
per million inhabitants, by EU Member
State, 2007
EU Member States’ innovation performance
Innovation leaders: Denmark, Finland, Germany, Sweden all show a performance well
above that of the EU27 average
Happiness and quality of life?
Happiness
Once again, Norwegians rank among the happiest
people in the world, behind only their fellow Nordic
neighbours in Denmark and Finland. The latest Gallup
World Poll indicates that the Nordic countries, with
their social welfare states and relative affluence, must
be doing something right.
Only the people of Iceland were missing when four out
of the five Nordic countries grabbed the top spots on
the Gallup World Poll’s list. Sweden ranked just after
Norway in a tie for fourth place .
Forbes Magazine, from OECD report
Place
In Norway, also considered by the United Nations
to be the world’s best place to live, fully 69
percent of the population were said to be thriving
while none of the respondents was “suffering.”
But 31 percent were considered to be “struggling,”
compared to 30 percent in Sweden, even though
the economy in Sweden is considered to be
weaker than Norway’s.
OECD Better Life Initiative. (2011)
‘Happiest countries in the world’
[OECD plus economic stability]
10. Austria
9. Israel
8. Finland
7. Switzerland
6. Sweden
5. The Netherlands
4. Australia
3. Norway
2. Canada
1. Denmark
Value
2011
(Constant
2005 PPP$)
2011
2011
Value
2011
Gross
National
Income
(GNI) per
capita
Nonincome
HDI
HDI
rank
GNI per
capita rank
minus HDI
rank
Human
Developmen
t Index (HDI)
Human Development Report 2011 - Sustainability and Equity: A
Better Future for All Human Development Index
1
Norway
0.943
47,557
6
0.975
7
Ireland
0.908
29,322
19
0.959
10 Sweden
0.904
35,837
4
0.936
14 Iceland
0.898
29,354
11
0.943
16 Denmark
0.895
34,347
3
0.926
22 Finland
0.882
32,438
0
0.911
28 United Kingdom
0.863
33,296
-7
0.879
Resilient and robust?
Legatum Prosperity Index (2011)
1
Norway
2
Denmark
5
Sweden
7
Finland
11
Ireland
12
Iceland
13
United Kingdom
The Road to a Better Place?
• Can we join this group – that is move into
the high income, high wealth,
sustainable, low inequality, high
opportunity, coherent economy and
society?
Traffic problems: the Road
The Arc of Prosperity
becomes
• ‘the arc of insolvency’
• ‘the arc of darkness’
• ‘the arc of delusion’
“Only prudent Norway is holding its head above water”.
• Associated Press: “Iceland teeters on the brink of
bankruptcy”
• International Herald Tribune: “Iceland is all but officially
bankrupt”
• Forbes: “Iceland teeters on bankruptcy”
• New York Times: “Iceland, in financial collapse...”
Financial crisis
• Surely small countries cannot cope ~ Nordic
model(s) ‘not sustainable’
• Better together
•
Protection
•
Support
•
Recovery
Public Debt (% of GDP) 2010
Country Ranks, By Rank
Rank
10
Country
Iceland
22
27
29
40
53
60
67
United Kingdom
Ireland
Norway
World
Finland
Sweden
Denmark
Value
100.6
68.5
63.7
60.2
53.6
46.6
43.2
38.1
List of countries by public debt
(2011)
Public debt as %GDP
Sweden
Denmark
Finland
Norway
World
United Kingdom
European Union
Ireland
Iceland
(CIA and Eurostat)
39.7
43.7
48.3
48.9
59.3
79.9
82.3
94.9
126.1
(IMF)
39.70
43.65
48.39
55.42
79.25
75.50
80.00
94.92
92.37
Banking crises
IMF Report:
During the past twenty years we have witnessed several major crises
throughout the financial world. The IMF study of banking crises
around the world reveals that 133 countries experienced significant
banking sector problems at some stage during the years 1980-1995.
The amount of public expenditure needed for resolving the crises and
reviving banking sector activity has been remarkable in all countries.
According to the above-mentioned IMF study, in some 25% of the
crises, the costs exceeded 10% of GNP. The figures from the Nordic
countries show that taxpayers' costs have ranged from 3% (Norway)
to 8% (Finland) of GNP. Considering that not only the government
budget but the whole economy suffers from such a crisis, it is
understandable that the countries around the world, together with
international organisations, have joined forces to determine the most
efficient ways to avoid systemic financial crises.
“The arc of prosperity become the arc of insolvency”
Sweden and Norway had banking crises in the early Nineties.
The Scandinavian banks collapsed after ... a credit and
property bubble in the 1980s that burst just like ours. The
Norwegian government moved quickly, driving down the
shares of the banks to zero, nationalising many and taking an
equity stake in the rest. It restructured and recapitalised the
banks and then sold them off, so that the Norwegian
taxpayers didn’t lose and the bankers didn’t get bailed out.
http://iainmacwhirter2.blogspot.com/2008/10/arc-ofprosperity-become-arc-of.html
Stopping a Financial Crisis, the Swedish Way
A banking system in crisis after the collapse of a housing
bubble. An economy hemorrhaging jobs. A market-oriented
government struggling to stem the panic. . banking system
was, for all practical purposes, insolvent. … [but 3 years later,
Sweden back on track]
But the final cost to Sweden ended up being less than 2
percent of its G.D.P. Some officials say they believe it was
closer to zero, [with more returns to come].
However, the reforms enacted during the 1990s seem to
have created a model in which extensive welfare benefits
can be maintained in a global economy.
NY Times
A better fiscal way?
GDP, government deficit/surplus and debt in the
EU (in national currencies)
Denmark
Government deficit (-) / surplus (+) (% of GDP)
Government expenditure
(% of GDP)
Government revenue
(% of GDP)
Government debt (% of GDP)
Ireland
Government deficit (-) / surplus (+) (% of GDP)
Government expenditure
(% of GDP)
Government revenue
(% of GDP)
Government debt (% of GDP)
Finland
Government deficit (-) / surplus (+) (% of GDP)
Government expenditure
(% of GDP)
Government revenue
(% of GDP)
Government debt (% of GDP)
Sweden
Government deficit (-) / surplus (+) (% of GDP)
Government expenditure
(% of GDP)
Government revenue
(% of GDP)
Government debt (% of GDP)
United Kingdom*
Government deficit (-) / surplus (+) (% of GDP)
Government expenditure
(% of GDP)
Government revenue
(% of GDP)
Government debt (% of GDP)
2007
2008
2009
2010
4.8
50.8
55.6
27.5
3.2
51.9
55.2
34.5
-2.7
58.4
55.6
41.8
-2.6
58.5
55.7
43.7
0.1
36.6
36.7
24.9
-7.3
42.8
35.5
44.3
-14.2
48.9
34.7
65.2
-31.3
66.8
35.5
94.9
5.3
47.4
52.7
35.2
4.3
49.3
53.6
33.9
-2.5
55.9
53.2
43.3
-2.5
55.3
52.5
48.3
3.6
51.0
54.5
40.2
2.2
51.7
53.9
38.8
-0.7
55.0
54.1
42.7
0.2
52.9
52.8
39.7
-2.7
43.9
41.1
44.4
-5.0
47.9
42.9
54.8
-11.5
51.4
40.1
69.6
-10.3
50.4
40.3
79.9
Fiscal Stability and Responsibility
Government Expenditure and Revenue as
% of GDP
2007
2010
DENMARK
Government expenditure
50.8
58.5
Government revenue
55.6
55.7
Government expenditure
36.6
66.8
Government revenue
36.7
35.5
Government expenditure
47.4
55.3
Government revenue
52.7
52.5
Government expenditure
51.0
52.9
Government revenue
54.5
52.8
Government expenditure
43.9
50.4
Government revenue
41.1
40.3
IRELAND
FINLAND
SWEDEN
UNITED KINGDOM
Personal taxation
Advanced European Countries: Main Macroeconomic Indicators, 2009–12 (Percent) IMF
Current Account Balance to GDP
2009
Advanced European
Economies
Euro area
2010
2011
2012
General Government Overall
Balance to GDP
2009
2010
2011
2012
0.7
0.8
0.8
1.0
-6.4
-6.0
-4.3
-3.3
-0.3
-0.4
0.1
0.4
-6.3
-6.0
-4.1
-3.1
Finland
2.3
3.1
2.5
2.5
-2.8
-2.8
-1.0
0.3
Ireland
-2.9
0.5
1.8
1.9
-14.2
-32.0
-10.3
-8.6
Other EU advanced economies
Denmark
3.8
5.1
6.4
6.4
-2.8
-2.9
-3.0
-3.0
Sweden
7.0
6.3
5.8
5.3
-0.9
-0.3
0.8
1.3
-1.7
-3.2
-2.7
-2.3
-10.3
-10.2
-8.5
-7.0
United Kingdom
Non-EU advanced economies
Iceland
-11.7
-10.2
1.9
3.2
-8.6
-5.4
-4.1
-2.3
Norway
12.9
12.4
14.0
12.8
10.6
10.9
12.0
11.2
-0.1
-0.1
-0.2
0.0
-6.8
-6.5
-4.6
-3.6
Memorandum
European Union
Total tax revenue as percentage of GDP, 2009, ranked
by tax to GDP ratios
Summary
View from Wall Street
The happiest countries seem to be places
where there is a good balance of work and
leisure time. Not all nations can afford to keep
unemployment low through government
subsidies. Not all countries can afford to
provide universal medical coverage. Not all
countries can afford to educate almost all of
their children, which in turn supports extremely
high literacy rates and builds a population of
skilled workers.
24/7 Wall St
Together or not:
The prime minister said: “there are
countries in Europe, small countries
that make it on their own, but ...
we are better off X
we are stronger X
we're fairer
X
we're richer
X
Impacts of poverty
• poor in a rich country intensely stressful
• made worse by stigmatisation both in the
media and as result of political rhetoric.
• Pressures to consume stem from a culture
that elevates passions and image above
relationships, community contribution, and
care for others and the environment
• There must be a better way
Routes out of poverty
• Possible to overcome poverty, 6th richest =>
adequate resources. Need allocation in more
effective and sustainable way.
• Greater role for businesses: paying taxes, ↑
employment of those further from the labour
market, offering decent jobs in sustainable
industries.
• Higher expectation on businesses to deliver
social sustainability, particularly in return for
the array of state support that businesses
receive.
Social protection and equality
• social protection measures (education, NMW
and social safety nets) strong mechanisms to
increase equality.
• they are a collective good - all depend on and
all benefit, cf. financial drain.
• funded fairly by progressive taxation.
• Collective ownership, management =>
genuine participation in all economic activity
– sharing ownership, work, and rewards
Can we move from poverty prosperity
• new prosperity, a shared future where we are
simply better at sharing, where there are
fewer extremes of money and wealth, esteem
and status, power and position.
• community-led economy focused on quality
and distribution of growth, where the assets
of communities and the value of individuals
are utilised and enhanced to promote social
and environmental sustainability.
Size matters
Iceland's Finance Minister Steingrimur
Sigfusson has told the BBC that his
country's size has been crucial in the
move towards recovery: "You are quicker
turning a small boat around than a big
ship."