Whose economy Scotland in Northern Europe balancing dynamic

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

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 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 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-2000 s 0. 50 0. 45 0. 40 0. 35 0. 30 0. 25 T R M EX TU PR L SA U PO IT A BR G ZL N IR L N P R C G JP ES AN C O AU EC S D -3 0 KO R EU D L FR A H U N IS R O N H E C L LD N N BE FI K SV T ZE C X E AU LU SW D N K 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 EU 27* 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 at. Persons 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 25 s) Males Females EA 17 21. 7 10. 1 10. 7 EU 27 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 Lone parent One- Twoearner Single perso n 150% of AW 2 children married couple No children married couple Lone parent One- Twoearner Single perso n 2 children married couple Lone parent One- Twoearner 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 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 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 Switzerland Singapore Sweden Finland Denmark United. Kingdom 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 GCI 2011– GCI 2010– 2012 rank 2011 rank among 2010 countries 1 2 3 4 8 10 16 29 30 1 3 2 7 9 12 14 29 31 World Economic Forum (2011) The Global Competitiveness Report 2011 -2012, http: //www 3. 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 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 EU 27 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

HDI rank Value 2011 (Constant 2005 PPP$) 2011 Nonincome HDI GNI per capita rank minus HDI rank Gross National Income (GNI) per capita Human Developmen t Index (HDI) Human Development Report 2011 - Sustainability and Equity: A Better Future for All Human Development Index Value 2011 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 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 1980 s 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: //iainmacwhirter 2. 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 1990 s 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 1. 0 -6. 4 -6. 0 -4. 3 -3. 3 -0. 4 0. 1 0. 4 -6. 3 -6. 0 -4. 1 -3. 1 Finland 2. 3 3. 1 2. 5 -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 -2. 8 -2. 9 -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. 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. 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, 6 th 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. "