The Government is Why the US has More Inequality than Sweden

Dylan Mathews:

The government is the only reason the US has more inequality than Sweden, by Dylan Matthews: ...the income distribution in the US still stands out as particularly uneven. ...

The US actually isn't especially unequal if you look at income before taxes or government transfers like Social Security and food stamps..., a whole number of wealthy countries — Israel, the UK, Greece, Poland, Germany, Finland, and Ireland — have more pre-tax/transfer inequality than we do... Spain, Norway, the Netherlands, and Sweden all have exactly the same level as the US does.

The entire difference comes after taxes and transfer spending. ...Germany and Ireland both have significantly more pre-tax/transfer inequality than the US, but significantly less post-tax/transfer inequality... Meanwhile, the Netherlands and Sweden, which have famously egalitarian economies with generous welfare states, have the exact same level of pre-tax/transfer inequality as the US. It's not that their societies just naturally produce more equitable distributions. Their governments simply do more redistribution. ...

Note that the pre-tax/transfer number doesn't take out the effects of government policy entirely; there's a lot the government can do to alter the pre-tax/transfer distribution, including promoting or hampering labor unions or increasing the minimum wage. A number of countries, including Japan, Korea, and Switzerland, boast significantly lower pre-tax/transfer inequality than the US. ...