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Where in the world is it easiest to get rich? | Harald Eia | TEDxOslo - YouTube
Channel: TEDx Talks
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Translator: Zs贸fia Herczeg
Reviewer: Queenie Lee
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Where in the world
is it easiest to get ...
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rich?
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That's the question I asked my professor
when I studied sociology in the early 90s
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because he was having a lecture
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about social democracies,
the Scandinavian welfare state,
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and he was a classical
left-wing sociology professor,
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and he could not hide his enthusiasm
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when he talked about
these egalitarian societies
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with no rich people and no poor people.
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But I, on the other hand, I was writing
my master's thesis about rich people.
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When I interviewed my informants
from the upper classes,
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they all said the same thing:
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"Life in Scandinavia is tough."
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(Laughter)
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"We have to work twice
as hard to earn money
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because we have to struggle against:
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high taxes,
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strong unions controlling the wages
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and a generous welfare state
that makes people lazy."
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As one rich guy told me,
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he said, "They call it
a social security net.
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Well, I call it a hammock."
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(Laughter)
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And as every aspiring social scientist,
I started to go native;
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I started to feel sympathy
for these rich people.
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And that's why I raised my hand
and asked my professor,
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"Well, what if you don't care
so much about equality?
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What if your dream is to become rich?
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Where in the world should I have been born
to become really rich?"
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I still remember the puzzled look
on my professor's face.
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But he answered the best he could.
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Something like,
"Well, if that's your goal in life,
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you should probably
have been born in a society
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with free markets, low taxes,
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and minimal government intervention.
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And he added, "If you want to become rich,
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you should probably not study sociology."
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(Laughter)
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That was a good answer
and the best guess we had back then.
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That is until I saw that the University
of Oslo professor in Economy, Karl Moene,
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actually had checked the facts:
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"Where in the world
is it easiest to get rich?"
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And before I share with you
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where you should go to earn money,
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we have to define "rich."
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The UN talks about the poverty line.
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You know, if you earn
less than one dollar a day,
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maybe two dollars a day.
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But we have to define the richness line.
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It's a more fun line, actually.
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And the most reliable report,
when it comes to rich people,
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the Wealth Report,
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they set the richness line
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at individuals with net worth
more than 30 million USD.
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In the consultant jargon,
these people are called UHNWI's.
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That is Ultra High Net Worth Individuals.
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That guy, by the way, is not rich.
He is just a model.
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(Laughter)
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Actually, on the lower part of the model.
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(Laughter)
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And I have saved some money
by keeping the watermark there as well.
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(Laughter)
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Smart.
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(Laughter) (Applause)
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So, according to The Wealth Report,
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there are more than 170, 000
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UHNWI's in the world.
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And here is the top five list
of countries with the richest people.
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Number five: China, with more than 8,000.
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UK, Germany, Japan,
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and on top, of course, the United States
with more than 40,000 rich people.
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But of course, we are not interested
in the absolute numbers here.
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We are interested in rich people
per capita, per million inhabitants.
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And if we leave out the pure tax havens,
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like Cyprus, and Switzerland,
Hong Kong, Singapore, Monaco -
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where we have an artificially
huge share of rich people -
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it turns out that we have
on number 5 Denmark -
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with 179 rich people
per one million inhabitants -
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Canada, New Zealand, Sweden
and on top: Norway.
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(Laughter)
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But where's the US?
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On place 13.
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So what happened to my old professor's,
you know, social democracies?
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There are no rich people there.
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But OK. 30 million dollars,
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that's just pocket money
in a country like the US,
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where people can get insanely rich.
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(Laughter)
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Look at the watermark again?
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(Laughter)
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So, let's raise the richness line
up from 30 million dollars up to ...
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1 billion dollars.
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And the most reliable source here
is the Forbes billionaires list.
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And according to the Forbes,
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if you look at billionaires
per million inhabitants.
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Number 5, Germany: 1.2 billionaires.
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1.2 billionaires per million inhabitants.
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The United States 1.7, Norway 2, Sweden,
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and on top Iceland with 3.1
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(Laughter)
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With a single billionaire:
Thor Bj枚rg贸lfsson.
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(Laughter) (Applause)
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He could have been a model.
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(Laughter)
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But the point is, the United States: 1.7
Scandinavia taken as a whole: 2.1
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And the big mystery is ...
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How can this be?
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How can Bernie Sanders' dream societies,
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these socialist paradises
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be such a breeding place for rich people?
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(Laughter)
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That's a mystery.
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(Laughter)
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There are two reasons.
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Reason number one is free education.
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Social democracies give free
higher education to everybody,
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and cheap student loans, and grants.
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That enables more people
to use their talents and earn money.
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We can see this
in the social mobility numbers.
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Imagine all fathers in a society,
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and we divide them into five groups
based on income:
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from the bottom fifth up to the top fifth.
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Then we look at their sons,
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and divide their income into five steps,
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and we see how many sons of the fathers
from the bottom income
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end up on top.
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How many sons go from rags to riches?
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If it was perfect social mobility,
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if talents and opportunities
were equally distributed,
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20% from the bottom would end up
on each of these five ladders.
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So let's look at the numbers
for the different countries.
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In Denmark, they are pretty close
to perfect social mobility
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with 14% that goes from rags to riches.
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In Norway 12, Sweden 11,
the United States 8.
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Because of free education,
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there are more self-made men
in Scandinavia than in the US.
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And if we look at those sons who don't
end up on top but stay at the bottom,
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that go from rags to rags.
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Again, 20% would be perfect mobility.
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In Denmark, 25% ends up at the bottom,
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Sweden a bit more. Norway.
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And look at the United States.
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This is because education
in the United States is very expensive.
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But the second and
most important explanation
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for Scandinavia being such
a breeding place for rich people is this:
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Have you ever noticed
if you have been to the United States,
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when you drive around
and drive through a toll plaza,
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there are actually people sitting there
taking your money.
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Compare that to my local toll plaza.
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(Laughter)
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Just a sign with some
gizmo attached to it.
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And when you go to a supermarket
in the United States,
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there are actually people there helping
to pack your things into your bags.
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It's very friendly and convenient
compared to my local grocery store.
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Like this.
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(Laughter)
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There's nobody there.
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(Laughter)
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The biggest shock I had
when I went to the US for the first time,
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when I went to the restroom,
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there were actually people working there.
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Compare that to my local public toilet.
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(Laughter)
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There's not even a cleaner there;
it cleans itself automatically.
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And the reason for this difference
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is that Scandinavian unions
are pressing up the minimum wages.
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It's so expensive to have
these people working there.
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In Norway, tollbooth operators,
supermarket packers,
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and a restroom janitor
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would earn almost three times
as much as in the US.
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And that's why we have replaced
these people with machines.
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That is why I was surprised
when I saw this article
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in The New York Times in 2014.
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Preparing for Chip-and-PIN Cards
in the United States.
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(Laughter)
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Because in the United States
people are still using paper checks
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as a method of payment,
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while Scandinavian banks have made us
start using Chip-and-PIN cards long ago.
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Because the minimum wages
here are so high.
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So Scandinavian banks can't afford
having people manually control the checks.
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So Scandinavian companies,
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because of the unions
pressing up the wages,
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they have to downsize
and introduce new technology or else ...
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they will go broke.
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And new technology increases
the productivity in a society,
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which in the long run
also increases profit.
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And on the upper end of the wage ladder,
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in the name of solidarity,
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Scandinavian unions hold back the highest
salaries of the skilled workers.
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So for example,
a Norwegian senior engineer -
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it's my uncle, by the way.
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(Laughter)
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That's why there's no watermark there.
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(Laughter)
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Actually, he would look cooler
with a watermark, better.
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(Laughter)
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He earns, on average per year,
76,000 dollars,
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while his American colleague earns
more than 100,000 dollars.
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So American engineers ...
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(Laughter)
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They are not only more good-looking,
but they are more expensive.
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Of course, this wage restraint
on high-skilled work is good for profit.
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So, the unions are in effect
subsidizing the capitalists.
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I wish I knew all this when I gave up
a career in social science
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because the beauty and the irony
of these findings, I think, is amazing.
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On the one hand,
you have my rich informants
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that complain about how hard
it is to get rich in Scandinavia.
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They had it all wrong.
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Not only is it easier to get rich
in a social democracy,
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but they are critical
to the very institutions
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that have helped them get rich.
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High taxes, which gives free education
and more talent into the economy.
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Strong unions that are helping
to increase productivity,
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and a generous welfare state
that makes the unions accept downsizing
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because they know that their members
will be well taken care of.
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So the unions cooperate
because of the safety net.
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So rich people are a bit like
Immanuel Kant's famous bird,
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who thinks she could fly
even faster in airless space,
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forgetting that it's the air itself
that gives her lift.
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On the other part
of the political spectrum,
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when Bernie Sanders is praising
Scandinavian societies,
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he forgets that these are not anti-rich
or anti-capitalist systems.
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Because the welfare state and the unions
work in tandem with capitalist dynamics.
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And I think that is the most
important lesson here.
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The economy is not a zero-sum game.
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We are in this together.
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And that is why Scandinavia
is a better place
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to fulfill the American dream ...
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(Laughter)
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than America itself.
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Thank you so much.
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(Applause) (Cheering)
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