Where in the world is it easiest to get rich? | Harald Eia | TEDxOslo


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