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On the Left’s Dream of Turning America into Scandinavia
Many left-liberals have a real thing about the social democracies of Scandinavia. As University of Arizona sociologist Lane Kenworthy has put it, “Over the course of the next half century, the array of social programs offered by the federal government of the United States will increasingly come to resemble the ones offered by [the Nordic welfare states].” And he might be right, if Democrats have their way. No sooner the arrival of universal healthcare did Democrats move into their next project: universal preschool. And next perhaps a universal basic income. (Hey, where is the VAT to pay for all this stuff?) There are fans in the media, too. Again, here is New York Times reporter Neil Irwin on what lessons America can learn from Scandinavia’s high labor force participation rates in creating a pro-work safety net:
In short, more people may work when countries offer public services that directly make working easier, such as subsidized care for children and the old; generous sick leave policies; and cheap and accessible transportation. If the goal is to get more people working, what’s important about a social welfare plan may be more about what the money is spent on than how much is spent. If correct, it could have broad implications for how the United States might better use its social safety net to encourage Americans to work. In particular, it could mean that more direct aid to the working poor could help coax Americans into the labor force more effectively than the tax credits that have been a mainstay for compromise between Republicans and Democrats for the last generation.
AEI’s Mike Strain, quoted in the Irwin piece, has a response here. So too does AEI’s Stan Veuger. Let me pull out a few of their insights. First, Strain:
I’m quoted in an article in the New York Times on the paper, and as the article reports I do think that we can learn some things from Scandinavia — better transportation, better public education — and I oppose expanding the government’s role in child care (we have enough middle-class entitlements, thank you very much). … I would make two other points as well. Americans might be willing to fork over more of their hard-earned cash to the government if they had more confidence that the government would spend the money in a productive way. … And, as I have written, very high marginal income tax rates would likely be very damaging to the long-term future of the United States. Why would a young person want to be a surgeon or an entrepreneur if the government will take seventy cents of her top dollars of income? Like Scandinavian culture, the longer-term reactions to high top rates — skill acquisition, occupational choice, general attitudes about work — are much harder to measure. And it is fine for economists to focus on what they can measure when writing their papers. But it is not fine for the public debate to assume that these effects are zero just because economists can’t measure them.
And Veuger:
But might policy and politics be downstream from culture? Well, that certainly appears to be the case once we look at Scandinavian culture. Scandinavians trust their fellow citizens. They think poor people have typically been unlucky instead of lazy. They vote actively and participate in civil society. They respect the rule of law, and they donate to charity. Professor Kleven recognizes all of these things, and ultimately chooses not to guess what causes what. Yet for the ambitions of American progressives, that distinction matters very much. If all of these things are so precisely because the Scandinavian countries are small and homogeneous and have been that way for quite some time, then there is not much to be learned from this Scandinavian business. The Scandinavians themselves seem quite confident that they know the answer: culture matters and that their countries are small and homogeneous matters. They are the most Euroskeptic peoples of the continent. Norway is not a member of the European Union, Sweden joined only recently, and none of the three adopted the eurozone’s common currency. They seem to like their small, homogeneous countries just fine. And perhaps that’s what Scandinavia ultimately teaches us: the value of subsidiarity, not of subsidies.
Other economists wonder if Nordic-style capitalism is as conducive to innovation. Certainly they file fewer patents and generate fewer superrich entrepreneurs. (Recall Strain’s remarks on taxes.) As economists Daron Acemoglu, James Robinson, and Thierry Verdier explain in their paper “Can’t We All Be More Like Scandinavians?”: “We cannot all be like the Scandinavians, because Scandinavian capitalism depends in part on the knowledge spillovers created by the more cutthroat American capitalism. … Some countries will opt for a type of cutthroat capitalism that generates greater inequality and more innovation and will become the technology leaders, while others will free-ride on the cutthroat incentives of the leaders and choose a more cuddly form of capitalism.”
Published in General
This sentiment, while true, also provides fodder to the American left’s argument.
As soon as somebody, anywhere, points out that Scandanavian countries have better-functioning public sectors because their cultures have greater solidarity and cohesion, that’s the cue for an American liberal to say: “See? If only you knuckle-draggers would get in line with us, we could make high-speed rail from NYC to LA cheaper and faster than flying!”
Of course, that important descriptor “small” seems to fly over many lefty’s heads.
The Left wants to make America monolingual and monoethnic? ;-)
But seriously…
I disagree.
The lesson to be learned is that these sorts of issues are best left to governments which represent populations of similar size and similar homogeneity as those in the Scandinavian countries.
In other words, the States:
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Furthermore, Norway and Iceland aren’t even members of the European Union!
If those countries can govern themselves successfully without the guiding hand of Brussels, why does the Left think States of similar size are stygian dystopias without the guiding hand of Washington D.C.?
Hmm, maybe I should have read the entire quote before rebutting…
;-)
It doesn’t matter that our backgrounds may be so splintered, we can still transform ourselves into one unified people, today. All we need is love.
Although personally, I would much rather prefer to come together as one nation under a groove.
As a Scandinavian-American, I think the culture in those countries is a huge part of their functioning. I live in Minnesota which has a large population of Scandinavian-Americans, and is closer in terms of taxes and services to the nordic countries our ancestors came from. The fact of the matter is that the characteristics mentioned in the post are also present here in the north star state. It is the only reason we don’t have the budget issues of California, given the way our left leaning voters empower the folks in St. Paul to spend. We always rank in the top 10 states in terms of income tax, but our unemployment numbers are back down to 2001 levels. We have a large population of basically good folks that work hard and put their best into the community. That and the weather keeps the rif-raf out, it can literally kill you if you don’t keep your wits about you.
The distance between Los Angeles and New York City is about 4,082 kms.
The longest continuous high-speed rail route in Europe, between London and Marseilles, is about 1,112 kms.
Japan’s high-speed rail network is about 1,775 kms long.
China’s longest high-speed rail route is about 3,342 kms long.
Rings a bell for me.
Capitalism’s chief advantage is that it’s an unbiased information system. Sales (and more importantly, changes in sales) will tell you where to focus your resources for maximum value.
But if a market becomes too large, and too many factors influence the change of sales, then the numbers are less and less informative. The larger the set of dimensions affecting the facts, the less informative a single measurement is.
In plainer English, if you have a product that sells a certain amount, and you change a single quality … say, the color … and sales change by a particular amount, then you can easily target the relationship between color and sales. But if you change multiple qualities at the same time, you can’t guarantee which quality (or combination of qualities) made the difference.
In a population the size of the United States, it’s often a mistake to appeal to the whole market, because too many competing forces in the giant total market make analysis impossible.
Has the American market simply become too big?
GASP!!!
Where in the world is transportation cheaper than in the US?
$6/gallon gas in Sweden.
Leftists think that because a bus might cost $2 per trip, that that’s all the cost of transportation someone incurs. They forget the cost of having to live nearby a bus or train line, which drives up property and rent prices for houses located there. You might pay $2 for a bus ticket, but the place you live in has a build in cost of being close to the bus line.
Driving, allows you to live in a cheaper and more convenient place.
Hmm…no.
http://data.worldbank.org/indicator/LP.LPI.INFR.XQ?order=wbapi_data_value_2014+wbapi_data_value+wbapi_data_value-last&sort=asc
The US is ranked 5th in the world in terms of infrastructure. The US with its massive size and by far the largest population of any Western country, is behind only a city state (Singapore), 2 nations with tiny populations (Norway and Netherlands), and Germany.
The rest of the Scandinavian countries, Sweden, Finland and Denmark, are nothing special.
Norway is ahead on this list because of its trade infrastructure due to oil.
The question no one asks, certainly no Leftist would dare ask…is WHY Scandinavian countries are so successful.
I.e., how did they build their wealth?
Well, if you look at the companies which dominate the markets in these countries, like Sweden, you’ll find something peculiar. These are gigantic companies that have been around for very long times, build by rich…aristocrats….who continue to dominate the Scandinavian economy and elite.
And BTW, a lot of those companies made/make their money off weaponry, and industrial products. Wonder what the Left thinks of that.
Norway, is a European version of a Gulf State. It’s an oil-based economy.
Finland…nothing special about it. Just a run of the mill European economy.
So I don’t understand either the Left’s or the Right’s arguments in Scandinavia. We’re either talking unique idiosyncratic situations (Norway), or old-school aristocratic mega-companies like Sweden.
And of course, there’s the issue that they aren’t actually all that great. GDP per capita is about 30% higher in Houston Texas than in Stockholm Sweden.
Nuh-uh! No need for a job if you get a check…
Norway also refused to join the EU and/or adopt the Euro, preferring to be a part of the European Free Trade Association (Norway, Iceland, Liechtenstein, Switzerland) and to stick with the krone.
Apropos of nothing: Norwegian health care – All in-patient hospital care is free-of-charge, but visits to doctors, prescription drugs, radiology and other medical tests, dental care, and non-essential surgery, incur charges. It’s government-run healthcare, but it isn’t free healthcare.
What if you don’t get the cheque unless you have a job?
That would make people “feel bad”
Once again, it’s vital that we’re comparing apples to apples.
Norway’s passenger rail network serves 58 million riders per year, in a country of 5 million people.
The New York metropolitan area alone has a population of over 23 million people, and (according to my own rough, back-of-the-envelope calculations) commuter rail services within that area serve nearly 3 billion riders per year (and that doesn’t even count subway or Amtrak riders).
(Colorado, a State with a population comparable to Norway, sees about 24 million riders per year on Denver’s light-rail service. Of course, Colorado’s only about 600 kms across, while Norway’s main rail line stretches 1,072 kms.)
It is, but when the words “Norway” are uttered, people’s brains turn into mush. Norway is assumed to be the pinnacle of human achievement…
…even if it is just Saudi Arabia with blonds.
Norway spends more on healthcare per capita than the US. It’s #1 in the world for healthcare costs, in fact (followed by Switzerland).
I wonder what the Left makes of that. An oil-based economy, where healthcare costs more than anywhere else in the world. Yet they think that’s the model we should follow.
I don’t think they understand irony.
What’s your source for that stat?
According to this link, the US is #1, Norway’s #2, and Switzerland’s #3:
http://www.usatoday.com/story/money/business/2014/07/07/countries-spending-most-health-care/12282577/
I’m pretty sure that Saudi Arabia and Norway have pretty different philosophies regarding government, political economy, social welfare, individual rights, foreign policy, etc.
;-)
James, coming at this from an economic viewpoint is entirely appropriate for R>’s “Money & Politics” person.
But the Leftist view of the Scandinavian utopia also involves culture. And Scandinavia has certainly adopted the Leftist cultural ideals of “openness” and “inclusiveness” they tout so strongly. And they have adopted rigid political correctness.
Scandinavia is becoming a lot less homogeneous than before, and it is leading to some significant strife. Sweden is now according to the UN, the rape capital of the world. At 66.5/100K, it is almost twice its nearest rival, Jamaica at 34.1/100K. Progressives say this is because Sweden is more egalitarian, so women feel freer to report rape. Others say this it is because Muslim men, some in “rape gangs,” go largely unchallenged by Swedes, for fear of being called racist and Islamophobic – much like the Rotherham, England sex abuse scandals were covered up to avoid “giving oxygen” to racism.
Swedish history is no longer required in school as it might not be “relevant” to newly arrived immigrant communities.
I know the focus of this post is economic, but I think cultural aspects have a lot to do with where a society is headed. And the mandated “openness” that comes with socialist utopias does not bode well. Acerbic British commentator Pat Condell thinks that Sweden may have indeed reached the tipping point and may not be able to recover. He calls Sweden “the canary in the coal mine on Planet Progressive”:
To be fair, Sweden’s level of foreign immigration is about 13 percentage points higher than the other Scandinavian countries (averaged out), and Sweden takes in way more immigrants from Muslim countries than the other Scandinavian countries do.
These are different countries we’re talking about here. “Scandinavia” isn’t really that easily generalized.
http://data.worldbank.org/indicator/SH.XPD.PCAP
The USA Today numbers are PPP adjusted, which makes little sense if you’re comparing costs of 1 product, vs. the GDP in total.
That’s the blonds part. The economy part, is Saudi Arabia. It’s just an oil-based economy.
So it’s not something you can really “copy”. Nor is it something the Left would like. They just don’t understand that Norway isn’t their ideal paradise.
That has to do with the definition of “rape” across countries. We see this when the White House claims that 1/5 women are raped on campuses in the US…which is absurd of course…unless you count looking at someone funny as “rape”.
When the Left says “Scandinavia” they usually mean Norway and Sweden. The Left never puts forth Finland or Estonia as shining examples (of course not Estonia, that’s the opposite of Leftist’s paradise).
But the problem is that Norway is an idiosyncratic circumstance: oil. Nothing else is relevant about Norway.
Sweden is an economy based on large mega-corporations dealings in weapons and industrial products, founded a century ago by aristocratic families.
So again, we have some rather idiosyncratic circumstances. If the Left thinks Sweden is such a great example, then I guess the Left must also think that economic freedom must be a great thing (since Sweden is among the top in economic freedom), and privatized pensions must be a great thing (Sweden again is at the top), and heavy industrial, weaponry and natural resource production must be a great thing.
So the fundamental question is really: why is Sweden rich? Is it because it’s got Unions? Or because it’s got huge successful companies?
Hmm…that’s a tough one!
Left Sweden in 1996 but still think I should suggest some corrections. Swedish people are not big on charity. The social democratic ideology has instilled contempt for charity in favor of government controlled welfare through the state controlled educational system.
Healthcare is not so great. It is free or low cost but you have no say on almost anything. You will meet different doctors every time you use the healthcare system. Doctors are punished if the ‘over-produce’. A doctor I know working in a Swedish outpatient clinic averaged 18 patients/day as opposed to the norm which is 5! Her employer instructed her to cut down the patient treatment part, take longer breaks and fill in more forms instead.
(continued)
Successful Swedish companies comes in many flavors. Some, like Ericsson very founded by entrepreneurs who had lived in America for several years before moving back. Other like IKEA were funded by rural poor entrepreneurs. I think it is fair to say that in general Swedish business people admire American capitalism. Swedes also respond to incentives. The relatively modes decreases in marginal tax rates implemented in the last 15 years have increased innovation and entrepreneurship (e.g. lots of IT startups).
Homogeneity is going down due to disastrous immigration policy. Political correctness has prevented implementation of more reasonable policies and I believe it is tearing the society apart. The newly elected government (Social Democratic coalition) fell when the populist anti-immigration party sided with the mildly conservative coalition. The populist party is still officially shunned by all parties. Sweden went from being a poor agrarian country ruled by sovereign kings to being led by social democrats who have little tolerance for opposing views as they are claiming that they are morally superior as their intentions are good.
Unfortunately it seems to me that Democrats in the US wants to become more Swedish model is breaking down.
??
PPP has to do with currencies and trade and is representative of an entire economy, not 1 product. If you want to compare the prices of 1 product…then just compare the prices in terms of a single currency: dollars.
It just doesn’t make sense to adjust for PPP in such an example, because you’ve already converted the costs into dollars.
But of course, if you want to show that US healthcare costs more than anywhere else in the world, that’s what you have to do. Otherwise, it doesn’t. In Norway it costs more.
Right, more government aid and a light rail line is all that’s preventing Ferguson residents from working, got it.
PPP seems to be a more robust measure to compare the actual opportunity cost of each item or product in different societies than a raw dollar comparison. Similarly, percent of GDP spent on health or education or defence provides a clearly meaningful comparison of the cost to a society of any one of these.
Swedish economist Per Bylund in a series of articles that can be found at mises.org explains it like this, summarized.
In 1870 Sweden was one of the poorest countries in Europe. Under the influence of classical liberalism its rulers freed the economy, kicking off explosive growth that, over the next half century, built a wealthy society and also established the capitalisic underpinnings that would help carry the upcoming welfare state. Also it stayed out of both world wars, thereby avoiding the massive destruction of wealth that comes from war. It was able to both maintain its infrastructure and profit greatly by serving countries destroyed by war.
Still, by the 1970s and 80s, the burden of the welfare state had brought massive public debt and economic crisis. Sweden responded in the 1990s by slashing spending, raising taxes, deregulating businesses, and deregulating the processes of hiring and firing, thus restoring economic vitatlity. By the time the Great Recession hit most of the rest of us in 2008, Sweden had reduced its public debt from 80% of GDP to 35%. This gave it the wherewithal to weather the recession almost unscathed.
Bylund points out that Sweden also nationalized its banks in the 1990s. This, naturally, is what Keynesans credit with Sweden’s weathering of the 2008 crisis.
So, if we skip the bank nationalization and add the privatized pensions (mentioned by AIG?) I think we have a Swedish model for America.