‘Misreading the Nordic Model’

George Rebane

[This is the addended transcript of my regular KVMR commentary broadcast on 31 August 2016.]

For quite some time now Americans have heard the siren song of Nordic socialism performed consistently by our country’s Left from which more and more are actually outing themselves as socialists.  In this election season we have heard Senator Bernie Sanders promote the Nordic style welfare state with statements like, “I think we should look to countries like Denmark, like Sweden and Norway, and learn what they have accomplished for their working people.”  And in order to scoop up Bernie’s base, Hillary Clinton has echoed those sentiments as part of her promise to continue the policies of Barack Obama.

Obama has also been quite open about his embrace of socialism, especially of the Nordic type as this year he declared, “In a world of growing economic disparities, Nordic countries have some of the least income inequality in the world . . . There have been times where I’ve said, why don’t we just put all these small countries in charge for a while? And they could clean things up.”

In these commentaries I have reviewed the current status of the Nordics, concentrating especially on the fiscal unsustainability of their welfare policies, and the realities of their economies to provide the growth they need.  Recently the non-partisan Council on Foreign Relations has published an essay by Kurdish born Swedish scientist and author Nima Sanandaji who has studied and written extensively on Nordic polity and policies.  His most recent book – Debunking Utopia: Exposing the Myth of Nordic Socialism – presents compelling arguments backed by reams of data that expose a more realistic picture of how the Nordics got to where they are, and how their current performance should be compared, especially by Americans, on an apples-to-apples basis.

Dr Sanandaji begins his analysis by recounting the economic history of the Nordics which since the 19^th century heavily emphasized individual initiative and entrepreneurship as the basis for developing the region’s commerce.  It turns out that in the Nordics capitalism flourished early and was the dominant economic paradigm until 1936 when Sweden began flirting with socialism during the depths of the depression.  The economic metrics of the region remained high until after WW2 when socialism renewed its grip on the electorates and the welfare states began serious development.  From that time on the measure of things started their inevitable decline, which got so bad that in recent years Nordic governments have been quietly stepping back from their complete welfare state models, a process that continues to this day.

But Sanandaji’s main argument for comparing the Nordics’ performance with that of America rests on culture.  As have other sociologists, he focuses on the culture of the Nordic peoples explaining that “in the hostile environment of preindustrial Scandinavia, it was difficult to survive as a farmer without working exceptionally hard. The population therefore adopted out of necessity a culture with a great emphasis on individual responsibility, honesty, trust, punctuality, and hard work.”  It is this culture reflected in the Nordics’ work ethic that has made all the difference when comparing these people to those under the sway of less demanding cultures.

And the reality emerges when Sanandaji compares each country’s Nordic-Americans with their Nordic cousins in Europe.  There we see the full impact of culture as Nordic-Americans, descended from the poorest and uneducated of their emigrants, outperform their ethnic counterparts still living under socialist welfare regimes.  This apples-to-apples comparison should be an eye-opener for the American voter who cares to look behind the Left’s slogans that prescribe their version of a brighter future for our country.  When the actual history and economic metrics are laid bare, then we find that “the simple truth is that there is nothing magical about the Nordics.”

For a more complete understanding of all this I recommend ‘Misreading the Nordic Model’ in the current online issue of Foreign Affairs (here).  I promise it will make you think new thoughts.

My name is Rebane, and I also expand on this and related themes on Rebane’s Ruminations where the addended transcript of this commentary is posted with relevant links, and where such issues are debated extensively.  However my views are not necessarily shared by KVMR.  Thank you for listening.

Addendum – As if to underline Sanandaji’s arguments, our SecTreas Jack Lew is instituting a new set of regulations that will make all financial transactions for America’s businesses as simply more sand in the gears of the country’s engines of economic growth.  His new business tax rules and reporting requirements will encumber corporations from big multi-nationals to small Sub-S companies; even the banks which stand to make money as intermediaries don’t like the newly proposed burdens.  And a bipartisan coalition in Congress is looking for a way to stop Looney Lew through legislation.

The putative benefit of all this is supposed be “a way to stop corporate inversions, in which companies use mergers to move their headquarters to lower-tax jurisdictions offshore. (Lew) wants to prevent “earnings stripping,” in which companies allegedly make loans from their overseas businesses to their U.S. subsidiaries to minimize taxes.”  So instead of streamlining the regulatory labyrinth to make the US again the desirable venue for locating businesses, the sumbich is doing exactly the opposite.  The sole benefit of his shenanigans is that they will be totally invisible to the lamestream media and the country’s liberals. (more here)

Finally, I want to highlight Dr Sanandaji’s by presenting some telling passages from his article.  First, on the universally corrosive effects of welfare socialism (e.g. compare with Americans claiming disability benefits) –

In recent years, a number of Nordic economists have linked the Nordic welfare state to evolving norms around work. The Danish economist Casper Hunnerup Dahl, for instance, has argued that there is a strong correlation between the expansion of Denmark’s welfare programs and a decrease in the Danish work ethic. The Swedish economist Martin Ljunge has found that Sweden’s generous sick leave insurance system has gradually increased the population’s desire to stay home from work, with younger Swedes 20 percent more likely to take sick days than their older counterparts, other circumstances being equal. Ljunge claims that “the higher demand for sick leave pay among the younger generations can be seen as a measure of how rapidly the welfare state affects attitudes toward the use of public benefits.” 

Then we have an idea of the comparative quality of life between the American and European cohorts –

Historically, impoverished people in the Nordic countries were more likely than the rich to sail across the Atlantic to start new lives. Yet despite coming from the poorest rungs of Nordic society, Nordic Americans have become much more affluent than their cousins back in Europe. Today, measured by GDP per capita, Danish Americans’ living standards are 55 percent higher than those of Danes; living standards of Swedish Americans are 53 percent higher than those of Swedes; and Finnish Americans’ living standards are 59 percent higher than the Finns’. Even for Norwegian Americans, who lack the oil wealth of Norway, living standards outpace those of the Norwegians by three percent.

Comments

[Todd Juvinall]

I do dig all that "Viking" stuff. Funny how Obama likes it too. Lots of looting and pillaging. Good fun.