The Scandinavian countries are regularly praised for their income equality, quality of life, gender equality, maternal care and many other traits, not just by leftist politicians and activists, but also by left-leaning economists like Paul Krugman. The Scandinavian model, they believe, is the ultimate proof that you can combine a high-growth economy with a generous welfare state.
The problem is that much of the praise is wrong.
True, the Scandinavian nations are very successful in many ways. Quality of life is considerably higher there than in most other parts of the world, and equality is a strong social norm. But despite what many in the American left who idealizes Scandinavia might wish, the success was not achieved thanks to the welfare state model, but perhaps despite its existence.
In the new book Scandinavian Unexceptionalism, Swedish author Nima Sanandaji dispels many of the popular conceptions about the Nordic countries. Scandinavia’s success came before the welfare state, not after it. Between 1936 and 2008, when much of the welfare expansion occurred, Sweden’s growth rate dropped to being the 13th highest out of 28 industrialized countries.
During the decades before, between 1870 and 1936, Sweden had enjoyed the highest economic growth in the entire industrialized world. Moreover, in the most intense period of “third-way” policies of market socialism, between the 1970s and 1990s, Sweden’s economic performance was exceptionally low. This period, however, was an exception: for most of its modern history, Sweden has been anything but a socialist mecca. The government has usually pursued free-market policies and free trade. If anything, high taxes and extensive social policies have hindered Scandinavian economic performance, which would most likely have been much higher without them.
Instead, Sanandaji shows, the root of Scandinavian success can largely be found in culture. These countries, and Sweden in particular, have historically had remarkably high levels of social trust, family values, a strong sense of work ethic, and social cohesion. The notion of the “Protestant work ethic” goes back far longer than the modern welfare state. Scholars like Max Weber, Sanandaji shows, long ago noted that the Protestant countries of northern Europe had an overall higher living standard and economic success than most. The often-celebrated equality of Scandinavian countries, too, began well before the welfare state was developed.
Again, these traditions and values by no means came with the welfare state. Sanandaji shows that these Scandinavian values follow people as they move abroad, even for generations: Americans of Scandinavian descent, whose ancestors left way before modern welfare states were established, tend to carry many of their norms with them. The median incomes of Americans with Scandinavian heritage is 20 percent higher than average income in the U.S. as a whole, and poverty rates in this group is roughly half of that of average Americans.
The Scandinavian utopia of many leftist Americans, as Sanandaji shows, primarily exists in their own fantasies. In many ways, holding up the Scandinavian welfare state as an example has become a way of arguing that there doesn’t have to be a choice between growth and prosperity on the one hand, and high taxes and social transfers on the other.
But that tradeoff still stands. If anything, the Scandinavian countries are good examples of how important it is to uphold social values and virtues that work. When Swedes voted a center-right coalition into government in 2006, they did so based on a platform that emphasized hard work and individual responsibility in a society where all too many healthy people of working age were living on welfare. This tradition of individual responsibility goes back all the way to the time when Sweden was largely a rural, farming-based country with individual tillers, Sanandaji points out.
The lesson isn’t only that the Scandinavian model is difficult to copy, but that it would even be outright unwise of a country like America to do so. What left-leaning people in America and other countries should ultimately learn from the Scandinavian model is that for redistribution of wealth to be possible, there must first and foremost be enough wealth to distribute.
Sunday, August 02, 2015
Sorry Leftist Americans, Your Swedish Utopia Does Not Exist