We Can’t Replicate Scandinavian Success and Here’s Why

“assorted-color buildings near red boat docked on port during daytime” by Maksym Potapenko on Unsplash

In the years since the onset of the 2016 campaign season, the American Left has become perfectly captivated by the dreamy narrative of democratic socialism. Hailed as pleasant and peaceful and suspiciously cooperative (which I’ll explain in a moment), it is juxtaposed with American capitalism with its supposedly “exploitive,” tasteless impulses. The Scandinavian nations with their seemingly envyingly successful welfare states and prosperous economies, are continually put forth as prime examples of the validity of socialism.

It is incumbent of me to point out that the Nordic nations are really not practitioners of “democratic socialism” at all. Thus, the term, as used by popular, trendy political figures such as Bernie Sanders, is actually pretty intellectually dishonest. It is more correct to say that these nations are primarily welfare states minus any other economic features of socialism. High taxation is merely paired with a surprising affinity for a private-enterprise, market economy. Precisely because these countries are rooted in free market orthodoxy do they seem “suspiciously cooperative” and peaceable for ostensibly falling underneath the socialist umbrella.

And despite having a large public sector, the Nordic public sector doesn’t swallow up all of the privately owned companies. The truth is, these nations have nearly always had loyalties to free markets and their covetable economic success is, in large part, due to just this historical devotion. What exists in their countries today is a model of heavy taxation (and consequently government spending) within the framework of, well, capitalism.

Nordic nations = free market economy + high taxes

If America upholds “democratic socialism” as its savior, let’s first recognize that the Scandinavian model is essentially comprised of the above two elements. Obviously, we share in the first part of the equation — the free market aspect — (although the purity of that could be argued). Naturally, that leaves us with “high taxes” as the remaining means to hurtle ourselves towards Scandinavian levels of prosperity. That’s not a very exciting thing to be left with.

Of course, to those ideologically possessed by socialism, they can actually be relatively unbothered about this and will often see high taxes somewhat abstractly — cleverly avoidant as they are in identifying who exactly will pay for robust entitlement programs, for example, not to mention what the consequences of such expenses might be. (And if they would like to offer a “solution” — it is always the rich who can be mercilessly looted because their wealth is always morally suspect.)

Scandinavian citizens willingly pay high taxes for a variety of social programs including long maternity/paternity leaves, health care, and generous disability and illness compensations. With ominous discussion going on about America’s indisputable inability to fund even the Big Three of our welfare programs (Social Security, Medicare, Medicaid) beyond most of our lifetimes, it is a little idealistic to be going around engaging in democratic socialism activism, insinuating that the solution to our problems lies in something we fundamentally cannot provide (which would be sufficient tax revenues to do the job).

It mustn’t be forgotten that harvesting taxes from a populace produces a hollowing-out somewhere. The people themselves are not this free well of wealth that America stupidly hasn’t tapped to its full capacity.

There’s also a misconception swirling around in these discussions: that the Nordic nations received their economic success as a consequence of their welfare states. This is not true. These small but mighty nations have long had productive economics characterized by free trade. Mid-century Scandinavia had thriving, fully capitalist economies and it wasn’t until the 60s/70s that the ideas of traditional European socialists began to tighten their grip and the modern Nordic welfare state was born. It is incorrect and unfair to suggest that the welfare state birthed economic prosperity; in fact, the reverse was true.

Now, Nordic welfare states may work satisfactorily for a time, because they have accumulated free-market-derived wealth as well as important cultural values conducive to their success but welfare states tend to take more than they give, kill off more than they create — that is, if given enough time to hang around.

Of course, it is never only the “scientific” components of an economic system that influence its success or lack thereof. Culture plays a profoundly important role. Consider that the Scandinavian nations have long had high levels of social cohesion and trust. A past of difficult agrarian labor, done independently, was partially responsible for embedding a conviction of personal responsibility into Nordic citizens.

That these nations were strikingly ethnically homogenous also helped in creating a sense of cooperative unity. As politically incorrect as it sounds to many, ethnic diversity historically correlates to weaker economic performance. Of course, problematically, this doesn’t comport with the modern, honorable notion that diversity is inherently self-improving but it has nonetheless been discovered to be true. After all, it is understandable that as humans we would trust people more similar to us than different to us, even subliminally. It would explain why there is a greater degree of mistrust present in metropolitan areas as compared to less expansive, more rural communities. It would also explain why millennials — having grown up in an environment increasingly more ethnically diverse than their predecessors — admit to significantly lower degrees of social trust.

Keeping in mind that the high taxes implicit in the Scandinavian model would be an untenable experiment in America, it also is worth mentioning that we do not have the cultural atmosphere of the northern European countries.

Currently — and granted, this is my opinion — America appears too riven societally for a Nordic-esque welfare state to be attempted with any hopeful success. We’re a large, expansive nation, quite ethnically diverse, and have a somewhat tumultuous history of social revolutions. We’re more apt to be suspicious of our neighbor than blithely trusting of them. Now, that may be a gross generalization but it’s more likely true than not.

And so, it is not as simple as transplanting the economic model from them to us. Culture is cumulative and requires protracted periods of time to inculcate into the economic fabric and thus, alter its results. It is not the economic formula we should be wholly concerned with (though that is incompatible with America anyways) but also the attitudes of the people contained in the society. And those attitudes are hard to change, and as previously mentioned, are really baked-in and get passed down from generations. Simply put, the soil is different over here.

By and large, Scandinavian citizens are surprisingly agreeable, in terms of contributing to their enormous social safety net. One suspects that they would be far less obliging if the economic conditions were poorer. But thankfully, bolstered by historically impressive prosperity, the amount of public contention is low because money is not terribly scarce (yet). One has a difficult time believing that the same easygoing attitude would be prevalent in the U.S., for various reasons.

The collective personalities of the two regions (Scandinavia and the U.S.) are quite different. Northern Europeans tend to be modest and steadfast people, with nonconfrontational impulses. They are subtly conformist as well and don’t rock the boat in the way that their American counterparts have more of a hankering to.

Americans, in contrast, are generally not described as terribly modest, typically resist conformity and have an innate allegiance to the individual rather than a loyalty to the collective. Attempting to graft a welfare state model onto the U.S. would likely not happen seamlessly, should we say. We cannot merely copy Nordic policies and expect that we will have handily cooked up a replica of their success because we have two fundamentally different, temperamentally disparate cultures.

American society has never been terribly welcoming to socialist enterprises. We are no strangers to griping about taxes, and so can you imagine what would happen if we tried experimenting with the Nordic model? We really don’t want those kinds of taxes, they’re genuinely crushing. Make no mistake: the Nordic countries are outrageously expensive countries in which to live. And no, it is not just the mythical, supposedly all-inclusive solution of “the 1%” that gets to pay these taxes.

The truth is, advocates of democratic socialism on the national stage are not engaging in such activism so much out of “compassion” (the public claim often made) as much as they might be out of resentment, broadly speaking. To somebody like Bernie Sanders, wealth transfers are regarded as justifiable because economic again, in his view, inevitably involves an element of “exploitation”. Rarely is economic gain regarded as the result of productive collaboration, for example. Wealth redistribution is important to Sanders more for political principle than for the actual economic results, which usually, in such scenarios, fall short of theoretical expectations.

And remember, Sanders, the self-proclaimed socialist, is actually incorrectly capitalizing on the Nordic countries as these paragons, these golden children, of socialism when they’re really not even socialist! Scandinavian “socialism” is mostly this: allowing a free market system to work its magic and then capturing a significant portion of its profits and redistributing them.

Within time, a social welfare system such that the Nordic nations employ will inevitably begin to show its wear and tear. In a lot of ways, it already has. Financial strain is a natural consequence at some point. Heavy taxation on a citizenry is usually not sustainable.

Widespread welfare dependency is also a looming threat. With easy access to the social safety net, more and more people will come to rely on it. With enough time, the very culture of the Nordic citizenry may change, from a people with a robust work ethic and levels of civic participation to one more indifferent and lethargic due to the easy availability of welfare programs. In time, the culture itself will be undermined by oppressively high taxes and a large welfare state; this is the usual order of things.

After all, if the government takes care of you, why should you work especially hard? Where’s the gain in that? Why should anyone work especially hard, for that matter? Such is the natural welfare-state rationale that quietly works its influence. It goes without saying that eliminating economic incentives is risky business.

To add to the threat of deterioration, high levels of immigration in recent years have put the integrity of the Nordic economic systems in danger. Naturally, incoming immigrants find these respectably lucrative nations appealing. In recent years, assimilation has not gone well at all in these nations and many immigrants end up sequestered in their own ethnic pockets of the cities. The vast majority take advantage of the benefits of the welfare system and many do not become what would be considered classically productive members of society. The strain is evident and is slowly tainting the image of these countries as the smiling faces of admirable success. Eventually, the welfare state will rust with financial exhaustion and a depletion of resources.

While much of America is just-so-terribly charmed with the Scandinavian model, it is important to remember that its seeming promise of flawless civilization is a bit of a myth.

Writer of economics, psychology, and lots in between. laurennreiff@gmail.com

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