Scandinavia, Socialism, and the Welfare State

There is plenty of fuzzy thinking about what is variously called Scandinavian socialism, the Nordic model, democratic socialism, and so on. And now that most leftists have finally realised that their socialist utopia – Venezuela – is actually just another socialist hellhole, they are pointing to Scandinavia as their preferred model.

Whether Bernie Sanders and Alexandria Ocasio-Cortez in the US or Jeremy Corbyn in the UK, these dreamers think that socialism is still the way to go, and if we look hard enough we just might find a successful model of it somewhere.

So they point to the Nordic nations as if that will make their case. Not so. Indeed, hot on the heels of my article yesterday on the socialist basket case in South America, I had one guy send in a comment telling me Scandinavia is socialist, and Marxism and Christianity were basically one and the same. Good grief.

This guy appears to be as clueless when it comes to basic economics and political economy as he is about basic biblical teachings. But these trendy lefty Social Justice Warriors tend to be like that. They are usually as uninformed as they are emotive. Facts and data mean little or nothing, while emotions and virtue signalling mean everything.

As Thomas Sowell once put it, “The strongest argument for socialism is that it sounds good. The strongest argument against socialism is that it doesn’t work. But those who live by words will always have a soft spot in their hearts for socialism because it sounds so good.”

But before going any further, let me just make a quick definitional point: Strictly speaking, Scandinavia is comprised of Norway, Sweden and Denmark. The Nordic countries include these three and a few more countries, such as Finland, Iceland, and Greenland.

Whether we refer to just the first three, or the larger group, it must be pointed out that the lefties are barking up the wrong tree when they say this is socialism in action. The simple truth is, the Scandinavian/Nordic countries are NOT socialist.

While they have high rates of taxation, extensive and generous welfarism, etc, they are also decidedly capitalist in all the basics: most of them feature – in varying degrees – private property, free market economies, privatisation of state sectors, wealth creation, private banking, and so on. That is not socialism, but very much capitalism.

It may be a ‘compassionate capitalism’ or some such thing, but it is not a genuine “third way” economy, nor is it socialism. It is time we got a basic grasp on all this. I just saw one ludicrous meme making the rounds that says, “Socialism is sharing”. Um no, not even close. Socialism is confiscation. The State takes any wealth you have created, keeps much of it for itself, and decides where the rest will go.

And one of the most basic truths of economics which the lefties never grasp is this: before you can redistribute wealth, you have to first create it. The free market, for all its faults, is the best thing we have ever come up with for wealth creation. And the worse thing for this is socialism.

Why bother working your butt off if you know the State is going to confiscate all or most of your earnings, and do with it as it sees fit? Why toil long hard hours when you know you will not get the reward of your labour, while someone who may never have lifted a finger will likely get it?

But back to the Nordic nations. Many experts have pointed out how decidedly UNsocialist they are. Let me cite just a few. As one economist puts it:

The myth of Nordic socialism is partially created by a confusion between socialism, meaning government exerting control or ownership of businesses, and the welfare state in the form of government-provided social safety net programs. However, the left’s embrace of socialism is not merely a case of redefining a word. Simply look at the long-running affinity of leftists with socialist dictators in Cuba, Nicaragua, and Venezuela for proof many on the left long for real socialism.

To the extent that the left wants to point to an example of successful socialism, not just generous welfare states, the Nordic countries are actually a poor case to cite. Regardless of the perception, in reality the Nordic countries practice mostly free market economics paired with high taxes exchanged for generous government entitlement programs.

First, it is worth noting that the Nordic countries were economic successes before they built their welfare states. Those productive economies, generating good incomes for their workers, allowed the governments to raise the tax revenue needed to pay for the social benefits. It was not the government benefits that created wealth, but wealth that allowed the luxury of such generous government programs.

Or as another writes:

Nordic countries are also leaders in the privatization of inefficient state-owned entities and applying world-class private company corporate governance and defending shareholder interests in semi-state owned companies (Statoil, etc).

The public sector does not dictate the growth pattern or the way in which the economy should be run, it is generated from the private sector, which finances more than 60% of research and development, and government applies private-sector best practices of efficiency and transparency in the management of public services. In addition, public officials do not have a life-long position. The opposite of the political control these populists defend.

Nordic countries have carried out successful privatizations of state sectors, from telecommunications to electricity generation and distribution. Sweden privatized even the postal service. Even some forests were privatized. They have a labor market that is among the most flexible in the world.

So the idea that the Scandinavian countries are somehow socialist states is just arrant nonsense. And the idea that as some sort of advanced welfare state they are utopias on earth is also fully fallacious. All these nations are facing very real problems. One piece giving an overview of the situation offers ten reasons why we definitely should not emulate the Nordic model. Let me offer a few of them:

2) Most of what American progressives envy about the Scandinavian countries existed before they expanded their welfare state, and America’s voices on the left are mixing up correlation with causation. As Nima Sanandaji, a Swedish author of Kurdish origin who holds a Ph.D. from the Royal Institute of Technology in Stockholm, wrote in 2015:

“Many of the desirable features of Scandinavian societies, such as low income inequality, low levels of poverty and high levels of economic growth predated the development of the welfare state. These and other indicators began to deteriorate after the expansion of the welfare state and the increase in taxes to fund it.”

3) At its biggest, most far-reaching, and invasive form in the late 20th century, the Nordic model crushed startups and the growth of new companies. “As of 2000,” Johan Norberg writes, “just one of the 50 biggest Swedish companies had been founded after 1970.”

8) If the government is paying for everything, why is Denmark’s average household debt as a share of disposable income three times that of the United States? Meanwhile, the household-debt share in both Sweden and Norway is close to double that of the United States. The cost of living is particularly high in these countries, and the high taxation means take-home pay is much less than it is under our system.

9) Nordic-system evangelists would have you believe that citizens of freer-market countries are stressed while those living under generous social-welfare systems are happier and more relaxed. If American-style capitalism is depressing and dehumanizing, why are Iceland, Denmark, Sweden, Finland, and Norway not that far behind us, ranking in the top twelve countries for antidepressant use? Is it just the long winters? Why are their drug-related deaths booming? Isn’t it possible that a generous, far-reaching welfare state depletes people’s sense of drive, purpose, and self-respect, and enables them to explore chemical forms of happiness?

And let me look at Denmark in particular to further drive home these truths. The author interviews someone who knows the situation quite well:

How much truth is there in the popular idea of Nordic exceptionalism? Michael Booth, a British journalist, examines this question in detail in a recent book, “The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia.” Booth, a U.K. native who has lived in Scandinavia for over a decade.

What are some of the biggest misconceptions that you find in how the rest of the world understands the Nordic countries?

Again, I think we’ve all been guilty of projecting some kind of utopian fantasy on them. The Nordic countries are, for example, depicted as paragons of political correctness, yet you still see racial stereotypes in the media here — the kind of thing which would be unthinkable in the U.S. Meanwhile, though it is true that these are the most gender-equal societies in the world, they also record the highest rates of violence towards women — only part of which can be explained by high levels of reporting of crime.

Denmark, meanwhile, promotes itself as a “green pioneer” and finger wags at the world about CO2 emissions, and yet it regularly beats the U.S. and virtually every other country on earth in terms of its per capita ecological footprint. For all their wind turbines, the Danes still burn a lot of coal and drive a lot of cars, their country is home to the world’s largest shipping company (Mærsk), and the region’s largest air hub.

Sweden is supposedly “neutral” (it’s not, and has not been for decades), yet since the days when it sold iron ore to Hitler, its economy has always benefited from its arms industry, which is one of the world’s largest.

Politicians in the U.S. like Bernie Sanders praise Denmark for its relative income equality, its free universities, parental leave, subsidized childcare, and national health system. That all sounds pretty good, right?

It is fantastic in theory, except that, in Denmark, the quality of the free education and health care is substandard: They are way down on the PISA [Programme for International Student Assessment] educational rankings, have the lowest life expectancy in the region, and the highest rates of death from cancer. And there is broad consensus that the economic model of a public sector and welfare state on this scale is unsustainable. The Danes’ dirty secret is that its public sector has been propped up by — now dwindling — oil revenues. In Norway’s case, of course, it’s no secret.

Much more can be said on all this. Scandinavia is not a model of socialism in action. And it has plenty of problems, making its high-taxing, high-entitlement system unsustainable in the long term. These mixed economies have some pluses, but also many minuses. We need to learn from their mistakes, and not see them as a panacea.

Let me finish by mentioning a short video by Swedish historian Johan Norberg which is well worth watching on all this:

[1839 words]

10 Replies to “Scandinavia, Socialism, and the Welfare State”

  1. Excellent article Bill Muehlenberg. I have a fairly good first hand experience of Finland (my wife originating from there); and can confirm that everything you have highlighted in your article is true of at least Finland.

    In addition I would add the following features of the societies I’ve experienced in that neck of the woods: –

    1. Contrary to popular misconception, they are in practice more Christian than places like Australia. Finland even has Lutheranism as their official state religion, and levies taxes from its citizens to fund the church.

    2. Gun ownership is a feature of almost all households. They also love hunting and in the case of Finland they have national military service. In other words they’re all gun nuts – eat that lefties!

    3. Despite horror stories like Malmo in Sweden, most of the Nordic counties are ethnically very homogeneous. Not only that the ethnic group that is so homogeneous is the dreaded white person (many with blonde hair and blue eyes! Oh the horror!).

    4. The heavy shackles of the welfare state tax burden all but extinguishes the entrepreneurial spark that is much more evident in places like the US and Australia.

    5. It costs a whopping €100 to see a GP! I remember the near riots in Australia over the proposed $5 co-payment to see GP’s

  2. Having a State Church and church tax does not make a nation more Christian. Now I don’t know much about the actual state of faithful Christian observance in Finland and how many people are actual Christians rather than just on paper because they were christened into the State Church, but in other Nordic countries it means that ministers of the State Church are little more than public servants and don’t even have to be true Christians. I personally consider State Churches as an abomination!

  3. It is, of course, that an advanced capitalist economy can afford a fairly extensive welfare state – as long as it is not so extensive as to depress initiative. Most of the burden, of course, falls on the ordinary person. However, I don’t think it would be possible to develop much of a welfare state in a third world economy – which is a pity, because the poor in such places as Latin America really do need help. Their governments would be better off trying to provide a modest safety need for dire emergencies, while creating opportunities for wealth creation by entrepreneurs.
    The trouble is, as Thomas Sowell also said: “Socialism always works at the start.”

  4. Here’s the problem that I have with this article, Bill. I quite happily regard myself as a pro-life socialist. Before my husband Ernest and I came out to live in New Zealand, we were staunch members of the Labour Life Group, an organisation that works within the British Labour Party against abortion and euthanasia. At one point recently, you noted Mrs Thatcher in this context. Maggie Thatcher presided over the most shameful liberalisation of British abortion law when her government voted to extend the killing of disabled unborn babies to full term while ‘reducing’ the abortion time limit a small amount otherwise. Added to which. it has been the right wing, neoliberal Dutch Party for Freedom and Democracy, their equivalent to the New Zealand National Party and Australian Liberal/National Coalition which has presided over stark attempts to coerce the disabled and elderly into the culture of death through social service and support cutbacks.

    Look at the current Australian Coalition and New Zealand National Party, in any case. It is not the left that is promoting the legalisation of euthanasia in New Zealand, it is the ACT Party, a tiny libertarian satellite of the National Party. It was Prime Minister John Key’s government that introduced a select committee of inquiry into assisted killing without that private members bill even being introduced into Parliament. And while the former Prime Minister Bill English stated his forthright opposition to abortion and euthanasia, current National Opposition leader Simon Bridges says that if a forthcoming euthanasia referendum rubber-stamped it, it would be quite all right. Under the hardline neoliberal National Party government of the nineties in New Zealand, abortion rates skyrocketed as pronatal, prolife social welfare benefits were cut. In 2016. the previous National-led government also presided over a stark increase in suicide rates. As far as I’m concerned, it is radical libertarianism is the major threat to the sanctity of human life and families today, not socialism. Radical libertarianism eats into family bonds like acid, weakening the ethics of care, compassion and solidarity that are at the core of Christian and socialist values alike. Such a perspective is hardly new in Australia, of course. I have always been a strong admirer of the late B.A.Santamaria and the National Civic Council for precisely that reason.

  5. Thanks for spilling the beans Rhona – being a socialist, a lefty, and a Labor Party enthusiast certainly explains the comments you have sent in here recently. Of course you should be aware of the simple fact that basically every Labor party, socialist party, and party of the left has pro-death policies as part of their platforms. That is true here in Australia and that is what your leftist parties in NZ are also all about. While we are glad you are prolife, trying to stay loyal to left/Labor parties while fighting abortion is like trying to stay loyal to Big Tobacco while fighting the harmful effects of cigarette smoking. Good luck with that.

    You really need to put aside your ideological blinders here in order to get some basics down pat. John Key in NZ is really just the same as Turnbull in Oz – both are lefties who have swung conservative parties to the liberal left, and many MPs in each party are not at all happy about it. Probably the majority of National MPs there and Liberal MPs here still oppose the social engineering agendas. But the overwhelming majority of Labour and all the Greens are pushing it in both countries.

    Thus if you really care about life, you should rethink your rather slavish commitment to parties and ideologies which are almost always inherently pro-death. Indeed, such an irrational attachment to the left is clouding your ability to think straight on some basic facts. Ardern and Labor are fully committed to pro-abortion and pro-euthanasia policies. The National Party is still officially committed to neither.

    And your remarks also tell us how confused you are about basic political ideology. Conservatism (which is almost always prolife) is NOT at all the same as libertarianism (which is almost always pro-“choice”). Perhaps it is time you learned about some of these basic distinctions. I have made them often on this site. See here for example.

    Or here:

    The simple truth is, many of those running the Liberal Party both Federally and in the states here in Australia are NOT conservatives at all. They are far more to the left, which explains their refusal to run with pro-life and pro-family policies and platforms. Turnbull always wanted to be in Labour, but ended up taking over the Libs, knifing pro-life conservatives like Abbott in the back to get the top job. And of course the Liberal Party itself does not have abortion on demand as a major part of its platform, as do your beloved Labor parties – at least not yet.

    And I knew Bob Santamaria quite well thanks – he actually asked me to work for him and the NCC which I did for many years.

  6. Topnotch response to Rhona, Bill. Your fact-filled rebuttal is much appreciated. Sometimes we think we are right in holding a certain position, like being pro-life, but the system we embrace, i.e., Socialism, makes the logical conclusion of our worldview rule entirely against us in practice. Shoot, I know what I’m trying to convey here, but am not doing such a hot job at it. You do this so much better!

  7. I lived in Sweden for almost 2 years. Sweden is not communist, but I would say it is very much a socialist country.

    The state runs the medical system (badly) and the education system. It controls the consumption of alcohol and the use and rationing of prescription drugs. The state rations health care. If you’re old and sick you will die in Sweden! They will let you die by denying you care! If you’re young and sick you may also die, because you have to convince the bureaucrat in the medical centre, or in the ambulance call centre, that you really are sick enough to warrant the doctor’s attention. And if you manage to get a script, you may not be able to fill it without travelling miles into the city centre…

    Women are not just encouraged but expected to work and to hand over their children to the care of the state. You, as a parent, are not qualified to raise children. You should let the professionals raise your children while you work and contribute to the national economy.

    They have a 25% GST and around 50+% personal tax rate, and cradle to grave welfare. Unions are also quite strong there.

  8. In response to Daniel Edmonds and Louise BIngen – about Finland being more Christian;
    I’ve read on the news;
    1. A female parliamentarian has been censured on her Biblical Christian beliefs
    2. The Bible has been deemed “harmful” to young children, because of its reference to “a talking donkey”, the one who prevented the pagan prophet Balaam from taking a foolish course of action in the book of Numbers.
    These 2 incidents show it’s a myth about “Finland being more Christian”.

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