The Nordic Model

It is that time again, when the television is dominated by political ads of all sorts. In America, another presidential election is fast approaching. As such, many old issues (and some new ones) once again come up in public discussion. In addition, there is a growing sentiment in America that something is wrong with the system, something is dreadfully broken. This is exemplified by the growing “Occupy” movement that started in New York and has now spread to various cities across the country.

History and tradition play a big part (in various degrees) on both sides of the aisle in American politics. The “Red Scare” of the McCarthy era and the Cold War in general goes a long way to explain America’s general aversion to communism, socialism or any social theory that approaches such doctrines. It is my opinion that unchecked capitalism is as dangerous to a society as is unchecked socialism. Moderation is the key for any social system, not extreme left or right politics, which seems to be a growing trend in America. Perhaps now is a good time to look more fairly at other social systems. Enter the Nordic Model.

As the model is quite complex, I will not attempt a comprehensive analysis. A brief overview will suffice, and this one is from Wikipedia. Though keep in mind that each of the Nordic countries does things a little differently and has variations.

  • An elaborate social safety net in addition to public services such as free education and universal health care.
  • Strong property rights, contract enforcement, and overall ease of doing business.
  • Public pension schemes.
  • Low barriers to free trade.This is combined with collective risk sharing (social programmes, labour market institutions) which has provided a form of protection against the risks associated with economic openness.
  • Little product market regulation. Nordic countries rank very high in product market freedom according to OECD rankings.
  • Low levels of corruption.In Transparency International’s 2010 Corruption Perceptions Index all five Nordic countries were ranked among the 11 least corrupt of 178 evaluated countries.
  • High degrees of labour union membership. In 2008, labour union density was 67.5% in Finland, 67.6% in Denmark, and 68.3% in Sweden. In comparison, union membership was 11.9% in the United States and 7.7% in France.
  • Sweden has decentralised wage co-ordination, while Finland is ranked the least flexible. The changing economic conditions have given rise to fear among workers as well as resistance by trade unions in regards to reforms. At the same time, reforms and favourable economic development seem to have reduced unemployment, which has traditionally been higher. Denmark’s Social Democrats managed to push through reforms in 1994 and 1996. (See Flexicurity).
  • Sweden at 56.6% of GDP, Denmark at 51.7%, and Finland at 48.6% reflects very high public spending. One key reason for public spending is the very large number of public employees. These employees work in various fields including education, healthcare, and for the government itself. They often have lifelong job security and make up around a third of the workforce (more than 38% in Denmark). The public sector’s low productivity growth has been compensated by an increase in the private sector’s share of government financed services which has included outsourcing. Public spending in social transfers such as unemployment benefits and early-retired programmes is high. In 2001, the wage-based unemployment benefits were around 90% of wage in Denmark and 80% in Sweden, compared to 75% in the Netherlands and 60% in Germany. The unemployed were also able to receive benefits several years before reductions, compared to quick benefit reduction in other countries.
  • Public expenditure for health and education is significantly higher in Denmark, Sweden, and Norway in comparison to the OECD average.
  • Overall tax burden are among the world’s highest; 51.1% of GDP in Sweden, and 43.3% in Finland, compared to 34.7% in Germany, 33.5% in Canada, and 30.5% in Ireland.

At its core, the Nordic model is a variant of socialism, relying on heavy taxation and redistribution of wealth. However, the system is also based on the long history and traditions of the Nordic countries, and thus unique to them. In Sweden in particular, the Nordic model embodies values of folkhemmet, “the home of the people.” The values that underlie folkhemmet are equality, fairness, a right to safety and security, solidarity, the right to work, a social conscious and environmental awareness. According to Robinowitz and Carr; “These themes contrast markedly with popular political messages in the United States, which tend to target the individual or special-interests groups, not society as a whole. (Robinowitz & Carr, pg 22).

Are there problems with this model? Undoubtedly. Many of the problems come from demographic changes, aging populations and less people working to support them, along with a whole host of other problems. No model is perfect, but that is not to say they do not deserve a look. Am I saying the U.S. should overthrow years of history and tradition? No. All I am saying is that this model deserve a fair look. Why does is deserve a fair look?

Well, Forbes ranked the Nordic countries in the top ten of the World’s Happiest Countries.

According to Wikipedia, the Nordic countries also rank in the top ten of the wealthiest countries by GDP.

As a person strapped with student loan debt, and just entering a world I find uncertain, there are a few things I know for sure. I would be willing to pay more taxes if it lowered the cost of education (which I intend to pursue), if it lowered the cost of health care and if it meant more money was funneled into creating jobs in the public sector. I am not opposed to capitalism, nor am I opposed to being able to reap the rewards of success. I believe in working hard, but I also believe in strong communities. Selfish accumulation of wealth is detrimental to a society. We should be willing to work hard for both ourselves, as well as our friends, family and neighbors. We lost something when we started thinking of only ourselves.

Anthropology has a great term, reciprocity. That is what I see in this model. Besides, didn’t our parents (at least try) to teach us that sharing is a good thing?

Sources:

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita

http://www.forbes.com/2011/01/19/norway-denmark-finland-business-washington-world-happiest-countries.html

http://en.wikipedia.org/wiki/Scandinavian_welfare_model

http://www.etla.fi/files/1892_the_nordic_model_complete.pdf

Robinowitz, Christina. Carr, Lisa. Modern-Day Viking: A practical guide to interacting with the Swedes. 2001

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About Nicholas Haney

I am a writer, author, hunter, craftsman, and student of anthropology/archaeology. View all posts by Nicholas Haney

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