•We know that many immigrants in the Nordic countries struggle to get a job and otherwise be included in society. If anything, they are trapped in poverty and dependency on public handouts. The lack of upward mobility for immigrants is a telling sign that there are limits to the success of the Nordic welfare model. Sweden, which has been more open to immigration than its Nordic neighbors, is currently experiencing a massive increase in inequality.11 Both high-educated and low-educated people of foreign origin have greater success in finding a job in America than in the Nordics.
An obvious explanation for all this is culture. Over centuries Nordic societies have relied on a particularly strong brand of Protestant working ethics. These stoic societies put great emphasis on hard work, individual responsibility, sobriety, and education. For this very same reason, the people of Nordic origin whose forefathers have migrated to the United States are today prospering. They have the same or even lower poverty levels than their cousins in the Nordics, although living in the capitalist American system that Bernie Sanders and other ideologues on the left are convinced is the root of social ills.
During the summer of 2015, I published the short book Scandinavian Unexceptionalism: Culture, Markets and the Failure of Third-Way Socialism for the Institute of Economic Affairs, a London-based think tank.12 The research-oriented book summarized the arguments above, taking quite some inspiration from the ideas of my brother, Tino Sanandaji – an economist from the University of Chicago who is currently doing research on the Stockholm School of Economics and teaching classes at the University of Cambridge. Tino has discovered many groundbreaking insights into the connection between culture, economy, and social development, and has aided me in my writings. Scandinavian Unexceptionalism quickly gained media attention around the world. The book and my previous writings on the subject have already been translated into a number of languages, including Spanish, Farsi, Polish, and Korean.
I am very glad that WND Books has given me the opportunity to write this book, aimed at an American audience, about the lessons we can learn from Nordic welfare states. I know that it is mainly conservatives and libertarians who have shown interest in my ideas, seeing them as a way of debunking the favorite arguments of leftist ideologues and politicians such as Bernie Sanders. And certainly, this book will burst many popular leftist myths. It will also argue that the Nordic experience, perhaps more than anywhere else in the world, teaches us about the benefits of free markets and traditional values, such as a strong work ethic and individual responsibility. However, my point is not to criticize Nordic welfare states head-on or to simply write an ideological pamphlet for the Right. Rather, if we set rosy, idealistic views aside and take an in-depth look at countries such as Sweden, Denmark, Norway, Finland, and Iceland, we can learn about both the shortcomings and the successes of welfare-state programs. The world isn’t black or white. And the Nordic welfare states – for all the turmoil they have been experiencing lately – can still teach us much, at least for those interested in a more nuanced view. According to a traditional Persian saying, you can learn at least as much from the mistakes of others as from their successes. In the case of the Nordics, we should learn from both.
Part 1
THE NORDIC SHANGRI-LA
1
AMERICAN OBSESSION WITH NORDIC SOCIAL DEMOCRACY
DURING THE 2016 DEMOCRATIC PRIMARY, Bernie Sanders has repeatedly claimed that the Nordic welfare systems are role models for the United States to follow.1 Already in 2013 Sanders wrote extensively on this point, with reference to a meeting with the Danish ambassador. Among others Sanders explained:
In Denmark, social policy in areas like health care, child care, education and protecting the unemployed are part of a “solidarity system” that makes sure that almost no one falls into economic despair. Danes pay very high taxes, but in return enjoy a quality of life that many Americans would find hard to believe….
In Denmark, there is a very different understanding of what “freedom” means. In that country, they have gone a long way to ending the enormous anxieties that comes with economic insecurity. Instead of promoting a system which allows a few to have enormous wealth, they have developed a system which guarantees a strong minimal standard of living to all – including the children, the elderly and the disabled.2
By pointing to Nordic social democracy as a role model, ideologues on the left can create optimism for the progressive cause in America.
The admiration of Nordic social democracy seems to resonate with liberal grassroots, which in turn can explain why Sanders has been able to compete with the much more established, and better funded, candidate Hillary Clinton. This really doesn’t come as a surprise. By pointing to Nordic social democracy as a role model, ideologues on the left can create optimism for the progressive cause in America. They point out that the Nordic model allows for universal health care, fully government-funded education, a system where most workers are part of labor unions, generous parental leave, open-handed unemployment benefits, liberal sick leave benefits and a lavish system with paid vacations. What more could the Left in the United States ask for? Hillary Clinton has tried to position herself in the middle, by combining praise of the Nordic model with a less enthusiastic stand on how far the United States should go in pursuit of democratic socialism. In her own words: “We are not Denmark. I love Denmark. We are the United States of America, and it is our job to rein in the excesses of capitalism.” Ezra Klein, editor of the liberal news website Vox, explained that this dispute “obscured deep similarities,” as “Clinton and Sanders both want to make America look a lot more like Denmark – they both want to pass generous parental leave policies, let the government bargain down drug prices, and strengthen the social safety net. Their disagreement isn’t over whether America should look more like Denmark.”3
Hillary and Bill Clinton for their part are also associated to the Nordic countries in the 2016 election cycle. The primary reason is a scandal, where the Clintons are accused of having set up and kept hidden a foundation in Sweden, which has received $26 million, with one of the main contributors being a Swedish government–sanctioned lottery.4 The Clintons also have ideological ties to the Nordics. Although the two centrist Democrats are careful not to identify themselves as admirers of democratic socialism, they too lean towards the Nordic model. In 1997, for example, Bill Clinton became the first sitting president to visit Denmark. Clinton, who had visited the country already during 1969 as a student, praised Danish policies, saying, “Denmark has been a pioneer in showing the world how a nation can succeed, both in creating a strong economy and a good society that provides opportunity for all its citizens and supports those in need, a society bound together by shared values and respect for real differences. We can all learn from your efforts to educate your people for a lifetime, to give them the tools necessary to make the most of their own lives in a time of global, economic, and technological change.”5 In his book Back to Work, published in 2011, Bill Clinton went further by explaining that Finland, Sweden, and Norway offer more chances for individuals to outearn their parents than the United States does.6
Obama is fond of musing to his aides, “Why can’t all countries be like the Nordic countries?” – CNN, 2016
In 2013 Obama followed suit by making the first bilateral visit by an American president to Sweden. After a joint speech with Sweden’s then prime minister Fredrik Reinfeldt, Obama explained that he admired Sweden’s economic model: “Sweden also has been able to have a robust market economy while recognizing that there are some investments in education or infrastructure or research that are important, and there’s no contradiction between making public investments and being a firm believer in free markets. And that’s a debate and a discussion that we often have in the United States.”7
Three years later, in May 2016, Obama hosted the leaders of the Nordic countries in Washington. He continued to praise the Nordic social welfare model, and the open immigration policies of the Nordics. Amongst others Obama
said: “We believe in societies that create opportunity for all people, through education, health care, and equal opportunity – including for women. In fact, in a world of growing economic disparities, Nordic countries have some of the least income inequality in the world – which may explain one of the reasons that they’re some of the happiest people in the world, despite not getting much sun…. 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 a story for CNN White House producer Kevin Liptak explained “the northern European nations remain an oasis of liberal cool for [Obama] … It’s no wonder Obama is fond of musing to his aides, ‘Why can’t all countries be like the Nordic countries?’”8
The admiration shown by Democrat presidents or would-be presidents is however only the tip of the iceberg. For a long time the Nordic countries have been regarded as prime role models by leftist ideologues. I don’t know of any part of the world in which the Left does not view the Nordics as examples of how high-tax social democratic systems are viable and successful. American musician Bruce Springsteen, famous for getting engaged in politics, explained during a tour in Paris that his dream was for the United States to adopt a Swedish-style welfare state.9 He is joined by many liberal intellectuals and journalists who over decades have built up the image of the nearly perfect Nordics. Time magazine, for example, described Sweden as a social democratic utopia already in 1976, going as far as using the word paradise: “It is a country whose very name has become a synonym for a materialist paradise. Its citizens enjoy one of the world’s highest living standards, and a great many possess symbols of individual affluence: a private home or a modern apartment, a family car, a stuga (summer cottage) and often a sailboat. No slums disfigure their cities, their air and water are largely pollution-free, and they have ever more leisure to indulge a collective passion for being ut i naturen (out in nature) in their half-forested country. Neither ill health, unemployment nor old age pose the terror of financial hardship.”10
Do you oppose creating a paradise of wealth and equality? Are you against having a society where no one needs to be financially worried when they are sick, out of a job, or old? Well, who can be? The American Left has created a utopian image of Sweden in particular and the Nordic countries in general. Based on this unrealistic image, they argue that social democracy is superior to a free-market model. Political scientist John Logue stated in 1979, “A simple visual comparison of Scandinavian towns with American equivalents provides strong evidence that reasonably efficient welfare measures can abolish poverty as it was known in the past; economic growth alone, as the American case indicates, does not.”11 Logue believed that the greatest threat to the Nordic welfare states was that they were too successful; eliminating social problems to such a degree that people forgot the importance of welfare policies.12
In 1994 David Popenoe wrote that “Scandinavian welfare and family policies are the envy of [left] liberal-thinking people around the world.” He, “like most American social researchers,” was “largely in support of the Scandinavians’ accomplishments in the area of social welfare.”13 It might not seem like it, but Popenoe was actually trying to burst the utopian bubble by explaining that there were indeed also drawbacks to the generous welfare systems supported by high taxes. The bubble, however, did not burst, even among top leftist academics. In 2006 Jeffrey Sachs, one of the world’s leading experts on economic development and the fight against poverty, argued in Scientific American that the ideas of free-market economist Friedrich Hayek were proven wrong by the Nordic social democracies: “In strong and vibrant democracies, a generous social-welfare state is not a road to serfdom but rather to fairness, economic equality and international competitiveness.”14 In 2011 liberal American economic guru Paul Krugman explained, “Every time I read someone talking about the ‘collapsing welfare states of Europe,’ I have this urge to take that person on a forced walking tour of Stockholm.”15 Journalists with a tilt to the left also add to the equation. During the presidential campaign of 2016, Hillary Clinton was criticized, among others in the Boston Globe, for not being enough of an admirer of the Nordic model.16
“Every time I read someone talking about the ‘collapsing welfare states of Europe,’ I have this urge to take that person on a forced walking tour of Stockholm.” – LIBERAL ECONOMIC GURU PAUL KRUGMAN
This list of admirers could be easily extended. Also in other parts of the world, the Nordic model is routinely seen as a great system to follow. I think this is the simple explanation for why my previous writings on this issue have gained so much attention abroad. Again, it would be one thing if people argued in a nuanced way in favor of the welfare states. I myself don’t believe that universal health care or public funding of child care and schooling is a bad idea. As I will explain in this book, one could certainly make a case for the early Nordic model, where low taxes and market-friendly policies were combined with such basic welfare services. Admirers of the Nordic system, however, often go all in, in the utopian myth creation. The leading French newspaper Le Monde has, for example, explained that “only the Scandinavian system is at once efficient and fair.”17
Rich Lowry, editor of the right-leaning National Review, recently used Shangri-La as an analogue for the American Left’s view of Nordic welfare states, in an article on Scandinavian unexceptionalism. I think this is a spot-on description, at least for the most vivid foreign advocates of Nordic-style social democracy.18
The high regard among the admirers of welfare state policy around the world, from Asia to Europe to Latin America, comes as no surprise. Nordic societies are uniquely successful. They characterized not only by high living standards, but also by other attractive features, such as low crime rates, long life expectations, high degrees of social cohesion, and even income distributions. Various international rankings conclude that they are among the best, if not the best, places in the world in which to live. One example is the Better Life Index, compiled by the Organization for Economic Cooperation and Development (OECD). In the 2015 edition of the index, Sweden was ranked as the nation with the second-highest level of well-being in the world. The other four Nordic countries also made the top ten global list (see next page).19 Another example is the 2015 edition of Mothers’ Index Rankings, where Save the Children rates nations based on how favorable their social and economic systems are for mothers and children. Norway ranks as the best country in the world in this regard, followed by Finland, Iceland, Denmark, and Sweden.20 The Nordics have been on top in previous years also.
If one disregards the importance of thinking carefully about causality, the argument for adopting a Scandinavian-style economic policy in other nations seems obvious. The Nordic nations – in particular, Sweden, which is most often used as an international role model – have large welfare states and are successful. This is often seen as proof that a third-way policy between socialism and capitalism works well, and that other societies can reach the same favorable social outcomes simply by expanding the size of government. If one studies Nordic history and society in depth, however, it quickly becomes evident that the simplistic analysis is flawed. The social success of Nordic countries is, as will be shown systematically throughout this book, rooted deeply in their history and was apparent long before the adaptation of large welfare states. Although welfare states certainly provide some benefits, to a large degree much-admired societies in the north are successful despite, not thanks to, their policies.
TOP TEN COUNTRIES: OECD BETTER LIFE INDEX 2015
1.Australia
2.Sweden
3.Norway
4.Switzerland
5.Denmark
6.Canada
7.United States
8.New Zealand
9.Iceland
10.Finland
Source: OECD Better Life Index
2
NORDIC SUCCESS PREDATES LARGE WELFARE STATES
DEMOCRATIC PRESIDENTS AND WOULD-BE PRESIDENTS, liberal
academics, journalists, and Hollywood celebrities who admire Nordic social democracy all make a simple assumption: if America adopts Nordic policies, American society will shape into a Nordic society. To paraphrase the movie Field of Dreams, “If you build it, he will come.”1 But does this assumption make sense? Italy, France, and Greece also have high government expenditure and welfare states based on socialist ambitions. Why wouldn’t America turn out to be the next Greece, Italy, or France? I am sure there is a point to be made about the benefits of generous welfare systems in these countries. At the same time, it is obvious that social challenges such as unrest, high unemployment, and stagnant growth exist in southern European welfare states. They are far from the Nordic Shangri-La.
Ideologues on the left often simply avoid this question. Bernie Sanders isn’t keen on comparing his policies with those introduced by socialists in southern Europe, although his ideals are arguably more popular there today than in the Nordics. Southern European social democrats have a lax attitude about public spending, while those in northern Europe are fiscally conservative. Which of the two reminds you more of the attitudes of American politicians who want to introduce social democracy? There is also the issue of outcomes. When you think about it, have states in America that have moved toward social democratic policies, such as California, been able to replicate the success of Nordic societies? Or have their outcomes been more in line with the welfare states of southern Europe? Again, the point isn’t to dismiss the idea of welfare programs, but to have realistic expectations on the limits of policy.
Debunking Utopia Page 2