The Nordic Economic Model ~ Debunking the Myth That It’s a Myth

As Patrick Moynihan once said, “You’re entitled to your own opinions but not to your own facts.” 

August 12, 2011 — I don’t know why I argue politics. It’s almost always a fruitless activity, especially when I argue with a staunch conservative. To my conservative friends – I’m sorry, I mean no offense by this. It’s simply the nature of conservative thinkers to make up their minds then stick to their guns, no matter what.

A Facebook friend named Sylvia recently posted to her wall this quote attributed to Prof. Victor Davis Hanson of Sanford University: “America is drifting as never before toward Europe—the ostensible model for an Obama administration that has borrowed nearly $5 trillion in three years, federalized health care, assumed control of private companies, blocked new plant openings, is eager to increase taxation, and seeks to subordinate U.S. foreign policy to the United Nations, and did not go to the U.S. Congress for authorization….”

In my opinion, except for the bit about seeking to subordinate U.S. policy to the UN, the quote pretty much tells it the way it is — albeit not without some exaggeration. His statement has appeared on dozens of right-wing, Obama-bashing websites and blogs recently. Prof. Hanson, by the way, is a well-respected military historian, columnist, political essayist and scholar of ancient warfare and is a Senior Fellow at Stanford’s Hoover Institution http://en.wikipedia.org/wiki/Victor_Davis_Hanson.

Rather than argue with the Professor’s points, I chose to respond in a different manner. I posted this comment: “Citizens of many European countries, especially the Nordic countries, are much better off than most Americans with more wealth per capita, better health care at a much lower cost, a cleaner environment, and better education. Notwithstanding capitalists’ arguments about the degree of socialism in Nordic countries, they do have open markets, low levels of regulation, strong property rights, stable currencies, and many other policies associated with growth and prosperity. Indeed, Nordic nations generally rank among the world’s most market-oriented nations. The Nordic Model http://en.wikipedia.org/wiki/Nordic_model is no myth. People there are generally happier, wealthier and healthier, so why should we worry about this so-called drift, Sylvia, if indeed it actually exists?”

Sylvia didn’t respond to this. One of her other friends did, a man named Les. Les took up the challenge by saying (spelling and grammar errors included) , “Kent, go live there!! Not as utopic as you think. Nationalized natural resources to support the leaches of there society. They have one of the highest suicide rate in the world because of the lack of ability to face and solve problems. Capitalism with it’s flaws is still a much better way for a society to evolve and take of it own. People at least have a choice.”

This got me to thinking. Could he be right, that Nordic countries have high suicide rates because the social and economic systems there deprive people of some resolve or ability to face and solve their own problems? So I did some research. Though this idea is popular with conservative pundits as a way to criticize the higher taxes and government spending on social programs prevalent in Nordic countries, the idea does not reconcile with the mental health community.

I responded to Les saying, “No thanks, Les, I need to stick around and do my best to rescue this country from corporatocracy.

I visited a Nordic country once, Denmark, and have read much about the economic and social conditions in these countries. Yes, according to the World Health Organization, Finland and Sweden do have higher suicide rates than the U.S. Maybe this is because of the long, cold winters and lack of sunshine there. Norway’s rate, however, is less than one person per 100,000 per year more than ours and Denmark’s rate is lower than ours by about the same amount http://en.wikipedia.org/wiki/List_of_countries_by_suicide_rate. So, what’s your point?”

“By the way,” I added, “you might be interested in this. According to Gallup as reported in Forbes, the four northern-most Nordic countries are the four happiest countries in the world. http://www.forbes.com/2010/07/14/world-happiest-countries-lifestyle-realestate-gallup-table.html.

Sylvia, who started the conversation/debate thread, responded saying, “Alaska is cold and it isn’t suicidal. The Nordic tax rate of 70% kills the “animal spirits” and, they do not have the diverse population as US. You can’t run over their borders and get free money from their governments. In US for some of our populations, failing in school is an “option” – not there. Because each HS dropout it costs the rest of us $90,000. We have unfunded liabilities here up the wahzoo. European countries that are more diverse are in TROUBLE: Italy (which is too big to fail), Greece, Ireland, Portugal, Spain. Enough said. The American dream – if allowed to survive – is the best.”

I responded with, “As Patrick Moynihan once said, “You’re entitled to your own opinion but not to your own facts.” The suicide rate in Alaska is in fact a serious problem http://www.adn.com/2011/01/12/1645956/report-says-suicide-remains-an.html.

“Kent – surely you know suicide rates are highest in socialist countries,” wrote my lady friend. “Suicide rates in US are highest in California, Hawaii, Oregon, Washington. Now, what do those states have in common?”

Before I could respond to Sylvia, Les wrote (again misspellings and grammar errors are included), “This countries greatness and probably your wages and retirement came from corporations, directly or indirectly. Alaska’s suicide rate is a direct result of people being hand a living without earning it (Indigenous people) let alone the weather :-). Socialism doesn’t work and hasn’t worked. Those societies continue to decline. That is not my fact. Nothing will ever give you the right to someone else wages. Government is only proficient at wasting tax dollars.”

“No, Sylvia,” I wrote. “According to The World Health Organization’s data (previously cited), suicide rates are highest in Lithuania. But Lithuania is not a socialist state. Neither is South Korea, Japan or Kazakhstan since the breakup of the old Soviet Union. These are the countries that have the highest suicide rates. The correlation you’ve made does not hold. Neither are your numbers correct. Look again, Sylvia.  Here is a reference from Mental Health America on just which states have the best and worst statistics with respect to mental health and suicide http://www.nmha.org/go/state-ranking. California, Hawaii, Oregon and Washington State have among the nation’s lowest suicide rates.

Les, your conclusions about the causes of mental illness and resultant suicides are not shared by the mental health community. The experts say that suicides are the result of biological predispositions, environmental factors, poor health policies and a lack of access to treatment for depression.”

Accepting defeat, I assume, on the suicide argument without admitting it, Les, in typical conservative argument style, shifted to another talking point. He cited an obscure New York Times op-ed from way back in 2007 http://www.nytimes.com/2007/12/05/business/worldbusiness/05iht-labor.4.8603880.html claiming that high tax rates in Denmark were contributing to a labor shortage there. Based on this one article, he claimed that socialism is most unfair to middle class workers.

Denmark, I didn’t bother to point out, was essentially at full employment when the New York Times article he cited was published and still is with an unemployment rate of just 4.2 http://www.indexmundi.com/denmark/unemployment_rate.html. Gee, I thought to myself, wouldn’t it be nice if we had a labor shortage here too?

Something else I didn’t share with Sylvia and Les is that neither Denmark https://www.cia.gov/library/publications/the-world-factbook/geos/da.html nor any of the other Nordic countries consider themselves to be socialist. Yes, tax rates are high in these countries, but their peoples enjoy a plethora of government-provided benefits and services that we don’t have. All of these countries have thriving, highly competitive market economies. And, despite the fact that  Norway’s economy https://www.cia.gov/library/publications/the-world-factbook/geos/no.html features a combination of free market activity and government intervention to include government control of resources, Norway in recent times could claim more millionaires per capita than any other country in the world http://www.aftenposten.no/english/local/article1881847.ece.

Responding to Les, I wrote, “I know about economic theories, about the advantages and disadvantages capitalism. I’ve been teaching economics for years. The truth here is that your arguments against the success of “impure” market systems, those that are regulated and constrained sufficiently to preclude the kind of excesses that we have recently experienced here in the U.S., can’t stand the light of day. We’re in the mess we’re in today not because of excess government spending or regulation. We’re in the mess we’re in today because of corporate greed let to run unchecked. I am convinced that it is “unbridled” (laissez faire) capitalism that is most unfair to the working class. Surely you must be confusing socialism with communism, which is a political system not an economic system.”

So, the conservatives’ myth about the Nordic economic model being a myth is now debunked. At least it should be.

Please feel free to post a comment whether you agree or not.

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Published in: on August 12, 2011 at 12:36 pm  Comments (10)  

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10 CommentsLeave a comment

  1. Once again, I really enjoyed reading your blog.

  2. Very good. It is amazing how much there is to be learned by finding out the facts beneath conservative arguments. Ever asked one to prove it, only to be told to “do your own work.” No wonder they consider the court system to be liberally biased. The responsibility of proof rests on the person making the claim, how liberal is that?

  3. The more conservative people are, the more inclined they seem to be to reject facts than cannot be twisted to support their already-held persuasions. That’s why most scientists and academics tend to be liberal thinkers.

  4. The little fact you forgot to mention is that Norway does have a lower standard of living than Americans. Buy a meal, blue jeans, a car etc and this will become clear. A Big Mac is $8-12. I worked in Norway off and on for 5 years. Norway is an advanced economy no doubt and no doubt socialism is hurting it.

    BTW: The other little fact you left out is that 1/3 of Norway’s income comes from North sea oil. This covers a lot of socialism.

  5. Despite the price of Big Macs in Norway, the people there are much better off than people here in America. Yes, North Sea oil and gas revenues contribute to this fact. But so does enlightened, socially responsible government. The country has a higher GDP per capita, runs budget surpluses consistently, and sustains low unemployment numbers with a highly educated population. I challenge all who question these facts to compare the numbers available on the CIA FactBook website.

  6. As a Finn, I found it interesting to read about the Nordic economy and our “socialism” from your point of view. I’d like to point out that the tax rate of 70% is an exaggeration. Income tax in Finland is 28%. For more information on tax in Finland and the other Nordic countries go to https://www.nordisketax.net/main.asp?url=files/suo/eng/i07.asp&c=suo&l=eng&m=02

  7. And a bottle of water costs $5 or more in those countries too? It is happier to live there I assume

  8. Yes, the cost of living in Scandinavian countries is something that free market capitalists like to talk about. Norway, for example, is among the most expensive countries in the world for Americans to visit as reflected in the Big Mac Index and other indices. However, these measurements are misleading. Compared to the high income level of most Norwegians, the country is really one of the cheapest in the world for its citizens (i.e. the number of hours that one has to work to buy goods). One must also consider the fact that healthcare, education and public transportation are provided by the government.

  9. Were can i start learning Macroeconomics

  10. Sign up for a class at your local community college. Short of this, recall that the library has books.


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